U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
EZEBIZ SOFTWARE, INC.,
(Exact name of registrant as specified in its charter)
DELAWARE 7372 98-0203850
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation Classification Code Number) Identification No.)
or organization)
Suite 125, 1555 McKenzie Street, Victoria, British Columbia, Canada V8N 1A4
(Address of registrant's principal executive offices) (Zip Code)
(250) 853-7700
(Registrant's Telephone Number, Including Area Code)
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate registration
to be registered registered per share offering price fee
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 2,000,000 $3.00 $6,000,000.00 $1584.00
==================================================================================================================
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The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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Preliminary Prospectus
EZEBIZ SOFTWARE, INC.,
a Delaware corporation
2,000,000 Shares of $.001 Par Value Common Stock
This prospectus ("prospectus") relates to 2,000,000 shares (the "Shares") of
common stock, $.001 par value (the "Common Stock"), of EZEBiz Software, Inc., a
Delaware corporation (the "Company"). We are offering for sale 2,000,000 Shares
on a "best efforts" basis pursuant to this Registration Statement on Form SB-2
("Form SB-2").
We will realize $6,000,000.00 from the sale of 2,000,000 shares of our Common
Stock, and will use those funds to pay for the costs of the offering, to fund
development and marketing of our proposed website, and for working capital. See
"Use of Proceeds." All expenses of registration incurred in connection with this
offering are being borne by the Company.
Any broker-dealers participating in the distribution of the Shares may be deemed
to be "underwriters" within the meaning of the 1933 Act, and any commissions or
discounts given to any such broker-dealer may be regarded as underwriting
commissions or discounts under the 1933 Act.
The Shares have not been registered for sale by the Company under the securities
laws of any state as of the date of this Prospectus. Brokers or dealers
effecting transactions in the Shares should confirm the registration thereof
under the securities laws of the states in which transactions occur or the
existence of any exemption from registration.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is February 15, 2000
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TABLE OF CONTENTS
Item
Number Caption
Page
3. Summary Information .................................................... 5
Risk Factors ........................................................... 6
Internet-Related Products and Services .............................. 6
We Have No Operating History ........................................ 7
We Depend on Name Recognition ....................................... 7
We Are in a Very Competitive Industry ............................... 7
We May Rely on Third-Parties ........................................ 8
We Rely on Our Computer Infrastructure .............................. 8
Risks Associated with Brand Development ............................. 9
We Rely on Growth and Use of the Internet ............................ 9
Uninsured Loss; Acts of God .......................................... 10
Regulatory and Related Influences .................................... 10
Market Forces ........................................................ 10
Growth of Business ................................................... 10
Future Capital Needs and Uncertainty of Additional Funding ........... 10
Limited Protection of Proprietary Technology ......................... 11
Rapid Technological Change ........................................... 11
Key Personnel ........................................................ 11
Conflicts of Interest ................................................ 11
Dependence on Management ............................................. 12
Limitation on Liability of Officers and Directors
of the Company .................................................... 12
Penny Stock Regulation ............................................... 12
Control by Existing Security Holders ................................. 12
Securities Market Factors ............................................ 13
No Foreseeable Dividends ............................................. 13
No Assurances of Revenue or Operating Profits ........................ 13
Federal Income Tax Consequences ...................................... 13
Impact of the Year 2000 .............................................. 13
4. Use of Proceeds ....................................................... 13
5. Determination of Offering Price ....................................... 14
6. Dilution .............................................................. 14
7. Selling Security Holders .............................................. 15
8. Plan of Distribution .................................................. 15
9. Legal Proceedings ..................................................... 16
10. Directors, Executive Officers, Promoters and Control Persons .......... 16
11. Security Ownership of Certain Beneficial Owners and Management ........ 17
12. Description of Securities ............................................. 17
13. Interest of Named Experts and Counsel ................................. 18
14. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities .......................................... 18
15. Organization Within Last Five Years ................................... 18
16. Description of Business ............................................... 18
17. Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................................. 20
18. Description of Property ............................................... 24
19. Certain Relationships and Related Transactions ........................ 24
20. Market for Common Equity and Related Stockholder Matters .............. 24
21. Executive Compensation ................................................ 25
22. Financial Statements .................................................. 25
23. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure .............................................. 25
Legal Matters ......................................................... 25
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Experts ............................................................... 25
Additional Information ................................................ 26
24. Indemnification of Directors and Officers ............................. 26
25. Other Expenses of Issuance and Distribution ........................... 26
26. Recent Sales of Unregistered Securities ............................... 26
27. Exhibits .............................................................. 27
28. Undertakings .......................................................... 27
Signatures ............................................................ 29
Power of Attorney ..................................................... 30
Consent of Independent Auditors ....................................... 31
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Item 3. Summary Information and Risk Factors.
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS, WHICH CONTAINS MORE DETAILED INFORMATION WITH RESPECT TO EACH OF THE
MATTERS SUMMARIZED IN THIS PROSPECTUS AS WELL AS OTHER MATTERS NOT COVERED IN
THE SUMMARY. ALL PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW THE ENTIRE
CONTENTS OF THE PROSPECTUS AND THE EXHIBITS ATTACHED HERETO, INDIVIDUALLY AND
WITH THEIR OWN TAX, LEGAL AND BUSINESS ADVISORS.
The Company: Our principal business address is Suite 125, 1555
McKenzie Street, Victoria, British Columbia, Canada
V8N 1A4; telephone number (250) 853-7700.
Business of the Company: We anticipate that we will be an Internet based
provider of small business services, software
products, and consultation over the Internet. We
intend to develop and maintain a website serving as
a marketplace community for small businesses and an
application service provider ("ASP"). An ASP is a
website with a central secured data warehousing
system which enables a small business user to
subscribe to management software applications via
the Internet connection with the small business
user's personal computer ("PC"). We anticipate that
our website will also allow users to interact with
other small business users, obtain advice, products
and services from vendors as well as purchase and
download software solutions. We will provide users
with the most current business management software
applications directly from our website.
State of organization We were incorporated pursuant to the provisions of
of the Company the General Corporation Law of Delaware of the
Company: on November 10, 1998.
Risk Factors: A purchase of the Common Stock involves various
risks that must be considered carefully by any
potential purchaser. Those risks include, but are
not necessarily limited to, (i) there can be no
assurance that our products and services will
achieve a significant degree of market acceptance,
and that acceptance, if achieved, will be sustained
for any significant period or that product and
service life cycles will be sufficient (or
substitute products and services developed) to
permit us to recover associated costs; (ii) we have
a limited operating history upon which an evaluation
of our prospects can be made; (iii) our officers and
directors may be subject to various conflicts of
interest; (iv) we may not be able to adequately
protect our trade secrets and proprietary
information; (v) we may be required to raise
substantial funds in order to implement our business
plans and objectives; (vi) we are subject to
significant competition from other developers of
business management software; (vii) our results of
operations may vary from period to period as a
result of a variety of factors; (viii) the market
for our products and services is characterized by
continuous development and introduction of new
products and services; (ix) the Internet is subject
to changing political, economic and regulatory
influences that may affect our business practices
and operations; (x) we are dependent on our key
personnel and management; (xi) we do not anticipate
paying dividends on our Common Stock in the
foreseeable future; and (xii) there can be no
assurance that our operations will become
profitable; See "RISK FACTORS."
The Shares: We are offering for sale 2,000,000 Shares on a "best
efforts" basis pursuant to this Form SB-2.
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Estimated use of We will realize $6,000,000.00 from the sale of
proceeds: 2,000,000 shares of our Common Stock, and will use
those funds to pay for the costs of the offering, to
fund development and marketing of our website, and
for working capital. See "Use of Proceeds."
RISK FACTORS
In addition to the other information specified in this Prospectus, the following
risk factors should be considered carefully in evaluating our business and us
before purchasing any of the Shares offered hereby. A purchase of the Shares
offered hereby is speculative in nature and involves a high degree of risk. No
purchase of the Shares should be made by any person who is not in a position to
lose the entire amount of such investment.
THIS PROSPECTUS SPECIFIES FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE RESULTS
DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THOSE SPECIFIED IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS
PROSPECTUS. PROSPECTIVE PURCHASERS OF SHARES MUST BE PREPARED FOR THE POSSIBLE
LOSS OF THEIR ENTIRE INVESTMENTS IN US. THE ORDER IN WHICH THE FOLLOWING RISK
FACTORS ARE PRESENTED IS ARBITRARY, AND PROSPECTIVE PURCHASERS OF SHARES SHOULD
NOT CONCLUDE, BECAUSE OF THE ORDER OF PRESENTATION OF THE FOLLOWING RISK
FACTORS, THAT ONE RISK FACTOR IS MORE SIGNIFICANT THAN THE OTHER RISK FACTORS.
Information specified in this Prospectus contains "forward looking statements"
which can be identified by the use of forward-looking terminology such as
"believes", "could", "possibly", "probably", "anticipates", "estimates",
"projects", "expects", "may", "will", or "should" or the negative thereof or
other variations thereon or comparable terminology. Such statements are subject
to certain risks, uncertainties and assumptions. No assurances can be given that
the future results anticipated by the forward looking statements will be
achieved. The following matters constitute cautionary statements identifying
important factors with respect to such forward-looking statements, including
certain risks and uncertainties, that could cause actual results to vary
materially from the future results covered in such forward-looking statements.
Among the key factors that have a direct bearing on our results of operations
are the effects of various governmental regulations, the fluctuation of our
direct costs and the costs and effectiveness of our operating strategy. Other
factors could also cause actual results to vary materially from the future
results covered in such forward-looking statements.
Internet-Related Products and Services. We anticipate that we will be an
Internet based provider of small business services, software products, and
consultation over the Internet. The market for Internet-related products and
services is characterized by rapid technological change, changing customer
needs, frequent new product introductions and evolving industry standards. These
market characteristics are exacerbated by the emerging nature of this market and
the fact that many companies are expected to introduce continually new and
innovative products and services. Our success will depend on our ability to
introduce new products, services and technologies continually and on a timely
basis and to continue to improve the performance, features and reliability of
our products and services in response to both evolving demands of prospective
customers and competitive products.
Acceptance and effectiveness of Internet-related products and services is
unproven. In addition, the acceptance of the Internet electronic commerce
("e-commerce") is unproven. Our success will be significantly dependent on an
increase in the use of the Internet for e-commerce. If the markets for Internet
advertising or e-commerce do not continue to develop, our business and financial
condition may be adversely affected. The Internet e-commerce market is new and
rapidly evolving, and the effectiveness of e-commerce cannot be accurately
measured. As a result, demand and market acceptance for the Internet and
e-commerce is uncertain and may not increase as necessary for our business to
increase or succeed. The use of e-commerce, particularly by companies that have
historically relied on traditional methods of selling their products and
services, requires the acceptance of a new method of conducting business,
exchanging information and completing commercial transactions. Our potential
e-commerce participants may determine that e-commerce is undesirable or less
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effective for selling their products and services compared to traditional
methods. If the Internet or e-commerce fails to develop or develops more slowly
than we expect, our business could be adversely affected.
There can be no assurance that any of our proposed products or services will
attain market acceptance. Our failure to design, develop, test, market and
introduce new and enhanced products and technologies and services successfully
so as to achieve market acceptance could have a material adverse effect upon our
business, operating results and financial condition.
There can be no assurance that we will not experience difficulties that could
delay or prevent the successful development, introduction or marketing of new or
enhanced products and services, or that our new products and services will
adequately satisfy the requirements of prospective customers and achieve
significant acceptance by those customers. Because of certain market
characteristics, including technologic change, changing customer needs, frequent
new product and service introductions and evolving industry standards. the
continued introduction of new products and services is critical. Delays in the
introduction of new products and services may result in customer dissatisfaction
and may delay or cause a loss of revenue. There can be no assurance that we will
be successful in developing new products or services or improving existing
products and services that respond to technological changes or evolving industry
standards. Additionally, there can be no assurance that we will not experience
difficulties that could delay or prevent the successful development,
introduction and marketing of new or improved products and services, or that our
proposed products and services will adequately satisfy the requirements of
prospective customers and achieve acceptance by those customers. In addition,
new or enhanced products and services introduced by us may contain undetected
errors that require significant design modifications. This could result in a
loss of customer confidence which could adversely affecting the use of our
website, which, in turn, could have a material adverse effect upon our business,
results of operations or financial condition. If we are unable to develop and
introduce new or improved products or services in a timely manner in response to
changing market conditions or customer requirements, our business, operating
results and financial condition will be materially adversely affected.
We Have No Operating History. We have no operating history upon which an
evaluation of our prospects can be made. Our prospects must be considered
speculative considering the risks, expenses and difficulties frequently
encountered in the establishment of a new business, specifically the risk
inherent in the development of computer software products. There can be no
assurance that unanticipated technical or other problems will not occur which
would result in material delays in future product and service commercialization
or that our efforts will result in successful product and service
commercialization. There can be no assurance that we will be able to achieve
profitable operations.
We Depend on Name Recognition. Our strategy for growth is substantially
dependent upon our ability to market and promote our website successfully. Other
companies, including those with substantially greater financial, marketing and
sales resources, compete with us, and have the advantage of marketing products
with existing production and distribution facilities. There can be no assurance
that we will be able to market and promote our products on acceptable terms, or
at all. Failure to market our products successfully could have a material
adverse effect on our business, financial condition or results of operations.
We believe that our future success will, at least, be dependent partially on our
ability to maintain and increase the name recognition of our proposed products.
We plan to promote our website by intensive marketing and advertising programs,
such as radio, television and direct mail campaigns. Our inability to obtain,
maintain and increase name recognition could have a material adverse impact on
our business, financial condition or results of operations. There can be no
assurance that our proposed products or services will achieve significant
acceptance by prospective customers, and that such acceptance, if achieved, will
be sustained for any significant period or that production and distribution will
be sufficient to permit the Company to recover start-up and other associated
costs. Failure of our products to achieve or sustain acceptance by prospective
customers could have a material adverse effect on the business, financial
conditions and results of operations.
We Are in a Very Competitive Industry. Competition to provide Internet based
business management software solutions is intense and we expect the competition
to increase. We will compete directly with other companies and businesses that
have developed and are in the process of developing technologies and products
which will be competitive with the technologies and products developed and
offered by us. There can be no assurance that other technologies or products
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which are functionally equivalent or similar to our technologies and products
have not been developed or are not in development. We expect that there are
companies or businesses which may have developed or are developing such
technologies and products as well as other companies and businesses which have
the expertise which would encourage them to develop and market products directly
competitive with those developed and marketed by us. To the extent that
customers exhibit loyalty to the supplier that first supplies them with a
particular service or technology, our competitors may have an advantage over us
with respect to products and technologies first developed by such competitors.
As a result of their size and breadth of their service offerings, certain of
these competitors have been and will be able to establish managed accounts by
which they seek to gain a disproportionate share of users for their products and
technologies. Such managed accounts present significant competitive barriers to
us. It is anticipated that we will benefit from its participation in niche
markets which, as they expand, may attract the attention of our competitors.
We believe that our ability to compete successfully depends on a number of
factors, including the performance, price, and functionality of its products
relative to those of its competitors. There can be no assurance that competitors
have not or will not succeed in developing products that are less expensive than
any which have been or are being developed by us or which would render our
products obsolete and noncompetitive.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and databases and significantly greater financial, technical and
marketing resources than us. Such competitors may be able to undertake more
extensive marketing campaigns, adopt more aggressive pricing policies and make
more attractive offers to potential employees and distribution partners. As a
result, they may be able to respond more quickly to new or emerging technologies
and changes in customer requirements. In addition, the software industry is
characterized by low barriers to entry. There can be no assurance that our
current competitors or any new market entrants will not develop management
products that offer significant performance, price, or other advantages over our
technology. In addition, operating system vendors could introduce new or upgrade
existing operating systems or environments that include systems management
functionality offered by us, which could render our products obsolete and
unmarketable. There can be no assurance that we will be able to successfully
compete against current or future competitors which could have a material
adverse effect on our business, operating results, and financial condition.
We May Rely on Third-Parties. We may become dependent upon various third parties
for one or more significant products or services required for our business,
which products or services will be provided to us pursuant to agreements with
such providers. Inasmuch as the capacity for certain products or services by
certain third parties may be limited, our inability, for economic or other
reasons, to continue to receive products or services from existing providers, or
to obtain similar products or services from additional providers, could have a
material adverse effect on us.
As we introduce new services that incorporate new technologies, we may be
required to license technology from others. There can be no assurance that these
third-party technology licenses will be available to us on commercially
reasonable terms, if at all. Our inability to obtain any of these technology
licenses could result in delays or reductions in the introduction of new
services or could adversely affect the performance of its services until
equivalent technology could be identified, licensed and integrated.
We Rely on Our Computer Infrastructure. Our success will be dependent in large
part on our initial investment in sophisticated computer systems and computer
software. We anticipate making significant investments in the acquisition,
development, and maintenance of such technologies in an effort to remain
competitive and anticipate that such expenditures will be necessary on an
on-going basis. Moreover, computer technologies are evolving rapidly and are
characterized by short product lifecycles, which requires us to anticipate
technological developments. There can be no assurance that we will be successful
in anticipating, managing or adopting such technological changes on a timely
basis or that we will have the capital resources available to invest in new
technologies. In addition, our business is highly dependent on our computer
equipment and software systems, the temporary or permanent loss of which,
through physical damage or operating malfunction, could have a material adverse
effect on our business. Operating malfunctions in the software systems of
financial institutions, market makers, and other parties might have an adverse
affect on our proposed operations.
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Risks Associated with Brand Development. We believe that establishing and
maintaining our Internet website is critical to our efforts to attract and
expand customers and advertisers, and the importance of name recognition will
increase because of the increasing number of Internet sites and the relative
ease to enter the e-commerce business. Promotion and enhancement of productions,
products and services to be offered on our website will depend significantly on
our success in providing access to high-quality products and services, which
success cannot be assured. In order to attract and retain Internet users and to
promote and maintain products and services in response to significant
competition, we may determine that it is necessary to increase substantially our
financial commitment to creating and maintaining a loyalty among consumers. If
we are unable to provide high-quality products and services or otherwise fail to
promote and maintain the products offered on our website, or if we incur
excessive expenses in an attempt to expand the products and services to be
offered on our website, our business, operating results and financial condition
will be materially and adversely affected.
Our promotion of our proposed website may not be successful. We anticipate that
the success of our website depends largely on our ability to provide
high-quality content and services. If Internet users do not perceive our
existing content and services to be of high-quality, or if we introduce new
content and services or enter into new businesses that are not favorably
perceived by users, we may not be successful in promoting and maintaining our
products or services. Any expansion of our operations creates a risk of
confusing consumers and decreasing the value of our website. In order to attract
and retain users, and to promote the products and services to be offered on our
website, we may need to increase our budgets for content and services or
otherwise substantially increase our financial commitment to establishing and
maintaining loyalty for our website. If we are unable to establish our website
or is forced to substantially increase our expenditures to promote our website,
our business could be severely harmed.
We must establish and maintain distribution relationships to attract more users
to our proposed website. We may depend on establishing and maintaining
distribution relationships with often used websites to increase the use of our
website. There is significant competition for relationships on favorable terms.
If we enter into distribution relationships for those websites, those websites
may not attract significant numbers of users, and we may in the future pay
significant fees to establish these relationships. We must continually develop
compelling content to attract Internet users. Our success may depend on our
ability to attract and retain a large number of Internet users by delivering
original and compelling Internet content and services. If we are unable to
develop content and services that allow us to attract, retain and expand loyal
Internet users who can spend significant amounts of money on our website, we
will be unable to generate advertising revenues or enter into sponsorships, and
our revenues and operating results will be severely harmed. The content,
products and services we will provide on our website may not appeal to a
sufficient number of Internet users to generate advertising revenues or attract
sponsorships. Our ability to develop compelling content depends on several
factors, including (i) the quality and number of developers who create content
for our website, (ii) the quality of our supervisory staff and (iii) the
technical expertise of our production staff. Consumer choices and preferences
change rapidly and we may not be able to anticipate, monitor and successfully
respond to these changes to attract and retain a sufficient number of Internet
users for our website. Internet users can freely navigate and instantly switch
among a large number of websites, many of which offer content and services that
compete with our website. If we are not able to respond adequately to changing
consumer choices and preferences, our business, operating results and financial
condition could be adversely affected.
We Rely on Growth and Use of the Internet. The substantial growth in the use of
and interest in the Internet and the Web is a recent phenomenon. There can be no
assurance that commerce over the Internet will become more widespread or that
extensive content will continue to be provided over the Internet. The Internet
may not prove to be a viable commercial marketplace for a number of reasons,
including potentially inadequate development of the necessary infrastructure,
such as a reliable network backbone, or timely development and commercialization
of performance improvements, including high speed modems. In addition, to the
extent that the Internet continues to experience significant growth in the
number of users and level of use, there can be no assurance that the Internet
infrastructure will continue to be able to support the demands placed upon it by
such potential growth or that the performance or reliability of the Web will not
be adversely affected by this continued growth. In addition, the Internet could
lose its viability due to delays in the development or adoption of new standards
and protocols required to handle increased levels of Internet activity, or due
to increased governmental regulation. Changes in or insufficient availability of
telecommunications services to support the Internet also could result in slower
response times and adversely affect usage of the Web and our online media
properties. If use of the Internet does not
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continue to grow, or if the Internet infrastructure does not effectively support
growth that may occur, our business, operating results and financial condition
would be materially and adversely affected.
Uninsured Loss; Acts of God. We may, but are not required to, maintain a
comprehensive general liability insurance policy, or other business insurance of
the types customarily carried by similar businesses. However, there are certain
types of extraordinary occurrences which may be either uninsurable or not
economically insurable. For example, in the event of a major earthquake, our
computer systems could be rendered inoperable for protracted periods of time,
which would adversely affect our financial condition. In the event of a major
civil disturbance, our operations could be adversely affected. Should such an
uninsured loss occur, we could lose significant revenues and financial
opportunities in amounts which would not be partially or fully compensated by
insurance proceeds.
Regulatory and Related Influences. The Internet is subject to changing
political, economic and regulatory influences that will affect the practices and
operation of Internet organizations. Any of these influences could have a
material adverse effect on our business, financial condition and results of
operations. During the past several years, the Internet has been subject to an
increase in governmental and international regulation. We cannot predict what
impact, if any, such factors might have on our business, financial condition and
results of operations.
Market Forces. Many software development organizations are consolidating to
create integrated software products and systems with greater functionality and
compatibility. As a result, these emerging systems could have greater bargaining
power, which may lead to price erosion of our products. Our failure to maintain
adequate price levels would have a material adverse effect on our business,
financial condition and results of operations. Other market-driven reforms could
have unpredictable effects on our business, financial condition and results of
operations. Our results of operations may vary from period to period due to a
variety of factors, including our level of research and development, the
introduction of new products or services by us or our competitors, cost
increases from third-party service providers, changes in marketing and sales
expenditures, market acceptance of our products and services, competitive
pricing pressures, and general economic and industry conditions that affect
customer demand.
As with any relatively new business enterprise operating in a specialized and
intensely competitive market, we are subject to many business risks which
include, but are not limited to, unforeseen marketing and promotional expenses,
unforeseen negative publicity, competition, and lack of operating experience.
Many of the risks may be unforeseeable or beyond our control. There can be no
assurance that we will successfully implement our business plan in a timely or
effective manner, or that our management will be able to market our services and
sell enough products to generate sufficient revenues and continue as a going
concern. Our strategy for growth is substantially dependent upon our ability to
market our services successfully. There can be no assurance that we will be able
to market our services on acceptable terms, or at all. Our failure to market our
services successfully could have a material adverse effect on our business,
financial condition or results of operations.
Growth of Business. We expect to experience growth and expect such growth to
continue for the foreseeable future. Our growth may place a significant strain
on our management, financial, operating and technical resources. Our ability to
manage future growth will depend upon a significant expansion of our accounting
and other internal management systems and the implementation and subsequent
improvement of a variety of systems, procedures, and controls. Moreover, we will
need to train, motivate, and manage our employees and attract and retain
qualified senior managers and technical professionals. If our management is
unable to manage growth effectively, there could be a material adverse effect on
our business, financial condition, and operating results.
Future Capital Needs and Uncertainty of Additional Funding. To achieve and
maintain competitiveness of our products and services and to conduct costly and
time-consuming research and development, we may be required to raise additional
funds. We believe that we may be able to acquire additional financing at
commercially reasonable rates; however, there can be no assurance that we will
be able to obtain additional financing at commercially reasonable rates, or at
all. We have expended, and will continue to expend in the future, substantial
funds on research and development in addition to the sales and marketing of our
products and services. Our failure to obtain additional financing would
significantly limit or eliminate
10
<PAGE>
our ability to fund our research and development and sales and marketing
activities, which would have a material adverse effect on our ability to
continue to compete with other software development organizations.
We anticipate that we may seek additional funding through public or private
sales of our securities, including equity securities, or through commercial or
private financing arrangements. However, adequate funds, whether through
financial markets or collaborative or other arrangements with corporate partners
or from other sources, may not be available when needed or on terms acceptable
to us. In the event that we are not able to obtain additional funding on a
timely basis, we may be required to scale back any proposed operations or
eliminate certain or all of our development or marketing programs or to license
third parties to commercialize products or technologies that we would otherwise
seek to develop, manufacture or market ourselves, any of which could have a
material adverse effect on our results of operations.
Limited Protection of Proprietary Technology. We anticipate that we will
exclusively own any and all software that we develop and regard our software
technology as proprietary. We may rely on a combination of copyright, trademark
and trade secret laws, as well as through contractual restrictions on
disclosure, copying and distribution (including but not limited to
confidentiality agreements with our employees and subcontractors), to attempt to
protect our intellectual property rights in our products and services. There is
a possibility that such copyright, registration, trademark and trade secret
laws, as well as such confidentiality agreements, may not be enforceable in
certain jurisdictions. It may be possible for unauthorized third parties to copy
our products or to reverse engineer or obtain and use information that we regard
as proprietary. There can be no assurance that our competitors will not
independently develop technologies that are substantially equivalent or superior
to our technologies. In addition, the laws of certain countries in which our
products and services are or may be distributed or utilized may not protect our
products and intellectual rights to the same extent as the laws of the United
States. As the number of software products increases and the functionality of
these products further overlaps, we believe that software will increasingly
become the subject of claims that such software infringes the rights of others.
To date no third party has filed an infringement claim against us and there have
been no explicit threats of litigation asserting that our products infringe on
any third party's intellectual property rights. However, there can be no
assurance that third parties will not assert infringement claims against us in
the future or that any such assertion will not result in costly litigation or
require us to obtain a license to intellectual property rights of third parties.
If we were required to so obtain any such licenses, there can be no assurance
that such licenses will be available on reasonable terms, or at all.
Rapid Technological Change. The software markets and the personal computer
industry in general are characterized by rapidly changing technology, resulting
in short product life cycles and rapid price declines. We must continuously
update our existing and planned products and services to keep them current with
changing technologies and must develop new products and services, to take
advantage of new technologies that could render our existing products and
services obsolete. Our future prospects are highly dependent on our ability to
increase the functionality of our proposed products and services in a timely
manner and to develop new products that address new technologies and achieve
market acceptance. There can be no assurance that we will be successful in these
efforts. If we were unable to develop and introduce such products and services
in a timely manner, due to resource constraints or technological or other
reasons, this inability could have a material adverse effect on our results of
operations. In particular, the introduction of new products and services are
subject to the inherent risk of development delays. We anticipate that such
delays may occur in the future. In addition, due to the uncertainties associated
with our emerging market, there can be no assurance that we will be able to
forecast product and service demands accurately or to respond in a timely manner
to changing technologies and customer requirements.
Key Personnel. The future success of us will depend in part on the service of
our key personnel and, additionally, our ability to identify, hire and retain
additional qualified personnel. There is intense competition for qualified
personnel in the areas of our activities, and there can be no assurance that we
will be able to continue to attract and retain such personnel necessary for the
development of our business. Because of the intense competition, there can be no
assurance that we will be successful in adding personnel as needed to satisfy
our staffing requirements. Failure to attract and retain key personnel could
have a material adverse effect on us.
Conflicts of Interest. The persons serving as our officers and directors may
have existing responsibilities and, in the future, may have additional
responsibilities, to provide management and services to other entities in
addition to us. As a result, conflicts of interest between us and the other
activities of those persons may occur from time to time, in that those persons
11
<PAGE>
shall have conflicts of interest in allocating time, services, and functions
between the other business ventures in which those persons may be or become
involved and, also, our affairs.
Dependence on Management. We are dependent on the efforts and abilities of our
senior management. The loss of various members of that management could have a
material adverse effect on our business and prospects. The members of our Board
of Directors believe that all commercially reasonable efforts have been made to
minimize the risks attendant with the departure by key personnel from the
service of us. There is no assurance, however, that upon the departure of key
personnel from our service, replacement personnel will cause us to operate
profitably.
Although we intend to pursue a strategy of aggressive marketing and development
of our primary product, implementation of this strategy will depend in large
part on our ability to (i) establish a significant customer base and maintain
favorable relationships with those customers; (ii) obtain adequate financing on
favorable terms to fund our business strategy; (iii) maintain appropriate
procedures, policies, and systems; (iv) hire, train, and retain skilled
employees; and (vi) continue to operate in the face of increasing competition.
Our inability to obtain or maintain any or all of these factors could impair our
ability to successfully implement our business strategy, which could have a
material adverse effect on our results of operations and financial condition.
Limitation on Liability of Officers and Directors of the Company. Our
Certificate of Incorporation includes a provision eliminating or limiting the
personal liability of our officers and directors to the Company and our
shareholders for damages for breach of fiduciary duty as a director or officer.
Accordingly, our officers and directors may have no liability to our
shareholders for any mistakes or errors of judgment or for any act or omission,
unless such act or omission involves intentional misconduct, fraud, or a knowing
violation of law or results in unlawful distributions to our shareholders.
DISCLOSURE OF OPINION OF COMMISSION REGARDING INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES:
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING PURSUANT TO THE SECURITIES
ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE
COMPANY PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH
INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT OF
1933 AND IS, THEREFORE, UNENFORCEABLE.
Penny Stock Regulation. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks". Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from those rules, to deliver a
standardized risk disclosure document prepared by the Commission, which
specifies information about penny stocks and the nature and significance of
risks of the penny stock market. The broker-dealer also must provide the
customer with bid and offer quotations for the penny stock, the compensation of
the broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules the broker-dealer must
make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction. These disclosure requirements may have the effect of reducing
the trading activity in the secondary market for a stock that becomes subject to
the penny stock rules. If our common stock becomes subject to the penny stock
rules, purchasers of Shares may find it more difficult to sell their Shares.
Control by Existing Security Holders. Our directors, officers and principal
(greater than 5%) Security Holders, taken as a group, together with their
affiliates, beneficially own, in the aggregate, approximately 100% of our
outstanding Common Stock. Certain principal Security Holders are directors or
executive officers of the Company. As a result of such ownership, these Security
Holders may be able to exert significant influence, or even control, matters
requiring approval by
12
<PAGE>
our Security Holders, including the election of directors. In addition, certain
provisions of Delaware law and of the Company's Certificate of Incorporation and
Bylaws could have the effect of making it more difficult or more expensive for a
third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Company. We are authorized to issue preferred stock.
Securities Market Factors. There is no public market for our securities
including, but not limited to, our common stock. Should there develop a
significant market for our securities, the market price for those securities may
be significantly affected by such factors as our financial results and
introduction of new products and services. No assurance can be given that an
active public market will develop or be sustained. Factors such as announcements
of new or enhanced products by us or our competitors and quarter-to-quarter
variations in our results of operations, as well as market conditions in the
high technology and Internet sector may have a significant impact on the market
price of our shares. Further, the stock market has experienced extreme
volatility that has particularly affected the market prices of equity securities
of many companies and that often has been unrelated or disproportionate to the
operating performance of such companies. These market fluctuations may adversely
affect the price of the Common Stock.
No Foreseeable Dividends. We do not anticipate paying dividends on the Common
Stock in the foreseeable future; but, rather, we plan to retain earnings, if
any, for the operation and expansion of our business.
No Assurances of Revenue or Operating Profits. There can be no assurance that we
will be able to develop revenue sources or that our operations will become
profitable.
Federal Income Tax Consequences. We have obtained no ruling from the Internal
Revenue Service and no opinion of counsel with respect to the federal income tax
consequences of the purchase of Common Stock. Consequently, investors must
evaluate for themselves the income tax implications which attach to their
purchase, and any subsequent sale, of the Shares.
Impact of the Year 2000. The Year 2000 (commonly referred to as "Y2K") issue
results from the fact that many computer programs were written using two, rather
than four, digits to identify the applicable year. As a result, computer
programs with time-sensitive software may recognize a two digit code for any
year in the next century as related to this century. For example, "00", entered
in a date-field for the year 2000, may be interpreted as the year 1900,
resulting in system failures or miscalculations and disruptions of operations,
including, among other things, a temporary inability to process transactions or
engage in other normal business activities. While companies and governments in
the United States spent an estimated $150 billion to $225 billion repairing the
problem, countries like Russia and China, which spent relatively minor amounts,
seemed to clear the New Year's Day hurdle with equal success. Major news media
in the United States are reporting that, after years of work and billions of
dollars spent repairing the Year 2000 computer glitch, the technological
tranquility of New Year's Day has raised a new concern that the United States
overreacted to this problem. While it is still too soon to state positively that
the Y2K transition has passed without mishap, we believe that Y2K issues will
not have a material adverse affect on our business.
Item 4. Use of Proceeds
We will realize $6,000,000.00 from the sale of 2,000,000 shares of our Common
Stock, and will use those funds to pay for the costs of the offering, to expand
computer systems, fund development and marketing of our website, and for working
capital. Our management has significant and absolute discretion to adjust the
application and allocation of proceeds of the offering in order to adjust and
respond to various circumstances and opportunities. As a result of the
foregoing, our success will be affected by the discretion and judgment of our
management with respect to the application and allocation of the proceeds of the
offering.
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<PAGE>
The following table outlines the anticipated use of proceeds:
================================================================================
Estimated Use Amount(1) Percentage of
Proceeds(1)
- --------------------------------------------------------------------------------
Computer Systems Expansion $470,000.00 7.83%
- --------------------------------------------------------------------------------
Development of Website $250,000.00 4.17%
- --------------------------------------------------------------------------------
Marketing $1,250,000.00 20.83%
- --------------------------------------------------------------------------------
Working Capital(2) $3,000,000.00 50.0%
- --------------------------------------------------------------------------------
General Corporate Purposes(2) $810,000.00 13.5%
- --------------------------------------------------------------------------------
Legal and Accounting Fees(2) $100,000.00 1.67%
- --------------------------------------------------------------------------------
Offering Expenses (3) $120,000.00 2.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total $6,000,000.00 100%
================================================================================
(1) Assumes the Company sells the maximum offering amount of $6,000,000.00.
(2) Working capital, general corporate purposes, and legal and accounting
reflect funds allocated to pay for daily expenditures incurred in our
business, operations and general and administrative overhead for the
twelve-month period following the closing of this offering.
(3) We believe that Offering Expenses, which include legal, accounting,
miscellaneous, compliance and offering expenses and printing costs will be
in an amount equal to approximately 2% of the gross proceeds received from
the offer and sale of the Shares.
Item 5. Determination of Offering Price
Factors Used to Determine Share Price. The offering price of the 2,000,000
Shares being offered on a "best efforts" basis has been determined primarily by
the capital requirements of the Company and has no relationship to any
established criteria of value, such as book value or earnings per share.
Additionally, because we have no significant operating history and have not
generated any revenues to date, the price of the Shares is not based on past
earnings, nor is the price of the Shares indicative of current market value for
the assets owned by the Company. No valuation or appraisal has been prepared for
the business and potential business expansion of the Company.
Item 6. Dilution
We will not be a reporting company until the effective date of the Registration
Statement on this Form SB-2. We are selling 2,000,000 Shares being registered
hereby on a "best efforts" basis. The Shares may be sold directly or through
brokers or dealers. The purchase prices paid by officers, directors, promoters
and affiliated persons for common equity purchased by them, or which they have
rights to purchase, or which they acquired by means of related party
transactions, are specified in this Prospectus under the captions "Security
Ownership of Certain Beneficial Owners and Management", "Organization Within
Last Five Years", and "Certain Relationships and Related Transactions."
We were initially capitalized by the sale of our $.001 par value common stock.
The following table sets forth the number of shares of $.001 par value common
stock purchased from the Company, the total consideration paid and the price per
share. The table assumes all of the Shares will be sold.
14
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================
Shares Issued Total Consideration Price Per
Share
Number Percent Amount Percent
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3,000,000 60% $3,000.00 0.05% $0.001
Founding Shareholders Shares
- ---------------------------------------------------------------------------------------------------------------
2,000,000 40% $6,000,000.00 99.95% $3.00
Purchasers of Shares(3) Shares
===============================================================================================================
5,000,000 100% $6,003,000.00 100%
Total Shares
===============================================================================================================
</TABLE>
(3) Assuming all of the Shares will be purchased.
Item 7. Selling Security Holders
Not applicable.
Item 8. Plan of Distribution
We are offering for sale 2,000,000 Shares on a "best efforts" basis pursuant to
this Form SB-2. We may from time to time sell all or a portion of the Shares in
the over-the-counter market, or on any other national securities exchange on
which our Common Stock is or becomes listed or traded, in negotiated
transactions or otherwise, at prices then prevailing or related to the then
current market price or at negotiated prices. The Shares will not be sold in an
underwritten public offering. The Shares may be sold directly or through brokers
or dealers. The methods by which the Shares may be sold include: (a) a block
trade (which may involve crosses) in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) privately
negotiated transactions. In effecting sales, brokers and dealers we engage, if
any, may arrange for other brokers or dealers to participate. Brokers or dealers
may receive commissions or discounts (or, if any such broker-dealer acts as
agent for the purchaser of such shares, from such purchaser) in amounts to be
negotiated which are not expected to exceed those customary in the types of
transactions involved. Broker-dealers may agree to sell a specified number of
such shares at a stipulated price per share, and, to the extent such
broker-dealer is unable to do so, to purchase as principal any unsold shares at
the price required to fulfill the broker-dealer commitment. Broker-dealers who
acquire shares as principal may thereafter resell such shares from time to time
in transactions (which may involve crosses and block transactions and sales to
and through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market or otherwise at prices and on terms then
prevailing at the time of sale, at prices then related to the then-current
market price or in negotiated transactions and, in connection with such resales,
may pay to or receive from the purchasers of such shares commissions as
described above.
Broker-dealers participating in the distributions of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the 1933 Act and any
commissions or discounts given to any such broker-dealer may be deemed to be
underwriting commissions or discounts pursuant to the Act.
We have filed the Registration Statement, of which this Prospectus forms a part,
with respect to the sale of the Shares. There can be no assurance that we will
sell any or all of the Shares offered hereunder.
15
<PAGE>
Under the Securities Exchange Act of 1934 ("Exchange Act") and the regulations
thereunder, any person engaged in a distribution of the Shares offered by this
Prospectus may not simultaneously engage in market making activities with
respect to our Common Stock during the applicable "cooling off" periods prior to
the commencement of such distribution.
We will pay all of the expenses incident to the offering and sale of the Shares,
other than commissions, discounts and fees of underwriters, dealers or agents.
Item 9. Legal Proceedings
There are no legal actions pending against us nor are any such legal actions
contemplated.
Item 10. Directors, Executive Officers, Promoters and Control Persons.
Executive Officers and Directors. We are dependent on the efforts and abilities
of certain of our senior management. The interruption of the services of key
management could have a material adverse effect on our operations, profits and
future development, if suitable replacements are not promptly obtained. We
anticipate that we will enter into employment agreements with each of our key
executives; however, no assurance can be given that each executive will remain
with us during or after the term of his or her employment agreement. In
addition, our success depends, in part, upon our ability to attract and retain
other talented personnel. Although we believe that our relations with our
personnel are good and that we will continue to be successful in attracting and
retaining qualified personnel, there can be no assurance that we will be able to
continue to do so. All officers and directors of the Company will hold office
until their resignation or removal.
Our directors and principal executive officers are as specified on the following
table:
================================================================================
Name Age Position
- --------------------------------------------------------------------------------
Stephen Gates 34 President, Secretary, Director
- --------------------------------------------------------------------------------
Kenneth L. Sherwood 52 Director
- --------------------------------------------------------------------------------
David R. Munday 47 Director
================================================================================
Stephen Gates is our President, Secretary and a director since our incorporation
in November 1998. Mr. Gates also currently serves as Chief Financial Officer of
EZE Biz Software Inc., a British Columbia corporation. Mr. Gates graduated with
a Master of Business Administration from University of British Columbia in 1994.
Mr. Gates also graduated with Bachelor of Science (Economics) with honors from
the University of Victoria in 1992. Prior to joining EZE Biz Software Inc., a
British Columbia corporation in 1996, Mr. Gates spent several in management
positions, primarily in the automotive industry. Mr. Gates currently serves as
the President and Chief Executive Officer of Balfour Pacific Management Corp., a
British Columbia corporation.
Kenneth Sherwood is a director of the Company since April 1999. Mr. Sherwood
graduated with Bachelor of Science (Accounting) with honors from the California
State University, Fullerton in 1972. Mr. Sherwood became a Certified Public
Accountant in California and also became a Chartered Accountant in the Province
of British Columbia in 1979. From 1980 to 1985, Mr. Sherwood was the Director of
Internal Audit Office for the Yukon Territory Government. From 1985 to present,
Mr. Sherwood has been practicing public accounting in the private sector. Mr.
Sherwood is also the Chief Financial Officer of Cyberstation Inc., a British
Columbia corporation, and the Chief Financial Officer of BWG Holdings BC Ltd., a
British Columbia corporation.
David Munday is a director of the Company since April 1999. Mr. Munday graduated
with a Master of Business Administration from Simon Fraser University in 1997.
Mr. Munday also graduated with Bachelor of Science (Marine Biology) with honors
from the University of Guelph in Ontario, Canada in 1977. From 1995 to the
present, Mr. Munday has been employed as an environmental specialist by Hatfield
Consultants Ltd., Coastline Technologies Inc. and Golder Associates Ltd.,
primarily in the environmental industry. Mr. Munday also served as
Vice-President of P.T. Hatfindo Prima from December 1991 to July 1995.
16
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of February 15, 2000 by (i) each person or
entity known by us to be the beneficial owner of more than 5% of the outstanding
shares of common stock, (ii) each of our directors and named executive officers,
and (iii) all of our directors and executive officers as a group.
<TABLE>
<CAPTION>
Title of Class Name and Address of Amount and Nature of Percent of Class
Beneficial Owner Beneficial Owner
- -------------------------- ----------------------------------- ---------------------------------- -------------------------
<S> <C> <C> <C>
$.001 Par Value Stuart Bristow, 365B Foul Bay 1,000,000 shares 33.33%
Common Stock Road, Victoria, British Columbia,
Canada V8S 4G6
$.001 Par Value Dr. C. P. Innis, 350-1105 Pandora 1,000,000 shares 33.33%
Common Stock Avenue, Victoria, British
Columbia, Canada V8V 3P9
$.001 Par Value Stephen Gates, 1639 Hybury Place, 1,000,000 shares, President, 33.33%
Common Stock Victoria, British Columbia, Secretary, Director
Canada V8N 5L3
$.001 Par Value All directors and named executive 33.33%
Common Stock officers as a group
</TABLE>
Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect to
securities. In accordance with Commission rules, shares of our common stock
which may be acquired upon exercise of stock options or warrants which are
currently exercisable or which become exercisable within 60 days of the date of
the table are deemed beneficially owned by the optionees. Subject to community
property laws, where applicable, the persons or entities named in the table
above have sole voting and investment power with respect to all shares of our
common stock indicated as beneficially owned by them.
Changes in Control. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.
Item 12. Description of Securities
We are authorized to issue 100,000,000 shares of common stock, $.001 par value,
each share of common stock having equal rights and preferences, including voting
privileges. We are authorized to issue 10,000,000 shares of preferred stock,
$.001 par value. As of February 15, 2000, 3,000,000 shares of our common stock
were issued and outstanding.
Our shares of $.001 par value common stock constitute equity interests in the
Company entitling each shareholder to a pro rata share of cash distributions
made to shareholders, including dividend payments. The holders of our common
stock are entitled to one vote for each share of record on all matters to be
voted on by shareholders. There is no cumulative voting with respect to the
election of our directors or any other matter, with the result that the holders
of more than 50% of the shares voted for the election of those directors can
elect all of the Directors. The holders of our common stock are entitled to
receive dividends when, as and if declared by our Board of Directors from funds
legally available therefor; provided, however, that cash dividends are at the
sole discretion of our Board of Directors. In the event of our liquidation,
dissolution
17
<PAGE>
or winding up, the holders of common stock are entitled to share ratably in all
assets remaining available for distribution to them after payment of our
liabilities and after provision has been made for each class of stock, if any,
having preference in relation to our common stock. Holders of shares of our
common stock have no conversion, preemptive or other subscription rights, and
there are no redemption provisions applicable to our common stock.
Dividend Policy. We have never declared or paid a cash dividend on our capital
stock and do not expect to pay cash dividends on our Common Stock in the
foreseeable future. We currently intend to retain our earnings, if any, for use
in our business. Any dividends declared in the future will be at the discretion
of our Board of Directors and subject to any restrictions that may be imposed by
our lenders.
Item 13. Interest of Named Experts and Counsel.
No "expert", as that term is defined pursuant to Regulation Section 228.509(a)
of Regulation S-B, or the Company's "counsel", as that term is defined pursuant
to Regulation Section 228.509(b) of Regulation S-B, was hired on a contingent
basis, or will receive a direct or indirect interest in the Company, or was a
promoter, underwriter, voting trustee, director, officer, or employee of the
Company, at any time prior to the filing of this Registration Statement.
Item 14. Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, INDEMNIFICATION FOR
LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933 IS CONTRARY TO PUBLIC
POLICY AND, THEREFORE, UNENFORCEABLE.
Item 15. Organization Within Last Five Years
Transactions with Promoters. We did not employ or contract with any promoters.
Item 16. Description of Business.
Our Background. We were incorporated pursuant to the laws of the State of
Delaware in November 10, 1998.
Our Business. We anticipate that we will be an Internet based provider of small
business services, software products, and consultation over the Internet. We
intend to develop and maintain a website serving as a marketplace community for
small businesses and an application service provider ("ASP"). An ASP is a
website with a central secured data warehousing system which enables a small
business user to subscribe to management software applications via the Internet
connection with the small business user's personal computer ("PC"). We
anticipate that our website will also allow users to interact with other small
business users, obtain advice, products and services from vendors as well as
purchase and download software solutions. We will provide users the most current
business management software applications directly from our website.
As number of users with high-speed Internet connectivity continues to increase,
we believe that ASPs will become a cost-effective channel for software
distribution. We are currently testing our model over the Internet with a
business management product, the EZEBiz Company Manager, which provides
integrated business management tools and was developed by EZE Biz Software Inc.,
a British Columbia corporation. We are currently negotiating the terms of a
software licensing agreement with EZE Biz Software Inc., a British Columbia
corporation, and we anticipate that we will be the exclusive distributor of the
EZEBiz Company Manager in the United States.
EZEBiz Company Manager. The EZEBiz Company Manager is a business management
software program which encompasses personal or corporate information, contact
management, order entry, real time accounting and payroll, inventory control,
job costing and tracking, financial analysis, and extensive reports including
marketing information and cash flow. We believe that the Company Manager offers
reliable and total control of a business and allows a user to locate information
or make informed decisions about the business at any time. The EZEBiz Company
Manager serves as the core
18
<PAGE>
software platform for the development of industry-specific products which cater
to the unique processes of businesses in a particular industry. We anticipate
that we will acquire the exclusive rights to market and distribute the EZEBiz
Company Manager and any future products or enhancements developed by EZE BIZ
Software Inc., a British Columbia corporation. However, there can be no
assurance that we will acquire the exclusive marketing and distribution rights
for the EZEBiz Company Manager and our inability to acquire such rights could
have a material adverse effect on our results of operations and financial
condition.
Our Website. Our website will be developed as an ASP enabling businesses to
upgrade hardware and software solutions with minimal capital expense. The small
business customer will pay a rental fee per user, which establishes a fixed cost
for current management software solutions. We anticipate that our website will
also provide advice and information to small businesses in a community based
format. Accounting, legal, tax, and other business information will be provided
on a global scope, referencing regional requirements for each business
marketplace. We intend to provide books, videos banking, resource information,
business associations, advertising with strategic partners, and complementary
software products to ensure comprehensive one-stop shopping for any growing
business manager.
We intend to provide the software and services necessary to enable businesses to
conduct safe, reliable commercial transactions over the Internet while making
use of their existing software applications. We plan to design our website to
provide users with e-commerce software applications for transacting business
over the Internet. We will offer e-commerce software applications that
accommodate unreliable Internet connections and scalability requirements.
Our Target Market. Our ASP services will target small business firms that can
use our website but do not have the computer network resources installed, do not
have the computer expertise on staff and cannot recruit and pay for such help
because of the huge impact on their payroll. With the explosive growth small
businesses throughout North America, our website addresses the need for products
to assist small businesses. The software industry until recently has provided
business solution tools to either small start-up business ventures or larger,
customized solution oriented businesses. Many companies in the past have each
used several software products to manage business functions from inventory
control to payroll.
The small and growing businesses market has traditionally been under-serviced in
providing software management tools for business managers. Small businesses
typically use PCs within simple peer-to-peer or small networked systems as their
primary technology platform. Within the networked systems of small businesses,
information can be shared among multiple users, but most application
functionality resides within the individual PCs. Small businesses employ
business management software applications to save time, reduce costs and
increase the ability to access and share information in a timely manner. We
believe that our website can be designed to meet the needs of a growing
organization, have an affordable cost and can be used with ease and relative
speed.
Internet Advertising. The Internet is emerging as an attractive method for
advertisers, due to the growth in the number of Internet users, the amount of
time Internet users spend on the Internet, the increase in electronic commerce,
the interactive nature of the Internet, the Internet's global reach, the ability
to reach targeted audiences and a variety of other factors. Many of the largest
advertisers in traditional media, including consumer products companies,
automobile manufacturers and others, have increased their use of Internet
advertising. We believe that Internet advertising will become an increasing
component of larger companies' total advertising budgets. We believe that the
leading Internet providers will benefit from the increasing number of Internet
users, as advertisers may advertise on websites that can demonstrate significant
use and provide advertising programs, allowing them to target specific
demographic groups. We believe that significant revenues can be generated from
online advertising, initially from small business service providers and product
vendors and, as use of our website increases, from advertisers, such as consumer
products companies.
Marketing. We intend to market and promote our website on the Internet. Our
marketing strategy is to promote our services and products and attract
businesses to our website. Our marketing initiatives include (i) utilizing
direct response print advertisements placed primarily in small business,
entrepreneurial, and financially-oriented magazines and special interest
magazines; (ii) links to industry focused websites; (iii) advertising by
television, radio, banners, affiliated marketing
19
<PAGE>
and direct mail; (iv) presence at industry tradeshows; and (v) entering into
relationships with other website providers to increase our access to Internet
business consumers.
Pricing. We will develop our website and related products and services to
provide small businesses with the most current software applications at a fixed
cost which allows our clients to control their software costs. We believe that
our fees allow small businesses to utilize the newest software applications at a
nominal amount, which makes us a cost effective solution for all small
businesses.
Growth Strategy. Our objective is to become a dominant provider of ASP software
applications, products and services worldwide for small businesses. Our strategy
is to continue providing clients with exceptional personal service and
developing comprehensive and fully integrated small business services, all
directly accessible from an end user's computer. Key elements of our strategy
include (i) create global awareness of our products and services; (ii) increase
the number of Internet users to our website; (iii) continue our website; (iv)
increase our relationships with small businesses; (v) increase our relationships
with third party providers of small business products and services; (vi) provide
additional services for small businesses; (vii) expand international operations;
and (viii) pursue advantageous relationships.
Competition. The ASP market is new, rapidly evolving and is expected to become
significantly competitive. Current and new competitors may be able to establish
websites at a relatively low cost and relatively quickly. There are minimal
obstacles for participation in the ASP business. Accordingly, we expect
competition to increase and the number of competitors to increase significantly
in the future. There can be no assurance that our website will compete
successfully.
There are a number of ASP companies that provide software applications on the
Internet. Those competitor's services may be sufficiently attractive to Internet
users to dissuade them from accessing and using our website. To compete
successfully, we must provide reliable software applications, deliver
informative and useful content to attract more small business customers,
generate fees from enhanced benefits services and sell advertising. If we are
unable to attract a significant number of users to our website, our business,
financial condition and results of operations will be materially adversely
affected and we may cease to be a commercially viable business.
Employees. We currently have one (1) full-time employee. We believe our future
success depends in large part upon the continued service of our key technical
and senior management personnel and our ability to attract and retain highly
qualified technical and managerial personnel.
Item 17. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following information specifies forward-looking statements of our
management. Forward-looking statements are statements that estimate the
happening of future events and are not based on historical fact. Forward-looking
statements may be identified by the use of forward-looking terminology such as
"may", "will", "could", "expect", "estimate", "anticipate", "probable",
"possible", "should", "continue", or similar terms, variations of those terms or
the negative of those terms. Actual results may differ materially from those
contemplated by the forward-looking statements.
Liquidity and Capital Resources. We have cash of $2449.00 as of February 15,
2000.
Results of Operations. We have not realized any revenue from operations.
Our success is materially dependent upon our ability to satisfy additional
financing requirements. We are reviewing our options to raise substantial equity
capital. We anticipate that we will begin to realize positive gross revenue in
or around January 2001. In order to satisfy our requisite budget, management has
held and continues to conduct negotiations with various investors. We anticipate
that these negotiations will result in additional investment income for us. To
achieve and maintain competitiveness, we may be required to raise substantial
funds. Our forecast for the period for which our financial resources will be
adequate to support our operations involves risks and uncertainties and actual
results could fail as a result of a number of factors. We anticipate that we
will need to raise additional capital to develop, promote and conduct our
20
<PAGE>
operations. Such additional capital may be raised through public or private
financing as well as borrowings and other sources.
There can be no assurance that additional funding will be available under
favorable terms, if at all. If adequate funds are not available, we may be
required to curtail operations significantly or to obtain funds through entering
into arrangements with collaborative partners or others that may require us to
relinquish rights to certain products and services that we would not otherwise
relinquish.
Internet Competition. The Internet market is new, rapidly evolving and intensely
competitive. We expect competition to intensify even more in the future.
Barriers to opening a new Internet storefront are increasing.
We believe that the principal competitive factors in maintaining an Internet
website are selection, convenience, price, speed and accessibility, customer
service, quality of site content, and reliability and speed of fulfillment. Many
of our current and potential competitors have longer operating histories, more
customers, greater brand recognition, and significantly greater financial,
marketing and other resources. In addition, larger, well-established and
well-financed entities may acquire, invest in, or form joint ventures with our
competitors as the Internet, and e-commerce in general, become more widely
accepted. The Internet and e-commerce are significantly competitive and
competition is expected to continue to increase significantly. There are no
substantial barriers to entry in these markets, and we expect that competition
will continue to intensify. Although we believe that the diverse segments of the
Internet market will provide opportunities for more than one supplier of
productions, products and services similar to those of ours, it is possible that
a single supplier may dominate one or more market segments. If competition
increases from these and other sources, we might have to respond to competitive
pressures by implementing pricing, marketing and other programs, or seeking
additional strategic alliances or acquisitions that may be less favorable than
would otherwise be established or obtained. Any such response to competitive
pressures could materially affect our business, results of operations and
financial conditions. We also have significant competition from other online
websites in international markets, including competition from United
States-based competitors, in addition to online companies that are already well
established in those foreign markets. Many of our existing competitors, in
addition to a number of potential new competitors, have significantly greater
financial, technical and marketing resources than us.
The market for Internet content is relatively new, rapidly changing and
significantly competitive. We expect competition for Internet content to
continue to increase and if we cannot compete effectively, our business could be
harmed. Moreover, we expect the number of websites competing for the attention
and spending of users, advertisers and sponsors to continue to increase, because
there are so few barriers to entry on the Internet. Increased competition could
result in advertising or sponsorship price reductions, reduced margins or loss
of market share, any of which could harm our business. Competition will probably
increase significantly, as new companies enter the market and current
competitors expand their services. Many of our potential competitors will
probably enjoy substantial competitive advantages, including (i) larger numbers
of users; (ii) larger numbers of advertisers; (iii) greater brand recognition;
(iv) more fully-developed e-commerce opportunities; (v) larger technical,
production and editorial staffs; and (vi) substantially greater financial,
marketing, technical and other resources. If we do not compete effectively or if
we experience any pricing pressures, reduced margins or loss of market share
resulting from increased competition, our business could be adversely affected.
In the future, we expect to have competition in the various special interest,
demographic and geographic markets addressed by media properties that are being
developed. This competition may include companies that are larger and better
capitalized than us and that have expertise and established brand recognition in
these markets. There can be no assurance that our competitors will not develop
Internet-related products and services that are superior to those of ours or
that achieve greater market acceptance than our productions, products or
services.
Technological Changes. Our future success is substantially dependent upon
continued growth in the use of the Internet. E-commerce and the distribution of
goods and services over the Internet are relatively new, and predicting the
extent of further growth, if any, is difficult. There can be no assurance that
communication or commerce over the Internet will increase or that extensive
content will continue to be provided over the Internet. The Internet may not
prove to be a viable commercial marketplace for a number of reasons, including
lack of acceptable security technologies, potentially inadequate development of
the necessary infrastructure, such as a reliable network system, or timely
development and commercialization of performance improvements, including high
speed modems. In addition, to the extent that the Internet
21
<PAGE>
continues to experience significant growth in the number of users and use, there
can be no assurance that the Internet infrastructure will continue to be able to
support the demands placed upon it by such potential growth or that the
performance or reliability of the Internet will not be adversely affected by
this continued growth. If use of the Internet does not continue to increase, or
if the Internet infrastructure does not effectively support growth that may
occur, our business, operating results, and financial condition would be
materially and adversely affected.
The market for Internet products and services is characterized by rapid
technological developments, evolving industry standards and customer demands,
and frequent new product introductions and enhancements. For example, to the
extent that higher bandwidth Internet access becomes more widely available using
cable modems or other technologies, we may be required to make significant
changes to the design and content of our online properties in order to compete
effectively. Our failure to adapt to these or any other technological
developments effectively could adversely affect our business, operating results,
and financial condition. Increasing users is critical to increasing revenues. If
we cannot attract users to our proposed website we may not be able to generate
revenues, which could leave us unable to maintain or grow our business. To
increase the number of our users, we must (i) develop our content and
communities; (ii) develop our network of distribution partners; and (iii)
increase brand recognition by advertising and syndication. If we do not achieve
these objectives to increase the number of our users, our business could be
harmed. Additionally, a significant element of our business strategy is to
develop loyal online communities, because we believe such communities help
retain actively engaged users. However, the concept of developing these
communities on the Web is unproven, and if we are not successful, then it may be
more difficult to increase the numbers of our users.
If the Internet infrastructure continues to be unreliable, access to our website
may be impaired and our business may be harmed. Our success depends in part on
the development and maintenance of the Internet infrastructure. If this
infrastructure fails to develop, our business would be harmed, because users may
not be able to access our website. Among other things, development and
maintenance of a reliable infrastructure will require a reliable network with
the necessary speed, data capacity, security and timely development of
complementary products for providing reliable Internet access and services. The
Internet has experienced, and is expected to continue to experience, significant
growth in number of users and amount of traffic. If the Internet continues to
experience increased numbers of users, frequency of use or increased bandwidth
requirements, the Internet infrastructure may not be able to support these
increased demands or perform reliably. The Internet has experienced a variety of
outages and other delays as a result of damage to portions of our
infrastructure, and could experience additional outages and delays in the
future. These outages and delays could reduce Internet usage and traffic on our
website. In addition, the Internet could lose its viability because of delays in
the development or adoption of new standards and protocols to handle increased
levels of activity. If the Internet infrastructure is not adequately developed
or maintained, marketing and distribution of products and services on our
website may be reduced.
Our systems may fail due to natural disasters, telecommunications failures and
other events, any of which would limit user traffic. Fire, floods, earthquakes,
power loss, telecommunications failures, break-ins and similar events could
damage our communications hardware and computer hardware operations for our
website and cause interruptions in our services. Computer viruses, electronic
break-ins or other similar disruptive problems could cause users to stop
visiting our website. If any of these circumstances were to occur, our business
could be harmed. Our insurance policies may not adequately compensate us for any
losses that may occur due to any failures of or interruptions in our systems. We
do not presently have a formal disaster recovery plan. Our website will
eventually be required to accommodate a significant traffic and deliver
frequently updated information. The website may experience slower response times
or decreased traffic for a variety of reasons. In addition, our users will
depend on Internet Service Provides ("ISP's"), Online Service Provides ("OSP's")
and other website operators for access to our website. Many of these providers
and operators have experienced significant outages in the past, and could
experience outages, delays and other difficulties due to system failures
unrelated to our systems. Any of these system failures could harm our business.
Government Regulation of the Internet and Legal Uncertainties. We are not
currently subject to direct regulation by any government agency in the United
States, other than regulations applicable to businesses generally, and there are
currently few laws or regulations directly applicable to access to commerce on
the Internet. Because of the increasing popularity and use of the Internet, it
is possible that a number of laws and regulations may be adopted with respect to
the Internet, relating to issues such as user privacy, pricing and
characteristics and quality of products and services. For example, we may be
subject to the provisions of the recently enacted Communications Decency Act
("CDA"). Although the constitutionality of
22
<PAGE>
the CDA, the manner in which the CDA will be interpreted and enforced and its
effect on our operations cannot be determined, it is possible that the CDA could
expose us to substantial liability. The CDA could also reduce the growth in the
use of the Internet generally and decrease the acceptance of the Internet as a
communications and commercial medium, and could, thereby, have a material
adverse effect on our business, results of operations and financial condition.
A number of other countries have enacted or may enact laws that regulate
Internet content. Other nations, including Germany, have taken actions to
restrict the free distribution of material on the Internet, and the European
Union has recently adopted privacy and copyright directives that may impose
additional burdens and costs on our international operations. In addition,
several telecommunications carriers are attempting to have telecommunications
over the Internet regulated by the Federal Communications Commission ("FCC") in
the same manner as other telecommunications services. For example, America's
Carriers Telecommunications Association ("ACTA") has filed a petition with the
FCC for this purpose. In addition, because the growing popularity and use of the
Internet has burdened the existing telecommunications infrastructure and many
areas with high Internet use have begun to experience interruptions in telephone
service, local telephone carriers, such as Pacific Bell, have petitioned the FCC
to regulate ISPs and OSPs in a manner similar to long distance telephone
carriers and to impose access fees on the ISPs and OSPs. If either of these
petitions is granted, or the relief sought therein is otherwise granted, the
costs of communicating on the Internet could increase substantially, potentially
slowing the growth in use of the Internet, which could in turn decrease the
demand for our productions, products and services.
A number of proposals have been made at various federal, state and local
agencies that would impose additional taxes on the sale of goods and services on
the Internet. Such proposals, if adopted, could substantially impair the growth
of e-commerce, and could adversely affect our opportunity to derive financial
benefit from such activities. In addition, a number of other countries have
announced or are considering additional regulation in many of the foregoing
areas. Such laws and regulations, if enacted in the United States or abroad,
could fundamentally impair our ability to attract corporate participation in our
business, or substantially increase the cost of doing so, which would have a
material adverse effect on our business, operating results, and financial
condition. Moreover, the applicability to the Internet of the existing laws
governing issues such as property ownership, copyright, defamation, obscenity,
and personal privacy is uncertain, and we may be subject to claims that our
products and services violate such laws. Any such new legislation or regulation
in the United States or abroad or the application of existing laws and
regulations to the Internet could have a material adverse effect on our
business, operating results, and financial condition.
Website Security and Privacy. Concerns about transactional security may hinder
our sale of products and services and e-commerce in general. A significant
barrier to e-commerce is the secure transmission of confidential information on
public networks. Any breach in our proposed security could expose us to a risk
of loss or litigation and possible liability. We may rely on encryption and
authentication technology licensed from third parties to provide secure
transmission of confidential information. As a result of advances in computer
capabilities, new discoveries in the field of cryptography or other
developments, a compromise or breach of the algorithms we anticipate using to
protect customer transaction data may occur. A compromise of our security could
severely harm our business. A party who is able to circumvent our security
measures could misappropriate proprietary information, including customer credit
card information, or cause interruptions in the operation of our proposed
website. We may be required to spend significant funds and other resources to
protect against the threat of security breaches or to alleviate problems caused
by these breaches. However, protection may not be available at a reasonable
price or at all. Concerns regarding the security of e-commerce and the privacy
of users may also inhibit the growth of the Internet as a means of conducting
commercial transactions.
Our efforts to sell products and services may expose us to product liability
claims. We have no experience in the sale of products online and the development
of relationships with manufacturers or suppliers of these products. Persons who
purchase products may sue us if any of the products purchased from our website
are defective, fail to perform properly or injure the user. Liability claims
could require us to spend significant time and money in litigation or to pay
significant damages. As a result, any such claims, whether or not successful,
could severely harm our business.
Our success and ability to compete may be significantly dependent on our
proprietary content. We anticipate that we will rely exclusively on copyright
law to protect our proprietary content. Although we will take action to protect
our proprietary
23
<PAGE>
rights, that action may not be adequate to prevent the infringement or
misappropriation of the content of our website. Infringement or misappropriation
of such content or intellectual property could materially harm our business. We
may be required to obtain licenses from others to refine, develop, market and
deliver new services. We cannot make assurances that we will be able to obtain
any such licenses on commercially reasonable terms, or at all, or that rights
granted pursuant to any licenses will be valid and enforceable.
Because of the global nature of the Internet, it is possible that, although
transmissions by us over the Internet originate primarily in the province of
British Columbia, the governments of other states and foreign countries might
attempt to regulate our transmissions or prosecute us for violations of their
laws. There can be no assurance that violations of local laws will not be
alleged or charged by state or foreign governments, that we might not
unintentionally violate such law or that such laws will not be modified, or new
laws enacted, in the future. Any of the foregoing developments could have a
material adverse effect on our business, results of operations, and financial
condition.
Item 18. Description of Property
Property held by the Company. As of the date specified in the following table,
we held the following property:
================================================================================
Property February 15, 2000
- --------------------------------------------------------------------------------
Cash $2,449.00
- --------------------------------------------------------------------------------
Furniture and Equipment $0.00
================================================================================
Our Facilities. At this time, we occupy facilities provided by EZE Biz Software
Inc., a British Columbia corporation, for nominal consideration. The office
space is located at 1555 McKenzie Street, Suite 125, in Victoria, British
Columbia, Canada.
Item 19. Certain Relationships and Related Transactions
Conflicts Related to Other Business Activities. The persons serving as officers
and directors of the Company have existing responsibilities and, in the future,
may have additional responsibilities, to provide management and services to
other entities in addition to the Company. As a result, conflicts of interest
between the Company and the other activities of those persons may occur from
time to time.
We will attempt to resolve any such conflicts of interest in favor of the
Company. The officers and directors of the Company are accountable to the
Company and its shareholders as fiduciaries, which requires that such officers
and directors exercise good faith and integrity in handling our affairs. A
shareholder may be able to institute legal action on behalf of the Company or on
behalf of that shareholder and all other similarly situated shareholders to
recover damages or for other relief in cases of the resolution of conflicts in
any manner prejudicial to the Company.
Related Party Transactions. There have been no related party transactions,
except for the following:
EZE Biz Software Inc., a British Columbia corporation, permits the Company to
use the EZEBiz Company Manager for testing of its website and provides office
space to the Company for nominal consideration. The Company is currently
negotiating the terms of a software licensing agreement with EZE Biz Software
Inc., a British Columbia corporation, and anticipates that it will be the
exclusive distributor of the EZEBiz Company Manager in the United States.
Stephen Gates, President, Secretary and a director of the Company, is also the
Chief Financial Officer of the EZE Biz Software Inc., a British Columbia
corporation.
Item 20. Market for Common Equity and Related Stockholder Matters
The Company's securities are not listed for trading on any exchange or quotation
service and, as such, we are not required to comply with the timely disclosure
policies of any exchange or quotation service. The requirements to which the
Company
24
<PAGE>
would be subject if the Company's securities were so listed typically include
the timely disclosure of a material change or fact with respect to the affairs
of the Company and the making of required filings. We will be a reporting
company on the effective date of the Registration Statement on this Form SB-2
and we will be required to file quarterly, annual and other reports with the
Commission.
There have been no cash dividends declared on our common stock in the last two
fiscal years. Dividends are declared at the sole discretion of our Board of
Directors.
Item 21. Executive Compensation - Remuneration of Directors and Officers.
Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to the Company payable to
our Chief Executive Officer and our other executive officers whose total annual
salary and bonus is anticipated to exceed $50,000 during the year ending
December 31, 2000. Our Board of Directors may adopt an incentive stock option
plan for our executive officers which would result in additional compensation.
<TABLE>
<CAPTION>
==================================================================================================================
Name and Principal Position Year Annual Salary $) Bonus ($) Other Annual All Other Compensation
Compensation ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stephen Gates, President 2000 None None None None
==================================================================================================================
</TABLE>
Compensation of Directors. Our directors who are also employees receive no extra
compensation for their service on our Board of Directors.
Employment Contracts. We anticipate that we will enter into an employment
contract with Stephen Gates.
Specified below, in tabular form, is the aggregate annual remuneration of the
Company's Chief Executive Officer and the four (4) most highly compensated
executive officers other than the Chief Executive Officer who were serving as
executive officers at the end of our last completed fiscal year.
<TABLE>
<CAPTION>
==================================================================================================================
Name of individual or Identity of Group Capacities in which remuneration was Aggregate remuneration
received
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
All Executive Officers None None
==================================================================================================================
</TABLE>
Item 22. Financial Statements
Audited Financial Statements of
Ezebiz software inc.
As at December 31, 1999
<PAGE>
[LETTERHEAD]
AUDITORS' REPORT TO THE DIRECTORS
We have audited the balance sheet of EZEBiz Software Inc. as at December 31,
1999 and the related statements of loss and deficit and cash flows for the
period from incorporation on November 10, 1998 to December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1999 and the
results of its operations and its cash flows for the period from incorporation
on November 10, 1998 to December 31, 1999 in accordance with generally accepted
accounting principles in the United States.
/s/ KPMG LLP
Chartered Accountants
Victoria, Canada
February 16, 2000
<PAGE>
EZEBIZ SOFTWARE INC.
(a company in the development stage)
Balance Sheet
(expressed in United States dollars)
December 31, 1999
- --------------------------------------------------------------------------------
Assets
Cash $ 2,449
- --------------------------------------------------------------------------------
$ 2,449
================================================================================
Liabilities
Accrued liabilities $ 1,350
Due to EZEBiz Software Inc. (note 1) 2,540
- --------------------------------------------------------------------------------
3,890
Deficiency in Assets
Capital stock:
Authorized:
100,000,000 Common shares, with a par value of $0.001
10,000,000 Preferred, non-voting shares with a par value
of $0.001
Issued:
1 Common share 1
Deficit accumulated during development stage 1,442)
- --------------------------------------------------------------------------------
(1,441)
Contingency (note 2)
- --------------------------------------------------------------------------------
$ 2,449
================================================================================
See accompanying notes to financial statements.
<PAGE>
EZEBIZ SOFTWARE INC.
(a company in the development stage)
Statement of Loss and Deficit
(expressed in U.S. dollars)
Period from incorporation on November 10, 1998 to December 31, 1999
- --------------------------------------------------------------------------------
Incorporation and start-up costs, being
loss for the period $1,442
- --------------------------------------------------------------------------------
Deficit, end of period $1,442
================================================================================
See accompanying notes to financial statements
<PAGE>
EZEBIZ SOFTWARE INC.
(a company in the development stage)
Statement of Cash Flows
(expressed in U.S. dollars)
Period from incorporation on November 10, 1998 to December 31, 1999
- --------------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Loss for the period $(1,442)
Increase in accrued liabilities 1,350
- --------------------------------------------------------------------------------
92
Financing:
Advances from affiliated company 2,540
Issue of shares 1
- --------------------------------------------------------------------------------
2,541
- --------------------------------------------------------------------------------
Increase in cash, being cash, end of period $ 2,449
================================================================================
See accompanying notes to financial statements.
<PAGE>
EZEBIz SOFTWARE INC.
(a company in the development stage)
Notes to Financial Statements
Period ended December 31, 1999
- --------------------------------------------------------------------------------
EZEBiz Software Inc. was incorporated in the State of Delaware on November
10, 1998.
1. Due to affiliated company:
The amount due to EZEBiz Software Inc., an affiliated company based in
Canada, is unsecured, bears no interest and has no set terms of repayment.
2. Contingency:
Uncertainty due to the Year 2000 Issue:
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. Although the change in date has
occurred, it is not possible to conclude that all aspects of the Year 2000
Issue that may affect the company, including those related to customers,
suppliers, or other third parties, have been fully resolved.
3. Subsequent events:
(a) On January 14, 2000, the company resolved to issue 3,000,000 common
shares for issue proceeds of $3,000.
(b) In February of 2000 the company filed a registration statement for the
proposed issue of 2,000,000 common shares, on a best efforts basis,
for proposed aggregate proceeds before issue costs of $6,000,000.
If the issue of common shares is completed as contemplated, the
company will record a cost on its statement of loss and deficit equal
to the difference between the fair value (based on the final selling
price of the shares proposed to be issued) of the initial 3,000,000
common shares issued and the initial consideration paid of $3,000.
Item 23. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with our accountants since the
formation of the Company required to be disclosed pursuant to Item 304 of
Regulation S-B.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby has
been passed upon for the Company by Stepp & Beauchamp LLP, located in Newport
Beach, California.
25
<PAGE>
EXPERTS
The financial statements of the Company for the period ended December 31, 1999
appearing in this Prospectus (which is part of a Registration Statement) have
been audited by KPMG LLP, and are included in reliance upon such reports given
upon the authority of KPMG LLP, as experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed a Registration Statement on Form SB-2 with the Commission pursuant
to the 1933 Act with respect to the Common Stock offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement
on Form SB-2 and the exhibits and schedules to the Registration Statement on
Form SB-2. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement on Form
SB-2 and the exhibits and schedules filed as a part of the Registration
Statement on Form SB-2. Statements contained in this Prospectus concerning the
contents of any contract or any other document referred to are not necessarily
complete, and reference is made in each instance to the copy of such contract or
document filed as an exhibit to the Registration Statement on Form SB-2. Each
such statement is qualified in all respects by such reference to such exhibit.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Article Seven of our Certificate of Incorporation provides, among other things,
that directors of the Company shall not be personally liable to the Company or
its shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of such director's duty of
loyalty to the Company or its security holders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) liability for unlawful payments of dividends or unlawful stock
purchase or redemption by the corporation; or (iv) for any transaction from
which such director derived any improper personal benefit. Accordingly, the
directors of the Company may have no liability to the shareholders of the
Company for any mistakes or errors of judgment or for any act of omission,
unless such act or omission involves intentional misconduct, fraud, or a knowing
violation of law or results in unlawful distributions to the shareholders of the
Company.
Indemnification Agreements. We anticipate that we will enter into
indemnification agreements with each of our executive officers pursuant to which
we will agree to indemnify each such person for all expenses and liabilities,
including criminal monetary judgments, penalties and fines, incurred by such
person in connection with any criminal or civil action brought or threatened
against such person by reason of such person being or having been officer or
director or employee of the Company. In order to be entitled to indemnification
by the Company, such person must have acted in good faith and in a manner such
person believed to be in our best interests and, with respect to criminal
actions, such person must have had no reasonable cause to believe his or her
conduct was unlawful.
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, INDEMNIFICATION FOR
LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933 IS CONTRARY TO PUBLIC
POLICY AND, THEREFORE, UNENFORCEABLE.
Item 25. Other Expenses of Issuance and Distribution
We will pay all expenses in connection with the registration and sale of the
Shares. The estimated expenses of issuance and distribution are set forth below.
Registration Fees Approximately $1,056.00
Transfer Agent Fees Approximately $3,944.00
Costs of Printing and Engraving Approximately $20,000.00
Legal Fees Approximately $60,000.00
26
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Accounting Fees Approximately $35,000.00
Item 26. Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three (3)
years which would be required to be disclosed pursuant to Item 701 of Regulation
S-B, except for the following:
On or about January 14, 2000, we authorized the issuance of 3,000,000 shares of
our $.001 par value common stock to Stephen Gates, Stuart Bristow and Dr. C.P.
Innis, in reliance on the exemption specified by the provisions of Section 4(2)
of the Securities Act of 1933. The net proceeds to the Company were $3,000.
Item 27. Exhibits.
Copies of the following documents are filed with this Registration
Statement, Form SB-2, as exhibits:
Exhibit No.
1. Underwriting Agreement (not applicable)
3.1 Certificate of Incorporation (Charter Document)
3.2 Amendment to Certificate of Incorporation (Charter Document)
3.3 Bylaws
5. Opinion Re: Legality (not applicable)
8. Opinion Re: Tax Matters (not applicable)
11. Statement Re: Computation of Per Share Earnings*
23.1 Consent of Auditors
23.2 Consent of Counsel (not applicable)
24. Power of Attorney is included on the Signature Page of the Registration
Statement
27. Financial Data Schedule
* Included in Financial Statements
Item 28. Undertakings.
A. Insofar as indemnification for liabilities arising under the 1933 Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
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B. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
1933 Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) (Section 230.424(b) of Regulation S-B)
if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement; and
(iii)To include any additional or changed material information with
respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the 1933 Act,
each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
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<PAGE>
SIGNATURES
In accordance with the requirements of the 1933 Act, as amended, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form SB-2 and authorized this Registration Statement
to be signed on its behalf by the undersigned, in the City of Victoria, British
Columbia, on February 17, 2000.
EZEBiz Software, Inc.,
a Delaware corporation
By: /s/
------------------------------
Stephen Gates
Its: President
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POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and hereby
authorizes Stephen Gates with the full power of substitution, as
attorney-in-fact, to sign in such person's behalf, individually and in each
capacity stated below, and to file any amendments, including post-effective
amendments to this Registration Statement.
In accordance with the requirements of the 1933 Act, this Registration Statement
was signed by the following persons in the capacities and on the dates stated.
EZEBIZ SOFTWARE, INC.
/s/ February 17, 2000
- ----------------------------
Stephen Gates
President and Director
/s/ February 17, 2000
- ----------------------------
David Munday
Director
/s/ February 17, 2000
- ----------------------------
Kenneth Sherwood
Director
30
CERTIFICATE OF INCORPORATION
OF
EZE BIZ SOFTWARE INC.
I, the undersigned, for the purposes of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
execute this Certificate of Incorporation and do hereby certify as follows:
FIRST. The name of this corporation is EZE Biz Software Inc..
SECOND. The address of this corporation's registered office in the State of
Delaware is One Rodney Square, 10th Floor, Tenth and King Streets, in the City
of Wilmington, County of New Castle, 19801. The name of its registered agent at
such address is RL&F Service Corp.
THIRD. The purpose of this corporation is to engage in any lawful act or
activity for which corporations may be organized pursuant to the General
Corporation Law of the State of Delaware.
FOURTH. The total number of shares of stock which this corporation shall
have authority to issue is one hundred ten million (110,000,000) with a par
value of $.001 per share amounting to $110,000.00. One hundred million
(100,000,000) of those shares are Common Stock and ten million (10,000,000) of
those shares are Preferred Stock. Each share of Common Stock shall entitle the
holder thereof to one vote, in person or by proxy, on any matter on which action
of the stockholders of this corporation is sought. The holders of shares of
Preferred Stock shall have no right to vote such shares, except (i) determined
by the Board of Directors of this corporation in accordance with the provisions
of Section (3) of ARTICLE FIFTH of this Certificate of Incorporation, or (ii) as
otherwise provided by the Delaware General Corporation Law, as amended from time
to time.
FIFTH. The Board of Directors of this corporation shall be, and hereby is
authorized and empowered, subject to limitations prescribed by law and the
provisions of the Article FOURTH of this Certificate of Incorporation, to
provide for the issuance of the shares of Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations or restrictions of each
such series. The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
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(1) The number of shares constituting such series and the distinctive
designation of such series;
(2) The dividend rate on the shares of such series, whether dividends shall
be cumulative, and, if so, from which date or dates, and the relative rights of
priority, if any, of payment of dividends on shares of such series;
(3) Whether such series shall have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights;
(4) Whether such series shall have conversion privileges, and, if so, the
terms and conditions of such conversion privileges, including provision for
adjustment of the conversion rate, in such events as the Board of Directors
shall determine;
(5) Whether or not the shares of such series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or date upon
or after which those shares shall be redeemable, and the amount per share
payable in the event of redemption, which amount may vary in different
circumstances and at different redemption dates;
(6) Whether that series shall have a sinking fund for the redemption or
purchase of shares of such series, and, if so, the terms and amount of such
sinking fund;
(7) The rights of the shares of such series in the event of voluntary or
involuntary liquidation, dissolution or winding up of this corporation, and the
relative rights of priority, if any, of payment of shares of such series; and
(8) Any other relative rights, preferences and limitations of such series.
Dividends on issued and outstanding shares of Preferred Stock shall be paid
or de clared and set apart for payment prior to any dividends shall be paid or
declared and set apart for payment on the shares of Common Stock with respect to
the same dividend period.
If, upon any voluntary or involuntary liquidation, dissolution or winding
up of this corporation, the assets of this corporation available for
distribution to holders of shares of Preferred Stock of all series shall be
insufficient to pay such holders the full and complete preferential amount to
which such holders are entitled, then such assets shall be distributed ratably
among the shares of all series of Preferred Stock in accordance with the
respective preferential amounts, including unpaid cumulative dividends, if any,
payable with respect thereto.
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<PAGE>
SIXTH. The incorporator of this corporation is Thomas E. Stepp, Jr., whose
mailing address is 1301 Dove Street, Suite 460, Newport Beach, California 92660.
SEVENTH. Each director of this corporation shall not be personally liable
to this corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of such
director's duty of loyalty to this corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which such director derived
any improper personal benefit. In the event that the Delaware General
Corporation Law is amended to authorize corporate action further eliminating or
limited the personal liability of directors of this corporation, then the
liability of each director of this corporation shall be eliminated or limited to
the fullest and most complete extent permitted by the Delaware General
Corporation Law, as so amended.
Any repeal or modification of this article by the stockholders of this
corporation shall not affect adversely any right or protection of any director
of this corporation existing at the time of such repeal or modification.
EIGHTH. This corporation reserves the right at any time, and from time to
time, to amend, alter, change or repeal any provision specified in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at any such time then in force may be added or inserted, in
the manner now or hereafter prescribed by law; and all rights, preferences and
privileges of whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Certificate of Incorporation in
its present form or as hereafter amended are granted subject to the rights
reserved in this article.
NINTH. The powers of the incorporator are to terminate upon the filing of
this Certificate of Incorporation. The name and mailing address of the person
who is to serve as the initial director of this corporation until the first
annual meeting of stockholders of this corporation, or until his successor is
elected and qualifies, is:
Thomas E. Stepp, Jr.
1301 Dove Street, Suite 460
Newport Beach, California 92660
TENTH. (a) The number of directors constituting the entire Board of
Directors of this corporation shall be not less than three (3) nor more than as
fixed from time to time by vote of a majority of the entire Board of Directors
of this corporation; provided,
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<PAGE>
however, that the number of directors shall not be reduced so as to shorten the
term of any director at the time in office, and; provided, further, that the
number of directors constituting the entire Board of Directors of this
corporation shall be three (3) until otherwise fixed by a majority of the entire
Board of Directors of this corporation.
(b) The Board of Directors of this corporation shall be divided into three
(3) classes, as nearly equal in numbers as the then total number of directors
constituting the entire Board of Directors permits, with the term of office of
one class expiring each year. At the first annual meeting of stockholders of
this corporation directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting of those stockholders,
directors of the second class shall be elected to hold office for a term expir
ing at the second succeeding annual meeting, and directors of the third class
shall be elected to hold office for a term expiring at the third succeeding
annual meeting of those stockholders. Any vacancies in the Board of Directors
for any reason, and any director ships resulting from any increase in the number
of directors, may be filled by the Board of Directors, acting by a majority of
the directors then in office, although less than a quorum, and any directors so
chosen shall hold office until the next election of the class for which such
directors shall have been chosen and until their successors shall be elected and
qualified. Notwithstanding the foregoing, and except as otherwise required by
law, whenever the holders of any one or more series of Preferred Stock shall
have the right, voting separately as a class, to elect one or more directors of
this corporation, the terms of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of stockholders. Subject to
the foregoing, at each annual meeting of stockholders the successors to the
class of directors whose terms shall then expire shall be elected to hold office
for a term expiring at the third succeeding annual meeting of stockholders.
(c) Notwithstanding any other provisions of this Certificate of
Incorporation or the bylaws of this corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, this Certificate of
Incorporation or the bylaws of this corporation), any director or the entire
Board of Directors of this Corporation may be removed at any time, but only for
cause and only by the affirmative vote of the holders of seventy-five percent
(75%) or more of the outstanding shares of capital stock of this corporation
entitled to vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders of this corporation
called for that purpose. Notwithstanding the foregoing, and except as otherwise
required by law, whenever the holders of any one or more series of Preferred
Stock shall have the right, voting separately as a class, to elect one or more
directors of this corporation, the provisions of section (c) of this article
shall not apply with respect to the director or directors elected by such
holders of Preferred Stock.
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<PAGE>
ELEVENTH. Subject to the provisions of any series of Preferred Stock of
this corporation which may at the time be issued and outstanding and convertible
into shares of Common Stock of this corporation, the affirmative vote of at
least two-thirds (2/3) of the outstanding shares of Common Stock held by
stockholders of this corporation other than the "related person" (as defined
later in this Certificate of Incorporation), shall be required for the approval
or authorization of any "business combination" (as defined later in this
Certificate of Incorporation) of this corporation with any related person;
provided, however, that such voting requirement shall not be applicable if:
(1) The business combination was approved by the Board of Directors of
this corporation either (A) prior to the acquisition by such related person
of the beneficial ownership of twenty percent (20%) or requisition the
outstanding shares of the Common Stock of this corporation, or (B) after
such acquisition, but only during such time as such related person has
sought and obtained the unanimous approval by the Board of Directors of
this corporation of such acquisition of more than 20% of the Common Stock
prior to such acquisition being consummated; or
(2) The business combination is solely between this corporation and
another corporation, fifty percent (50%) or more of the voting stock of
which is owned by a related person; provided, however, that each
stockholder of this corporation receives the same type of consideration in
such transaction in proportion to his or her stockholdings; or
(3) All of the following conditions are satisfied:
(A) The cash or fair market value of the property, securities or
other consideration to be received per share by holders of Common
Stock of this corporation in the business combination is not less than
the higher of (i) the highest per share price (including brokerage
commissions, soliciting dealers fees, dealer-management compensation,
and other expenses, including, but not limited to, costs of newspaper
advertisements, printing expenses and attorneys' fees) paid by such
related person in acquiring any of its holdings of this corporation's
Common Stock or (ii) an amount which has the same or a greater
percentage relationship to the market price of this corporation's
Common Stock immediately prior to the commencement of acquisition of
this corporation's Common Stock by such related person, but in no
event in excess of two (2) times the highest per share price
determined in clause (i), above; and
(B) After becoming a related person and prior to the consummation
of such business combination, (i) such related person shall not have
acquired
5
<PAGE>
any newly issued shares of capital stock, directly or indirectly, from
this corporation (except upon conversion of convertible securities
acquired by it prior to becoming a related person or upon compliance
with the provision of this article or as a result of a pro rata stock
dividend or stock split) and (ii) such related person shall not have
received the benefit, directly or indirectly, (except proportionately
as a stockholder) of any loans, advances, guarantees, pledges or other
financial assistance or tax credits provided by this corporation, or
made any major changes in this corporation's business or equity
capital structure; and
(C) A proxy statement complying with the requirements of the Se
curities Exchange Act of 1934, whether or not this corporation is then
subject to such requirements, shall be mailed to the public
stockholders of this corporation for the purpose of soliciting
stockholder approval of such business combination and shall contain at
the front thereof, in a prominent place (i) any recommendations as to
the advisability (or inadvisability) of the business combination which
the continuing directors, or any outside directors, may determine to
specify, and (ii) the opinion of a reputable national investment
banking firm as to the fairness (or not) of the terms of such business
combination, from the point of view of the remaining public
stockholders of this corporation (such investment banking firm to be
engaged solely on behalf of the remaining public stockholders, to be
paid a reasonable fee for its services by this corporation upon
receipt of such opinion, to be a reputable national investment banking
firm which has not previously been associated with such related person
and, if there are at the time any such directors, to be selected by a
majority of the continuing directors and outside directors).
For purposes of this article:
(1) The term "business combination" shall be defined as and mean (a) any
merger or consolidation of this corporation with or into a related person; (b)
any sale, lease, exchange, transfer or other disposition, including, without
limitation, a mortgage or any other security device, of all or any substantial
part of the assets of this corporation, including, without limitation, any
voting securities of a subsidiary, or of a subsidiary, to a related person; (c)
any merger or consolidation of a related person with or into this corporation or
a subsidiary of this corporation; (d) any sale, lease exchange, transfer or
other disposition of all or any substantial part of the assets of a related
person to this corporation or a subsidiary of this corporation; (e) the issuance
of any securities of this corporation or a subsidiary of this corporation to a
related person; (f) the acquisition by this corporation or a subsidiary of this
corporation of any securities of a related person;
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(g) any reclassification of Common Stock of this corporation, or any
recapitalization involving Common Stock of this corporation, consummated within
five (5) years after a related person becomes a related person, and (h) any
agreement, contract or other arrangement providing for any of the transactions
described in this definition of business combination.
(2) The term "related person" shall be defined as and mean and include any
individual, corporation, trust, association, partnership or other person or
entity which, together with their "affiliates" and "associates" (defined later
in this Certificate of Incorporation), "beneficially" owns (as this term is
defined in Rule 13d-3 of the General Rules and Regulations pursuant to the
Securities Exchange Act of 1934), in the aggregate 20% or more of the
outstanding shares of the Common Stock of this corporation, and any "affiliate"
or "associate" (as those terms are defined in Rule 12b-2 pursuant to the
Securities Exchange Act of 1934) of any such individual, corporation, trust,
association, partnership or other person or entity;
(3) The term "substantial part" shall be defined as and mean more than ten
percent (10%) of the total assets of the corporation in question, as of the end
of its most recent fis cal year ending prior to the time the determination is
being made;
(4) Without limitation, any shares of Common Stock of this corporation
which any related person has the right to acquire pursuant to any agreement, or
upon exercise of conversion rights, warrants or options, or otherwise, shall be
deemed beneficially owned by such related person;
(5) For the purposes of this article, the term "other consideration to be
received" shall include, without limitation, Common Stock of this corporation
retained by its existing public stockholders in the event of a business
combination with such related person pursuant to which this corporation is the
surviving corporation; and
(6) With respect to any proposed business combination, the term "continuing
director" shall be defined as and mean a director who was a member of the Board
of Di rectors of this corporation immediately prior to the time that any related
person involved in the proposed business combination acquired twenty percent
(20%) or more of the out standing shares of Common Stock of this corporation,
and the term "outside director" shall be defined as and mean a director who is
not (a) an officer or employee of this corporation or any relative of an officer
or employee, (b) a related person or an officer, director employee, associate or
affiliate of a related person, or a relative of any of the foregoing, or (c) a
person having a direct or indirect material business relationship with this
corporation.
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TWELFTH. No action required to be taken or which may be taken at any annual
or special meeting of stockholders of this corporation may be taken without a
meeting, and the power of stockholders of this corporation to consent in
writing, without a meeting, to the taking of any action is specifically denied.
THIRTEENTH. No special meeting of the stockholders of this corporation may
be called by any of the stockholders of this corporation, and the power of
stockholders of this corporation to call such a meeting is specifically denied.
FOURTEENTH. All of the powers of this corporation, insofar as the same may
be lawfully vested by this Certificate of Incorporation in the Board of
Directors, are hereby conferred upon the Board of Directors of this corporation.
In furtherance and not in limitation of that power, the Board of Directors shall
have the power to make, adopt, alter, amend and repeal from time to time bylaws
of this corporation, subject to the right of the shareholders entitled to vote
with respect thereto to adopt, alter, amend and repeal bylaws made by the Board
of Directors; provided, however, that bylaws shall not be adopted, altered,
amended or repealed by the stockholders of this corporation, except by the vote
of the holders of not less than two thirds (2/3) of the outstanding shares of
stock entitled to vote upon the election of directors.
The undersigned incorporator hereby acknowledges that the foregoing
Certificate of Incorporation is his act and deed on this 2nd day of November,
1998.
Incorporator:
/s/ Thomas E. Stepp, Jr.
- ---------------------------
Thomas E. Stepp, Jr.
8
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF EZE BIZ SOFTWARE, INC.,
a Delaware corporation
EZE Biz Software, Inc., a corporation organized under the General
Corporation Law of Delaware (the "Corporation"), does hereby certify:
FIRST: The Corporation has not received any payment for any of its capital
stock.
SECOND: The amendment to the Corporation's Certificate of Incorporation set
forth in the following resolution approved by a majority of the Corporation's
Board of Directors and was duly adopted in accordance with the provisions of the
Section 241 of the General Corporation Law of Delaware.
"RESOLVED, that the Certificate of Incorporation of the Corporation be
amended by striking Article FIRST in its entirety and replacing therefor:
'FIRST: The name of the corporation is EZEBiz Software Inc.' "
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed and attested by its duly authorized officers.
Dated: June 29, 1999 EZEBiz Software Inc.
/s/ Dennis B. Bristow
-------------------------
By: Dennis B. Bristow
Its: President
ATTEST:
/s/ [Illegible]
---------------------------
By:
Its: Secretary
1
BYLAWS
OF
EZE BIZ SOFTWARE INC.
ARTICLE I
Offices
Section 1. Registered Office. The registered office of EZE Biz Software
Inc. ("Corporation") shall be maintained at such locations within the State of
Delaware as the Board of Directors from time to time shall designate. The
Corporation shall maintain in charge of such registered office an agent upon
whom process against the Corporation may be served.
Section 2. Other Offices. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors from time to time may determine or the
business of the Corporation may require.
ARTICLE II
Meetings of Shareholders
Section I. Annual Meetings. Subject to the provisions of these Bylaws, the
annual meeting of the shareholders for the election of directors and for the
transaction of such other business as may properly come before such meeting
shall be held on such date and at such time as shall be designated by the Board
of Directors and stated in the notice of such meeting. If the election for
directors shall not be held on the day designated therefor or at any adjournment
thereof, the directors shall cause such election to be held at a special meeting
of the shareholders as soon thereafter as may be convenient. At such special
meeting, subject to the provisions of these Bylaws, the shareholders may elect
the directors and transact any other business with the same force and effect as
at an annual meeting duly called and held.
Section 2. Special Meetings. A special meeting of the shareholders for any
purpose or purposes, unless otherwise prescribed by statute, may be called at
any time and shall be called by the President or Secretary, upon the direction
of the Board of Directors, or upon the written request of a shareholder or
shareholders holding of record at least ten percent (10%) of the outstanding
shares of the Corporation entitled to vote at such a meeting.
Section 3. Place of Meetings. All meetings of the shareholders shall be
held at the
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principal place of business of the Corporation or at such other place, within or
without the State of Delaware, as shall be designated by the Board of Directors
and stated in the notice of each such meeting.
Section 4. Notice of Meetings. Except as otherwise provided by law, notice
of each meeting of the shareholders, whether annual, special, or adjourned,
shall be given, not less than ten (10) days nor more than sixty (60) days before
the day on which such meeting is to be held, to each shareholder of record
entitled to vote at such meeting by delivering a written or printed notice
thereof to such shareholder personally, by facsimile machine, or by mailing such
notice in a postage prepaid envelope addressed to such shareholder at the post
office address furnished by such shareholder to the Secretary for such purpose,
or, if such shareholder shall not have furnished to the Secretary an address for
such purpose, then at the address of such shareholder last known to the
Secretary. Except when expressly required by law, no publication of any notice
of a meeting of shareholders shall be required. Notice of any meeting of
shareholders shall not be required to be given to any shareholder who shall
attend such meeting in person or by proxy. If any shareholder shall in person or
by proxy waive notice, in writing, of such meeting, whether before or after such
meeting, notice thereof need not be given to such shareholder. Notice of any
adjourned meeting of the shareholders shall not be required to be given, except
when expressly required by law.
Section 5. Quorum. At each meeting of the shareholders, the presence in
person or by proxy of shareholders holding of record a majority of the
outstanding shares entitled to vote at such meeting shall be necessary and
sufficient to constitute a quorum for the transaction of business. In the
absence of a quorum, the shareholders entitled to vote who are present in person
or by proxy at the time and place of any meeting, or, if no shareholder entitled
to vote is so present in person or by proxy, any officer entitled to preside at
or act as secretary of such meeting may adjourn such meeting from time to time,
without notice other than an announcement at such meeting, until a quorum shall
be present. At any such adjourned meeting at which a quorum may be present, any
business may be transacted which might have been transacted at the meeting as
originally called.
Section 6. Organization. At every meeting of the shareholders, the
President, or, in his or her absence, a Vice President, or, in the absence of
the President and all of the Vice Presidents, a chairman chosen by a majority in
interest of the shareholders present in person or by proxy and entitled to vote
thereat, shall act as chairman. The Secretary, or, in his or her absence, an
Assistant Secretary, shall act as secretary at all meetings of the shareholders.
In the absence from any such meeting of the Secretary or an Assistant Secretary,
the chairman may appoint any person to act as secretary of such meeting.
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Section 7. Business and Order of Business. Subject to the provisions of
these Bylaws, at each meeting of the shareholders, such business may be
transacted as may properly be brought before such meeting.
Section 8. Voting. At each meeting of the shareholders, each shareholder
shall be entitled to one vote in person or by proxy for each share of the
Corporation having voting rights registered in his or her name on the books of
the Corporation at the close of business on the day next preceding the day on
which notice of such meeting was given, or, if no notice was given, on the day
next preceding the day on which such meeting is held, except when, pursuant to
the provisions of Section 7 of Article VII of these Bylaws, a date shall have
been fixed as a record date for the determination of the shareholders entitled
to vote. Any shareholder entitled to vote may vote in person or by proxy in
writing; provided, however, that no proxy shall be valid after eleven (11)
months after the date of its execution, unless otherwise provided therein. The
presence at any meeting of any shareholder who has given a proxy shall not
revoke such proxy, unless such shareholder shall file written notice of such
revocation with the secretary of such meeting prior to the voting of such proxy.
At each meeting of the shareholders, all matters other than those the
manner of deciding of which is expressly regulated by statute, the Certificate
of Incorporation, or these Bylaws, shall be decided by a majority of the votes
cast by the holders of shares entitled to vote thereon.
The Board of Directors, in advance of any meeting of the shareholders, or
the chairman of such meeting, at such meeting, may appoint one or more
inspectors of election to act at such meeting or any adjournment thereof, but no
inspectors need be appointed unless expressly requested at such meeting by a
shareholder entitled to vote thereat.
Section 9. Conduct of Meetings of Shareholders. Meetings of the
shareholders shall generally follow reasonable and fair procedure. Subject to
the foregoing, the conduct of any meeting and the determination of procedure and
rules shall be within the absolute discretion of the chairman, and there shall
be no appeal from any ruling of the chairman with respect to procedure or rules.
Accordingly, in any meeting of the shareholders, or part thereof, the chairman
shall have the absolute power to determine appropriate rules or to dispense with
theretofore prevailing rules. Without limiting the foregoing, the following
rules shall apply:
(a) Within his or her sole discretion, the chairman of a meeting may
adjourn such meeting by declaring such meeting adjourned. Upon his or
her doing
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so, such meeting shall be immediately adjourned.
(b) The chairman may ask or require that anyone who is not a bona fide
shareholder or proxy leave a meeting.
(c) A resolution or motion shall be considered for vote only if proposed
by a shareholder or duly authorized proxy, and seconded by a person,
who is a shareholder or a duly authorized proxy, other than the person
who proposed the resolution or motion. The chairman may propose any
motion for vote.
(d) The chairman of a meeting may impose any reasonable limits with
respect to participation by shareholders in a meeting, including, but
not limited to, limits on the amount of time at the meeting taken up
by the remarks or questions or any shareholder, limits on the numbers
of questions per shareholder, and limits as to the subject matter and
timing of questions and remarks by shareholders.
Notwithstanding anything in these Bylaws to the contrary, no business shall
be conducted at any meeting of the shareholders except in accordance with the
procedures set forth in this Section 9; provided, however, that nothing in this
Section 9 shall be deemed to preclude discussion by any shareholder as to any
business properly brought before any meeting.
The chairman shall, if the facts warrant, determine, and declare at any
meeting of the shareholders that business was not properly brought before such
meeting in accordance with the provisions of this Section 9, and if he or she
should so determine, he or she shall so declare to such meeting and any such
business not properly brought before such meeting shall not be transacted.
Section 10. Advance Notice of Shareholder Proposed Business at any Meeting
of the Shareholders. To be properly brought before any annual meeting of the
shareholders, business must be either (a) specified in the notice of such
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise properly brought before such meeting by or at the
direction of the Board of Directors, or (c) otherwise properly brought before
such meeting by a shareholder. In addition to any other applicable requirements,
including, but not limited to, requirements imposed by federal and state
securities laws pertaining to proxies, for business to be properly brought
before any meeting by a shareholder, such shareholder must have given timely
notice thereof in writing to the Secretary. To be timely, shareholder's notice
must be delivered
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to or mailed and received at the principal executive offices of the Corporation
not later than the close of business on the 15th day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made, whichever first occurs. A shareholder's notice to the
Secretary shall set forth as to each matter such shareholder proposes to bring
before any meeting of the shareholders (i) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at the meeting, (ii) the name and record address of the shareholder
proposing such business, (iii) the class and number of shares of the Corporation
which are beneficially owned by such shareholder, and (iv) any material
interests of such shareholder in such business.
Notwithstanding anything in these Bylaws to the contrary, no business shall
be conducted at any annual meeting except in accordance with the procedures set
forth in this Section 10. The chairman of such annual meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before such meeting and in accordance with the provisions of
this Section 10, and if he or she should so determine, he or she shall so
declare to such meeting and any such business not properly brought before such
meeting shall not be transacted.
Section 11. Action by Shareholders Without a Meeting. Any action required
or permitted to be taken at a meeting of the shareholders under any provisions
of the Delaware General Corporation Law, the Certificate of Incorporation, or
these Bylaws may be taken without a meeting if all of the shareholders entitled
to vote thereon consent in writing to such action being taken, or, subject to
the provisions of Section 228 of the Delaware General Corporation Law, if the
shareholders who would have been entitled to cast the minimum number of votes
which would be necessary to authorize such action at a meeting at which all of
the shareholders entitled to vote thereon were present and voting shall consent
in writing to such action being taken. Whenever action of the Corporation is so
taken, the consents of the shareholders consenting thereto shall be filed with
the minutes of proceedings of the shareholders.
ARTICLE III
Board of Directors
Section 1. General Powers. The property, affairs, and business of the
Corporation shall be managed by the Board of Directors.
Section 2. Number, Qualifications, and Term of Office. There shall be five
(5) directors constituting the Board of Directors. The directors shall be
elected annually at the
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annual meeting of the shareholders. Each director shall hold office until his or
her successor shall have been elected and qualified, until his or her death,
until he or she shall have resigned in the manner set forth in Section 13 of
this Article III, or until he or she shall have been removed in the manner set
forth in Section 14 of this Article III, whichever shall first occur. Any
director elected to fill a vacancy in the Board of Directors shall be deemed
elected for the unexpired portion of the term of his or her predecessor on the
Board of Directors. Each director, at the time of his or her election, shall be
at least eighteen (18) years of age.
Section 3. Nomination of Directors. (a) Only persons who are nominated in
accordance with the procedures set forth in this section shall be eligible for
election as directors. The Board of Directors, or a duly appointed committee
thereof, shall act as a nominating committee for selecting nominees for election
as directors. Except in the case of a nominee substituted as a result of the
death or incapacity of a nominee of the nominating committee, the nominating
committee shall deliver written nominations to the Secretary at least ninety
(90) days prior to the appropriate date of the previous meeting of shareholders
called for election of directors. Provided such nominating committee makes such
nominations, no nominations for directors, except those made by the nominating
committee, shall be voted upon at the annual meeting unless other nominations by
shareholders are made in accordance with the provisions of this section. No
person shall be elected as a director of the Corporation unless nominated in
accordance with the procedures set forth in this section. Ballots specifying the
names of all persons nominated by the nominating committee and by shareholders
shall be provided for use at the annual meeting.
(b) Nominations of persons for election to the Board of Directors of the
Corporation at an annual meeting of shareholders may be made by any shareholder
entitled to vote for the election of directors at such meeting who complies with
the procedures set forth in this section. Such nominations, other than those
made by the Board of Directors or a nominating committee thereof, shall be made
pursuant to timely notice in writing to the Secretary as set forth in this
section. To be timely, a shareholder's notice shall be delivered to or received
at the principal executive offices of the Corporation not less than ninety (90)
days prior to the appropriate anniversary date of the previous meeting of
shareholders of the Corporation called for the election of directors. Each such
shareholder's notice shall set forth (1) the name and address of the shareholder
who intends to make the nomination and of the person or persons to be nominated;
(2) a representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (3) a description of all arrangements or
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understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (4) such other information
regarding each nominee proposed by such shareholder as would be required to be
disclosed in solicitations of proxies with respect to nominees for election as
directors, pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended, including, but not limited to, information required to be disclosed
by Items 4, 5, 6, and 7 of Schedule 14A; (5) the consent of each nominee to
serve as director of the Corporation if so elected; and (6) the class and number
of shares of stock of the Corporation which are beneficially owned by such
shareholder on the date of such shareholder notice and, to the extent known, by
any other shareholders known by such shareholder to be supporting such nominees
on the date of such shareholder notice. At the request of the Board of
Directors, any person nominated by the Board of Directors, or a nominating
committee thereof, for election as a director shall furnish to the Secretary
that information required to be set forth in a shareholder's notice of
nomination which pertains to the nominee together with the required written
consents, each as described herein.
(c) The Board of Directors may reject any nomination by a shareholder not
timely made in accordance with the requirements of this section. If the Board of
Directors , or a designated committee thereof, determines that the information
provided in a shareholder's notice does not satisfy the informational
requirements of this section in any material aspect, the Secretary shall notify
such shareholder of the deficiency in the notice. The shareholder shall have an
opportunity to cure the deficiency by providing additional information to the
Secretary within such period of time, not to exceed five (5) days from the date
such deficiency notice is given to the shareholder, as the Board of Directors or
such committee shall reasonably determine. If the deficiency is not cured within
such period, or if the Board of Directors or such committee reasonably
determines that the additional information provided by the shareholder, together
with information previously provided, does not satisfy the requirements of this
section in any material respect, then the Board of Directors may reject such
shareholder's nomination. The Secretary shall notify a shareholder in writing
whether his or her nomination has been made in accordance with the time and
informational requirements of this section. Notwithstanding the procedures set
forth in this section, if neither the Board of Directors nor such committee
makes a determination as to the validity of any nominations by a shareholder,
the chairman of such annual meeting shall determine and declare at such annual
meeting whether the nomination was made in accordance with the terms of this
section. If such chairman determines a nomination was made in accordance with
the terms of this section, he or she shall so declare at such annual meeting and
ballots shall be provided for use at the annual meeting with respect to such
nominee. If such chairman determines that a nomination was not
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made in accordance with this section, he or she shall so declare at the annual
meeting and defective nomination shall be disregarded.
Section 4. Election of Directors. At each meeting of the shareholders for
the election of directors, the directors shall be chosen by a plurality of the
votes cast at such election by the holders of shares entitled to vote thereon.
The vote for directors need not be by ballot, unless demanded by a shareholder
entitled to vote thereon at such election and before the voting begins. The
shareholders shall not be entitled to cumulate their votes for directors.
Section 5. Annual Meetings. The annual meeting of the Board of Directors
shall be held in each year immediately after the annual meeting of shareholders,
at such place as the Board of Directors from time to time may fix and, if so
held, no notice of such meeting need be given.
Section 6. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times as the Board of Directors shall determine. If any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting which would otherwise be held on that
day shall be held at said place at the same hour on the next succeeding business
day that is not a legal holiday. Notice of regular meetings need not be given.
Section 7. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the President or any one (1) director. Notice
of each such meeting shall be mailed to each director, addressed to him or her
at his or her residence or usual place of business, at least five (5) days
before the day on which such meeting is to be held, or shall be sent to him or
her at such place by facsimile machine, telegraph, cable, telex, or the
equivalent, or be delivered personally or by telephone, not later than the day
preceding the day on which such meeting is to be held, except that in the event
of an emergency, the President may direct that shorter notice of a special
meeting be given personally or by facsimile machine, telephone, telegraph,
cable, telex, or the equivalent. Neither the business to be transacted nor the
purpose of any such meeting need be specified in such notice. Notice of any
meeting of the Board of Directors need not be given, however, if waived in
writing or by facsimile machine, telegraph, telex, cable, or the equivalent,
either before or after such meeting, or, at the meeting. Any meeting of the
Board of Directors shall be a legal meeting without any notice having been
given, if all the directors shall be present thereat.
Section 8. Place of Meeting. Meetings of the Board of Directors may be held
at
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such place or places within or without the State of Delaware as the Board of
Directors from time to time may designate.
Section 9. Quorum and Manner of Acting. A majority of the directors shall
be required to constitute a quorum for the transaction of business at any
meeting. The act of a majority of the directors present at any meeting while a
quorum is present shall be an act of the Board of Directors. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum be had. Notice of any adjourned meeting shall be given, in
the same manner as notice of special meetings is required to be given, as set
forth in these Bylaws. The directors shall act only as a board and the
individual directors shall have no power as such.
Section 10. Action by Written Consent. Any action required or permitted to
be taken at any meeting of the Board of Directors or any committee thereof may
be taken without a meeting if, prior or subsequent to such action, all members
of the Board of Directors or of such committee, as the case may be, consent
thereto in writing and such written consents are filed with the minutes of the
proceedings of the Board of Directors or such committee. Such consent shall have
the same effect as a unanimous vote of the Board of Directors or such committee
for all purposes and may be stated as such in any certificate or other document.
Section 11. Organization. At each meeting of the Board of Directors, the
President or, in his or her absence, a chairman chosen by a majority of the
directors present, shall act as chairman. The Secretary, or, in his or her
absence, an Assistant Secretary, or, in the absence of the Secretary and the
Assistant Secretaries, any person appointed by the chairman, shall act as
secretary of such meeting.
Section 12. Order of Business. At all meetings of the Board of Directors
business may be transacted in such order as the Chairman of the Board of
Directors may determine.
Section 13. Resignations. Any director of the Corporation may resign at any
time by giving written notice to the President or to the Secretary. The
resignation of any director shall take effect at the time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make such resignation effective.
Section 14. Removal of Directors. Any director may be removed at any time,
either with or without cause, by the shareholders at any regular or special
meeting of the shareholders and the vacancy in the Board of Directors caused
thereby may be filled by
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the shareholders at the same meeting.
Section 15. Vacancies. In addition to a vacancy occurring by removal by the
shareholders, as contemplated by Section 14 of these Bylaws, a vacancy in the
Board of Directors shall occur upon the happening of any of the following
events:
(a) a director dies or resigns:
(b) the shareholders fail to elect the number of directors authorized to
be elected at any meeting of shareholders at which any director is to
be elected;
(c) the Board of Directors by resolution have elected to increase the
number of directors;
(d) the Board of Directors declare vacant the office of any director for
such cause as the Board may determine; or
(e) a vacancy occurs for any other reason. Any vacancy occurring in the
Board of Directors shall be filled by a majority of the remaining
members of the Board of Directors, though less than a quorum, and each
person so elected shall hold office until the next annual meeting of
shareholders and until his or her successor is duly elected and has
qualified.
Section 16. Compensation. The directors shall receive no compensation for
their services as directors.
Section 17. Indemnification of Directors, Officers, Employees and Agents.
The Corporation shall indemnify each director, officer, employee and agent of
the Corporation, as amended by the provisions of Section 145 of the Delaware
General Corporation Law, as set forth in Article VI of these Bylaws.
(b) During the intervals between the meetings of the Board of Directors,
the Executive Committee may exercise all the authority of the Board of
Directors; provided, however, that the Executive Committee shall not have the
power to amend or repeal any resolution of the Board of Directors that by its
terms shall not be subject to amendment or repeal by the Executive Committee,
and the Executive Committee shall not have the authority of the Board of
Directors in reference to (1) approving or proposing to shareholders action
required to be approved by shareholders; (2) filling vacancies on the Board of
Directors or on any of its committees; (3) amending the Certificate of
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Incorporation; (4) adopting, amending or repealing bylaws; or (5) approving a
plan of merger or share exchange not requiring shareholder approval.
(c) The Executive Committee shall meet from time to time on call of the
Chairman of the Board of Directors or of any two (2) or more members of the
Executive Committee. Meetings of the Executive Committee may be held at such
place or places, within or without the State of Delaware, as the Executive
Committee shall determine or as may be specified or fixed in the respective
notices or waivers of such meetings. The Executive Committee may fix its own
rules of procedures, including provision for notice of its meetings. It shall
keep a record of its proceedings and shall report these proceedings to the Board
of Directors at the meeting thereof held next after they have been taken, and
all such proceedings shall be subject to revision or alternation by the Board of
Directors except to the extent that action shall have been taken pursuant to or
in reliance upon such proceedings prior to any such revision or alternation.
(d) The Executive Committee shall act by majority vote of its members;
provided, however, the provisions of Section 20 of these Bylaws notwithstanding,
that contracts or transactions of and by the Corporation in which officers or
directors of the Corporation are interested shall require the affirmative vote
of majority of the disinterested members of the Executive Committee, at a
meeting of the Executive Committee at which the material facts as to the
interest and as to the contract or transaction are disclosed or known to the
members of the Executive Committee prior to the vote.
(e) Members of the Executive Committee may participate in committee
proceedings by means of conference telephone or similar communications equipment
by means of which all persons participating in the proceedings can hear each
other, and such participation shall constitute presence in person at such
proceedings.
(f) The Board of Directors, by resolution adopted in accordance with
Paragraph (a) of this section, may designate one or more directors as alternate
members of the Executive Committee who may act in the place and stead of any
absent member or members at any meeting of said committee.
(g) The Board of Directors, by resolution adopted by a majority of the
entire Board of Directors, may designate one or more additional committees, each
committee to consist of two (2) or more of the directors, which shall have such
name or names and shall have and may exercise such powers of the Board of
Directors, except the powers denied to the Executive Committee, as may be
determined from time to time by the Board of Directors. Such committees shall
provide for their own rules of procedure, subject to the same
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restrictions thereon as provided above for the Executive Committee.
(h) The Board of Directors shall have the power at any time to remove any
member of any committee, with or without cause, and to fill vacancies in and to
dissolve any such committee.
Section 19. Provision Concerning Interested Transactions. Any contract or
other transaction between the Corporation and (i) any director, or (ii) any
corporation, unincorporated association, business trust, estate, partnership,
trust, joint venture, individual or other legal entity ("Legal Entity") (A) in
which any director has a material financial interest or is a general partner, or
(B) of which any director is a director, officer, or trustee (collectively, a
"Conflict Transaction"), shall be valid for all purposes, if the material facts
of such Conflict Transaction and such director's interest were disclosed or
known to the Board of Directors, a committee with authority to act thereon, or
the shareholders entitled to vote thereon, and the Board of Directors, such
committee, or such shareholders authorized, approved, or ratified such Conflict
Transaction. A Conflict Transaction shall be authorized, approved or ratified:
(a) By the Board or Directors or such committee, if it receives
affirmative vote of majority of the directors who have no interest in
the Conflict Transaction, notwithstanding the fact that such majority
may not constitute a quorum or a majority of the Board of Directors or
such committee or a majority of the directors present at such meeting,
and notwithstanding the presence or vote of any director who does have
such an interest; provided, however, that no Conflict Transaction may
be authorized, approved or ratified by a single director; or
(b) By such shareholders, if such Conflict Transaction receives the vote
of a majority of the shares entitled vote, in which vote shares owned
or voted under the control of any director who, or of any Legal Entity
that, has an interest in the Conflict Transaction may be counted. This
section shall not be construed to require authorization, ratification
or approval by the shareholders of any Conflict Transaction, or to
invalidate any Conflict Transaction that would otherwise be valid
under the common and statutory law applicable thereto.
Section 20. Telephonic Meeting. Unless restricted by the Certificate of
Incorporation, any one or more members of the Board of Directors may participate
in a meeting of the Board of Directors by means of a conference telephone or
similar
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communications equipment by means of which all persons participating in the
meeting can hear each other. Participation by such means shall constitute
presence in person at a meeting.
ARTICLE IV
Officers
Section 1. Number. The officers of the Corporation shall be a President, a
Treasurer, and a Secretary, and, in the discretion of the Board of Directors,
one or more Vice Presidents.
Section 2. Election, Qualifications, and Terms of Office. The officers
shall be elected annually by the Board of Directors. Each officer shall hold
office until his or her successor shall have been elected and qualified, or
until his or her earlier death, resignation, or removal in the manner provided
in these Bylaws. Any person may hold more than one office.
Section 3. Resignations. Any officer may resign at any time by giving
written notice of such resignation to the Board of Directors, the President, or
the Secretary. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt of the notice thereof by the Board of
Directors or any such officer.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause shall be filled for
the unexpired portion of the term by the Board of Directors.
Section 5. The President. The President shall be the chief executive
officer of the Corporation. Subject to the direction of the Board of Directors,
the President shall have general charge of the business affairs and property of
the Corporation and general supervision over its officers and agents. If
present, the President shall preside at all meetings of shareholders and at all
meetings of the Board of Directors. The President shall see that all orders and
resolutions of the Board of Directors are carried into effect. The President may
sign, with any other officer "hereunto authorized, share certificates of the
Corporation, the issuance of which shall have been duly authorized, and may sign
and execute, in the name of the Corporation, deeds, mortgages, bonds, contracts,
agreements, and other instruments duly authorized by the Board of Directors,
except in these instances where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent.
From time to time, the President shall report to the Board of Directors all
matters within his or her knowledge which the interests of the
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Corporation may require to be brought to their attention. The President shall
also perform such other duties as are given to him or her by these Bylaws or as
from time to time may be assigned to him or her by the Board of Directors.
Section 6. The Secretary. The Secretary shall (a) record all the
proceedings of the meetings of the shareholders and Board of Directors in a book
or books to be kept for that purpose; (b) cause all notices to be duly given in
accordance with the provisions of these Bylaws and as required by statute; (c)
be custodian of the records and of the seal of the Corporation and cause such
seal to be affixed to all certificates representing shares of the Corporation
prior to the issuance thereof and to all instruments the execution of which on
behalf of the Corporation under its seal shall have been duly authorized; (d)
see that the lists, books, reports, statements, certificates, and other
documents and records required by statute are properly kept and filed; (e) have
charge of the share record books of the Corporation and cause the same to be
kept in such manner as to show at any time the amount of shares of the
Corporation issued and outstanding, the names and addresses of the holders of
record thereof, the number of shares held by each, and the date when each became
such holder of record; (f) perform the duties required of him or her under
Section 9 of Article II of these Bylaws; (g) sign (unless the Treasurer shall
sign) certificates representing shares of the Corporation, the issuance of which
shall have been duly authorized; and (h) in general, perform all duties incident
to the office of Secretary and such other duties as are given to him or her by
these Bylaws or as from time to time may be assigned to him or her by the Board
of Directors or the President.
Section 7. The Chief Financial Officer. The Chief Financial Officer shall
(a) have charge of and supervision over and by responsible for the funds,
securities, receipts, and disbursements of the Corporation; (b) cause the moneys
and other valuable effects of the Corporation to be deposited in the name and to
the credit of the Corporation in such banks or trust companies, or with such
bankers or other depositories, as shall be selected in accordance with Section 3
of Article V of these Bylaws or to be otherwise dealt with in such manner as the
Board of Directors may direct; (c) cause the funds of the Corporation to be
disbursed by checks or drafts upon the authorized depositories of the
Corporation and cause to be taken and preserved proper vouchers for all moneys
disbursed; (d) render to the Board of Directors or the President, whenever
requested, a statement of the financial condition of the Corporation and of all
his or her transactions as Chief Financial Officer; (e) cause to be kept, at the
principal office of the Corporation or at such other office (within or without
the State of Delaware) as shall be designated by the Board of Directors, correct
books of account of all its business and transactions; (f) sign (unless the
Secretary shall sign) certificates representing shares of the Corporation, the
issuance of which shall have been duly authorized; and (g) in general, perform
all duties incident to the office of
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Treasurer and such other duties as are given to him or her by these Bylaws or as
from time to time may be assigned to him or her by the Board of Directors or the
President.
Section 8. The Vice Presidents. At the request of the President, any Vice
President shall perform all the duties of the President and, when so acting,
shall have all the powers of and be subject to all restrictions upon the
President. Any Vice President may also sign, with any other officer thereunto
duly authorized, share certificates of the Corporation, the issuance of which
shall have been duly authorized, and may sign and execute in the name of the
Corporation, deeds, mortgages, bonds, contracts, agreements, and other
instruments duly authorized by the Board of Directors, except in those instances
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent. Each Vice President shall
perform such other duties as are given to him or her by these Bylaws or as from
time to time may be assigned to him or her by the Board of Directors or the
President.
Section 9. Salaries. The salaries of the officers of the Corporation shall
be fixed from time to time by the Board of Directors. No officer shall be
prevented from receiving such salary by reason of the fact that he or she is
also a director of the Corporation.
Section 10. Surety Bonds. In the event the Board of Directors shall so
require, any officer or agent of the Corporation shall execute a bond to the
Corporation, in such amount and with such surety or sureties as the Board of
Directors may direct, conditioned upon the faithful discharge of his or her
duties.
ARTICLE V
Contracts and Financial Matters
Section 1. Execution of Contracts. The President or any Vice President,
subject to the approval of the Board of Directors, may enter into any contract
or execute and deliver any instrument in the name and on behalf of the
Corporation. Such authorization may be general or restricted to specific
instances.
Section 2. Checks and Drafts. All checks, drafts, or other orders for the
payment of money and all notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers or agent or
agents of the Corporation as shall be thereunto so authorized from time to time
by resolution of the Board of Directors.
Section 3. Deposits. All funds of the Corporation not otherwise employed
shall be
15
<PAGE>
deposited from time to time to its credit in such banks or trust companies or
with such bankers or other depositaries as the Board of Directors may select or
as may be selected by any officer or officers or agent or agents authorized so
to do by the Board of Directors. Endorsements for deposit to the credit of the
Corporation in any of its duly authorized depositaries shall be made in such
manner as the Board of Directors from time to time may determine.
Section 4. General and Special Bank Accounts. The Board of Directors may
authorize from time to time the opening and keeping of general and special bank
accounts with such banks, trust companies, or other depositaries as the Board of
Directors may designate and may make such special rules and regulations with
respect thereto, not inconsistent with the provisions of these Bylaws, as the
Board of Directors may deem expedient.
Section 5. Loans. No loans or advances shall be contracted on behalf of the
Corporation and no negotiable paper shall be issued in its name, unless and
except as authorized by the Board of Directors. Such authorization may be
general or restricted to specific instances. Any officer or agent of the
Corporation thereunto so authorized may effect loans and advances for the
Corporation and for such loans and advances may make, execute, and deliver
promissory notes, bonds, or other evidences of indebtedness of the Corporation.
Any officer or agent of the Corporation thereunto so authorized may pledge,
hypothecate, or transfer, as security for the payment of any and all loans,
advances, indebtedness, and liabilities of the Corporation, any and all stocks,
bonds, other securities, and other personal property at any time held by the
Corporation and, to that end, may endorse, assign, and deliver the same and do
every act and shine necessary or proper in connection therewith.
Section 6. Proxies. Proxies to vote with respect to shares of stock of
other corporations owned by or standing in the name of the Corporation may be
executed and delivered from time to time on behalf of the Corporation by such
person or persons as shall be thereunto authorized from time to time by the
Board of Directors.
ARTICLE VI
Indemnification and Insurance
Section 1. Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any pending,
threatened, or completed civil, criminal, administrative, or arbitration action,
suit, or proceeding, or any appeal therein or any inquiry or investigation which
could lead to such action, suit, or proceeding
16
<PAGE>
("proceeding"), by reason of his or her being or having been a director,
officer, employee, or agent of the Corporation or of any constituent corporation
absorbed by the Corporation in a consolidation or merger or by reason of his or
her being or having been a director, officer, trustee, employee, or agent of any
other corporation (domestic or foreign) or of any partnership, joint venture,
sole proprietorship, trust, employee benefit plan, or such enterprise (whether
or not for profit), serving as such at the request of the Corporation or of any
such constituent corporation, or the legal representative of any such director,
officer, trustee, employee, or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than the Delaware General
Corporation Law permitted prior to such amendment), from and against any and all
reasonable costs, disbursements, and attorney's fees, and any and all amounts
paid or incurred in satisfaction of settlements, judgments, fines, and
penalties, incurred or suffered in connection with any such proceeding, and such
indemnification shall continue as to a person who has ceased to be a director,
officer, trustee, employee, or agent and shall inure to the benefit of his or
her heirs, executors, administrators, and assigns; provided, however, that,
except as provided in Section 2 of this Article VI, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was specifically authorized by the Board of Directors of the
Corporation. The right to indemnification specified in this Article VI shall be
a contract right and shall include the right to be paid by the Corporation the
expenses incurred in connection with any proceeding in advance of the final
disposition of such proceeding as authorized by the Board of Directors;
provided, however; that, if the Delaware General Corporation Law so requires,
the payment of such expenses in advance of the final disposition of a proceeding
shall be made only upon receipt by the Corporation of an undertaking, by or on
behalf of such director, officer, employee, or agent, to repay all amounts so
advanced unless it shall ultimately be determined that such person is entitled
to be indemnified under this article or otherwise.
Section 2. Right of Claimant to Bring Suit. If a claim made under Section 1
of this Article VI is not paid in full by the Corporation within thirty (30)
days after a written request has been received by the Corporation, the claimant
may, at any time thereafter, apply to a court for an award of indemnification by
the Corporation for the unpaid amount of the claim and, if successful on the
merits or otherwise in connection with any proceeding or in the defense of any
claim, issue, or matter therein, the claimant shall also be entitled to be paid
by the Corporation for any and all expenses incurred or suffered in connection
with such proceeding. It shall be a defense to any such action (other than an
17
<PAGE>
action brought to enforce a claim for the advancement of expenses incurred in
connection with any proceeding where the required undertaking, if any, has been
tendered to the Corporation) that the claimant has not satisfied the standard of
conduct which makes it permissible under the Delaware General Corporation Law
for the Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel, or its shareholders) to have made a determination prior to the
commencement of such proceeding that indemnification of the claimant is proper
in the circumstances because he or she has satisfied the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, its
independent legal counsel, or its shareholders) that the claimant has not
satisfied such applicable standard of conduct, nor the termination of any
proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo
contendere or its equivalent, shall be a defense to the action or create a
presumption that the claimant has not satisfied the applicable standard of
conduct.
Section 3. Nonexclusivity of Rights. The right to indemnification and
advance of expenses provided by or granted pursuant to this Article VI shall not
exclude or be exclusive of any other rights to which any person may be entitled
under the Certificate of Incorporation of the Corporation, these Bylaws, any
agreement, vote of shareholders, or otherwise; provided, however, that no
indemnification shall be made to or on behalf of such person if a judgment or
other final adjudication adverse to such person establishes that such person has
not satisfied the applicable standard of conduct required to be satisfied under
the Delaware General Corporation Law.
Section 4. Insurance. The Corporation may purchase and maintain insurance
on behalf of any director, officer, employee, or agent of the Corporation, or of
another corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise, against any expenses incurred in any proceeding and against
any liabilities asserted against him or her by reason of such person's being or
having been such a director, officer, employee, or agent, whether or not the
Corporation would have the power to indemnify such person against such expenses
and liabilities under the provisions of this Article VI or otherwise.
ARTICLE VII
Shares and Their Transfer
Section 1. Share Certificates. Every holder of shares of the Corporation
shall be entitled to have a certificate, signed by the President or a Vice
president and either the
18
<PAGE>
Treasurer or the Secretary, certifying the number of shares owned by him or her
in the Corporation. In case any officer of the Corporation who has signed any
such certificate shall cease to be such officer, for whatever cause, before the
certificate shall have been delivered by the Corporation, the certificate shall
be deemed to have been adopted by the Corporation, unless the Board of Directors
shall otherwise determine prior to the issuance and delivery thereof, and may be
issued and delivered as though the person who signed it had not ceased to be
such officer of the Corporation. Certificates representing shares of the
Corporation shall be in such form as shall be approved by the Board of
Directors. There shall be entered upon the share record books of the
Corporation, at the time of issuance of each share, the number of the
certificate issued, the name and address of the person owning the shares
represented thereby, the number of shares, and the date of issuance thereof.
Every certificate exchanged or returned to the Corporation shall be marked
"cancelled" with the date of cancellation.
Section 2. Share Record Books. The share record books and the blank share
certificate books shall be kept by the Secretary, or by any officer or agent
designated by the Board of Directors.
Section 3. Addresses of Shareholders. Each shareholder shall designate to
the Secretary of the Corporation an address at which notices of meetings and all
other corporate notices may be served, delivered, or mailed to such shareholder
and, if any shareholder shall fail to designate such address, all corporate
notices (whether served or delivered by the Secretary, another shareholder, or
any other person) may be served upon such shareholder by mail directed to him or
her at his or her last known post office address.
Section 4. Transfers of Shares. Transfers of shares of the Corporation
shall be made on the books of the Corporation by the holder or record thereof or
by his or her attorney thereunto duly authorized by a power of attorney duly
executed in writing and filed with the Secretary and on surrender of the
certificate or certificates representing such shares. The Corporation shall be
entitled to treat the holder of record of any shares as the absolute owner
thereof for all purposes and, accordingly, shall not be obligated to recognize
any legal, equitable, or other claim to or interest in such shares on the part
of any other person, whether or not it or they shall have express of other
notice thereof, except as otherwise expressly provided by statute; provided,
however, that whenever any transfer of shares shall be made for collateral or
security and not absolutely and written notice thereof shall be given to the
Secretary, such fact shall be expressed in the entry of the transfer.
Notwithstanding anything to the contrary contained in these Bylaws, the
Corporation shall not be required or permitted to make any transfer of shares of
the
19
<PAGE>
Corporation which, if made, would violate the provisions of any agreement
restricting the transfer of shares of the Corporation to which the Corporation
shall be a party; provided, however, that the restriction upon the transfer of
the shares represented by any share certificate shall be set forth or referred
to upon the certificate.
Section 5. Regulations. Subject to the provisions of this Article VII, the
Board of Directors may make such rules and regulations as it may deem expedient
concerning the issuance, transfer, and registration of certificates for shares
of the Corporation.
Section 6. Lost, Destroyed, and Mutilated Certificates. The holder of any
shares shall immediately notify the Corporation of any loss, destruction, or
mutilation of the certificate therefor and the Board of Directors, in its
discretion, may cause to be issued to him or her a new certificate or
certificates upon surrender of the mutilated certificate or, in case of loss or
destruction of the certificate, upon satisfactory proof of such loss or
destruction. The Board of Directors, in its discretion, may require the owner of
the lost or destroyed certificate or his or her legal representative to give the
Corporation a bond, in such amount (not exceeding twice the value of such
shares) and with such surety or sureties as it may direct, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss or destruction of any such certificate.
Section 7. Fixing of Record Dates. The Board of Directors shall have the
power to fix in advance a date, not more than sixty (60) nor less than ten (10)
days, preceding the date of any meeting of shareholders, the date for the
payment of any dividend or allotment of any right, the date when any change,
conversion, or exchange of shares shall go into effect, or for the purpose of
any other action, as a record date for the determination of the shareholders
entitled to notice of and to vote at any such meeting, entitled to receive
payment of any such dividend or allotment of any right, entitled to exercise the
rights in respect to any such change, conversion, or exchange of shares, or
entitled to participate in or be entitled to the benefit of any such other
action. Whenever a record date has been so fixed, only shareholders of record on
such date shall be entitled to notice of and to vote at such meeting, to receive
payment of any such dividend or allotment of any right, to exercise such rights
in respect to any such change, conversion, or exchange of shares, or to
participate in or be entitled to the benefit of any such other action.
Section 8. Refusal to Register Transfer. The Corporation shall not register
any transfer of securities issued by the Corporation in any transaction that
qualifies for the exemption from registration requirements specified by the
provisions of Regulation S, unless such transfer is made in accordance with the
provisions of Regulation S.
20
<PAGE>
ARTICLE VIII
Dividends and Surplus
Subject to any restrictions imposed by statute, the Board of Directors from
time to time, in its discretion, may fix and vary the amount of the working
capital of the Corporation and determine what, if any, dividends shall be
declared and paid to the shareholders out of the surplus of the Corporation. The
Board of Directors, in its discretion, may use and apply any surplus in
purchasing or acquiring any of the shares of the Corporation in accordance with
law or any of its bonds, debentures, or other obligations, or from time to time
may set aside from such surplus such amount or amounts as it, in its absolute
discretion, may deem proper as a reserve fund to meet contingencies or for
equalizing dividends, for the purpose of maintaining or increasing the property
or business of the Corporation, or for any other purposes it may deem consistent
with the best interest of the Corporation. All such surplus, until actually
declared in dividends or used and applied as aforesaid, shall be deemed to be so
set aside by the Board of Directors for one or more of said purposes.
21
<PAGE>
ARTICLE IX
Corporation Seal
The Corporation shall have a corporate seal which shall be in circular
form, shall bear the name of the Corporation and the words and figures denoting
its organization under the laws of the State of and the year thereof and
otherwise shall be in such form as shall be approved from time to time by the
Board of Directors.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE XI
Accountants
The Board of Directors of the Corporation from time to time shall designate
the independent accountants of the Corporation.
ARTICLE XII
Amendments
All Bylaws of the Corporation shall be subject to amendment, alteration, or
repeal, and new Bylaws not inconsistent with any provision of the Certificate of
Incorporation of the Corporation or any provision of law may be made, by the
shareholders or by the Board of Directors, except as otherwise expressly
required by statute. Any Bylaw adopted, amended, or repealed by the shareholders
may be amended or repealed by the Board of Directors, unless the resolution of
the shareholders adopting such Bylaw expressly reserves the right to amend or
repeal it only to the shareholders.
22
<PAGE>
ARTICLE XIII
Force and Effect
These Bylaws are subject to the provisions of the Delaware General
Corporation Law and the Certificate of Incorporation, as the same may be amended
from time to time. If any provision in these Bylaws is inconsistent with an
express provision of either of the Delaware General Corporation Law or the
Certificate of Incorporation, the provision of the Delaware General Corporation
Law or the Certificate of Incorporation, as the case may be, shall govern,
prevail and control the extent of such inconsistency.
-----------------------------
Secretary
23
The Board of Directors
EZEBiz Software Inc.
We consent to the use of our report on the financial statements of EZEBiz
Software Inc. as at and for the period from incorporation on November 10, 1998
to December 31, 1999 included in the Registration Statement on Form SB-2, dated
February 15, 2000 and to the reference to our firm under the heading "Experts"
in the prospectus.
Victoria, Canada
February 17, 2000
/s/ KPMG LLP
- --------------------------------------------
KPMG LLP
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<PERIOD-START> NOV-10-1998
<PERIOD-END> DEC-31-1999
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