<PAGE>2
SECURITIES AND
EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10SB
General Form for
Registration of Securities of Small
Business
Issuers
Under Section 12(b) or (g) of the
Securities Exchange Act of 1934
MICRO
LABORATORIES, INC.
(Exact name of Small
Business Issuer in its charter)
NEVADA
05-049-4587
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization
Identification No.)
29 Lakeside Drive, Johnston, Rhode Island
02919
(Address of principal executive offices)
(Zip Code)
Registrant's Telephone number, including
area code: (401) 949-3562
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, $.001 par value
Forward-Looking Statements and Associated
Risk. This Registration
Statement contains forward-looking
statements including statements
regarding, among other items, the
Corporation's growth strategies, and
anticipated trends in the Corporation's
business and demographics. These
forward-looking statements are based
largely on the Corporation's expectations
and are subject to a number of risks and
uncertainties, certain of which are
beyond the Corporation's control.
Actual results could differ materially
from these forward-looking statements.
<PAGE>3
ITEM 1. DESCRIPTION OF BUSINESS
Business of Corporation. The operations
and objectives of the Corporation are to
produce, market and distribute a line of
oral spray vitamins, trade name "Micro
Spray". The Corporation intends to
produce, market and distribute an
additional product line of, minerals,
herbs and other oral absorption products
in the United States and the
international market. Therefore, the
Corporation's financial viability will
depend almost exclusively on the
Corporation's ability to generate
revenues from its operation, and the
production of the above product lines.
The Corporation will not have the benefit
of reducing its financial risks by
relying on revenues derived from other
operations.
Competition. There is significant
competition in the vitamin, minerals and
nutritional supplement industry. The
Corporation will compete with established
companies and other entities (many of
which possess substantially greater
resources than the Corporation). Almost
all of the companies with which the
Corporation will compete are
substantially larger, have more
substantial histories, backgrounds,
experience and records of successful
operations, greater financial, technical,
marketing and other resources, more
employees and more extensive facilities
than the Corporation now has, or will in
the foreseeable future. It is also likely
that other competitors will emerge in the
near future. There is no assurance that
Corporation will compete successfully
with other established vitamin, minerals
and nutritional supplement manufacturers.
The Corporation shall compete on the
basis of quality in addition to a price
basis. Inability to compete successfully
might result in increased costs, reduced
yields and additional risks to the
investors herein
Employees. The Corporation has one full
time and two part time employees. The
Corporation shall employ individuals as
required.
Governmental Regulation. The Corporation
is not subject to governmental regulation
other those regulations, which apply to
manufacturing. The Corporation will need
to meet the requirements of the Food and
Drug Administration for food processing
standards.
Seasonal Nature of Business Activities.
The Corporation's operations shall not be
seasonal.
Products. The Corporation currently has
six different nutritional health
products. All natural ingredients are
used in each product. The price of the
products range from retail pricing of
approximately $7.00 to $40.00 and
wholesale prices of $5.00 to $20.00. The
Corporation's products are: Adult
Multiple Vitamin, Children's Multiple
Vitamin, Vitamin B-12, Adult B-Complex
with C, Children's B-Complex with C, Zinc
plus Vitamin C.
The nutritional supplement industry is
not regulated by the Food and Drug
Administration. The Food and Drug
Administration has tried unsuccessfully
in the past to pass legislation labeling
vitamins as drugs. Due to this position,
the Corporation does not publish any
information that could be considered as
"'prescribing". The Corporation attempts
to cooperate with this agency whenever
possible and seeks professional legal
counsel experienced and specializing in
Food and Drug Administration matters.
The Food and Drug Administration
prohibits any companies from providing
information to the customer as to what
the product is for and why it works. The
Food and Drug Administration views that
if the marketer is making any suggestions
or claims as to what the product is for
then that is considered prescribing and
as such the product is a drug. If the
product is determined to be a drug, then
it needs to be licensed as one and
available only as a prescription item.
The Food and Drug Administration has
tried unsuccessfully in the past to pass
legislation labeling vitamins as drugs.
Due to this position, the Corporation
does not publish any information that
could be considered as "'prescribing".
Micro Spray Delivery System. The
Corporation has developed "Micro Spray",
a delivery system in the form of a spray
that is sprayed directly onto the mouth
in the form of a fine mist. Micro Spray
enters the delicate tissue of the mouth
and is absorbed into the bloodstream and
assimilated throughout the body. Micro
Spray consists of vitamins and nutrients
in an aqueous solution that is delivered
through a non-aerosol pump.
<PAGE>4
In-house studies have determines that
Micro Spray, derived from vegetable
sources, increases the quantity of
nutrients that enter into the
bloodstream, provides proper nutrient
levels and increases the rate at which a
nutrient is absorbed.
Current Industry Background and Delivery
Systems. The metabolism of nutrients
consist of four important steps:
digestion, assimilation, utilization and
excretion. Digestion takes place in
either the stomach where the fluids are
acidic, or the small intestines where the
fluids are alkaline. The proper balance
of acid levels in these vital organs is
crucial to the digestion process, yet as
people age, increasingly less of these
fluids are produced and as a result, the
level of nutrient absorption is
decreased.
NBC's Today Show reported that when a
variety of name brand vitamins were
tested, 36% of the vitamin pills failed
to disintegrate quickly enough to be
absorbed into the bloodstream. In order
to combat this problem, tablet
manufacturers often attach a catalyst
(chelator) to the minerals that will aid
in the digestion process, however,
normally up to 80% of the tablet can
become chelator and only 20% of the
content is actually pure mineral. In
addition, minerals are typically unstable
and easily destroyed in the digestive
tract and the acid in the stomach can
actually deactivate enzymes before they
reach the site of optimal activity. To
counter this difficulty, manufacturers
enteric-coat pancreatic and other similar
acid sensitive ingredients to prevent
destruction in the stomach. The coating
must be resistant to acid in the stomach,
yet dissolve in the alkaline environment
of the small intestine. As individuals
vary greatly in the levels of acid in
their stomachs and the alkaline levels of
their small intestines, if coatings are
improperly balanced or designed in a
generic environment, the supplement will
be wasted.
Assimilation takes place primarily in the
small intestines where adverse effects
can result from a multitude of factors.
Some nutrients react to one another and
compete for absorption. Some even
require that your body secretes special
proteins as carriers before being
absorbed, while others are best absorbed
when fat and oils are induced into the
body's diet as a carrier. The result of
assimilation complications is known to
cause, among other ailments, unpleasant
side effects such as nausea and
gastrointestinal discomfort. In
addition, digestive organs such as the
liver, kidneys and stomach are taxed
unnecessarily, as the nutrients do not
always break down and might not offer the
body any nutritional value.
Manufacturing. The Corporation will
package its product line. Most packaging
will be done in house, some will be done
by independent packaging companies across
the nation. The Corporation supplies the
packaging Corporation with the finished
product in measured-premixed form, so
that a measured amount can be inserted
into the vials by the packaging
Corporation. The vials are filled,
labeled and packaged for distribution.
The Corporation will offer variations of
their product for private label.
Service and Support. The Corporation
guarantees its products to 100%
satisfaction. If a customer is not
satisfied with the product for any
reason, the product will be replaced or
the price refunded.
Marketing. The Corporation shall
position its marketing efforts to target
large retail store chains and is
presently in negotiations with several
large distributors. The Corporation has
entered into an agreement with three
large distributors and marketing
representatives for the distribution of
its products in the northwest, mid west,
and New England. The distributors receive
commissions on each product sold. The
target market extends to drug, grocery,
health food stores, fitness clubs,
established physicians, chiropractors and
even veterinarians.
New Products. The Corporation shall
continue to pursue the development of new
products as funds allow.
Advertising and Name Brand Awareness.
In order to increase the number of new
distributors and expand the customer
base, the Corporation shall utilize a
portion of the proceeds of the Offering
to finance media campaigns encompassing a
broad communication spectrum ranging from
network television to the Internet, and
trades.
International Markets. The Corporation
shall pursue its expansion into the
foreign markets.
<PAGE>5
Item 2. Management's Discussion and
Analysis or Plan of Operation
Trends and Uncertainties. Demand for the
Corporation's products will be dependent
on, among other things, general economic
conditions, which are cyclical in nature.
Inasmuch as a major portion of the
Corporation's activities is the receipt
of revenues from the sale of its
products, the Corporation's business
operations may be adversely affected by
its competitors and prolonged
recessionary periods.
The Corporation is entering a phase of
conversion from a Development Stage
Corporation to an Operational
Corporation. Agreements have been
reached to provide key personnel in the
areas of marketing and sales. An
agreement has been reached with three
large distributors to include the west
coast, mid west and New England.
Preliminary market research was conducted
to arrive at the flavorings for the Micro
Spray product line. The Corporation sent
a representative to the National
Association of Chain Drug Stores (NACDS)
trade convention in Philadelphia, PA also
the packaging show in Chicago Ill. The
Corporation plans to use a "target"
marketing approach for the distribution
of its Micro Spray product line.
Capital and Source of Liquidity. The
Corporation currently has no material
commitments for capital expenditures.
For the six months ended September 30,
1999, the Corporation acquired intangible
assets for $24,979 and property and
equipment for $28,025. The Corporation
had an increase in shareholder loans of
$600 and an increase in notes payable of
$4,700. As a result, the Corporation had
net cash used in investing activities of
$$58,304 for the six months ended
September 30, 1999.
For the six months ended September 30,
1998, the Corporation did not pursue any
investing activities.
For the year ended March 31, 1999, the
Corporation acquired intangible assets
valued at $129,238 and acquired property
and equipment of $25,756. For the year
ended March 31, 1999, the Corporation
made shareholder loans of $24,710. The
Corporation had a note payable of
$45,000, had $5,500 due to shareholder
and $64,030 due to a related party for
the year ended March 31, 1999. As a
result, the Corporation had net cash used
in investing activities of $65,174 for
the year ended March 31, 1999.
For the period from August 8, 1997 to
March 31, 1998, the Corporation acquired
intangible assets of $75,750 and property
and equipment of $40,965. As a result,
the Corporation had net cash used for
investing activities of $116,715 for the
period from August 8, 1997 to March 31,
1998.
For the six months ended September 30,
1999, the Corporation did not pursue any
financing activities
For the six months ended September 30,
1998, the Corporation did not pursue any
financing activities.
For the year ended March 31, 1999, the
Corporation received proceeds of $182,198
from the issuance of its common stock.
The Corporation also received services
valued at $572,455 in exchange for its
common stock for the year ended March 31,
1999. As a result, the Corporation had
net cash provided by financing activities
of $754,653 for the year ended March 31,
1999.
For the period from August 8, 1997 to
March 31, 1998, the Corporation received
proceeds of $411,000 from the issuance of
its common stock resulting in net cash
provided by financing activities of
$411,000.
On a long term basis, liquidity is
dependent on commencement of operations
as discussed above, (See "TRENDS AND
UNCERTAINTIES."), receipt of revenues,
additional infusions of capital and debt
financing. The Corporation believes that
additional capital and debt financing in
the short term will allow the Corporation
to increase its marketing and sales
efforts and become a fully operational
Corporation thereafter resulting in
increased revenue and greater liquidity
in the long term. However, there can be
no assurance that the Corporation will be
able to obtain additional equity or debt
financing in the future, if at all.
<PAGE>6
Results of Operations.
The Corporation is accurately classified
as a "development stage Corporation" and
as such has conducted startup and
development operations that include:
" completed photo shoots, created Corporation logos,
brochures, sales literature, product labels and packaging
design, UPCs
" prepared the product line of six items for distribution
roll out
" completed negotiations with three large distributors to
include west coast, mid west, and New England to represent
and sell the companies product lines to national chains
The Corporation has not received any
material revenues since inception. For
the six months ended September 30, 1999,
the Corporation had sales of $349 and
received interest income of $1,681
resulting in total revenues of $2,031.
Cost of Sales were $13,635 resulting in
gross profit of $(11,605) for the six
months ended September 30, 1999.
For the six months ended September 30,
1999, the Corporation had general and
administrative expenses of $328,520
resulting in a net loss of $340,125.
The general and administrative expenses
included advertising of $27,754, auto
lease expense of $4,730, bookkeeping
services of $12,560, consultant expense
of $73,369, fullfilment expense of
$55,000, legal expense of $16,213,
professional fees of $7,865, office
expense of $4,057, rent of $12,750,
repairs of $2,033, research and
development of $93,095, telephone expense
of $13,914. Other miscellaneous
expenses were $5,180.
For the six months ended September 30,
1998, the Corporation had general and
administrative expenses of $154,688
resulting in a net loss of $153,445.
The general and administrative expenses
included advertising of $13,500,
administrative fees of $17,220, research
and development costs of $15,022, payroll
and payroll taxes of $43,593, telephone
of $4,117, rent of $4,800, automobile
expense of $8,069, travel expense of
$7,962, insurance expense of $2,466,
office supplies of $3,543, freight of
$1,313, repairs and maintenance of
$22,654. Other miscellaneous expenses
were $10,429.
For the year ended March 31, 1999, the
Corporation had operating expenses of
$444,156 and had a net loss of $440,507
resulting in a loss per common share of
$.04. These operating expenses consisted
primarily of advertising and public
relations of $103,008, legal and
professional fees of $111,444, research
and development of $51,022, telephone
expense of 18,959, rent of $24,200,
automobile expense of $14,272, freight
expense of $62,107 and other
miscellaneous expenses of $59,133
For the year ended March 31, 1998, the
Corporation had operating expenses of
$153,550 and had a net loss of $152,226
resulting in a loss per common share of
$.03. These operating expenses consisted
primarily of advertising and public
relations ($48,422), administrative fees
($58,127), start-up expenses ($7,627),
laboratory supplies ($4,764), telephone
expenses ($6,192) and other miscellaneous
expenses ($28,368).
Plan of Operation. The Corporation is in
the development stage and has not
conducted any significant operations to
date or received any material operating
revenues. The Corporation may experience
problems; delays, expenses and
difficulties sometimes encountered by an
enterprise in the Corporation's stage of
development, many of which are beyond the
Corporation's control. These include,
but are not limited to, unanticipated
problems relating to additional costs and
expenses that may exceed current
estimates and competition.
The Corporation is not delinquent in any
of its obligations even though the
Corporation has generated limited
operating revenues. The Corporation
intends to market its products and
services utilizing cash made available
from the private sale of its securities
and operations. The Corporation's
management is of the opinion that the
proceeds of the sales of its securities
and future revenues will be sufficient to
pay its expenses for the next twelve
months.
<PAGE>7
ITEM 3. DESCRIPTION OF PROPERTY
The Corporation's executive offices are
located at 29 Lakeside Drive, P.O. Box
19296, Johnston, Rhode Island 02919.
These offices consist of 400 square feet
for office, product development, product
testing and is leased at the rate of $600
per month.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following tabulates holdings of
shares of the Corporation by each person
who, subject to the above, at the date of
this prospectus, holds of record or is
known by Management to own beneficially
more than 5.0% of the Common Shares and,
in addition, by all directors and
officers of the Corporation individually
and as a group. Each named beneficial
owner has sole voting and investment
power with respect to the shares set
forth opposite his name.
Shareholdings at Date of
This Prospectus
<TABLE>
<CAPTION>
Percentage of
Number &
Class(1) Outstanding
Name and Address of
Shares Common Shares
<S> <C>
<C>
Robert Thistle
29 Lakeside Drive
Johnston RI 02919
8,880,000 52.88%
Irene R. Zawadowicz
7 Lakeside Drive
Johnston, RI 02919
10,000 .06%
Mark Shvetz
333 Neipsic Road
Glastonbury, CT 02924
100,000 1.02%
Gerald Schaffert
6 Caldar Road
North Providence 02904
100,000 1.02%
Vanda Poli
117 Nutmeg Drive
Torrington, CT 06790
300,000 3.06%
Cede & Co
C/O Depository Trust Co.
P.O. Box 20
Bowling Green Station
New York NY 10004
4,723,155 28.13%
All Directors & Officers
as a group (4 persons)
9,090,000 55.92%
</TABLE>
(1)Pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as
amended, beneficial ownership of a
security consists of sole or shared
voting power (including the power to vote
or direct the voting) and/or sole or
shared investment power (including the
power to dispose or direct the
disposition) with respect to a security
whether through a contract, arrangement,
understanding, relationship or otherwise.
Unless otherwise indicated, each person
indicated above has sole power to vote,
or dispose or direct the disposition of
all shares beneficially owned, subject to
applicable unity property laws.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS.
Board of Directors. The following
persons listed below have been retained
to provide services as director until the
qualification and election of his
successor. All holders of Common Stock
will have the right to vote for Directors
of the Corporation. The Board of
Directors has primary responsibility for
adopting and reviewing implementation of
the business plan of the Corporation,
supervising the development business
plan, review of the officers' performance
of specific business
<PAGE>8
functions. The Board is responsible for
monitoring management, and from time to
time, to revise the strategic and
operational plans of the Corporation.
Directors receive no cash compensation or
fees for their services rendered in such
capacity.
Mr Thistle dedicates 90% of his time to
the Corporation. Ms. Zawadowicz
dedicates 50% of her time to the
Corporation. Mr. Shvetz dedicates 10%
of his time to the Corporation.
The Executive Officers and Directors are:
<TABLE>
<CAPTION>
Name Position
Term(s) of Office
<S> <C>
<C>
Robert Thistle, age 59 President, Director
Inception to Present
Mark Shvetz, age 50 Treasurer, Director
Inception to Present
Gerald Schaffert, age 38 Director
January 27, 1999
to present
Irene R. Zawadowicz, age Secretary
August 28, 1999
to present
</TABLE>
Resumes:
Robert Thistle. Mr. Thistle has been
Chief Executive Officer, President and a
Director of the Corporation from
inception. From 1984 to 1991, Mr. Thistle
was President of TR Productions, a
Philadelphia production company. From
1991 to present, Mr. Thistle has worked
as a international business and political
consultant working with the countries of
Russia, Pakistan, the Philippines and
China. He also advises Chinese political
officials in The People's Republic of
China and is involved in the annual MFN
renewal between China and the United
States.
Mark Shvetz. Mr. Shvetz has been the
Treasurer and a Director of the
Corporation since inception. Mr. Shvetz
has been involved in sales and marketing
for 29 years. From 1993 until he joined
the Corporation, Mr. Shvetz was self
employed selling hospital products and
other medical related equipment. From
1979 through 1993, he was a manager of
Timmed Labeling Systems, Inc., a
distributor of hospital products and
capital equipment for a national medical
products manufacturer. His
responsibilities included interacting
with hospital management and purchasing
decision making staff. Mr. Shvetz
received a BS in Accounting from the
University of Connecticut in 1967.
Gerald Schaffert. Mr. Schaffert has
been a Director of the Corporation since
January 27, 1999. Mr. Schaffert has been
involved in sales and marketing for the
past 19 years. From 1990 to present, Mr.
Schaffert has been the assistant sales
manager for Union Wadding Co., a
manufacturer of Christmas and Halloween
decorations. Mr. Schaffert has been
responsible for supervising a sales force
of 50 manufacturer's representatives
covering the entire United States. Mr.
Schaffert received a Bachelor of Science
degree in 1982 from the University of
Rhode Island with a concentration in
Consumer Affairs.
Irene Zawadowicz. Ms. Zawadowicz has
been secretary of the Corporation since
August 1999. From 1994 to 1998, Ms.
Zawaowicz was secretary in the human
resources department of Butler Hospital.
From 1998 to present, Ms. Zawadowicz has
been attending Johnson and Wales
University pursing a degree in
information science. Ms. Zawadowicz
received an Associate of Arts degree from
the Community College of Rhode Island
along with an Office Automation
Certificate.
ITEM 6. EXECUTIVE COMPENSATION
Since inception, the following cash
compensation has been paid by the
Corporation to its executive officers,
during which there were three (3)
officers.
<PAGE>9
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation
Awards Payouts
(a) (b) (c) (d) (e)
(f) (g) (h) (i)
Other
All
Name Annual
Restricted LTIP Other
and Compen-
Stock Options/ Pay- Compen-
Principal Salary Bonus
sation Awards SARs Outs sation
Position Year ($) ($) ($)
($) ($) ($) ($)
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
Robert Thistle 1999
President 1998 $12,000
Mark Shvetz 1999
1998
(1)
Irene Zawadowicz 1999
(2)
Secretary
</TABLE>
(1)Mr. Shvetz received 100,000 Common
Shares for services rendered from
inception.
(2)Pursuant to an agreement dated August
28, 1999, Ms. Zawadowicz received 10,000
common shares as compensation for
services.
The Corporation has not entered into
Employment Agreements with its officers.
Board of Directors Compensation.
Currently board members receive no
special compensation for meetings or time
incurred. Director liability insurance
may be provided to all members of the
Board of Directors. No differentiation
shall be made for any further
compensation of "outside directors" and
those officers of the Corporation serving
in that capacity.
Stock Option Plan. The Corporation
shall implement an employee stock option
program. The specifics of the plan have
yet to be determined.
ITEM 7. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
During the year ended March 31, 1999, the
Corporation paid rents totaling $7,200 to
Robert Thistle, President, Director and
majority shareholder. The Corporation
incurred administrative expenses during
the period totaling $26,353 paid to a
company operated by Mr Thistle
The Corporation has a receivable totaling
$27,925 due from President, Director and
a shareholder and a payable totaling
$5,500 due to Robert Thistle.
The Corporation incurred various expenses
totaling $64,030, which were paid for by
and due to Beneficial Health, Inc., a
company operated by Robert Thistle.
In addition, the Corporation borrowed
$45,000 from Beneficial Health, Inc., a
corporation operated by Robert Thistle
during the year ended March 31, 1999.
ITEM 8. DESCRIPTION OF SECURITIES
Qualification. The following statements
constitute brief summaries of the
Corporation's Certificate of
Incorporation and Bylaws, as amended.
Such summaries do not purport to be
complete and are qualified in their
entirety by the full text of the
Certificate of Incorporation and Bylaws.
The Corporation's articles of
incorporation authorize it to issue up to
50,000,000 Common Shares, $.001 par value
per Common Share.
Common Stock. Holders of Common Shares
of the Corporation are entitled to cast
one vote for each share held at all
shareholders meetings for all purposes.
Upon liquidation or dissolution, each
outstanding Common Share will be entitled
to share equally in the assets of the
Corporation legally available for
distribution to shareholders after the
payment of all debts and other
liabilities. Common Shares are not
redeemable, have no conversion rights and
carry no preemptive or other rights to
subscribe to or purchase additional
<PAGE>10
Common Shares in the event of a
subsequent offering. All outstanding
Common Shares are, and the Common Shares
offered hereby will be when legally
issued, fully paid and non-assessable.
There are no limitations or restrictions
upon the rights of the Board of Directors
to declare dividends out of any funds
legally available therefor. The
Corporation has not paid dividends to
date and it is not anticipated that any
dividends will be paid in the foreseeable
future. The Board of Directors initially
may follow a policy of retaining
earnings, if any, to finance the future
growth of the Corporation. Accordingly,
future dividends, if any, will depend
upon, among other considerations, the
Corporation's need for working capital
and its financial conditions at the time.
Transfer Agent. Harris Trust and Savings
Bank acts as the Corporation's transfer
agent.
<PAGE>11
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON
THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's common stock is traded in
the over-the-counter market and listed on
the NASDAQ Bulletin Board under the
symbol "MLAR-BB.
The following table sets forth the range
of high ask and low bid quotations for
the Company's common stock for each
quarter since commencement of trading
(July 8, 1998), as reported by the OTC
Bulletin Board. The Company's market
makers are Hill, Sharpe Capital, Inc. and
Paragon Securities. The quotations
represent inter-dealer prices without
retail markup, markdown or commission,
and may not necessarily represent actual
transactions.
Quarter Ended High
Ask Low Bid
9/30/98
$4.00 $4.00
12/31/98
$6.062 $.375
3/31/99
$3.250 $.187
6/30/99
$3.00 $.0437
9/30/99
$.750 $.218
12/31/99
$2.125 $.218
The Corporation has never paid any cash
dividends nor does it intend, at this
time, to make any cash distributions to
its shareholders as dividends in the near
future.
As of December 31, 1999, the number of
holders of Corporation's common stock is
approximately 33.
ITEM 2. LEGAL PROCEEDINGS
The Corporation had entered into verbal
agreement with InterCapital Holdings (an
unaffiliated entity) to provide services
relating to public relations and
marketing of the Corporation and its
products. InterCapital Holdings and its
affiliates were to be issued an aggregate
of 500,000 Common Shares as payment for
these services. The Corporation
terminated the agreement for non-
performance and did not issue the Common
Shares to InterCapital Holdings Corp.
On October 4, 1998, InterCapital Holdings
Corp filed a lawsuit in the Supreme Court
of the State of New York, InterCapital
Holdings Corp. vs. Micro Laboratories,
Inc., Index No. 98.026334. InterCapital
Holdings Corp. alleges that it did
perform and is seeking to obtain the
500,000 Common Shares or $50,000.
Management of the Corporation is of the
opinion that it will successfully defend
itself in the above-described lawsuit.
Additionally, management is of the belief
that any unsuccessful result would not
materially impact the operations of the
Corporation.
The Corporation filed suit in an civil
action against Deborah L. Gutt, Vanda
Poli Gutt, DL Gutt Corporation, a New
Jersey Corporationand William Gutt (Micro
laboratories, inc., et al vs. Gutt, et
al, Docket #: 99-0774 in the Providence
County Superior Court. The Corporation
is seeking the return of shares of stock
and other property. The Corporation
alleged, among other things, that the
defendants did not render the
professional services, which would have
entitled them to the shares of stock as
compensation. The Corporation is of the
belief that it shall be successful in any
legal proceeding and shall request the
return of the Common Shares so that they
may be canceled on the books and records
of the Corporation.
On or about May 10, 1999, the Corporation
was served with a Complaint in United
States District Court, District of
Connecticut containing a variety of
claims against, among others, the
Corporation (Deborah L. Gutt, Vanda Poi
Gutt, DL Gutt Corporation, a New Jersey
Corporation and William Gutt vs. Micro
Laboratories, Inc., a Nevada Corporation,
Beneficial Heealth Products, Inc., a
Nevada corporation, Top Hat Media
Productions, Inc., a Nevada corporation,
Robert Thistle and Ada Thistle, a/k/a Ada
D. Kuszai-Thistle - Case No. 3:99CV0860
SRU). The plaintiffs claim breach of
fiduciary duty, conversion, theft, unjust
enrichment, securities fraud, fraud,
breach of affirmative duty of disclosure
and breach of contract. On or about
September 17, 1999, the defendants filed
a Motion to Dismiss on several grounds
including, without limitation, the
pendency of a prior pending action in
another jurisdiction and the inadequacy
of the claims allenged in the Complaint.
On November 5, 1999, the Plantiffs filed
an Amended Complaint which purports to
address the objections raised in the
Motion to Dismiss. The Corporation
intends to maintain the objectios
<PAGE>12
raised in the Motion to Dismiss and
vigorously defend against any claims
raised in the Complaint should they
survive the Motion to Dismiss. The
Corporation is of the view that the
claims raised in the Complaint are
without merit and will engage in
discovery and file additional substantive
motions to address the claims.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS.
Since inception, there have been no
changes in or disagreements with the
Corporation's principal independent
accountant.
ITEM 4. RECENT SALES OF UNREGISTERED
SECURITIES.
In the last quarter of 1997 and the first
quarter of 1998, the Corporation issued
3,100,000 common shares to Robert Thistle
for equipment valued at $4,150. The
Corporation also issued the following
individuals and entities 850,000 common
shares for services valued at $850z($.001
per share):
Name # of Shares
Services provided
Donald Davett 500,000
financial market consulting
Mark Shvetz 100,000
marketing consulting
William McCollum 250,000
South African distribution
consulting
These issuances were made to
sophisticated investors (based on their
relationship with the Corporation and
representations by the above listed
individuals to the Corporation) pursuant
to Section 4(2) of the Securities Act of
1933.
The Corporation issued 348,000 Common
Shares for cash of $411,000 to the
following individuals
Name Number of Common
Shares Amount Paid
Intercapital Holdings 175,000
$206,860
Stanley Katz 25,000
29,500
Julian Herskowitz 25,000
29,500
Windless Capital Mgt 12,500
14,750
Meersbrook, Ltd. 12,500
14,750
Michael Fielding 75,000
88,500
Steven Lefkowitz 7,000
8,260
Mitchell Birzon 12,500
14,750
Milton & Olga Cohen 1,000
1,180
Suzanne Spiliotis 1,000
1,180
James Lynch 1,500
`,770
These issuances were made in compliance
with Rule 504, Regulation D of the
Securities Act of 1933 by Registrant's
management. The offering was approved
and/or exempted by the required states.
No commissions were paid. The
determination of whether an investor was
accredited or nonaccredited was based on
the responses in the subscription
agreement filled out by each investor.
The investor was given the definition of
accredited as set out in the Securities
Act of 1933 and asked to indicate if they
were, in fact, accredited or
nonaccredited.
In the fourth quarter of the year ended
March 31, 1999, the Corporation issued
1,254,500 to the following individuals
for services rendered.
Name Number of Common
Shares Value of Services
Nadine Schaffert 200,000
$20,000
Susan Robbins 200,000
20,000
Vandi Poli 300,000
36,000
Jean Sawyer 19,500
2,340
Mitch Birzon 75,000
14,063
Kenneth Richardson 100,000
18,750
Jean Sawyer 250,000
46,875
Don Mazin 50,000
9,375
Harry Hartzstark 25,000
4,687
Ken Alger 25,000
4,687
William Ruffa 10,000
1,875
These issuances were made to
sophisticated investors (based on their
relationship with the Corporation and
representations by the above listed
individuals to the Corporation) pursuant
to Section 4(2) of the Securities Act of
1933.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND
OFFICERS
Indemnification. The Corporation shall
indemnify to the fullest extent permitted
by, and in the manner permissible under
the laws of the State of Nevada, any
person made, or threatened to be made, a
party to an action or proceeding, whether
criminal, civil, administrative or
investigative, by reason of the fact that
he is or was a director or officer of the
Corporation, or served any other
enterprise as director, officer or
employee at the request of the
Corporation. The Board of Directors, in
its discretion, shall have the power on
behalf of the Corporation to indemnify
any person, other than a director or
officer, made a party to any action, suit
or proceeding by reason of the fact that
he/she is or was an employee of the
Corporation.
Insofar as indemnification for
liabilities arising under the Act may be
permitted to directors, officers and
controlling persons of the Corporation,
the Corporation has been advised that in
the opinion of the Securities and
Exchange Commission such indemnification
is against public policy as expressed in
the Act and is, therefore, unenforceable.
In the event that a claim for
indemnification against such liabilities
(other than the payment by the
Corporation of expenses incurred or paid
by a director, officer or controlling
person of the Corporation in the
successful defense of any action, suit or
proceedings) is asserted by such
director, officer, or controlling person
in connection with any securities being
registered, the Corporation will, unless
in the opinion of its counsel the matter
has been settled by controlling
precedent, submit to a court of
appropriate jurisdiction the question
whether such indemnification by it is
against public policy as expressed in the
Act and will be governed by the final
adjudication of such issues.
INDEMNIFICATION OF OFFICERS OR PERSONS
CONTROLLING THE CORPORATION FOR
LIABILITIES ARISING UNDER THE SECURITIES
ACT OF 1933, IS HELD TO BE AGAINST PUBLIC
POLICY BY THE SECURITIES AND EXCHANGE
COMMISSION AND IS THEREFORE
UNENFORCEABLE.
PART F/S
The following financial statements
required by Item 310 of Regulation S-B
are furnished below
Unaudited Balance Sheet as of September
1999 and 1998
Unaudited Statement of Operations for the
six months ended September 30, 1999 and
1998
Unaudited Statement of Cash Flows for the
six months ended September 30, 1999 and
1998
Unaudited Statement of Stockholders'
Equity for the six months ended September
30, 1999 and 1998
Unaudited Notes to Financial Statements
Independent Auditor's Report dated June
9, 1999
Balance Sheet as of March 31, 1999
Statement of Operations for the year
ended March 31, 1999
Statement of Cash Flows for the year
ended March 31, 1999
Statement of Stockholders' Equity for the
year ended March 31, 1999
Notes to Financial Statements
Independent Auditor's Report dated
January 18, 1999
Balance Sheet as of March 31, 1998
Statement of Operations for the year
ended March 31, 1998
Statement of Cash Flows for the year
ended March 31, 1998
Statement of Stockholders' Equity for the
year ended March 31, 1998
Notes to Financial Statements
<PAGE>14
MICRO LABORATORIES, INC.
BALANCE SHEET
September 30, 1999
ASSETS
Current assets:
Cash
$7,668
Accounts Receivable
45,000
Allowance for Doubtful Accounts
(45,000)
Inventory
12,154
Prepaid expense
4,542
Advance against commissions
3,000
Shareholder loans
28,525
- --------
Total current assets
55,779
- --------
Property and equipment:
Machinery and equipment
238,925
Furniture and fixtures
3,664
Leaseholder improvements
2,357
- --------
Total property and equipment
244,946
Less: accumulated depreciation
(13,737)
- --------
Net property and equipment
231,209
- --------
Other assets:
Deposits
4,600
Formulas and trademarks
(net of accumulated amortization)
63,125
Research and Development
8,167
- --------
Total other assets
75,892
- --------
TOTAL ASSETS
$362,880
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 15,259
Due to Related Entities
64,030
Due to Shareholder
5,500
- -------
Total current liabilities
84,789
- -------
Stockholders' equity:
Capital stock-$.001 par common;
authorized 50,000,000 shares,
issued and
outstanding 10,352 shares
10,352
Additional paid-in-capital
1,160,300
Deficit accumulated during the
development stage
(932,86)
- --------
Total stockholders' equity
237,791
- --------
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY
$362,880
========
<PAGE>15
MICRO LABORATORIES, INC
STATEMENT OF OPERATIONS
For the Six Months Ending September
30, 1999 and 1998
<TABLE>
<CAPTION>
1999
1998
<S> <C>
<C>
Net sales $ 671
$ 0
--------
- -------
Cost of goods sold 13,635
0
--------
- -------
Operating expenses 328,521
308,238
--------
- -------
Loss from operations (338,444)
(154,688)
--------
- --------
Other income:
Interest income 1,681
1,243
--------
- ------
Net other income 1,681
1,243
--------
- ------
Net loss $(340,125)
$(153,445)
=========
=========
Loss per common share $.03
$.04
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>16
MICRO LABORATORIES INC
STATEMENT OF CASH FLOWS
For the Six Months Ended September 30, 1999 and
1998
<TABLE>
<CAPTION>
1999 1998
<S>
<C> <C>
Cash flows from operating activities:
Net income $
(340,125) (153,567)
Adjustments to reconcile net income
to net cash used for operating
activities:
Depreciation and amortization
5,642 6,553
(Increase) decrease in assets:
Prepaid expenses
17,934 20,882
Shareholder loans
600 (4,375)
Increase (decrease) in liabilities:
Accounts payable
30,488 1,200
Notes payable
4,700 45,000
-----
- --- ------
Net cash used by operating activities
(59,364) (84,307)
-----
- --- ------
Investing activities:
Acquisition of intangible assets
(24,979) -
Acquisitions of property and equipment
(28,025) -
-----
- --- -------
Net cash used for investing activities
(53,004) -
-----
- --- -------
Net increase (decrease) in cash
during the period
(405,341) (84,307)
Cash balance, beginning of period
412,899 102,969
Cash balance, end of period $
7,558 18,662
========= ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>17
MICRO LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
1. SIGNIFICANT ACCOUNTING POLICIES
Background
Micro Laboratories, Inc. ("the
Company") was incorporated as a
Nevada Corporation on August 8, 1997.
Micro Laboratories, Inc. is a
development stage enterprise which
has undertaken the development and
marketing of a line of oral spray
vitamins, nutrients, herbs and other
oral absorption products as well as
gel capsules, etc. in the United
States and international market. The
financial statements and notes are
representations of the Company's
management, who is responsible for
their integrity and objectivity. The
accounting policies of the Company
are in accordance with generally
accepted accounting principles and
conform to the standards applicable
to development stage companies. The
preparation of financial statements
in conformity with generally accepted
accounting principles requires
management to make estimates and
assumptions that affect certain
reported amounts and disclosures.
Accordingly, actual results could
differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly
liquid investments purchased with a
maturity of three months or less to
be cash and cash equivalents.
Formulas and Trademarks
Formulas and trademarks are recorded
at cost and are amortized over a
period of 15 years using the straight-
line method.
Property and Equipment
Property and equipment are recorded
at cost. Depreciation is computed
using the straight line method for
financial reporting purposes.
Estimated service lives of property
and equipment range from 7 to 31.5
years.
Revenue Recognition
Revenue will be recognized upon the
invoicing and shipping of product.
No revenue has been recognized as of
September 30, 1999 and 1998.
Advertising Costs
Advertising costs are charged to
operations and are expensed as
incurred. The total amount charged
to expense at September 30, 1999 is
$27,754 and $13,500 at September 30,
1998.
Income Taxes
The Company has adopted Financial
Accounting No. 109, "Accounting for
Income Taxes" (FAS 109). Under the
provisions of FAS 109, an entity
recognizes deferred tax assets and
liabilities for the future tax
consequences of events that have been
previously recognized in the
Company's financial statements or tax
returns. The measurement of deferred
tax assets and liabilities is based
on provisions of the enacted tax law;
the effects of future changes in tax
laws or rates are not anticipated.
The adoption of FAS 109 did not have
an effect on the Company's financial
statements.
Net Income (Loss) Per Share
Primary net income (loss) per share
is determined by dividing net income
(loss) by the weighted average number
of common shares and dilutive common
shares outstanding during the year.
2. COMMON STOCK
Common stock issued by the Company as
payment for services has been valued
by management at fair market value.
<PAGE>18
CAYER PRESCOTT CLUNE CHATELLIER
CERTIFIED PUBLIC ACCOUNTANTS
BUSINESS CONSULTANTS
Providence, Rhode Island
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
To the Stockholders and Board of
Directors
Micro Laboratories, Inc.
We have audited the balance sheet of
MICRO LABORATORIES, INC. (a development
stage Company) as of March 31, 1999 and
the related statements of operations,
stockholders' equity and cash flows for
the year then ended and the period from
August 8, 1997 (inception) to March 31,
1999. The financial statements are the
responsibility of the Company's
management. Our responsibility is to
express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance
with generally accepted auditing
standards. Those standards require that
we plan and perform the audits 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 audits
provide 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 MICRO LABORATORIES, INC. for the year
ended March 31, 1999 and for the period
from August 8, 1997 to March 31, 1999,
and the results of its operations and its
cash flows for the period then ended in
conformity with generally accepted
accounting principles.
The accompanying financial statements
have been prepared assuming that the
Company will continue as a going concern.
As discussed in Note 1 to the financial
statements, the Company is a development
stage enterprise. The Company has not
yet commenced its principal operations
and has focused it efforts on the raising
of capital and the development and
marketing of its products. Accordingly,
the Company has no operating history,
which raises substantial doubt about its
ability to continue as a going concern.
The financial statements do not include
any adjustments that might result from
the outcome of this uncertainty.
June 9, 1999
<PAGE>19
CAYER PRESCOTT CLUNE AND CHATELLIER
MICRO LABORATORIES, INC.
(A DEVELOPMENT STAGE COMPANY
BALANCE SHEET
MARCH 31, 1999
ASSETS
Current assets:
Cash
$412,899
Prepaid expense
25,478
Shareholder loans
27,925
Inventory
12,154
- --------
Total current assets
478,456
- --------
Property and equipment:
Machinery and equipment
64,850
Furniture and fixtures
3,664
Leaseholder improvements
2,357
- --------
Total property and equipment
70,871
Less: accumulated depreciation
(10,619)
- --------
Net property and equipment
60,252
- --------
Other assets:
Deposits
4,600
Formulas and trademarks
(net of accumulated amortization)
65,650
Website development costs
129,238
- --------
Total other assets
199,488
- --------
TOTAL ASSETS
$738,196
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 45,746
Due to shareholder
5,500
Note payable - related party
45,000
Due to related parties
64,030
- ---------
Total current liabilities
160,276
- ---------
Stockholders' equity:
Capital stock-$.001 par common;
authorized 50,000,000 shares, issued and
outstanding 10,352,500 shares
10,353
Additional paid-in-capital
1,160,300
Deficit accumulated during the
development stage
(592,733)
- ---------
Total stockholders' equity
577,920
- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY
$738,196
=========
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>20
MICRO LABORATORIES, INC
(A DEVELOPMENT STAGE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31,1999
AND THE PERIOD FROM AUGUST 8, 1997 (DATE
OF INCEPTION)
TO MARCH 31,1999
<TABLE>
<CAPTION>
Year
Ended August 8, 1997
(inception)
March 31,
1999 to March 31. 1999
<S> <C>
<C>
Net sales $
0 $ 0
-------
- - --------
Cost of goods sold
0 0
-------
- - --------
Operating expenses:
Advertising and public relations
103,008 151,430
Legal and professional fees
111,44 169,571
Research and development
51,022 51,022
Laboratory supplies
9,632 14,396
Payroll and payroll taxes
18,959 18,959
Telephone
13,409 19,601
Incorporation fees 0
6,501
Depreciation
7,874 10,619
Amortization
5,050 10,100
Rent
24,200 26,600
Automobile expense
13,272 15,470
Travel expense
3,220 6,043
Insurance expense
3,684 4,368
Start-up expense 0
7,627
Samples 0
827
Office supplies
4,988 7,100
Consulting
62,107 62,607
Freight
1,313 2,277
Repairs and maintenance
1,722 2,740
Meals and entertainment
1,312 1,312
Outside services 0
168
Postage
1,061 1,263
Bank service charges
329 442
Printing
1,433 1,516
Dues and subscriptions
1,302 1,302
Licenses and fees
2,080 2,080
Contributions 0
30
Utilities expense
598 598
Miscellaneous expense
1,137 1,137
-------
- - --------
Total operating expenses
444,156 597,706
-------
- - --------
Loss from operations
444,156 597,706
-------
- - --------
Other income:
Interest income
3,649 4,973
-------
- - --------
Net other income
3,649 4,973
--------
- - ---------
Net loss
$(440,507) $(592,733)
========= =========
Loss per common share $0.04
$0.06
</TABLE>
SEE INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS'AUDIT REPORT.
<PAGE>21
MICRO LABORATORIES INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OFCASH FLOWS
YEAR ENDED MARCH 31,1999
AND THE PERIOD FROM AUGUST 8,1997 (DATE
OF INCEPTION)
TO MARCH 31,1999
Year
Ended August 8, 1997
(inception)
March 31,
1999 to March 31, 1999
----------
- ---- -----------------
Cash flows from operating activities:
Net income
$(440,507) $(592,733)
Adjustments to reconcile net income
to net cash used for operating
activities:
Depreciation and amortization 12,924
20,719
(increase) decrease in assets:
Prepaid expenses 22,811
(25,478)
Inventory
(12,154) (12,154)
Deposits
(4,000) (4,600)
Increase (decrease) in liabilities:
Accounts payable 41,377
45,746
--------
- --------
Net cash used by operating
Activities
(379,549) (568,500)
--------
- --------
Investing activities:
Acquisition of intangible assets
(129,238) (204,988)
Acquisitions of property and equipment
(25,756) (66,721)
Shareholder loans
(24,710) (27,925)
Due to shareholder 5,500
5,500
Due to related party 64,030
64,030
Notes payable 45,000
45,000
--------
- --------
Net cash used for investing activities
(65,174) (185,104)
--------
- --------
Financing activities:
Proceeds from issuance of common stock
182,198
593,198
Services exchanged for common stock
572,455
573,305
--------
- ---------
Net cash provided by financing activities
754,653
1,166,503
--------
- ---------
Net increase (decrease) in cash during
the period
309,930
412,899
Cash balance, beginning of period 102,969
- -
-------
- ----------
Cash balance, end of period $412,899
$ 412,899
========
==========
SEE INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS'AUDIT REPORT.
<PAGE>22
MICRO LABORATORIES, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS'
DEFICIT
YEAR ENDED MARCH 31,1999
AND THE PERIOD FROM AUGUST 8,1997(Date of
Inception)
TO MARCH 31,1999
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK
PAID IN ACCUMULATED
SHARES AMOUNT
CAPITAL DEFICIT
------ ------ --
- ----- --------
<S> <C> <C>
<C> <C>
Common stock issued for
equipment through March 31, 1998
. 3,100,000 $3,100
$1,050
Common stock issued for services
rendered through March 31, 1998
850,000 $850
Common stock issued for cash
through March 31, 1998
348,000 $348
$410,652
Net loss through March 31, 1998.
($152,226)
Balance at March 31, 1998
--------- ----- ---
- ------ ---------
4,298,000 $4,298
$411,702 ($152,226)
Common stock issued for services
rendered for the year ended
March 31, 1999
1,254,500 $1,255
$571,200
Common stock issued for cash
for the year ended March 31, 1999.
4,800,000 $4,800
$177,398
Net loss year ended March 31, 1999
(440,507)
BALANCE AT MARCH 31,1999
-------- ----- --
- ----- --------
10,352,500 $10,353
$1,160,300 ($592,733)
========== =======
========== ========
</TABLE>
SEE INDEPENDANT CERTIFIED PUBLIC
ACCOUNTANTS' AUDIT REPORT
<PAGE>23
MICRO LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31,1999
1. SIGNIFICANT ACCOUNTING POLICIES
Background
Micro Laboratories, Inc. ("the
Company") was incorporated as a Nevada
Corporation on August 8, 1997. Micro
Laboratories, Inc. is a development stage
enterprise which has undertaken the
development and marketing of a line of
oral spray vitamins, nutrients, herbs and
other oral absorption products as well as
gel capsules, etc. in the United States
and international market. The financial
statements and notes are representations
of the Company's management, who is
responsible for their integrity and
objectivity. The accounting policies of
the Company are in accordance with
generally accepted accounting principles
and conform to the standards applicable
to development stage companies. The
preparation of financial statements in
conformity with generally accepted
accounting principles requires management
to make estimates and assumptions that
affect certain reported amounts and
disclosures. Accordingly, actual results
could differ from those estimates.
Development Stage Enterprise
The Company is a Development Stage
Company as defined in financial
accounting standards Board Statement No.
7. As of the balance sheet date, the
Company had not yet begun principal
operations. The primary activities
during the fiscal period covered by these
financial statements were raising capital
and developing vitamin products (the
major source of projected revenue).
Inventories
Inventories consist of chemicals and
product packaging. Inventories are
stated at the lower of cost, determined
on the first-in, first-out (FIFO) method,
or market.
Cash and cash Equivalents
The Company considers all highly liquid
investments purchased with a maturity of
three months or less to be cash and cash
equivalents.
Concentration of Credit Risk
The Company occasionally maintains
deposits in excess of federally insured
limits. Statement of Financial
Accounting Standards No. 105 identifies
these items as a concentration of credit
risk requiring disclosure regardless of
the degree of risk. The risk is managed
by maintaining all deposits in high
quality financial institutions.
Formulas and Trademarks
Formulas and trademarks are recorded at
cost and are amortized over a period of
15 years using the straight-line method.
Property and Equipment
Property and equipment are recorded at
cost. Depreciation is computed using the
straight line method for financial
reporting purposes. Estimated service
lives of property and equipment range
from 7 to 31.5 years.
Revenue Recognition
Revenue will be recognized upon the
invoicing and shipping of product. No
revenue has been recognized as of March
31, 1999.
Advertising Costs
Advertising costs are charged to
operations and are expensed as incurred.
The total amount charged to expense at
March 31, 1999 is $103,008.
<PAGE>24
Income Taxes
The Company has adopted Financial
Accounting No. 109, "Accounting for
Income Taxes" (FAS 109). Under the
provisions of FAS 109, an entity
recognizes deferred tax assets and
liabilities for the future tax
consequences of events that have been
previously recognized in the Company's
financial statements or tax returns. The
measurement of
deferred tax assets and liabilities is
based on provisions of the enacted tax
law; the effects of future changes in tax
laws or rates are not anticipated. The
adoption of FAS 109 did not have an
effect on the Company's financial
statements.
Net Income (Loss) Per Share
Primary net income (loss) per share is
determined by dividing net income (loss)
by the weighted average number of common
shares and dilutive common shares
outstanding during the year.
2. COMMON STOCK
Common stock issued by the Company as
payment for services has been valued by
management at fair market value.
3. LEASE COMMITMENTS
The Company leases an automobile under a
two-year operating lease dated February
23, 1998. Rent expense for the year
ended March 31,1999 amounted to $11,798.
Lease commitment fees of $10,477 were
paid at inception. This amount is
considered a prepaid expense to be
amortized over the life of the lease.
4. RELATED PARTY TRANSACTIONS
During the year ended March 31, 1999, the
Company paid rents totaling $7,200 to a
shareholder. The Company incurred
administrative expenses during the period
totaling $26,353 paid to a Company
operated by a shareholder. The Company
has a receivable totaling $27,925 due
from a shareholder and a payable totaling
$5,500 due to a shareholder. The Company
incurred various expenses totaling
$64,030 which were paid for by and are
due to a company operated by a
shareholder. In addition, the Company
borrowed $45,000 from a Company operated
by a shareholder during the year ended
March 31, 1999.
6. CONTINGENCIES
The Company is named as a defendant in
legal action. The plaintiff claims that
in consideration for raising capital for
the Company, it is entitled to receive
500,000 shares in unrestricted common
stock and/or $50,000. The Company
intends to vigorously defend this action
and is not inclined to seek an out of
court settlement. The case is in the
discovery stage and the ultimate
resolution of the matter is not
ascertainable at this time. No provision
has been made in the financial statements
related to this claim.
7. GOING CONCERN STATUS - FUTURE
OPERATIONS
The Company began operation in August 8,
1997 and there is no assurance that it
will reach profitability. Since its
inception, the Company has been
principally engaged in product and
service development. As shown in the
accompanying financial statements, the
company has incurred net operating losses
of $592,733 since its inception. The
Company is a development stage business.
Numerous problems, many of which are
beyond the Company's control, are
frequently experienced by companies in
this period of development - marketing
and customer support problems, difficulty
in dealing with competition, lack of
familiarity on the part of customers and
suppliers, and technical obsolescence.
The Company believes from its initial
contacts with potential clients that
there is a substantial market for its
services; however, there can be no
assurance that commercial viability can
be demonstrated for said products and
services. There can be no assurance that
the Company will ever achieve
profitability on a sustained basis, if at
all.
<PAGE>25
The Company's status as a going concern
is dependent on its ability to
successfully implement a marketing plan
and generate sufficient revenues to
operate on a profitable basis. The
financial statements do not include any
adjustments that might be necessary
should the Company be unable to continue
as a going concern.
8. INCOME TAXES
Deferred income taxes reflect the net tax
effects of temporary differences between
the carrying amounts of assets and
liabilities for financial reporting
purposes and the amounts used for income
tax purposes. The Company's net deferred
tax asset balances are primarily
attributable to timing differences in
inventory, property and equipment, and
accrued expenses for book and tax
purposes and net operating loss
carryforwards and tax credits. At March
31, 1999, the Company's deferred tax
asset was $0 using a blended federal and
state rate of 40%. A 100% valuation
allowance was provided for at March 31,
1999. Therefore, net deferred tax asset
recognized on the accompanying balance
sheet is $0.
At April 3, 1999, the Company had a net
operating loss carryforward of
approximately $590,000 available to
offset future income that would otherwise
be subject to federal income taxes. The
net operating loss carryforward will
expire in the year 201 1 if not utilized.
If certain substantial changes in the
Company's ownership should occur, there
would be an annual limitation on the
amount of net operating loss and
investment tax credit carryforwards,
which could be utilized.
<PAGE>26
CAYER PRESCOTT CLUNE CHATELLIER
CERTIFIED PUBLIC ACCOUNTANTS
BUSINESS CONSULTANTS
Providence, Rhode Island
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
To the Stockholders and Board of
Directors
Micro Laboratories, Inc.
We have audited the balance sheet of
MICRO LABORATORIES, INC. (a
development stage Company) for the
period from August 8, 1997
(inception) to March 31, 1998 and the
related statements of operations,
stockholders' equity and cash flows
for the period then ended. The
financial statements are the
responsibility of the Company's
management. Our responsibility is to
express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance
with generally accepted auditing
standards. Those standards require
that we plan and perform the audits
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 audits provide 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 MICRO
LABORATORIES, INC. for the period
from August 8, 1997 to March 31,
1998, and the results of its
operations and its cash flows for the
period then ended in conformity with
generally accepted accounting
principles.
The accompanying financial statements
have been prepared assuming that the
Company will continue as a going
concern. As discussed in Note 1 to
the financial statements, the Company
is a development stage enterprise.
The Company has not yet commenced its
principal operations and has focused
it efforts on the raising of capital
and the development and marketing of
its products. Accordingly, the
Company has no operating history,
which raises substantial doubt about
its ability to continue as a going
concern. The financial statements do
not include any adjustments that
might result from the outcome of this
uncertainty.
January 18, 1999
<PAGE>27
MICRO LABORATORIES, INC.
BALANCE SHEET
MARCH 31, 1998
ASSETS
Current assets:
Cash
$102,969
Prepaid expense
48,289
Shareholder loans
3,215
- --------
Total current assets
154,473
- --------
Property and equipment:
Machinery and equipment
39,094
Furniture and fixtures
3,664
Leaseholder improvements
2,357
- --------
Total property and equipment
45,115
Less: accumulated depreciation
(2,745)
- --------
Net property and equipment
42,370
- --------
Other assets:
Deposits
600
Formulas and trademarks
(net of accumulated amortization)
70,700
- --------
Total other assets
71,300
- --------
TOTAL ASSETS
$268,143
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 4,369
- -------
Total current liabilities
4,369
- -------
Stockholders' equity:
Capital stock-$.001 par common;
authorized 50,000,000 shares,
issued and
outstanding 4,298,000 shares
4,298
Additional paid-in-capital
411,702
Deficit accumulated during the
development stage
(152,226)
- --------
Total stockholders' equity
263,774
- --------
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY
$268,143
========
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>28
MICRO LABORATORIES, INC
STATEMENT OF OPERATIONS
THE PERIOD FROM AUGUST 8, 1997 (DATE
OF INCEPTION)
TO MARCH 31,1998
Net sales $
0
--
- ------
Cost of goods sold
0
--
- ------
Operating expenses:
Advertising and public relations
48,422
Administrative fees
58,127
Laboratory supplies
4,764
Telephone
6,192
Incorporation fees
6,501
Depreciation
2,745
Amortization
5,050
Rent
2,400
Automobile expense
2,882
Travel expense
2,823
Start-up expense
7,627
Samples
827
Office supplies
2,112
Consulting
500
Freight
964
Repairs and maintenance
1,018
Outside services
168
Postage
202
Bank service charges
113
Printing
83
Contributions
30
-
- -------
Total operating expenses
153,550
-
- -------
Loss from operations
(153,550)
-
- -------
Other income:
Interest income
1,324
-
- -------
Net other income
1,324
-
- -------
Net loss
$(152,226)
=========
Loss per common share
$.03
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>29
MICRO LABORATORIES INC
STATEMENT OF CASH FLOWS
PERIOD FROM AUGUST 8,1997 (DATE OF
INCEPTION)
TO MARCH 31,1998
Cash flows from operating activities:
Net income
$ (152,226)
Adjustments to reconcile net income
to net cash used for operating
activities:
Depreciation and amortization
7,795
Allowance for doubtful acounts
45,000
Services exchanged for common stock
850
(Increase) decrease in assets:
Accounts receivable
(45,000)
Prepaid expenses
(48,289)
Shareholder loans
(3,215)
Deposits
(600)
Increase (decrease) in liabilities:
Accounts payable
4,369
- --------
Net cash used by operating activities
(191,316)
- --------
Investing activities:
Acquisition of intangible assets
(75,750)
Acquisitions of property and
equipment (40,965)
- --------
Net cash used for investing
activities
(116,715)
- --------
Financing activities:
Proceeds from issuance of common
stock 411,000
- --------
Net cash provided by financing
activities 411,000
- --------
Net increase (decrease) in cash
during the period
102,969
Cash balance, beginning of period
- -
Cash balance, end of period
$102,969
=========
Supplemental disclosures of non-cash
investing and financing activities:
Equipment amounting to $4,150 was
received in exchange for issuance of
3,100,000 shares of common stock.
Services rendered valued at $850 were
received in exchange for issuance of
850,000 shares of common stock.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>30
MICRO LABORATORIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS'
DEFICIT
PERIOD FROM AUGUST 8,1997(Date of
Inception)
TO MARCH 31,1998
<TABLE>
<CAPTION>
DEFICIT
ADDITIONAL ACCUMULATED
COMMON STOCK
PAID IN DURING
SHARES AMOUNT
CAPITAL DEVELOPMENT STAGE
-------------------
- ---------------------------
<S> <C> <C>
<C> <C>
Common stock issued for
equipment through March 31, 1998
3,100,000 $3,100
$1,050
Common stock issued for services
rendered through March 31, 1998
850,000 $850
Common stock issued for cash
through March 31, 1998
348,000 $348
$410,652
Net loss through March 31, 1998.
($152,226)
--------------------
- --------------------------
Balance at March 31, 1998
4,298,000 $4,298
$411,702 ($152,226)
==============================================
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>31
MICRO LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31,1998
1. SIGNIFICANT ACCOUNTING POLICIES
Background
Micro Laboratories, Inc. ("the
Company") was incorporated as a
Nevada Corporation on August 8, 1997.
Micro Laboratories, Inc. is a
development stage enterprise which
has undertaken the development and
marketing of a line of oral spray
vitamins, nutrients, herbs and other
oral absorption products as well as
gel capsules, etc. in the United
States and international market. The
financial statements and notes are
representations of the Company's
management, who is responsible for
their integrity and objectivity. The
accounting policies of the Company
are in accordance with generally
accepted accounting principles and
conform to the standards applicable
to development stage companies. The
preparation of financial statements
in conformity with generally accepted
accounting principles requires
management to make estimates and
assumptions that affect certain
reported amounts and disclosures.
Accordingly, actual results could
differ from those estimates.
Cash and cash Equivalents
The Company considers all highly
liquid investments purchased with a
maturity of three months or less to
be cash and cash equivalents.
Formulas and Trademarks
Formulas and trademarks are recorded
at cost and are amortized over a
period of 15 years using the straight-
line method.
Property and Equipment
Property and equipment are recorded
at cost. Depreciation is computed
using the straight line method for
financial reporting purposes.
Estimated service lives of property
and equipment range from 7 to 31.5
years.
Revenue Recognition
Revenue will be recognized upon the
invoicing and shipping of product.
No revenue has been recognized as of
March 31, 1998.
Advertising Costs
Advertising costs are charged to
operations and are expensed as
incurred. The total amount charged
to expense at March 31, 1998 is
$48,422.
Income Taxes
The Company has adopted Financial
Accounting No. 109, "Accounting for
Income Taxes" (FAS 109). Under the
provisions of FAS 109, an entity
recognizes deferred tax assets and
liabilities for the future tax
consequences of events that have been
previously recognized in the
Company's financial statements or tax
returns. The measurement of deferred
tax assets and liabilities is based
on provisions of the enacted tax law;
the effects of future changes in tax
laws or rates are not anticipated.
The adoption of FAS 109 did not have
an effect on the Company's financial
statements.
Net Income (Loss) Per Share
Primary net income (loss) per share
is determined by dividing net income
(loss) by the weighted average number
of common shares and dilutive common
shares outstanding during the year.
2. COMMON STOCK
Common stock issued by the Company as
payment for services has been valued
by management at fair market value.
<PAGE>32
3. LEASE COMMITMENTS
The Company leases an automobile
under a two-year operating lease
dated February 23, 1998. Rent
expense for the year ended March
31,1998 amounted to $964. Lease
commitment fees of $10,477 were paid
at inception. This amount is
considered a prepaid expense to be
amortized over the life of the lease.
4. RELATED PARTY TRANSACTIONS
During the period ended March 31,
1998, the Company paid $75,000 to a
shareholder in exchange for services
related to flavoring of vitamin
formulas. The Company incurred
administrative expenses during the
period totaling $13,127 paid to a
Company operated by a shareholder.
In addition, the Company has a
receivable totaling $3,215 due from a
shareholder.
<PAGE>33
PART III
ITEM 1. INDEX TO EXHIBITS
(2) Charter and by-laws
(3) Instruments defining the rights of
security holders
(5) Voting Trust Agreement - Not
Applicable
(6) Material Contracts - Not Applicable
(7) Material Foreign Patents - Not
Applicable
(12) Additional Exhibits
ITEM 2. DESCRIPTION OF EXHIBITS
(2.1) Articles of Incorporation
(2.2) Bylaws
(3.1) Common Stock Certificate
<PAGE>34
SIGNATURES
In accordance with Section 12 of the
Securities Exchange Act of 1934, the
registrant caused this registration
statement to be signed on its behalf by
the undersigned, thereunto duly
authorized.
MICRO
LABORATORIES, INC.
/s/
Robert Thistle
Date: January 5,2000 ---------
- -----------------------
By:
Robert Thistle, President
</TABLE>
<PAGE>35
ARTICLES OF INCORPORATION
OF
MICRO LABORATORIES, INC.
The undersigned natural person of the age
of eighteen years or more, acting as
incorporator of a corporation under the
provisions of the Nevada Business Act of
the State of Nevada, adopts the following
Articles of Incorporation for such
corporation.
ARTICLE I
NAME
The name of the corporation is Micro
Laboratories, Inc.
ARTICLE II
EXISTENCE AND DURATION
The period of duration of this
corporation is perpetual.
ARTICLE III
PURPOSES AND POWERS
The purpose for which this corporation is
organized is to engage in all lawful
business for which corporations may be
incorporated pursuant to the Nevada
Business Corporation Act. In furtherance
of its lawful purposes, the corporation
shall have and may exercise all rights,
powers and privileges now or hereafter
exercisable by corporations organized
under the laws of Nevada. In addition,
it may do everything necessary, suitable,
convenient or proper for the
accomplishment of any of its corporate
purposes.
ARTICLE IV
CAPITALIZATION
(a) Authorized Shares. The aggregate
number of shares which the corporation
shall have the authority to issue is
50,000,000 shares. Fifty Million
(50,000,000) shares shall be designated
"Common Stock", and shall have a par
value of $.001.
(b) Consideration for Shares. All shares
of Common Stock shall be issued by the
corporation for cash, property or
services actually performed, for no less
than the par value of $.001 for Common
Stock. All shares shall be fully paid
and non-assessable.
<PAGE>36
(c) Dividends. Dividends in cash,
property or share of the corporation may
be paid upon the Common, as and when
declared by the Board of Directors, out
of funds of the corporation to the
extent, and in the manner permitted by
law.
(d) Voting Rights & Cumulative Voting.
Each outstanding share of Common Stock
shall be entitled to one vote, and each
fractional share of Common Stock shall be
entitled to a corresponding fractional
vote on each matter submitted to a vote
of shareholders. Cumulative voting
shall not be allowed in the election of
directors of the corporation.
(e) Denial of Preemptive Rights. No
holder of any shares of the corporation,
whether now or hereafter authorized,
shall have any preemptive or preferential
right to acquire any shares or securities
of the corporation, including shares or
securities held in the treasury of the
corporation.
(f) Dissolution or Liquidation. Upon any
dissolution or liquidation, whether
voluntary or involuntary, the holders of
preferred shares shall be entitled to
receive out of the assets of the
Corporation, whether such assets are
capital or surplus, the sum initially
paid per share and a further amount equal
to any dividend thereon declared and
unpaid to the date of such distribution,
before any payment shall be made or any
assets distributed to the common stock
shareholders. Upon any dissolution or
liquidation, whether voluntary or
involuntary, if the assets thus
distributed among the holders of
preferred shares are insufficient to
permit the payment to such shareholder of
the full preferential amounts, then the
entire assets of the Corporation to be
distributed shall be distributed ratably
among the holders of preferred shares and
after payment to the preferred
shareholders of such preferential
amounts, the holders of common shares
shall be entitled to receive ratably all
the remaining assets. A merger or
consolidation of this corporation with or
into any other corporation or
corporations shall not be deemed to be a
dissolution or liquidation within the
meaning of this provision.
ARTICLE V
INITIAL OFFICE AND AGENT
The address of this corporation's initial
registered office is 2533 North Carson
Street, Carson City, Nevada 89710 and the
name of its initial registered agent is
Laughlin & Associates.
<PAGE>37
ARTICLE VI
PRINCIPAL OFFICE
The address of the principal office of
the corporation is 29 Lakeside Drive,
Johnston, Rhode Island 02919. The
corporation may maintain such other
offices, either within or out of the
State of Nevada, as the Board of
Directors may from time to time determine
or the business of the corporation may
require.
ARTICLE VII
INITIAL BOARD OF DIRECTORS
The number of directors constituting the
initial board of directors of this
corporation is three. The number of
directors of this corporation shall be
not less than three; except there need be
only as many directors as there are
shareholders in the event that the
outstanding shares are, or initially will
be, held of record by fewer than three
shareholders. The names and addresses of
the person who are to serve as directors
until the first annual meeting of
shareholders or until their successors
are elected and qualified are:
Robert Thistle
29 Lakeside Drive
Johnston, Rhode Island 02919
Donald Davett
Tuscany C-183
Delray Beach, Florida 33446
Mark Shvetz
333 Kelpsic Road
Glastonberry, CT 06033
ARTICLE VIII
INDEMNIFICATION
As the Board of Directors may from time
to time provide in the By-Laws or by
resolution, the corporation may indemnify
its officers, directors, agents and other
persons to the full extent permitted by
the laws of the State of Nevada.
ARTICLE IX
INCORPORATOR
The name and address of the incorporator
is:
Jody M. Walker
7841 South Garfield Way
Littleton, CO 80122
Dated this 27th day of August, 1997
Jody M. Walker, Incorporator
STATE OF COLORADO )
)ss.
COUNTY OF )
I, , a Notary Public,
hereby certify that Jody M. Walker, known
to me to be the person whose name is
subscribed to the annexed and foregoing
Articles of Incorporation, appeared
before me this 27th day of August, 1997,
in person and being by me first duly
sworn, acknowledged that he signed said
Articles of Incorporation as his free and
voluntary act and deed for the uses and
purposes therein set forth and that
statements therein contained are true.
My Commission Expires:
Notary Public
Address
SEAL
<PAGE>38
BYLAWS OF
MICRO LABORATORIES, INC.
A NEVADA CORPORATION
ARTICLE I
OFFICES
Section 1.01 Registered Office and
Agent. The name of the registered agent
and the location of the registered office
of the Corporation in the State of Nevada
shall be Laughlin & Associates, 2533
North Carson Street, Carson City, Nevada
89710, and such information shall be
filed in the appropriate office of the
State of Nevada pursuant to applicable
provisions of law.
Section 1.02 Corporate Offices. The
Corporation may have such corporate
offices within and outside the State of
Nevada as the board of directors from
time to time may direct or the
Corporation may require. The principal
office of the Corporation may be fixed
and so designated from time to time by
the board of directors, but the location
or residence of the Corporation in Nevada
shall be deemed for all purposes to be in
the county in which its principal office
in Nevada is maintained. The location of
the principal office of the Corporation
shall be 29 Lakeside Drive, Johnston,
Rhode Island 02919.
Section 1.03 Records. The Corporation
shall keep correct and complete books
and records of account, minutes of
proceedings of its shareholders and board
of directors, and such other or
additional records as may be required by
law. The Corporation shall keep at its
registered office or principal place of
business, or at the office of its
transfer agent or registrar, either
within or outside Nevada, a record of its
shareholders, giving the names and
addresses of all shareholders and the
number and class of the shares held by
each.
ARTICLE II
SHAREHOLDERS' MEETINGS
Section 2.01 Place of Meeting. All
meetings of the shareholders shall be
held at the principal office of the
Corporation, unless the board of
directors designates some other place
either within or outside the State of
Nevada. Unless specifically prohibited
by law any meeting may be held at any
place and at any time and for any purpose
if consented to in writing by all of the
shareholders entitled to vote at such
meeting.
Section 2.02 Annual Meetings. An
annual meeting of the shareholders shall
be held on the 1st day of June of each
year, unless notified of an alternate
date in accordance with the provisions of
these bylaws, at 3:00 p.m. for the
purpose of electing directors and for the
transaction of such other business as may
properly come before it. If such day is
a legal holiday, the meeting shall be on
the next business day.
Section 2.03 Special Meetings. Special
meetings of the shareholders, for any
purpose or purposes, unless otherwise
prescribed by statute, may be called by
the president, secretary or by the board
of directors, and shall be called by the
president at the request of holders of
not less than 10% of all the outstanding
shares of the Corporation entitled to
vote at the meeting. No business other
than that specified in the notice of the
meeting shall be transacted at any such
special meeting.
Section 2.04 Notice of Meetings.
Written or printed notice stating the
place, day and hour of the meeting and,
in case of a special meeting, the purpose
for which the meeting is called, shall be
delivered not less than ten days nor more
than fifty days before the date of the
meeting, either personally or by mail, by
or at the direction of the board of
directors, the president, the secretary,
or the officer or person calling the
meeting to each shareholder of record
entitled to vote at such meeting; except
that, if the authorized shares are to be
increased at least thirty days' notice
shall be given.
Section 2.05 Fixing Record Date and
Closing Transfer Books. The board of
directors may fix a date not less than
ten nor more than fifty days prior to any
meeting as the record date for the
purpose of determining shareholders
entitled to notice of and to vote at such
meetings, of the shareholders. The
transfer books may be closed by the board
of directors for a stated period not to
exceed fifty days for the
<PAGE>39
purpose of determining shareholders
entitled to receive payment of any
dividend or in order to make a
determination of shareholders for any
other purpose. In the absence of any
action by the board of directors, the
date upon which the board of directors
adopts the resolution declaring the
dividend shall be the record date.
Section 2.06 Voting Lists. The
officers or agent having charge of the
stock transfer books for shares of the
corporation shall make, at least ten days
before each meeting of the shareholders,
a complete record of the shareholders
entitled to vote at the meeting or any
adjournment thereof, arranged in
alphabetical order with the address of,
and the number of shares held by each.
The record, for a period of ten days
before such meeting, shall be kept on
file at the principal office of the
Corporation whether within or outside the
State of Nevada, and shall be subject to
inspection by any shareholder for any
purpose germane to the meeting at any
time during normal business hours. Such
record shall also be produced and kept
open at the time and place of any purpose
germane to the meeting during the whole
time of the meeting. The original stock
transfer book shall be prima facie
evidence as to the shareholders who are
entitled to examine the record or
transfer books or to vote any meeting of
shareholders.
Section 2.07 Quorum. The holders of a
majority of the shares who are entitled
to vote at a shareholders meeting and who
are present in person or by proxy shall
be necessary for and shall constitute a
quorum for the transaction of business at
such meetings, except as otherwise
provided by statute, by the Articles of
Incorporation or these Bylaws. If a
quorum is not present or represented at a
meeting of the shareholders, those
present in person or represented by proxy
shall have the power to adjourn the
meeting from time to time, without notice
other than announcement at the meeting,
until a quorum is present or represented.
At an adjourned meeting where a quorum is
present or represented, any business may
be transacted which might have been
transacted at the meeting as originally
notified.
Section 2.08 Majority Vote; Withdrawal
of Quorum. When a quorum is present at a
meeting, the vote of the holders of a
majority of the issued and outstanding
shares having voting power, present in
person or represented by proxy, shall
decide any question brought before the
meeting, unless the question is one
which, by express provision of the
statutes, the Articles of Incorporation
or these Bylaws, requires a higher vote
in which case the express provision shall
govern. The shareholders present at a
duly constituted meeting may continue to
transact business until adjournment,
despite the withdrawal of enough
shareholders holding, in the aggregate,
issued and outstanding shares having
voting power to leave less than a quorum.
Section 2.09 Proxies. At all meetings
of shareholders, a shareholder may vote
in person or by proxy executed in writing
by the shareholder or by his or her duly
authorized attorney in fact. No proxy
shall be valid after eleven months from
the date of its execution, unless
otherwise provided by the proxy. Each
proxy shall be filed with the secretary
of the Corporation before or at the time
of the meeting.
Section 2.10 Voting. Each issued and
outstanding share is entitled to its
respective vote and each fractional share
is entitled to a corresponding fractional
vote on each matter submitted to a vote
at a meeting of shareholders. The vote
of a majority of the shares voting on any
matter at a meeting of shareholders at
which a quorum is present shall be the
act of the shareholders on that matter,
unless the vote of a greater number is
required by law, the Articles of
Incorporation, or these Bylaws. Voting
on all matters except the election of
directors shall be by voice or by show of
hands, unless the holders of one-tenth of
the shares represented at the meeting
shall, prior to the voting on any matter,
demand a ballot vote on that particular
matter.
(A) Neither treasury shares
nor shares held by another Corporation if
the majority of the shares entitled to
vote for the election of directors of
such other Corporation is held by the
Corporation shall be voted at any meeting
or counted in determining the total
number of issued and outstanding shares
at any given time.
(B) Shares standing in the
name of another Corporation, domestic or
foreign, may be voted by such officer,
agent or proxy as the Bylaws of that
Corporation may prescribe, or, in the
absence of such provision, as the board
of directors of that Corporation may
determine.
<PAGE>40
(C) Shares held by an
administrator, executor, guardian, or
conservator may be voted by him or her,
either in person or by proxy, without the
transfer of such shares into his name.
Shares standing in the name of a trustee
may be voted by him or her, either in
person or by proxy, but no trustee shall
be entitled to vote shares held by him or
her without a transfer of the shares into
his or her name.
(D) Shares standing in the
name of a receiver may be voted by such
receiver, and shares held by or under the
control of a receiver may be voted by
such receiver without the transfer into
his or her name if authority to do so is
contained in an appropriate order of the
court by which the receiver was
appointed.
(E) A shareholder whose shares
are pledged shall be entitled to vote
such shares until the shares have been
transferred into the name of the pledgee,
and thereafter the pledgee shall be
entitled to vote the shares transferred.
(F) Redeemable shares which
have been called for redemption shall not
be entitled to vote on any matter and
shall not be deemed issued and
outstanding shares on and after the date
on which written notice of redemption has
been mailed to shareholders and a sum
sufficient to redeem such shares has been
deposited with a bank or trust
corporation with irrevocable instruction
and authority to pay the redemption price
to the holders of the shares upon
surrender of their certificates.
Section 2.11 Action Without Meeting.
Any action required by statute to be
taken at a meeting of the shareholders,
or any action which may be taken at a
meeting of the shareholders, may be taken
without a meeting if a consent in
writing, setting forth the action so
taken, shall be signed by a majority of
the holders entitled to vote with respect
to the subject matter thereof and such
consent shall have the same force and
effect as a unanimous vote of the
shareholders. The consent may be in more
than one counterpart so long as each
shareholder signs one of the
counterparts. The signed consent, or a
signed copy shall be placed in the
minutes book.
Section 2.12 Telephone and Similar
Meetings. Shareholders may participate
in and hold a meeting by means of
conference telephone or similar
communications equipment by means of
which all persons participating in the
meeting can hear each other.
Participation in such a meeting shall
constitute presence in person at the
meeting, except where a person
participates in the meeting for the
express purpose of objecting to the
transaction of any business on the ground
that the meeting is not lawfully called
or convened.
Section 2.13 Order of Business at
Meetings. The order of business at
annual meetings and so far as practicable
at other meetings of shareholders shall
be as follows unless changed by the board
of directors: (a) call to order; (b)
proof of due notice of meeting; (c)
determination of quorum and examination
of proxies; (d) announcement of
availability of voting lists; (e)
announcement of distribution of annual
statement; (f) reading and disposing of
minutes of last meeting of shareholders;
(g) reports of officers and committees;
(h) reports of directors; (l) opening of
polls for voting; (m) recess; (n)
reconvening, closing of polls; (o) report
of voting inspectors; (p) other business;
and (q) adjournment.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01 General Powers. The
business and affairs of the Corporation
shall be managed by its board of
directors. The directors shall in all
cases act as a board of directors, and
they may adopt such rules and regulations
for the conduct of their meetings and the
management of the Corporation as they
deem proper. Such rules and regulations
may not be inconsistent with these
Bylaws, the Articles of Incorporation,
and the laws of Nevada.
Section 3.02 Number, Tenure and
Qualifications. The number of directors
constituting the board of directors of
this Corporation is three. The number of
directors of this Corporation shall not
be less than three; except that there
need by only as many directors as there
are shareholders in the event that the
issued and outstanding shares are held of
record by fewer than three shareholders.
A director shall be elected by the
shareholders to serve until the next
annual meeting
<PAGE>41
of shareholders, or until his or her
death, or resignation and his or her
successor is elected. A director must be
at least eighteen years of age but need
not be a shareholder in the Corporation
nor a resident of the State of Nevada.
Section 3.03 Change in Number. The
number of directors may be increased or
decreased from time to time by amendment
to these Bylaws but no decrease shall
have the effect of shortening the term of
any incumbent director. Any directorship
to be filled by reason of an increase in
the number of directors shall be filled
by election at an annual meeting or at a
special meeting of shareholders called
for that purpose.
Section 3.04 Election of Directors.
The directors shall be elected at the
annual meeting of shareholders and those
persons who receive the highest number of
votes shall be deemed to have been
elected. Election of directors shall be
by ballot.
Section 3.05 Cumulative Voting.
Directors shall be elected by majority
vote. Cumulative voting shall not be
permitted.
Section 3.06 Removal of Directors. A
meeting called expressly for the purpose
of removing a director, the entire board
of directors or any lessor number may be
removed, with or without cause, by a vote
of the holders of the majority of the
shares then entitled to vote at an
election of directors. If any directors
are so removed, new directors may be
elected at the same meeting.
Section 3.07 Resignation. Subject to
Section 3.02, a director may resign at
any time by giving written notice to the
board of directors, the president, or the
secretary of the Corporation and unless
otherwise specified in the notice, the
resignation shall take effect upon
receipt thereof by the board of directors
or such officer, and the acceptance of
the resignation shall not be necessary to
make it effective.
Section 3.08 Vacancies. A vacancy
occurring in the board of directors may
be filled by the affirmative vote of a
majority of the remaining directors
though less than a quorum of the board of
directors remains. A director elected to
fill a vacancy shall be elected for the
unexpired term of his or her predecessor
in office. Any directorship to be filled
by reason of an increase in the number of
directors shall be filled by election at
an annual meeting of shareholders or at a
special meeting of the shareholders
called for that purpose. A director
chosen to fill a position resulting from
an increase in the number of directors
shall holder office until his or her
successor(s) shall have been qualified.
Section 3.09 Compensation. By
resolution of the board of directors,
compensation may be paid to directors for
their services. Also by resolution of
the board of directors, a fixed sum and
expenses for actual attendance at each
regular or special meeting of the board
of directors may also be paid. Nothing
herein contained shall be construed to
preclude any director from serving the
Corporation in any other capacity and
receiving compensation therefore.
Members of the executive committee or of
special or standing committees may, by
resolution of the board of directors, be
allowed like compensation for attending
committee meetings.
Section 3.10 First Meeting. The first
meeting of a newly elected board shall be
held without further notice immediately
following the annual meeting of
shareholders, and it shall be at the same
place, unless by unanimous consent of the
directors then electing and serving, the
time or place is changed.
Section 3.11 Regular Meetings. Regular
meetings of the board of directors may be
held without notice at such time and
place as shall from time to time be
determined by the board of directors.
Section 3.12 Special Meetings. Special
meetings of the board of directors may be
called by the president on three days
notice to each director, either
personally or by mail or by telegram.
Special meetings shall be called in like
manner and on like notice on the written
request of two directors. Except as
otherwise expressly provided by statute,
the Articles of Incorporation or these
Bylaws, neither the business to be
transacted at, nor the purpose of, any
special meeting need be specified in a
notice or waiver of notice.
<PAGE>42
Section 3.13 Quorum; Majority Vote. At
meetings of the board of directors a
majority of the number of directors fixed
by these Bylaws shall constitute a quorum
for the transaction of business. The act
of a majority of the directors present at
a meeting at which quorum is not present
at a meeting of the board of directors,
the directors present may adjourn the
meeting from time to time, without notice
other than announcement at the meeting
until, a quorum is present.
Section 3.14 Procedure. The board of
directors shall keep regular minutes of
its proceedings. The minutes shall be
placed in the minutes book of the
Corporation.
Section 3.15 Action Without Meeting.
Any action required or permitted to be
taken at a meeting of the board of
directors may be taken without a meeting
if a consent in writing, setting forth
the action so taken, is signed by all
members of the board of directors. Such
consent shall have the same force and
effect as a unanimous vote at a meeting.
The signed consent, or a signed copy,
shall be placed in the minutes book. The
consent may be in more than one
counterpart so long as each director
signs one of the counterparts.
Section 3.16 Telephone and Similar
Meetings. Directors may participate in
and hold a meeting by means of conference
telephone or similar communications
equipment by means of which all persons
participating in the meeting can hear
each other. Participation in such a
meeting shall constitute presence in
person at the meeting, except where a
person participates in the meeting for
the express purpose of objecting to the
transaction of any business on the ground
that the meeting is not lawfully called
or convened.
Section 3.17 Interested Directors and
Officers.
(A) No contract or transaction
between the Corporation and one or more
of its directors or officers, or any
other corporation, firm, association,
partnership or entity in which one or
more of its directors or officers are
directors or officers or are financially
interested shall be either void or
voidable solely because of such
relationship or interest or solely
because such directors or officers are
present at the meeting of the board of
directors or a committee thereof which
authorizes, approves, or ratifies such
contract or transaction or solely because
their votes are counted for such purposes
if:
(1) the fact of the
common directorship or financial interest
is disclosed to or known by the board of
directors or committee and noted in the
minutes, and the board or committee which
authorizes, approves, or ratifies the
contract or transaction by a vote
sufficient for the purpose without
counting the votes or consents of such
interested directors; or
(2) the material facts of
such relationship or financial interest
is disclosed to or known by the
shareholders entitled to vote thereon and
they authorize, approve or ratify such
contract or transaction in good faith by
a majority vote or written consent of
shareholders holding a majority of the
shares the votes of the common or
interested directors or officers shall be
counted in any such vote of shareholders;
or
(3) the contract or
transaction is fair and reasonable to the
Corporation.
(B) Common or interested
directors may be counted in determining
the presence of a quorum at a meeting of
the board of directors or a committee
thereof which authorizes, approves or
ratifies such contract or transaction.
ARTICLE IV
EXECUTIVE COMMITTEE
Section 4.01 Designation. The board of
directors may from time to time, by
resolution adopted by a majority of the
whole board, designate an executive
committee.
Section 4.02 Number; Qualification and
Term. The executive committee shall
consist of one or more directors, one of
whom shall be the president of the
executive committee. The executive
committee shall serve at the pleasure of
the board of directors.
<PAGE>43
Section 4.03 Authority. The executive
committee, to the extent provided in such
resolution, shall have and may exercise
all of the authority of the board of
directors in the management of the
business and affairs of the Corporation,
including authority over the use of the
corporate seal. However, the executive
committee shall not have the authority of
the board of directors in reference to:
(a) amending the Articles of
Incorporation; (b) approving a plan of
merger or consolidation; (c) recommending
to the shareholders the sale, lease or
exchange of all or substantially all of
the property and assets for the
corporation other than in the usual and
regular course of its business; (d)
recommending to the shareholders a
voluntary dissolution of the Corporation
or a revocation thereof; (e) amending,
altering, or repealing these Bylaws or
adopting new Bylaws; (f) filling
vacancies in or removing members of the
board of directors or of any committee
appointed by the board of directors; (g)
electing or removing officers or members
of any such committee; (h) fixing the
compensation of any member of such
committee; (i) altering or repealing any
resolution of the board of directors
which by its terms provides that it shall
not be so amendable or repealable; (j)
declaring a dividend; or (k) authorizing
the issuance of shares of the
Corporation.
Section 4.04 Change in Number. The
number of executive committee members may
be increased or decreased from time to
time by resolution adopted by a majority
of the board of directors.
Section 4.05 Removal. Any member of
the executive committee may be removed by
the board of directors by the affirmative
vote of the majority of the board of
directors, whenever in its judgment the
best interests of the Corporation will be
served thereby.
Section 4.06 Vacancies. A vacancy
occurring in the executive committee (by
death, resignation, removal or otherwise)
may be filled by the board of directors
in the manner providing for original
designation in Bylaw Section 4.01.
Section 4.07 Resignation. A committee
member may resign by giving written
notice to the board of directors, the
president or the secretary of the
Corporation. The resignation shall take
effect at the time specified in it, or
immediately if no time is specified.
Unless it specifies otherwise, a
resignation takes effect without being
accepted.
Section 4.08 Meetings. Time, place and
notice (if any) of executive committee
meetings shall be determined by the
executive committee.
Section 4.09 Quorum; Majority Vote. At
meetings of the executive committee, a
majority of the number of members
designated by the board of directors
shall constitute a quorum for the
transaction of business. The act of a
majority of the members present at any
meeting at which a quorum is present
shall be the act of the executive
committee, except as otherwise
specifically provided by statute, the
Articles of Incorporation or these
Bylaws. If a quorum is not present at a
meeting of the executive committee, the
members present may adjourn the meeting
from time to time, without notice other
than an announcement at the meeting,
until a quorum is present.
Section 4.10 Compensation. By
resolution of the board of directors,
compensation may be paid to members of
the executive committee for their
services. Also by resolution of the
board of directors, a fixed sum and
expenses for actual attendance at each
regular or special meeting of the
executive committee may also be paid.
Section 4.11 Procedure. The executive
committee shall keep regular minutes of
its proceedings and report the same to
the board of directors when required.
The minutes of the proceedings of the
executive committee shall be placed in
the minutes book of the Corporation.
Section 4.12 Action Without Meeting.
Any action required or permitted to be
taken at a meeting of the executive
committee may be taken without a meeting
if a consent in writing, setting forth
the action so taken, is signed by all the
members of the executive committee. Such
consent shall have the same force and
effect as a unanimous vote at a meeting.
The signed consent, or a signed copy,
shall be placed in the minutes book.
Section 4.13 Telephone and Similar
Meetings. Members of the executive
committee may participate in and hold a
meeting by means of conference telephone
or similar communications equipment by
means of
<PAGE>44
which all persons participating in the
meeting can hear each other.
Participation in such a meeting shall
constitute presence in person at the
meeting, except where a person
participates in the meeting for the
express purpose of objecting to the
transaction of any business on the ground
that the meeting is not lawfully called
or convened.
Section 4.14 Responsibility. The
designation of an executive committee and
the delegation of authority to it shall
not operate to relieve the board of
directors, or any member thereof, of any
responsibility imposed upon it, him or
her by law.
ARTICLE V
NOTICE
Section 5.01 Method. Whenever by
statute, the Articles of Incorporation,
these Bylaws or otherwise, notice is
required to be given to a shareholder,
director or committee member, and no
provision is made as to how the notice
shall be given, it shall not be construed
to mean personal notice, but any such
notice may be given: (a) in writing, by
United States mail, certified, return
receipt requested, postage prepaid,
addressed to the shareholder, director or
committee member at the address appearing
on the books of the Corporation; or (b)
in any other method permitted by law.
Any notice required or permitted to be
given by mail shall be deemed given at
the time when the same is deposited in
the United States mails.
Section 5.02 Waiver. Whenever by
statute, the Articles of Incorporation or
these Bylaws, notice is required to be
given to a shareholder, committee member
or director, a waiver thereof in writing
signed by the person or persons entitled
to such notice, whether before or after
the time stated in such notice, shall be
equivalent to the giving of such notice.
Attendance at a meeting shall constitute
a waiver of notice of such meeting,
except where a person attends for the
express purpose of objecting to the
transaction of any business on the ground
that the meeting is not lawfully called
or convened.
ARTICLE VI
OFFICERS AND AGENTS
Section 6.01 Number, Qualification;
Election; Term.
(A) The Corporation shall
have:
(1) a president, a vice
president, a secretary and a treasurer;
and
(2) such other officers
(including a chairman of the board of
directors and additional Vice Presidents)
and assistant officers and agents as the
board of directors may deem necessary.
(B) No officer or agent need
be a shareholder, a director or a
resident of the state of incorporation.
(C) Officers named in Bylaw
Section 6.01(A)(1) shall be elected by
the board of directors on the expiration
of an officer's term or whenever a
vacancy exists. Officers and agents
named in Bylaw Section 601(A)(2) may be
elected by the Board of Directors at any
meeting.
(D) Unless otherwise specified
by the board of directors at the time of
election or appointment, or in an
employment contract approved by the board
of directors, each officer's and agent's
term shall end at the first meeting of
directors held after each annual meeting
of the shareholders. He shall serve
until the end of his or her term, or if
earlier, until his or her death,
resignation or removal.
(E) Any two or more offices
may be held by the same person, except
that the president and the secretary
shall not be the same person.
Section 6.02 Election and Term of
Office. The officers of the Corporation
shall be elected annually by the board of
directors at the first meeting of the
board of directors held after each annual
meeting of the shareholders. If the
election of officers shall not be held at
<PAGE>45
such meeting, such election shall be held
as soon thereafter as convenient. Each
officer shall hold office until his or
her successor shall have been duly
elected and shall have qualified or until
his or her death or until he or she shall
resign or shall have been removed in the
manner hereinafter provided.
Section 6.03 Resignation. Any officer
may resign at any time by delivering a
written resignation either to the board
of directors, the president or the
secretary of the Corporation. The
resignation shall take effect at the time
specified therein or immediately if no
time is specified. Unless it specifies
otherwise, a resignation takes effect
without being accepted.
Section 6.04 Removal. Any officer or
agent elected or appointed by the board
of directors may be removed by the board
of directors, whenever, in its judgment,
the best interest of the Corporation will
be served thereby, but such removal shall
be without prejudice to the contractual
rights, if any, of the person so removed.
Section 6.05 Vacancies. A vacancy in
any office because of death, resignation,
removal, disqualification, creation of a
new office, or otherwise, may be filled
by the board of directors for the
unexpired portion of the term.
Section 6.06 Salaries and Compensation.
The salaries or other compensation of the
officers of the Corporation shall be
fixed from time to time by the board of
directors, except that the board of
directors may delegate to any person or
group of persons the duty of fixing
salaries or other compensation by reason
of the fact that he or she is also a
director of the Corporation.
Section 6.07 Surety Bonds. In the
event the board of directors shall so
require, any officer or agent of the
Corporation shall execute to the
Corporation a bond in such sums and with
such surety or sureties as the board of
directors may direct, conditioned upon
the faithful performance of his or her
duties to the Corporation, including
responsibility for negligence and for the
accounting for all property, monies, or
securities of the Corporation which may
come into his or her hands.
Section 6.08 President.
(A) The president shall be the
chief executive and administrative
officer of the Corporation.
(B) The president shall preside at
all meetings of the shareholders, and, in
the absence of the chairman of the board
of directors, at meetings of the board of
directors.
(C) The president shall exercise
such duties as customarily pertain to the
office of the president and shall have
general and active supervision over the
property, business and affairs of the
Corporation and over its several
officers.
(D) The president may appoint
officers, agents, or employees other than
those appointed by the board of
directors.
(E) The president may sign,
execute and deliver in the name of the
Corporation powers of attorney,
contracts, bonds and other obligations,
and shall perform such other duties as
may be prescribed from time to time by
the board of directors or by the Bylaws.
Section 6.09 Vice President. The vice
president(s) in the order of their
seniority, unless otherwise determined by
the board of directors, shall, in the
absence or disability of the president,
perform the duties and have the authority
and exercise the powers of the president.
They shall perform such other duties and
have such other authority and powers as
the board of directors may from time to
time prescribe or as the president may
from time to time delegate.
<PAGE>46
Section 6.10 Secretary.
(A) The secretary shall keep the
minutes of all meetings of the
shareholders and of the board of
directors and, to the extent ordered by
the board of directors or the president,
the minutes of meetings of all
committees.
(B) The secretary shall cause
notice to be given of meetings of
shareholders, of the board of directors,
and of any committee appointed by the
board of directors.
(C) The secretary shall have
custody of the corporate seal and general
charge of the records, documents and
papers of the Corporation not pertaining
to the performance of the duties vested
in other officers, which shall at all
reasonable times be open to the
examination of any director.
(D) The secretary may sign or
execute contracts with the president in
the name of the Corporation and affix the
seal of the Corporation thereto.
(E) The secretary shall perform
such other duties as may be prescribed
from time to time by the board of
directors or the Bylaws.
Section 6.11 Assistant Secretary. The
assistant secretaries in the order of
their seniority, unless otherwise
determined by the board of directors,
shall, in the absence or disability of
the secretary, perform the duties and
have the authority and exercise the
powers of the secretary. They shall
perform other duties and have such other
powers as the board of directors may from
time to time prescribe or as the
president may from time to time delegate.
Section 6.12 Treasurer.
(A) The treasurer shall have
general custody of the collection and
disbursements of funds of the
Corporation.
(B) The treasurer shall endorse on
behalf of the Corporation for collection,
checks, notes and other obligations, and
shall deposit the same to the credit of
the Corporation in such bank or banks or
depositories as the board of directors
may direct.
(C) The treasurer may sign, for
the president and other persons as may be
designated for the purpose by the board
of directors, all bills of exchange or
promissory notes of the Corporation.
(D) The treasurer shall enter or
cause to be entered regularly in the
books of the Corporation a full and
accurate account of all monies received
and paid by him or her on account of the
Corporation; shall at all times exhibit
his or her books and accounts to any
director of the Corporation upon
application at the office of the
Corporation during business hours; and,
whenever required by the board of
directors or the president, shall render
statements of his or her accounts. The
treasurer shall perform such other duties
as may be prescribed from time to time by
the board of directors or by the Bylaws.
(E) If the board of directors
require, the treasurer shall give bond
for the faithful performance of his or
her duties in such sum and with or
without such surety as shall be approved
by the board of directors.
Section 6.13 Assistant Treasurer. The
assistant treasurers in the order of
their seniority, unless otherwise
determined by the board of directors,
shall, in the absence or disability of
the treasurer, perform the duties and
have the authority and exercise the
powers of the treasurer. They shall
perform such other duties and have such
other powers as the board of directors
may from time to time prescribe or the
president may from time to time delegate.
Section 6.14 Registered Agent. The
Registered Agent shall serve as the agent
of the Corporation for purposes of
receiving service of process or any
demand or notice authorized by law to be
served on the Corporation.
Section 6.15 Other Officers. Other
officers shall perform such duties and
have such powers as may be assigned to
them by the board of directors or the
president.
<PAGE>47
Section 6.16 Delegation of Duties. If
any officer of the Corporation is absent
or unable to act for any other reason the
board of directors may deem sufficient,
the board of directors may delegate, for
a period of time, some or all of the
functions, duties, powers and
responsibilities of any officer to any
other officer, agent or employee of the
Corporation or other responsible person,
provided a majority of the whole board of
directors concurs therein.
ARTICLE VII
CONTRACTS, LOANS, DEPOSITS AND CHECKS
Section 7.01 Contracts. The board of
directors may authorize any officer or
officers, agent or agents, to enter into
any contract or execute and deliver any
instrument in the name of and on behalf
of the Corporation and such authority may
be general or confined to specific
instances.
Section 7.02 Loans. No loans or
advances shall be contracted on behalf of
the Corporation; on negotiable paper or
other evidence of its obligation under
any loan or advance shall be issued in
its name, and no property of the
Corporation shall be mortgaged, pledged,
hypothecated, or transferred as security
for the payment of any loan, advance,
indebtedness or liability of the
Corporation unless and except as
authorized by the board of directors.
Any such authorization may be general or
confined to specific instances.
Section 7.03 Deposits. All funds of
the Corporation not otherwise employed
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 select, or as may be selected by an
officer or agent authorized to do so by
the board of directors.
Section 7.04 Checks and Drafts. All
notes, drafts, acceptances, checks,
endorsements, and evidences of
indebtedness of the Corporation shall be
signed by such officer or officers, or
such agent or agents of the Corporation
and in such manner as the board of
directors from time to time may
determine.
<PAGE>48
ARTICLE VIII
CAPITAL STOCK
Section 8.01 Certificates.
Certificates representing shares of the
Corporation shall be issued, in such form
as the board of directors shall
determine, to every shareholder for the
fully paid shares owned by him. These
certificates shall be signed by the
president and the secretary. They shall
be consecutively numbered or otherwise
identified; and the name and address of
the person to whom they are issued, with
the number of shares and the date of
issue, shall be entered on the stock
transfer books of the Corporation.
Section 8.02 Issuance. Shares (both
treasury and authorized but unissued) may
be issued for such consideration (not
less than par value) and to such persons
as the board of directors may determine
from time to time. Shares may not be
issued until the full amount of the
consideration, fixed as provided by law,
has been paid.
Section 8.03 Payment of Shares.
(A) The consideration for the
issuance of shares shall consist of money
paid, labor done (including the services
actually performed for the Corporation)
or property (tangible or intangible)
actually received. Neither promissory
notes nor the promise of future services
shall constitute payment for shares.
(B) In the absence of fraud in the
transaction, the judgment of the board of
directors as to the value of
consideration received shall be
conclusive.
(C) When consideration, fixed as
provided by law, has been paid, the
shares shall be deemed to have been
issued and shall be considered fully paid
and nonassessable.
(D) The consideration received for
shares shall be allocated by the board of
directors, in accordance with law,
between stated capital and capital
surplus accounts.
Section 8.04 Subscriptions. Unless
otherwise provided in the subscription
agreement, subscriptions for shares,
whether made before or after organization
of the Corporation, shall be paid in full
at such time or in such installments and
at such times as shall be determined by
the board of directors. Any call made by
the board of directors for payment of
subscriptions shall be uniform as to all
shares of the same series. In case of
default in the payment on any installment
or call when payment is due, the
Corporation may proceed to collect the
amount due in the same manner as any debt
due the Corporation.
Section 8.05 Lien. For any
indebtedness of a shareholder to the
Corporation, the Corporation shall have a
first and prior lien on all shares of its
stock owned by him or her and on all
dividends or other distributions declared
thereon.
Section 8.06 Lost, Stolen or Destroyed
Certificates. The Corporation shall
issue a new certificate in place of any
certificate for shares previously issued
if the registered owner of the
certificate: (a) makes proof in
affidavit form that it has been lost,
destroyed or wrongfully taken; (b)
requests the issuance of a new
certificate before the Corporation has
notice that the certificate has been
acquired by a purchaser for value in good
faith and without notice of an adverse
claim; (c) gives a bond in such form, and
with such surety or sureties, with fixed
or open penalty, as the Corporation may
direct, to indemnify the Corporation (and
its transfer agent and registrar, if any)
against any claim that may be made on
account of the alleged loss, destruction
or theft of the certificate; and (d)
satisfies any other reasonable
requirements imposed by the Corporation.
When a certificate has been lost,
apparently destroyed or wrongfully taken,
and the holder of record fails to notify
the Corporation within a reasonable time
after he or she has notice of it, and the
Corporation registers a transfer of the
shares represented by the certificate
before receiving such notification, the
holder of record is precluded from making
any claim against the Corporation for the
transfer or for a new certificate.
Section 8.07 Registration of Transfer.
The Corporation shall register the
transfer of a certificate for shares
presented to it for transfer if: (a) the
certificate is properly endorsed by the
registered owner or by his or her duly
authorized attorney; (b) the signature of
such person has been notarized and
reasonable assurance is given that such
endorsements are effective; (c) the
Corporation has no notice of
<PAGE>49
an adverse claim or has discharged any
duty to inquire into such a claim; (d)
any applicable law relating to the
collection of taxes has been complied
with; and (e) there is an opinion of
counsel satisfactory to counsel of the
Corporation that such transfer is made in
accordance with all federal and state
securities regulations.
Section 8.08 Registered Owner. Prior
to due presentment for registration of
transfer of a certificate for shares, the
Corporation may treat the registered
owner as the person exclusively entitled
to vote, to receive notices and otherwise
to exercise all the rights and powers of
a shareholder.
Section 8.09 Transfer of Shares.
Transfer of shares of the Corporation
shall be made only in the stock transfer
books of the Corporation by the holder of
record thereof or by his or her legal
representative, who shall furnish proper
evidence of authority to transfer, or by
his attorney therein authorized by power
of attorney duly executed and filed with
the secretary of the Corporation and on
surrender for cancellation of the
certificate for such shares. The person
in whose name the shares stand on the
books of the Corporation shall be deemed
by the Corporation to be the owner
thereof for all purposes by the stock
transfer books shall be in the possession
of the secretary or transfer agent or
clerk of the Corporation.
Section 8.10 Transfer Agent and
Registrar. By resolution of the board of
directors, the Corporation may from time
to time appoint a transfer agent, and, if
desired, a registrar, who will perform
his or her duties in accordance with the
terms and conditions the board of
directors deems advisable; provided,
however, that until and unless the board
of directors appoints some other person,
firm or Corporation as its transfer
agent, the secretary of the Corporation
shall act as transfer agent without the
necessity of any formal action of the
board of directors and he or she shall
perform all of the duties thereof.
ARTICLE IX
INDEMNIFICATION
Section 9.01 Indemnification.
(A) No officer or director shall be
personally liable for any obligations of
the Corporation or for any duties or
obligation of the Corporation or for any
duties or obligations arising out of any
actions or conduct of such officer or
director performed for or on behalf of
the Corporation.
(B) The Corporation shall and does
hereby indemnify and hold harmless each
person and his or her heirs and
administrators who shall serve at any
time hereafter as a director or officer
of the Corporation from and against any
and all claims, judgments and liabilities
to which such person shall become subject
by reason of his or her having heretofore
or hereafter been a director or officer
of the Corporation or by reason of any
action alleged to have heretofore or
hereafter been taken or admitted to have
been taken by him or her as such director
or officer, and shall reimburse each such
person for all legal and other expenses
reasonably incurred by him or her in
connection with any such claim or
liability, including power to defend such
person from all suits or claims as
provided for under the laws of the State
of Nevada; provided, however, that no
such person shall be indemnified against,
or be reimbursed for, any expense
incurred in connection with any claim or
liability arising out of his or her
negligence or willful misconduct. The
rights accruing to any person under the
foregoing provisions of this section
shall not exclude any other right to
which he or she may lawfully be entitled,
nor shall anything herein contained
restrict the right of the Corporation to
indemnify or reimburse such person in any
proper case, even though not specifically
herein provided. The Corporation, its
directors, officers, employees and agents
shall be fully protected in taking any
action or making any payment in reliance
upon the advice of counsel.
Section 9.02 Other Indemnification.
The indemnification herein provided shall
not be deemed exclusive of any other
rights to which those seeking
indemnification may be entitled under any
Bylaw, agreement, vote of shareholders,
or disinterested directors, or otherwise,
both as to action in his or her official
capacity and as to
<PAGE>50
action in another capacity while holding
such office, and shall continue as to a
person who has ceased to be a director,
officer, employee or agent, and shall
inure to the benefit of the heirs,
executors and administrators of such
person.
Section 9.03 Insurance. The
Corporation may purchase and maintain
insurance on behalf of any person who is
or was a director, officer, employee or
agent of the Corporation or is or who was
serving at the request of the Corporation
as a director, officer, employee or agent
of another corporation, partnership,
joint venture, trust or other enterprise
against any liability asserted against
him or her and incurred by him or her in
any such capacity, or arising out of his
or her status as such, whether or not the
Corporation would have the power to
indemnify him or her against liability
under the provisions of this section or
of the laws of the State of Nevada.
Section 9.04 Settlement by Corporation.
The right of any person to be indemnified
shall be subject always to the right of
the Corporation by its board of
directors, in lieu of such indemnity, to
settle any claim, action, suit or
proceeding at the expense of the
Corporation by the payment of the amount
of such settlement and the cost and
expense incurred in connection therewith.
ARTICLE X
GENERAL PROVISIONS
Section 10.01 Dividends and Reserves.
(A) Subject to statute, the
Articles of Incorporation and these
Bylaws, dividends may be declared by the
board of directors at any regular or
special meeting and may be paid in cash,
in property, or in shares of the
Corporation. The declaration and payment
shall be at the discretion of the board
of directors.
(B) By resolution, the board of
directors may create such reserve or
reserves out of the earned surplus of the
Corporation as the directors from time to
time, in their discretion, think proper
to provide for contingencies, or to
equalize dividends, or to repair or
maintain any property of the Corporation,
or for any other purpose they think
beneficial to the Corporation. The
directors may modify or abolish any such
reserve in the manner in which it was
created.
Section 10.02 Books and Records. The
Corporation shall keep correct and
complete books and records of account,
shall keep minutes of the proceedings of
its shareholders and board of directors,
and shall keep at its registered office
or principal place of business, or at the
office of its transfer agent or
registrar, a record of its shareholders,
giving the names and addresses of all
shareholders and the number and class of
shares held by each.
Section 10.03 Annual Statement. The
board of directors shall mail to each
shareholder of record, at least ten days
before each annual meeting a full and
clear statement of the business and
condition of the Corporation, including a
reasonably detailed balance sheet, income
statement, surplus statement, and
statement of changes in financial
position, for the last fiscal year and
for the prior fiscal year, all prepared
in conformity with generally accepted
accounting principals applied on a
consistent basis.
Section 10.04 Checks and Notes.
Checks, demands for money and notes of
the Corporation shall be signed by
officer(s) or other person(s) designated
from time to time by the board of
directors.
Section 10.05 Fiscal Year. The fiscal
year of the Corporation shall be fixed by
resolution of the board of directors.
Section 10.06 Seal. The corporate seal
of the Corporation (of which there may be
one or more exemplars) shall contain the
name of the Corporation and the name of
the state of incorporation. The seal may
be used by impressing it or reproducing a
facsimile of it, or otherwise.
<PAGE>51
Section 10.07 Amendment of Bylaws.
(A) These Bylaws may be altered,
amended or repealed at any meeting of the
board of directors at which a quorum is
present, by the affirmative vote of a
majority of the directors present at such
meeting, provided notice of the proposed
alteration, amendment, or repeal is
contained in the notice of the meeting.
(B) These Bylaws may also be
altered, amended or repealed at any
meeting of the shareholders at which a
quorum is present or represented, by the
affirmative vote of the holders of a
majority of the shares present or
represented at the meeting and entitled
to vote thereat, provided notice of the
proposed alteration, amendment or repeal
is contained in the notice of the
meeting.
Section 10.08 Construction. Whenever
the context so requires, the masculine
shall include the feminine and neuter,
and the singular shall include the
plural, and conversely. If any portion
of these Bylaws shall be invalid or
inoperative, then, so far as is
reasonable and possible: (a) the
remainder of these Bylaws shall be
considered valid and operative and (b)
effect shall be given to the intent
manifested by the portion held invalid or
inoperative.
Section 10.09 Table of Contents;
Headings. The table of contents and
headings are for organization,
convenience and clarity. In interpreting
these Bylaws, they shall be subordinated
in importance to the other written
material.
Section 10.10 Relation to Articles of
Incorporation. These Bylaws are subject
to and governed by the Articles of
Incorporation.
Adopted by the directors on this 27th day
of August, 1997.
/s/Robert Thistle
Robert Thistle, Director
/s/Donald Davett
Donald Davett, Director
/s/Mark Shvetz
Mark Shvetz, Director
<PAGE>52
NUMBER
SHARES
Micro
Laboratories, Inc.
Incorporated Under the Laws
of the State of Nevada
Common Stock Par Value $.001
CUSIP 594847 10 5
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID and NONASSESSABLE Shares of
Micro Laboratories, Inc., transferable
only on the books of the Corporation by
the holder hereof in person or by duly
authorized attorney upon surrender of
this Certificate properly endorsed.
This certificate is not valid unless
countersigned and registered by the
Transfer Agent and Registrar
Witness the facsimile seal of the
Corporation and the facsimile signatures
of its duly authorized officers.
Secretary
President
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