<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON ________________, 2000
====================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POWER SAVE INTERNATIONAL, INC.
(Name of Small Business Issuer in Its Charter)
NEVADA 3629 88-0227424
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification No.)
Incorporation or
Organization)
5800 NW 64 Avenue
Building 26 #109
Tamarac, Florida 33319
(954) 722-1615
-----------
--------------------
Scott Balmer, Chairman
POWER SAVE INTERNATIONAL, INC.
5800 NW 64 Avenue
Building 26 #109
Tamarac, Florida 33319
(Name, Address and Telephone Number of Agent For Service)
-----------
COPIES OF COMMUNICATIONS TO:
State Agent and Transfer Syndicate, Inc.
Attention: Jed Block, phone (775) 882-1013
318 North Carson Street, Suite 214
Carson City, NV 89701
----------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this registration statement becomes effective.
<PAGE>
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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
====================================================================
<TABLE>
<CAPTION>
Proposed Proposed
Amount to Maximum Maximum Registration
Title of Each Be Offering Price Aggregate Fee
Class of Securities Registered Per Security Offering Price
to be Registered
<S> <C> <C> <C> <C>
Common Stock, par
Value $.03 per share 1,000,000 $5.00 $5,000,000 $1,390
</TABLE>
Includes no shares of Common Stock which the Underwriters have the option
to purchase from the Registrant to cover over-allotments, if any.
-------------------------
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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell nor does it seek an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted. Subject
to Completion dated _________
Power Save International, Inc.
1,000,000 shares of Common Stock at $5.00 per share
Power Save International, Inc., (the "Company") hereby offers up to 1,000,000
shares of the Company's Common Stock (the "Shares") at an offering price of
$5.00 per Share (the "Offering"). The offering price has been arbitrarily
determined solely by the Company. The Offering will begin on the date of this
Offering Circular and continue until the Company has sold all of the shares
offered hereby or such earlier date as the Company may close or terminate the
Offering, no later than ___________, 2001. A minimum of 100,000 shares totaling
$500,000 must be sold to release funds from escrow. The subscriber's funds will
be promptly returned with interest if the minimum is not achieved by the escrow
date of _________, 2001. No plans for exchange listing have been made. The
shares are offered only by the Underwriter and no officers, directors or
employees sell the shares. The Company intends to apply for listing on the
NASDAQ OTC Bulletin Board.
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE
MERITS OF OR GIVE APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE
OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING
CIRCULAR OR ANY OTHER SELLING LITERATURE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM
REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN
INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREBY ARE EXEMPT FROM
REGISTRATION.
THIS OFFERING HAS BEEN REGISTERED UNDER THE SECURITIES LAWS OF A LIMITED NUMBER
OF STATES, AND THE SHARES OFFERED HEREBY MAY BE SOLD ONLY IN THOSE STATES. SUCH
REGISTRATIONS, HOWEVER, DO NOT CONSTITUTE AN ENDORSEMENT OR APPROVAL BY ANY
PARTICULAR STATE SECURITIES COMMISSION OF ANY SECURITIES OFFERED OR THE TERMS OF
THIS OFFERING. NO STATE SECURITIES COMMISSION HAS PASSED UPON THE ACCURACY OR
COMPLETENESS OF THIS OFFERING CIRCULAR OR ANY OTHER SELLING LITERATURE.
THIS OFFERING INVOLVES SUBSTANTIAL RISKS (SEE "RISK FACTORS" BEGINNING ON PAGE
3) AND SHOULD BE CONSIDERED ONLY BY PERSONS ABLE TO BEAR THE ECONOMIC RISK OF
THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
<TABLE>
Offering Underwriting Commissions Proceeds to the Company
Price
<CAPTION>
<S> <C> <C> <C>
----------------------------------- --------------- ------------------------------ -------------------------------
Per share $0.25 $4.75
$5.00
----------------------------------- --------------- ------------------------------ -------------------------------
Total Minimum (escrow) $500,000 $ 25,000 $475,000
----------------------------------- --------------- ------------------------------ -------------------------------
Total Maximum $5,000,000 $250,000 $4,750,000 (1) (2)
</TABLE>
[FN]
(1)Three Arrows Capital Corp. has also received a warrant to purchase up to
66,666 shares of Common Stock at the Offering Price. See "Plan of
Distribution."
</FN>
[FN]
(2)Before deduction of offering expenses previously paid by the Company of
$18,500 and a consulting fee paid to Three Arrows Capital Corp. of $9,950.
</FN>
THREE ARROWS CAPITAL CORP.
____________, 2000
<PAGE>
A graphical representation of the Company's products and how they operate.
<PAGE>
OFFERING CIRCULAR SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Financial Statements and Notes thereto and the Glossary
appearing elsewhere in this Offering Circular. Investors should carefully
consider the risk factors related to the purchase of Common Stock of the
Company. See "Risk Factors."
Our Business
PSI designs, manufactures, sells/leases and finances fossil-fueled
engine-driven air conditioning, heating, thermal heat recovery and electric
cogenerating plants for the more than 2 million U.S. small businesses that have
been excluded from the benefits of utility deregulation. We provide equipment
that can provide typical savings of 20% to 50% on annual utility bills for HVAC
(heating, ventilating, air conditioning) with no out of pocket costs on a
convenient rental or lease/purchase. With usual utility backup, our clients have
redundant and secure power supplies at less cost than their dependent neighbors.
Our natural gas-fired individual unit system sales range from $75,000 to
$125,000, with turnkey retrofits ranging between $125,000 and $500,000. Most
competition for cogeneration systems has focused on large-scale industrial
users, permitting PSI to concentrate on a huge and attractive model for small
business with enviable margins. The energy efficiency of cogeneration systems is
approximately twice that of conventional generation. The nitrogen oxide
emissions that result from cogeneration are often ten times less than
conventional electrical generation.
We have more than thirty years of development and installation
experience and intend to develop a national market for our proven technology.
Our original demonstration test site model (PSA-120) system was installed in
1995 in Mamaroneck, NY and continues to meet or exceed the customer's
expectations. Our latest PSI-70/50 Combo system is presently being completed in
a commercial office building in Rochester, New York. The PSI systems are built
in a proprietary manner, sold outright and/or operated on a turnkey basis as the
PSI Combo package of cogeneration technology. Our expansion will be created
through a combination of advertising in the national trade magazines for
outright sales, and direct sales representatives in selected areas for the
sale/lease of units. We also intend to acquire suitable HVAC companies that will
permit a rapid conversion of existing customer bases to our units, thought we
have no targeted acquisitions at the present time.
The Company
For a detailed description of our business strategy, see
"Business--Business Strategy." We were incorporated in Nevada on May 8, 1987.
Our principal executive offices are located at 5800 NW 64 Avenue, Bldg. 26,
#109, Tamarac, FL 33319. Our telephone number is (954) 722-1615 and the fax
number is (954) 722-6417. E-mail is addressed [email protected] and the
Website is www.power-save.net.
The Offering
<TABLE>
<CAPTION>
<S> <C>
Shares offered by the Company ......................... 1,000,000
Shares outstanding after the Offering .................. 7,414,149
Use of proceeds ........................................ The Company intends to use the net proceeds from
the Offering for: (i) marketing and advertising, (ii)
development of new applications, and (iii) equipment and
inventory. See "Use of Proceeds."
Minimum/maximum......................................... The Company is offering a minimum of 100,000 shares
to break escrow and a maximum of 1,000,000 shares. If
the Company returns funds interest will be paid.
</TABLE>
Potential investors should carefully consider the risk factors relating
to the Company described in the "Risk Factors" section of this Offering Circular
before making an investment decision with respect to the securities offered
hereby.
<PAGE>
Summary Financial Data
(As of December 31, 1999)
Balance Sheet Data
<TABLE>
<CAPTION>
1997 1998 December 31, 1999
---- ---- -----------------
<S> <C> <C> <C>
Cash & Cash Equivalents, $1,041 $3,527 $53,227
Current Assets ................... 1,041 3,527 973,625
Total Assets ....................... 10,295,672 3,973 976,000
Current Liabilities .............. 155,506 144,250 220,809
Total Shareholders' Equity (deficit) $10,140,166 (140,277) $755,191
</TABLE>
<TABLE>
<CAPTION>
Income Statement
1997 1998 December 31, 1999
---- ---- -----------------
<S> <C> <C> <C>
Revenue................................... $36,119 $5,041 $69,986
Cost of Sales.......................... 9,449 589 67,261
Operating Expenses .................... 68,547 63,895 62,163
Other Income (Expenses) ................ - (221,000) 11,701
Net Ordinary Income (Loss)............. $(41,877) $(280,443) $(47,737)
</TABLE>
<PAGE>
RISK FACTORS
You should carefully consider the following risks and all other
information contained in this prospectus before purchasing our common stock. If
any of the following risks occur, our business, prospects, results of operations
or financial condition could be harmed. In that case, the trading price of our
common stock could decline, and you could lose all or part of your investment.
This prospectus also contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in the forward-looking statements as a result of specific factors, including the
risks described below and elsewhere in this prospectus.
We have a going concern issue
Our auditors have expressed reservations concerning our ability to
continue as a going concern. The auditors state: "As discussed in Notes 3 and 4
[financial statements], the Company is in the development stage and has
sustained significant losses from inception to date and there is no assurance
that the Company can realize sufficient revenues from its products and services
to attain profitable operations. These matters raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans regarding
those matters is also discussed in Note 3 and 4. The financial statements do no
include any adjustments that might result from the outcome of this uncertainty.
(See "Financial Statements.")
We have incurred losses for the last several years
As of December 31, 1999, we had an accumulated deficit of ($1,052,108)
and we have incurred net losses of ($1,279,064) from inception of the Company
through December 31, 1999. We have not achieved profitability and expect to
continue to incur net losses until we can produce sufficient revenues to cover
our costs. Even if we achieve our objectives of significant sales and
profitability in the year 2000, we may be unable to sustain or increase our
profitability in the future. (See "Selected Historical Financial Data.")
We may be unable to raise additional capital to complete our product development
and commercialization plans
Our product distribution schedule could be delayed if we are unable to
fund our marketing capabilities. We expect that the net proceeds of this
offering, together with the proceeds from our issuance of shares and all other
existing sources of capital, will be sufficient to fund our activities through
the end of 2001. We do not know whether we will be able to secure additional
funding, or funding on terms acceptable to us, to pursue all of our marketing
plans through the mass-market stage. (See "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations".)
Our systems have not been extensively tested in the marketplace and investors
have limited information upon which to judge.
We have been a development stage company for some period of time and
our current product line has had very limited sales and commercial testing. We
have little relevant financial or market data associated with our company.
Accordingly, there is only a limited basis upon which you can evaluate our
business and prospects. An investor in our common stock should consider the
challenges, expenses and difficulties that we will face as a development stage
company seeking to manufacture and distribute a new product. (See "Business" and
"Financial Statements.")
<PAGE>
A mass market for smaller cogeneration systems may never develop or may take
longer to develop than we anticipate
A mass market may never develop for our systems, or may develop more
slowly than we anticipate. Cogeneration systems for small business use represent
an emerging market, and we do not know whether our targeted distribution method
will be successful, if distributors will want to sell them or whether end-users
will want to use them. If a mass market fails to develop or develops more slowly
than we anticipate, we may be unable to recover the losses we will have incurred
to develop our product and may be unable to achieve profitability. (See
"Business.") The development of a mass market for our systems may be impacted by
many factors, some of which are out of our control, including:
o the cost competitiveness of cogeneration systems;
o the future costs of natural gas, propane and other fuels used by our systems;
o consumer reluctance to try a new product; o consumer perceptions of our
systems' safety; o regulatory requirements; and o the emergence of newer, more
competitive technologies and products.
We have limited experience manufacturing cogeneration systems on a commercial
basis
To date, we have focused primarily on research and development and have
little experience manufacturing cogeneration systems for the small business
market on a commercial basis. We are also relying on contractors to outsource
the production of our systems. Even if we are successful in developing effective
manufacturing capability and processes on an outsourced basis, we do not know
whether we will do so in time to meet our product commercialization schedule or
to satisfy the requirements of our distributors or customers. (See
"Business--Manufacturing".)
We are dependent on third party suppliers for the development and supply of key
components for our products
While we have recently entered into relationships with some suppliers,
we do not know when or whether such relationships will continue to be on terms
that will allow us to achieve our objectives. Failure to secure such
satisfactory relationships could harm our business, prospects, results of
operations, or financial condition. Once we establish relationships with third
party suppliers, we will rely on them to provide components for our systems. A
supplier's failure to develop and supply components in a timely manner, or to
supply components that meet our quality, quantity or cost requirements, or our
inability to obtain substitute sources of these components on a timely basis or
on terms acceptable to us, could harm our ability to outsource manufacture our
systems. In addition, to the extent the processes that our suppliers use to
manufacture components are proprietary, we may be unable to obtain comparable
components from alternative suppliers. (See "Business.")
We face intense competition and may be unable to compete successfully
The markets for electricity are intensely competitive. There are many
companies engaged in all areas of traditional and alternative electric power
generation in the United States, Canada and abroad, including, among others,
major electric, oil, chemical, natural gas, and specialized electronics firms,
as well as universities, research institutions and foreign government-sponsored
companies. Many of these entities have substantially greater financial, research
and development, manufacturing and marketing resources than we do. (See
"Business--Competition.")
<PAGE>
Alternatives to our technology could render our systems obsolete
Our system is one of a number of alternative energy products being
developed today as supplements to the electric grid that have potential
residential applications, including fuel cells, solar power and wind power, and
other types of cogeneration technologies. Improvements are also being made to
the existing electric transmission system. Technological advances in alternative
energy products, improvements in the electric grid or other fuel cell
technologies may render our systems obsolete. (See "Business.")
Changes in government regulations and electric utility industry restructuring
may affect demand for our systems
The market for electricity generation products is heavily influenced by
federal and state governmental regulations and policies concerning the electric
utility industry. The loosening of current regulatory standards could deter
further investment in the research and development of alternative energy sources
and could result in a significant reduction in the potential market demand for
our products. We cannot predict how the deregulation and restructuring of the
industry will affect the market for small business cogeneration systems. (See
"Business".)
We may have difficulty managing the expansion of our operations
We expect to undergo rapid growth in the number of our employees, the
size of our physical plant and the scope of our operations. Such rapid expansion
is likely to place a significant strain on our senior management team and other
resources. Difficulties in effectively managing the budgeting, forecasting and
other process control issues presented by such a rapid expansion could harm our
business, prospects, results of operations or financial condition. (See
"Management.")
We may not be able to protect important intellectual property
Our ability to compete effectively against other cogeneration companies
will depend, in part, on our ability to protect our proprietary technology,
systems designs and manufacturing processes. Much of our products and processes
are in the public domain. We do not know in the case of any patents that may be
issued in the future, that the claims allowed are or will be sufficiently broad
to protect our technology or processes. Even if patents are issued and are
sufficiently broad, they may be challenged or invalidated. We could incur
substantial costs in prosecuting or defending patent infringement suits. While
we have attempted to safeguard and maintain our proprietary rights, we do not
know whether we have been or will be completely successful in doing so.
Further, our competitors may independently develop or patent
technologies or processes that are substantially equivalent or superior to ours.
If we are found to be infringing third party patents, we do not know whether we
will be able to obtain licenses to use such patents on acceptable terms, if at
all. Failure to obtain needed licenses could delay or prevent the sale of our
systems.
We rely, in part, on contractual provisions to protect our trade
secrets and proprietary knowledge. These agreements may be breached, and we may
not have adequate remedies for any breach. Our trade secrets may also be known
without breach of such agreements or may be independently developed by
competitors. Our inability to maintain the proprietary nature of our technology
and processes could harm our business, prospects, results of operations or
financial condition. (See "Business--Intellectual Property".)
Our existing stockholders will control all matters requiring a stockholder vote
Upon the completion of this offering, our principal stockholders will
retain approximately 87% of our outstanding stock. If all of these stockholders
were to vote together as a group, they would have the ability to exert
significant influence over our Board of Directors and its policies. For
instance, these stockholders would be able to control the outcome of all
stockholder votes, including votes concerning director elections, charter and
by-law amendments and possible mergers, corporate control contests and other
significant corporate transactions. (See "Principal Stockholders" and
"Description of Capital Stock".)
<PAGE>
We may be unable to attract or retain key personnel
We have attracted a highly skilled management team, technical
specialists and marketing professionals. Based on our planned expansion, we will
require a significant increase in the number of our employees and outside
contractors. Our future success, therefore, will depend, in part, on attracting
and retaining additional qualified management and technical personnel. We do not
know whether we will be successful in hiring or retaining qualified personnel.
Our inability to hire qualified personnel on a timely basis, or the departure of
key employees, could harm our expansion plans. (See "Management.")
Our stock price is likely to be highly volatile
The stock market has, from time to time, experienced extreme price and
volume fluctuations. Many factors may cause the market price for our common
stock to decline, perhaps substantially, following this offering, including: (a)
failure to meet our marketing milestones; (b) demand for our common stock; (c)
revenues and operating results failing to meet expectations of investors; (d)
changes in general market conditions; (e) technological innovations by
competitors or in competing technologies; (f) investor perception of our
industry or our prospects; or (g) general technology or economic trends.
In the past, companies that have experienced volatility in the market
price of their stock have been the subject of securities class action
litigation. We may be involved in a securities class action litigation in the
future. Such litigation often results in substantial costs and a diversion of
management's attention and resources and could harm our business, prospects,
results of operations, or financial condition. (See "Financial Statements.")
Provisions of Nevada law and of our charter and by-laws may make a takeover
more difficult
Provisions in our certificate of incorporation and by-laws and in the
Nevada corporate law may make it difficult and expensive for a third party to
pursue a tender offer, change in control or takeover attempt, which is opposed
by our management and Board of Directors. Public stockholders who might desire
to participate in such a transaction may not have an opportunity to do so. We
also have a staggered Board of Directors, which makes it difficult for
stockholders to change the composition of the Board of Directors in any
one-year. These anti-takeover provisions could substantially impede the ability
of public stockholders to benefit from a change in control or change our
management and Board of Directors. (See "Description of Capital Stock".)
Future sales of our common stock could adversely affect our stock price
Substantial sales of our common stock in the public market
following this offering, or the perception by the market that such sales could
occur, could lower our stock price or make it difficult for us to raise
additional equity capital in the future. After this offering, we will have
7,414,149 shares of common stock outstanding. Of these shares, the 1,000,000
shares sold in this offering will be freely tradable. The remaining 6,414,149
shares are subject to one-year lock-up agreements. At the Company's discretion
6,414,149 shares will generally be available for sale in the public market
one-year after the date of this prospectus. We cannot predict if future sales of
our common stock, or the availability of our common stock for sale, will harm
the market price for our common stock or our ability to raise capital by
offering equity securities. (See "Underwriting" and "Shares Eligible for Future
Sale".)
We will have broad discretion as to the use of the net proceeds from this
offering
Our Board of Directors and our management will have broad discretion
over the use of the net proceeds of this offering. Investors will be relying on
the judgment of our Board of Directors and our management regarding the
application of the net proceeds of this offering. (See "Use of Proceeds".)
<PAGE>
We do not intend to pay dividends
We have never declared or paid any cash dividends on shares of our
common stock. We currently intend to retain our earnings, if any, for future
growth and, therefore, do not anticipate paying any dividends in the foreseeable
future. (See "Dividend Policy".)
Lack of significant trademark, patent and service mark protection.
To the extent that our business becomes associated with our trademarks
and service marks such that significant value is attached to such property, the
failure to protect such property could have a material adverse effect upon our
business, operating results and financial condition. There can be no assurance
that the steps taken by us to protect our proprietary rights will be adequate to
deter misappropriation or that we will be able, or will have the financial
capacity, to deter unauthorized use and take appropriate steps to enforce its
rights. Any such required action, regardless of the outcome, could result in
substantial costs and diversion of resources and could have a material adverse
effect on our business, operating results and financial condition. (See
"Business.")
Our security pricing has not been made on conventional valuation assumptions.
The Offering price of the Shares has been determined based on an
estimate by management of our earnings potential over the next five years.
Management makes no representations that we will generate such earnings and
there can be no assurance as to when we will generate revenues and earnings, if
ever. The Offering price does not reflect our asset value, net worth, present
earnings, cash flow or any other established criteria of value. The Offering
price of the Shares may or may not be an indication of their present value or
the value of us or their future value or the future value of us. The capital
requirements estimated by management are based on a series of internal
projections of revenues and expenses prepared by management and are subject to
the inherent limitations associated with making financial forecasts. (See
"Financial Statements.")
Illiquidity--Lack of Market for Company Securities.
At the present time, there is no public market for the Company's Common
Stock, nor can there be any guarantee that such a market will develop, or if
developed, will be sustained. Investors should consider the purchase of Shares
to be a long-term investment. (See "Plan of Distribution.")
Limits of Insiders' Liability to the Company and its Stockholders.
The Certificate of Incorporation and our Bylaws limit the liability of
the Board of Directors and Officers of the Company for errors in judgment and
other acts or omissions. Our Bylaws also provide for indemnification of the
Directors and Officers for certain liabilities they may incur. As a result,
stockholders will have limited rights of action against the Directors and
Officers.
(See "Limitations on Directors' Liability and Indemnification of Directors and
Officers.")
Immediate and Substantial Dilution.
The Offering price is substantially higher than the pro forma book
value per outstanding ordinary share. Based upon the Offering price of $5.00 per
share, investors purchasing Shares in the Offering will incur immediate and
substantial dilution of $4.81 per share on a minimum Offering and $4.26 on a
maximum Offering. This amounts to 96% on a minimum Offering and 85% on a maximum
Offering. (See "Capitalization.")
Risk of Uninsured Losses.
We will carry commercial, general liability insurance and comprehensive
insurance on our operations, including fire, liability, extended coverage, other
casualty insurance and workers compensation insurance if necessary and
available. There may be risks that are uninsurable or not insurable on terms
that the Company believes to be economic. In addition, losses may exceed amounts
of the policies. (See "Financial Statements.")
<PAGE>
Our business may become subject to future government regulation
We do not believe that we will be subject to existing federal and state
regulatory commissions governing traditional electric utilities and other
regulated entities. We do believe that our product and its installation will be
subject to oversight and regulation at the local level in accordance with state
and local ordinances relating to building codes, safety, pipeline connections
and related matters. Such regulation may depend, in part, upon whether a system
is placed outside or inside a building. At this time, we do not know which
jurisdictions, if any, will impose regulations upon our product. We also do not
know the extent to which any existing or new regulations may impact our ability
to distribute, install and service our product. Once our product becomes more
widely distributed federal, state or local government entities or competitors
may seek to impose regulations. Any new government regulation of our product,
whether at the federal, state or local level, may harm our business, prospects,
results of operations, or financial condition.
The Company is subject to a variety of governmental jurisdictions and
numerous regulations that stem from normal commercial activities. The Company
cannot predict the extent to which its revenues and operations will be affected
by changes in specifications and safety codes for the industry or restrictions
on any of its products imposed by government agencies. (See "Business.")
Limited State Registration.
These securities are not registered in states other than those
indicated in this Offering Circular. Subsequent sale and transfer to residents
of various states may be required to be made only pursuant to registration or an
exemption from registration in the transferee's state. (See "Plan of
Distribution.")
Special Notice Regarding Forward-Looking Statements.
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate" and "continue" or similar words. You should
read statements that contain these words carefully because they discuss our
expectations about our future performance, contain projections of our future
operating results of our future financial condition, or state other "forward-
looking" information. We believe it is important to communicate our expectations
to our investors. There may be events in the future, however, that we are not
accurately able to predict or over which we have no control. The risk factors
listed in this prospectus, as well as any other cautionary language in this
prospectus, provide examples of risks, uncertainties and events that may cause
our actual results to differ materially from the expectations we describe in our
forward-looking statements. Before you invest in our common stock, you should be
aware that the occurrence of any of the events described in these risks factors
and elsewhere in this prospectus could have a material and adverse effect on our
business, results of operations and financial condition and that upon the
occurrence of any of these events, the trading price of our common stock could
decline and you could lose all or part of your investment.
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of 1,000,000 Shares of
Common Stock offered by the Company hereby, after deducting commissions and
estimated Offering expenses payable by the Company, are estimated to be
approximately $4,722,500 if the maximum number of Shares are sold and $450,000
if the minimum number of Shares are sold.
The following table sets forth the Company's anticipated use of the
proceeds of this Offering.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
If Minimum Sold If Maximum Sold
Amount Percent Amount Percent
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Total Proceeds: $500,000 100% $5,000,000 100%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less Offering Expenses:
Commissions $25,000 5.0% $250,000 5.0%
Legal & Accounting Fees 4,500 .9% 4,500 .1%
Copying & Advertising 4,000 .8% 4,000 .1%
Filing Fees 16,000 3.2% 16,000 .3%
Postage 500 .1% 3,000 .1%
Net Proceeds of Offering $450,000 90.0% $4,722,500 94.4%
- --------------------------------------------------
----------------------------------------------------------
Use of Net Proceeds:
o Rent, Utilities, Leases $58,200 12.9% $116,400 2.4%
o Payroll:
o Administrative 160,000 35.6% 320,000 6.8%
o Professional 75,675 16.8% 351,350 7.4%
o Insurance 14,500 3.2% 29,000 .6%
o Equipment Purchase/Lease 14,600 3.2% 43,800 .9%
Inventory/Lease 31,025 6.9% 2,689,950 57.0%
Financing 46,000 10.3% 720,000 15.2%
o Advertising/Marketing 10,000 2.2% 10,000 .2%
o Corporate Website 40,000 8.9% 450,000 9.5%
o Working Capital $450,000 100.0% $4,722,500 100.0%
Total Use of Net Proceeds
</TABLE>
NOTE: AFTER REVIEWING THE PORTION OF THE OFFERING ALLOCATED TO THE PAYMENT OF
OFFERING EXPENSES, AND TO THE IMMEDIATE PAYMENT TO MANAGEMENT AND PROMOTERS OF
ANY FEES, REIMBURSEMENTS, PAST SALARIES, OR SIMILAR PAYMENTS, A POTENTIAL
INVESTOR SHOULD CONSIDER WHETHER THE REMAINING PORTION OF HIS INVESTMENT, WHICH
WOULD BE THAT PART AVAILABLE FOR FUTURE DEVELOPMENT OF THE COMPANY'S BUSINESS
AND OPERATIONS, WOULD BE ADEQUATE.
If required, we will seek additional sources of funds to include
equipment leasing, equity financing, commercial bank loans and private
investors. There can be no assurances that we will be eligible for such loans or
that private financing will be available to us.
We currently have 1 full time employee (as of March 22, 2000), and
others serve on an as needed basis, and are currently uncompensated. We will
expand that number in response to the pace of our development and subject to the
availability of funds from the proceeds of this Offering and other sources. The
Company anticipates hiring added personnel as the Offering progresses. Payroll
taxes will be incurred by the Company and are included in the estimates for
payroll above. Except as detailed under "Material Agreements," all salaries,
bonuses and reimbursements are subject to Company earnings and finances.
Payroll is divided into administrative and professional personnel as a
function of the general nature of the duties performed. Administrative personnel
are categorized as staff (payroll, human resources, secretarial, clerical, etc.)
while professional personnel are categorized as engineers and managers.
<PAGE>
If the Company successfully completes the sale of the Shares, even if
just the minimum is raised, management does not anticipate any cash flow or
liquidity problem for its planned operations. The Company is not in default or
in breach of any debenture indebtedness or financing arrangement. The Company
has no collective bargaining agreements. However, it may be confronted with such
issues as it develops its workforce.
With the exception of normal operating revenues, no material amounts of
funds from sources other than this Offering are expected to be used in
conjunction with the proceeds from this Offering. No portion of the proceeds
will be used to reimburse an officer, director and principal stockholder for
services already rendered, assets previously transferred, or moneys loaned or
advanced. The amount shown as advances from shareholders in the financial
statements at December 31, 1999 were paid in full in February 2000. The Company
does not anticipate any liquidity problems in the next 12 months and will not be
in default or in breach of any note, loan, lease or other indebtedness or
financing (See below and "Risk Factors").
Differences in estimated expenses for filing fees, legal and
accounting, etc., between the amounts required under a minimum offering and
those required under a maximum offering reflect the anticipated greater number
of state registrations that would be required for larger sales throughout the
offering period. Such registrations would only be secured as a function of the
Company's experience with the Offering.
If the Company realizes less than the maximum amount from this
offering the Company intends to prioritize its fund uses as follows:
1. Personnel
2. Advertising/Marketing
3. Equipment Purchase/Lease
4. Rent, Utilities, Leases
5. Training of Employees
6. Corporate Website
7. Working Capital
8. Insurance
The Company has no plans or intentions to acquire any assets from
officers, directors or principal stockholders.
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1999 and as adjusted to give effect to the sale of 100,000 shares
of Common Stock (assuming the minimum number of Shares offered hereby are sold)
and the sale of 1,000,000 shares (assuming the maximum number of Shares offered
hereby are sold) and the application of the estimated net proceeds therefrom,
assuming an Offering price at $5.00 per share for the Common Stock. This table
should be considered together with our financial statements included elsewhere
in this prospectus. No stock splits, stock dividends, or other forms of
re-capitalization are planned at this time. See "Use of Proceeds."
Amount Outstanding
As of December 31, 1999
<TABLE>
<CAPTION>
Prior to Offering Minimum Maximum
<S> <C> <C> <C>
Debt: $220,809 $220,809 $220,809*
Stockholder's equity:
Preferred stock, par value of $.03 per share;
50,000,000 authorized; 296,300 shares
issued and outstanding. 8,889 8,889 8,889
Common stock, $.03 par value; 50,000,000
shares authorized; 6,414,149 shares issued
and outstanding. 192,425 195,425 222,425
Additional paid-in capital 1,493,581 1,954,581 6,195,081
Deficit accumulated during development (1,278,764) (1,278,764) (1,278,764)
Accumulated other comprehensive income 339,060 339,060 339,060
Total stockholders' equity 755,191 1,219,191 5,486,691
Total Liabilities & Stockholders' Equity $976,000 $1,440,000 $5,707,500
</TABLE>
*This debt was paid in full in February 2000.
<PAGE>
DIVIDEND POLICY
The Company has not declared or paid any cash dividends on the Common
Stock since its inception. The Company currently anticipates that all of its
earnings will be retained in the immediate future for development and expansion
of the Company's business. No declaration or payment of any cash dividend is
anticipated in the foreseeable future.
DILUTION
Purchasers of the Common Stock offered hereby will experience an
immediate and substantial dilution in the net tangible book value of their
Common Stock from the Offering price. The net tangible book value of the Company
as of December 31, 1999 was $1,219,191 or $0.12 per Share of Common Stock. Net
tangible book value per share represents the amount of the Company's tangible
net worth divided by the total number of shares of Common Stock outstanding as
of December 31, 1999. After giving effect to the sale of 1,000,000 shares of
Common Stock by the Company in the Offering and the application of the net
proceeds therefrom (assuming the maximum Offering is subscribed and after
deduction of underwriting discounts and commissions and estimated Offering
expenses payable by the Company), the pro forma net tangible book value of the
Company as of December 31, 1999 would have been $5,486,691 or $0.74 per Share of
Common Stock. This represents an immediate increase in net tangible book value
of $0.62 per Share to existing shareholders and an immediate dilution of $4.26
per Share to purchasers of Shares in this Offering on a maximum basis (85%) and
$4.81 on a minimum basis (96%). The following table illustrates the per Share
dilution:
<TABLE>
<CAPTION>
Offering price: $5.00 Minimum Maximum
--------- ---------
<S> <C> <C>
Net tangible book value per common share before the Offering $0.12 $0.12
Increase attributable to new investors .07 .62
Pro forma net tangible book value per share after the Offering .19 .74
Dilution in net tangible book value per share to new investors $4.81 $4.26
</TABLE>
The following table sets forth a comparison as of December 31, 1999 of
the number of shares of Common Stock acquired by current shareholders from the
Company, the total consideration paid for such shares of Common Stock and the
average price per share paid by such current shareholders and to be paid by the
prospective purchasers of the Shares (based upon an offering price of $5.00
<TABLE> <CAPTION>
Shares Purchased Consideration Avg. Cash Price
Number Percent Amount Percent Per Share
<S> <C> <C> <C> <C> <C>
Existing shareholders 6,414,149 86.5% $297,348 5.6% $0.05
New investors 1,000,000 13.5% $5,000,000 94.4% $5.00
Total 7,414,149 100.0% $5,000,002 100.0%
</TABLE>
The Offering price of the Shares has been determined based on an
estimate by management of the Company's earnings potential over the next five
years. Management makes no representations that the Company will generate such
earnings and there can be no assurance as to when the Company will generate
revenues and earnings, if ever. The Offering price is arbitrary and does not
reflect the Company's asset value, net worth, present earnings, cash flow or any
other established criteria of value. The Offering price of the Shares may or may
not be an indication of their present value or the value of the Company or their
future value or the future value of the Company.
<PAGE>
PLAN OF OPERATION
The following plan of operation of the Company should be read in
conjunction with The Use of Proceeds included elsewhere in this Prospectus. This
plan of operation and other parts of this prospectus contain forward-looking
information that involves risks and uncertainties. The Company's actual results
could differ materially from those anticipated by such forward-looking
information as a result of certain factors including, but not limited to, those
set forth under Risk Factors and elsewhere in this prospectus.
The Company is a development stage Company, which intends to become a
leading (OEM) Original Equipment Manufacturer, owner and leaser of engine
driven, air conditioning, refrigeration, heat recovery and electric generating
systems for the commercial and industrial marketplace. Since its inception, the
Company's operations have been limited to developing the concepts, the marketing
program and the basic mechanical modules, and raising needed capital.
As shown in the Use of Proceeds section, a large percentage of the
funds raised will be for inventory of components, finished goods and systems
site lease financing.
The Company has determined that there are 20 states where the
difference between the cost of natural gas as opposed to the cost of electricity
create a favorable economic situation for the placement of the PSI systems.
The states are as follows: New York, Vermont, New Jersey, New
Hampshire, Massachusetts, Connecticut, Nevada, Missouri, Rhode Island,
Pennsylvania, Kansas, California, Ohio, Arizona, Missouri, New Mexico,
Mississippi, Illinois, Michigan, Louisiana.
Upon completion of the Offering, PSI will commence with a marketing
program, which encompasses, advertisements in the trade magazines backed up by
recruiting qualified Systems Sales Engineers for each of these marketing areas.
Additionally, in order to have the product available for placement at
sites and eliminate long lead times, PSI will order and stock sufficient
components to have 10 Basic System Modules on hand as finished goods.
The bulk of the systems as installed will be owned by PSI and leased to
the sites for a ten-year period of time on a guaranteed savings basis.
Placement of the systems on that basis will generate a continuous
stream of positive revenue for PSI from site energy reductions over that
ten-year period of time.
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following tables present selected historical financial data for the
years ended December 31, 1999 and 1998 and the period from (date of inception)
through December 31, 1999. The balance sheet data as of December 31, 1999 and
1998 and the statement of operations data for the years ended December 31, 1999
and 1998 have been derived from financial statements (including those set forth
elsewhere in this prospectus) that have been audited by David T. Thomson, P.C.,
independent accountants. The historical data for the period from inception
through December 31, 1999 is derived from our unaudited financial statements
and, in the opinion of management, include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of our results
of operations for that period.
<TABLE>
<CAPTION>
Statements of Operations Data
Year Ended Inception Through
December 31, December 31,
------------
1999 1998 1999
---- ---- ----
<S> <C> <C> <C>
Net Sales $ 69,986 $ 5,041 $ 587,581
Cost of Sales 67,261 589 352,207
Gross Profit(Loss) 2,725 4,452 235,374
Total Operating Expenses 62,163 63,895 1,305,139
(Loss) from Operations (59,438) (59,443) (1,069,765)
Net (Loss) (47,737) (280,443) (1,279,064)
Basic and Diluted (Loss) Per Share $ (.01) $ (.04)
Basic and Diluted Weighted Average
Number of Common Shares
Outstanding 6,414,149 6,414,149
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data
December 31,
1999 1998
---- ----
<S> <C> <C>
Cash $ 53,227 $ 3,527
Current Assets 973,625 3,527
Total Assets 976,000 3,973
Current Liabilities 220,809 144,250
Stockholders' Equity (Deficiency) 755,191 (140,277)
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The Company was formed on May 8, 1987 to design, manufacture,
sell/lease and finance fossil-fueled engine-driven air conditioning, heating,
thermal heat recovery and electric co-generation plants. Realizing that the
Company needed operating capital to effectively execute its proposed business
plan, the Company raised both cash and services through the issuance of the
Company's stock $1,090,750 through December 31, 1998. These funds allowed the
Company to stay in business and generate over $500,000 in gross sales. However,
the Company's operating losses exceeded its gross revenues and capital raised by
over $140,000 through December 31, 1998.
On July 22, 1999 the Company was re-incorporated, whereby, the
operations were transferred to the new corporation and the old parent company
was sold to a new investor group to seek a new operation. As part of this
reorganization, certain shareholders of the old corporation transferred their
common stock of the old corporation into the newly re-incorporated entity. As a
result of this reorganization, the Company now has working capital of over
$750,000 and a positive shareholders' equity over $755,000.
Even though the Company still has a going concern issue, the Company
believes with the successful completion of the offering and with the new working
capital it has obtained, it will be successful in generating sufficient revenues
in the future to sustain current operations.
The Company operates in a very competitive environment often competing
for the same customers where larger more established and well-capitalized
companies exist. Additionally, the Company prior to 1999 did not have the
personnel or finances to be competitive in its current market.
Typically, the systems the Company sells outright require a fifty
percent deposit up front, with forty percent upon shipment of the system. The
remaining ten percent is due upon the equipment functioning properly on startup.
Turnkey installations of the systems, at commercial and industrial sites, are
made on a long-term 10-year lease from PSI with full maintenance and service.
The system is owned by PSI and produces a continuous stream of positive
cash-flow to PSI for 10 years from the reduction in utility costs
In the past, the Company has not had the ability to finance, engineer,
or market its equipment properly. However, with the current funds and the
funding from the offering, the Company believes it will become competitive
within its market and generate sufficient revenues to allow the Company to
obtain profits from its operations.
Liquidity
During 1999, the Company, as discussed above, re-capitalized itself
with the issuance of preferred stock for certain marketable securities.
The Company has been selling a certain number of these securities on a
daily basis converting its investment to cash. Since December 31, 1999, the
stock has appreciated in value and the Company expects to generate sufficient
liquidity from the stock sales to maintain its current operations.
As reflected in the financial statements, the Company's working capital
increased by $893,539 from December 31, 1998 to December 31, 1999.
Capital Resources
As discussed above, the Company believes it has generated sufficient
capital in 1999 to sustain its current operations. During the year ended
December 31, 1999, the Company through an exchange of preferred stock for
marketable securities increased its capital by over $900,000. In fact, the
Company had a net stockholders' equity of $755,191 at December 31, 1999.
The Company lost $59,438 from operations in 1999 and expects to
continue to have a loss from operations through the end of the year 2000.
However, the Company believes it currently has sufficient working capital to
continue its operating plan until it will generate sufficient revenues from
operations to support its activities.
If the offering is successful, the Company will have the additional
capital required to accelerate its business plan via an expansion of its
operations, marketing activities and financing of its activities. Additionally,
the Company would seek certain alliances with manufacturers and marketing
agreements. The Company will also seek certain acquisitions to further expand
its planned operation. However, the Company will seek stock based acquisitions
to preserve its cash for the operating activities.
<PAGE>
BUSINESS
PSI designs, manufactures, sells/leases and finances fossil-fueled
engine-driven air conditioning, heating, thermal heat recovery and electric
cogenerating plants for the more than 2 million U.S. small businesses that have
been excluded from the benefits of utility deregulation. We provide typical
savings of 20% to 50% on annual utility bills for HVAC (heating, ventilating,
air conditioning) with no out of pocket costs on a convenient rental or
lease/purchase. With usual utility backup, our clients have redundant and secure
power supplies at less cost than their dependent neighbors. Our natural
gas-fired individual unit sales range from $75,000 to $125,000, with retrofits
ranging between $125,000 and $500,000. Most competition for cogeneration has
focused on large-scale industrial users, permitting PSI to concentrate on an
attractive model for small business with enviable margins. The energy efficiency
of cogeneration systems is approximately twice that of conventional generation.
The nitrogen oxide emissions that result from cogeneration are often one-tenth
that of conventional electrical generation.
We have more than thirty years of development and installation
experience and intend to develop a national market for our proven technology.
Our original demonstration test site model (PSI-120) system was installed in
1995 in Mamaroneck, NY and continues to meet or exceed the customer's
expectations. Our latest PSI-70/50 Combo system is presently being completed in
a commercial office building in Rochester, New York. The PSI systems are built
in a proprietary manner, sold outright and/or operated on a turnkey basis as the
PSI Combo package of cogeneration technology. Our expansion will be created
through a combination of advertising in the national trade magazines for
outright sales, and direct sales representatives in selected areas for the
sale/lease of units. We also intend to acquire suitable HVAC companies that will
permit the more rapid conversion of existing customer bases to our units.
Our Risk Model
We have taken steps to lower the risks that we take and simultaneously
enhance our expectations of profitability during a period of rapid growth. We
have structured the following business profile:
o Outright sales are made for cash with a 50% deposit due upon the order, 40%
prior to shipment and the remaining 10% on startup.
o Since we contract out most manufacturing and distribute maintenance needs to
the field, the requirement for a parts inventory has been primarily shifted to
other concerns.
o Unless sold outright, the systems remain the property of PSI and are easily
recoverable, if necessary.
o Funds from this offering and borrowings are targeted principally for
production and installations with immediate income.
Marketing
We have examined various factors associated with our market including
small business electricity usage, ability to pay for our systems, power
availability and quality, fuel sources, electricity prices, penetration of
competing distributed generation technologies, new capacity requirements and the
cost of new capacity additions. Based on this evaluation, we intend to target
the following market segments for our systems
1.Business users with annual electricity costs between ($100,000 to $1,000,000);
2.Firms in remote areas with little available service competition.
3.Facilities in high electricity cost areas.
4.Business users where utilities are unable to efficiently satisfy power needs.
5.Strategic partnership possibilities where natural gas utilities can enhance
their sales with PSI installations.
<PAGE>
We will employ numerous techniques to identify potential customers such
as:
o Advertisements in the trade publications.
o Web sites as a vertical industry, business-to-business (B2B), to develop a
next-generation sales organization. o Identify, acquire and support several
profitable and attractive HVAC companies as subsidiaries. o Secure motivated
sales engineers at each HVAC subsidiary site and provide evaluation, design and
marketing support. We are specifically looking for superior market and
technologically specific expertise.
o We will centrally manage the delivery and installation to allow field
personnel to concentrate on marketing activities.
Sales Strategy
We will implement our marketing plan with an emphasis on
differentiating PSI from competing packaged cogeneration manufacturers. Our
strategy is essentially to permanently upgrade and alter the way HVAC equipment
is used by the small end user market. We generate direct sales of CoGenAirHeat
units partially through industry advertising, largely in trade publications. We
will also depend upon contractor sales personnel who have already established
relationships with prime sales prospects. We will target owners, operators and
managers of the properties that are prime candidates for our systems and seek to
leverage our advertising. We will also supply a resident cogeneration sales
engineer and support him or her with operating systems, a defined marketing
program and facilities. The HVAC licensees/subsidiaries generate instant local
name recognition and credibility as well as a base client list. These firms will
be given in-house engineering, installation and maintenance capabilities at a
minor and incremental cost to PSI.
Our on-site sales engineer will develop working relationships with
local utilities and complete energy audits for prospective customers. Although
the sales cycle to initial system placement may take up to nine months from the
date of the energy audit, we expect to generate a sustaining backlog of
projected installations. We also anticipate that successful site-performance
histories will serve as valuable referrals and demonstrations for on-going
system sales and acquisitions as well.
Industry Background
The bulk of the cogeneration industry today primarily revolves around
large industrial installations and numerous systems are operating in the
marketplace today. Capital markets have developed attractive financing
mechanisms and regularly fund such projects. In addition, the leading
cogeneration manufacturers are centralized with a high overhead structure that
makes their ability to respond to small and geographically dispersed end-users
problematic. The National Energy Policy Act of 1992 brought about deregulation
in order to balance out the usage of natural gas and electricity and alleviate
the need to build new power plants. Incentive programs that encourage adherence
to the Act constitute an important impetus to our growth. The natural gas
utility in the market of each of our prospective HVAC licensees/subsidiaries is
an immediate beneficiary of our installations and should have an interest in
working closely with us.
PSI Strategy
Our approach has been to overcome the existing competitive barriers by
making cogeneration technology available to small users and we have developed:
(a) a standard line of affordable and easy to integrate, 100KW to 500 KW
cogeneration modules, with impressive energy efficiency savings; (b) a low risk
leasing vehicle whose repayment stream is closely matched to savings and is
compatible with customer needs; and (c) a decentralized overhead structure with
an added new focus on stable HVAC licensees for an operational format that is
fast, directed towards the customer and is hands-on.
<PAGE>
The modular nature of our systems permits us to fully use HVAC
facilities and personnel with their technological expertise as well as plant and
equipment. Our corporate and site engineering staff will specify, design and
deliver the cogeneration components and/or modules to a HVAC facility for their
assembly, installation and continuing maintenance. The expected increase in site
placements and revenues accompanied by new technology is expected to
significantly improve the competitive position as well as the stability and
capabilities of HVAC organizations.
Products
The benefits and flexibility of our CoGenAirHeat System for commercial,
industrial and large residential equipment of all sizes and BTU capacities are
exclusive and unequaled in the industry. Technological developments in
efficiency, size and standardized manufacturing or sub-systems and components
have allowed us to introduce this competitive new line. We can outsource major
manufacturing components, while producing cost-effective solutions to an
underserved market niche of significant size.
Competitive Advantages
We have formulated our systems and marketing program to contain
multiple benefits to users, affiliates and partners alike:
o The customer receives a state of the art equipment upgrade at
no cost while the existing life of his present facility is
extended with efficiency and substantial cost savings.
o The HVAC licensee will receive enhanced technological
capacities and accelerated revenues. He experiences only
incremental costs and is given the possibility of shareholder
appreciation and liquidity.
o The subsystem and component manufacturer receives stable
demands with economies in production and resultant improved
profitability.
o The natural gas utility receives increased throughput, load
balancing and profits with the marketing goodwill associated
with environmental improvements.
o The electric utility is helped to achieve its mandated
deferral of electric power capital investments.
Competition
There are approximately 25 cogeneration system manufacturers in the
U.S., but none have successfully addressed the millions of small commercial
enterprise market, except for PSI. The significant barriers to this market
include: (a) long sales and installation cycles; (b) complicated due diligence
procedures for system financing, and (c) costly operational structure need to
expand quickly into new markets. We have solved these problems by: (a) building
standard and easily scalable modules available in weeks; (b) we have in place
financing packages that are paid for by system savings; and (c) by leveraging
the existing assets of HVAC companies through distribution or acquisition
alignments, we accelerate geographical penetration.
We will also compete with other distributed generation technologies
including fuel cells and reciprocating engines, available at prices competitive
with existing forms of power generation. We believe that our systems will have a
competitive advantage in that they can be easily scaled to various business
sizes and will be more efficient in handling the load profile of small business
customers. We also believe that our systems will be quiet, environmentally
clean, efficient and relatively inexpensive to install, service and maintain.
Our systems will also compete with solar and wind-powered systems.
<PAGE>
Need for Cogeneration
Due to increasing competitive pressures to cut costs, owners and
operators of industrial and commercial facilities are actively looking for ways
to use energy more efficiently. One option is cogeneration. In this context,
cogeneration is the simultaneous production of air conditioning, or other shaft
power usage, electricity and useful heat from the same fuel source. Facilities
with cogeneration systems use them to produce their own electricity, and use the
waste heat for process steam, hot water heating, space heating, and other
thermal needs. They may also use excess process heat to produce steam for
electricity production. Cogeneration currently coexists with a regulated
industry that is going through major structural changes that may limit its
application.
Regulatory Issues
The concept of cogeneration is not new. Early in this century, before
there was an extensive network of power lines, many industries had cogeneration
plants. As utilities became established and grew, most states began to regulate
them in order to limit their pricing power. The Public Utilities Holding Act of
1935 (PUHCA), together with amendments to the Federal Power Act (also in 1935),
were the final steps in protecting utility companies from competition. These
laws created vertically integrated utilities with responsibility for the
production, transmission, and distribution of power. In exchange for their
exclusive franchises (territories) and guaranteed revenues, utilities agreed to
government regulation of rates and service. Under these rules, more investments
in infrastructure and more sales meant more profits. As the network of power
lines grew and electricity from utilities became more economical, industrial
facilities bought more of their electricity from utilities. However, many
industries still had to generate process heat on-site. The economies of scale
that the utilities were able to obtain at that time, as well as the availability
of low-priced process heat from cheap oil and gas, removed incentives to retain
cogeneration.
In the past three decades, however, the long-term trend of energy
prices generally moved upward. Building more and more large power plants no
longer provided economies of scale. This was a major factor in the increasing
use of cogeneration by commercial and industrial facilities. The Public
Utilities Regulatory Policies Act of 1978 (PURPA) provided further encouragement
for developers of cogeneration plants. Section 210 required utilities to
purchase excess electricity generated by "qualified facilities" (QFs) and to
provide backup power at a reasonable cost. QFs included plants that used
renewable resources and/or cogeneration technologies to produce electricity.
PURPA cogenerators must use at least 5% of their thermal output for process or
space heating (10% for facilities that burn oil or natural gas). In many cases,
this forced independent cogenerators to accept very low rates for their steam
production in order to become a qualified facility under PURPA. Another problem
is the rate at which utilities purchase a cogenerator's excess power production.
Most states set the price at "avoided cost," or the cost to the utility of
producing that extra power. Utilities with excess power generation capacity are
often allowed to have extremely low avoided costs. This practice has created
artificial barriers to cogeneration as well as to independent power generators.
The Energy Policy Act of 1992 (EPAct) tried to create a more
competitive marketplace for electricity generation. It created a new class of
power generators known as Exempt Wholesale Generators (EWGs). These are exempt
from PUHCA regulation and can sell power competitively to wholesale customers. A
cogeneration facility can be (but does not have to be) a QF under PURPA and an
EWG under EPAct. This happens when the facility is in the exclusive business of
wholesale power sales, and makes no retail power sales to its "steam host"
(customer).
Cogeneration Technology
A typical PSI cogeneration system consists of an engine, steam turbine,
or combustion turbine that uses shaft power to drive compressors, pumps, and/or
electrical generators. A waste heat exchanger recovers waste heat from the
engine and/or exhaust gas to produce hot water or steam. Cogeneration produces a
given amount of electric power and process heat with 10% to 30% less fuel than
it takes to produce the electricity and process heat separately.
<PAGE>
There are two main types of cogeneration concepts: "Topping Cycle"
plants, and "Bottoming Cycle" plants. A topping cycle plant generates
electricity or mechanical power first. Facilities that generate electrical power
may produce the electricity for their own use, and then sell any excess power to
a utility. There are four types of topping cycle cogeneration systems. The first
type burns fuel in a gas turbine or diesel engine to produce electrical or
mechanical power. The exhaust provides process heat, or goes to a heat recovery
boiler to create steam to drive a secondary steam turbine. This is a
combined-cycle topping system. The second type of system burns fuel (any type)
to produce high-pressure steam that then passes through a steam turbine to
produce power. The exhaust provides low-pressure process steam. This is a
steam-turbine topping system. A third type (diesel-engine topping system) burns
natural gas or diesel fuel. Gasified coal and landfill gas can also be used. The
hot water from the engine jacket cooling system flows to a heat recovery boiler,
where it is converted to process steam and hot water for space heating. The
fourth type is a gas-turbine topping system. A natural gas turbine drives a
generator. The exhaust gas goes to a heat recovery boiler that makes process
steam and process heat. A topping cycle cogeneration plant always uses some
additional fuel, beyond what is needed for manufacturing, so there is an
operating cost associated with the power production. Bottoming cycle plants are
much less common than topping cycle plants. These plants exist in heavy
industries such as glass or metals manufacturing where very high temperature
furnaces are used. A waste heat recovery boiler recaptures waste heat from a
manufacturing heating process. This waste heat is then used to produce steam
that drives a steam turbine to produce electricity. Since fuel is burned first
in the production process, no extra fuel is required to produce electricity.
An emerging technology that may have cogeneration possibilities is the
fuel cell. A fuel cell is a device that directly converts fossil fuels to
electricity without combustion. The first commercial availability of fuel cell
technology was in the phosphoric acid fuel cell, which has been on the market
for a few years. There are about 40 installed and operating in the United
States. A portable, 200 kW, natural gas fired phosphoric acid fuel cell was
hooked up to the Springs Industries baby-clothing manufacturing plant in
Jackson, Georgia in 1996. The fuel cell will supply electricity to the textile
plant for one year while the engineers monitor its performance. Hot water
generated by the fuel cell is used in the manufacturer's dyeing and washing
processes. Other fuel cell technologies (molten carbonate and solid oxide) are
in early stages of development. Solid oxide fuel cells (SOFCs) may be potential
source for cogeneration due to the high temperature heat generated by their
operation.
Cogeneration Applications
Cogeneration systems have been designed and built for many different
applications. Large-scale systems can be built on-site at a plant, or off-site.
Off-site plants need to be close enough to a steam customer (or municipal steam
loop) to cover the cost of a steam pipeline. Industrial or commercial facility
owners can operate the plants, or a utility or a non-utility generator (NUG) may
own and operate them. Manufacturers use 90% of all cogeneration systems. Some
industries and waste incinerator operators who own their own equipment realize
sizable profits with cogeneration.
Another large-scale application of cogeneration is for district
heating. Many colleges and cities, which have extensive district heating and
cooling systems, have cogeneration facilities. The University of Florida has a
42 Megawatt (MW) gas turbine cogeneration plant ("Gator Power"), built in
partnership with the local utility. Pictures of the plant as well as
descriptions of the system and other technical references are currently
available on the Internet (see address below).
Some large cogeneration facilities were built primarily to produce
power. They produce only enough steam to meet the requirements for qualified
facilities under PURPA. If no steam host is nearby, one can be built. For
example, there are large (80 MW) plants operating under PURPA that have large
greenhouses as "steam hosts." The greenhouses operate without losing money only
because their steam heat is virtually free of charge. These types of plants are
candidates to become EWGs in the new regulatory environment.
Many utilities have formed subsidiaries to own and operate cogeneration
plants. These subsidiaries are successful due to the operation and maintenance
experience that the utilities bring to them. They also usually have a long-term
sales contract lined up before the plant is built. One example is a 300 MW plant
that is owned and operated by a subsidiary co-owned by a utility and an oil
company. The utility feeds the power directly into its grid. The oil company
uses the steam to increase production from its nearby oil wells.
<PAGE>
Cogeneration systems are also available to small-scale users of
electricity. Small-scale packaged or "modular" systems are being manufactured
for commercial and light industrial applications. Modular cogeneration systems
are compact, and can be manufactured economically. These systems, ranging in
size from 20 kilowatts (kW) to 650 kW produce electricity and hot water from
engine waste heat. It is usually best to size the systems to meet the hot water
needs of a building. Thus, the best applications are for buildings such as
hospitals or restaurants that have a year-round need for hot water or steam.
They can be operated continuously or only during peak load hours to reduce peak
demand charges, although continuous operation usually has the quickest payback
period.
Cogeneration systems have also been developed for private residences.
These home-sized cogeneration packages have a capacity of up to 5 kW. Both
natural gas-fueled and oil-fueled systems exist. They are capable of providing
most of the heating and electrical needs for a home. Small-scale cogeneration
has not been widely used in the United States due to the initial cost of buying
and installing the system.
Environmental Issues
While cogeneration provides several environmental benefits by making
use of waste heat and waste products, air pollution is a concern any time fossil
fuels or biomass are burned. The major regulated pollutants include
particulates, sulfur dioxide (SO2), and nitrous oxides (NOX). Water quality,
while a lesser concern, can also be a problem. New cogeneration plants are
subject to an Environmental Protection Agency (EPA) permit process designed to
meet National Ambient Air Quality Standards (NAAQS). Many states have stricter
regulations than the EPA. This can add significantly to the initial cost of some
cogeneration facilities.
Some cogeneration systems, such as diesel engines, do not capture as
much waste heat as other systems. Others may not be able to use all the thermal
energy that they produce because of their location. They are therefore less
efficient, and the corresponding environmental benefits are less than they could
be. The environmental impacts of air and water pollution and waste disposal are
very site-specific for cogeneration. This is a problem for some cogeneration
plants because the special equipment (water treatment, air scrubbers, etc.)
required to meet environmental regulations adds to the cost of the project. If,
on the other hand, pollution control equipment is required for the primary
industrial or commercial process, cogeneration still can be economically
attractive.
Future Market Development
Although the number of cogeneration systems is growing at a steady
rate, certain factors have and will slow the acceleration of cogeneration
activities. Such factors include the initial cost of buying and bringing a
cogeneration system on-line, maintenance costs, and environmental control
requirements. Not all electric utilities need the additional electricity. They
may have excess generation capacity or a stable customer base. This leads to
lower "avoided cost" rates, which reduces the viability of cogeneration projects
that rely heavily on power sales to utilities. In addition, the deregulation, or
restructuring, of electric power generation makes it more attractive for
developers to become independent power producers and to build "electricity only"
power plants, instead of cogeneration plants. There has also been a great deal
of pressure from utility and industrial special interests to repeal or amend
PURPA. If they are successful, it could be difficult for new cogeneration
projects to get off the ground. Barring that development, improved technology
and cooperation among industries, businesses, utilities, and financiers should
provide impetus to the continued development of both cogeneration projects and
independent power production projects.
<PAGE>
Government Regulation
We do not believe that we will be subject to exiting federal and state
regulatory commissions governing traditional electric utilities and other
regulated utilities. We do believe that our systems will be subject to oversight
and regulation at the local level in accordance with state and local ordinances
relating to building codes, safety, pipeline connections and related matters.
Such regulation may depend, in part, upon whether a system is placed inside or
outside of a facility. At this time, we do not know which jurisdictions, if any,
will impose regulations upon our system or installation. We also do not know the
extent to which any existing or new regulations may impact our ability to
distribute, install and service our systems. Once our product reaches extensive
national distribution, federal, state or local government entities or
competitors may seek to impose regulations. We intend to encourage the
standardization of industry codes to avoid having to comply with differing
regulations on a state-by-state or locality-by-locality basis.
Intellectual Property
We intend to trademark and otherwise brand our services. If successful,
our rights to such trademarks and service marks will last indefinitely so long
as we continue to use and police the marks and, with respect to registered
marks, to renew filings with the appropriate government agencies. We consider
that marks will become material to our business.
Web Site
As part of our program to secure added clients, we will provide a Web
site that features a variety of information for sales engineers and customers
alike. Our national Web site will feature valuable information for HVAC needs of
small business as well as a chat room to allow questions to be submitted to
Company personnel. Each HVAC licensee/subsidiary will also have a Web site that
relates to his particular territory and unique community dynamics. We believe
continued participation and promotion of such Web sites will provide the
important marketing advantages.
Employees
As of December 31, 1999, we had 5 employees who serve on as needed
basis only and are unsalaried. None of our employees is represented by a union
and our employee relations are satisfactory. We intend to augment our staff in
response to the proceeds of this offering and the success of our acquisition and
marketing strategies.
Properties
Our principal executive and administrative offices are located at 5800
NW 64th Avenue, Bldg 26 #109, Tamarac, FL. We currently occupy 1,000 square feet
of space at a monthly cost of $500, on a month-to-month basis. Upon completion
of this offering we intend to acquire approximately 2,500 square feet in a
nearby basis on comparable terms.
Legal Proceedings
We are not a party to any material litigation. However, claims and
litigation may arise in the normal course of business.
Additional Information
We have filed a registration statement on Form SB-2 under the
Securities Act with the Securities and Exchange Commission in Washington, D.C.
with respect to the securities offered hereby. This prospectus, which
constitutes a part of the registration statement, does not contain all of the
information set forth in the registration statement and the exhibits and
schedules thereto. For further information with respect to us and the securities
offered hereby, reference is made to the registration statement and the exhibits
and schedules thereto filed as a part thereof. Statements contained in this
prospectus as to the contents of any contract or other document filed as an
exhibit to the registration statement to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or document filed
as an exhibit to the registration statement, each such statement being qualified
in all respects by such reference. The registration statement, including all
amendments, exhibits and schedules thereto, may be inspected without charge at
the office of the Securities and Exchange Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and the Securities and Exchange
Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York, New
York 10048, and Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material may also be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, the Securities and
Exchange Commission maintains a web site that contains reports, proxy and
information statements and other information regarding issues that file
electronically with the Commission. The address of site is http://www.sec.gov.
<PAGE>
MANAGEMENT
Directors and Executive Officers
<TABLE>
<CAPTION>
Name Age Position Director Since
<S> <C> <C> <C>
Scott Emerson Balmer 74 Chairman of the Board of Directors 1988
Burton T. O'Donald 57 CEO
Raymond H. Buldcoc II 52 President, COO, CFO
Victor V. Vurpillat, PhD 58 Vice President, Acquisitions
Norman S. Haugen 65 Consultant, Electric Power Programs
Mary Jane Balmer, 69 Interim Secretary and Treasurer 1998
</TABLE>
Note: Presently all executives are compensated on an as needed basis
only. They will join us permanently in the position indicated upon attaining
financing. An officer or director "expected to join the company" or "designate"
is one who will assume the office no later than upon completion of the offering.
Our directors are elected at the annual meeting of our shareholders.
Each director holds office until his successor is elected and qualified or until
his earlier death, resignation or removal. Our executive officers serve at the
discretion of the Board of Directors. None of the permanent executives or
directors has or will have any family relationship to any other. We expect to
obtain key life insurance on Scott Balmer, payable to us. Mary Jane Balmer, the
Interim Secretary and Treasurer, is the wife of Scott Balmer.
Scott Emerson Balmer is our founder and has directed the Company since
1988. He has had a lifetime in the HVAC industry and has designed equipment to
fill a variety of niches in the marketplace. Balmer & his associates have
concentrated on development of medium capacity combo system electric generating
plants, cogeneration, and research and development of natural gas fueled
systems. He is a creator of numerous unique designs in energy saving equipment
including solar and geothermal energy systems.
Burton D. O'Donald joined us as CEO in 1998 following three years at
the Oxford Acceptance Company and ten years at the DME Corporation. He
co-founded Oxford and implemented direct marketing and support systems for this
capital provider. At DME he was involved in product development, design
engineering and support of marketing. He holds two Bachelor's degrees from the
University of Pennsylvania and a Master's degree from the Wharton School.
Raymond H. Bolduc II has been our President, CFO and COO since December
1998. He has served as an advisor and participant in major corporate development
programs for Arthur D. Little Company and has held a variety of executive
positions with firms such as American Express, Latin America. From 199 to 1996
he served as a consultant to Renova Group, and from 1996 to 1997 as a consultant
to Tronco, South Africa. From 1997 he was a consultant to Hidden Eyes, Inc. and
from 1998 to present he has served as Manager of Administration and Projects of
Miami Millwrights. He holds a Bachelor's degree from Rutgers University and an
MBA from Northeastern University.
Victor V. Vurpillat has chaired our Executive Committee since 1995 and
presently serves as Vice President, Acquisitions. From 1999 to the present he
has served as a vice president of 21st Century Medicine. From 1996 to 1999 he
was with SpanWorks, a joint venture with Toshiba, as a founder and board member.
From 1992 to 1996 he was the chairman of a biotech engineering company, Incell.
From 1976 to 1990 he served as a founder and VP for R&D of Safeguard
Scientifics, Inc., a company that served as an incubator for many technology
firms. He is either the founder, officer or director of 13 early stage
companies including Novell, Telerate, LV Computer Systems, Compucom, InCell
and IDR-Reuters. He holds 7 U.S. patents and was granted a PhD from Newport
University.
Norman S. Haugen has served as a Consultant to the Company since 1988.
He has 40 years of experience in the power generation field with extensive
experience in the application of cogeneration systems. He also is experienced in
the manufacturing and servicing of cogeneration applications.
Mary Jane Balmer has served as our Interim Secretary and Treasurer
since 1988.
<PAGE>
Director Compensation
None of the Company's directors received any compensation for their
services as a director during fiscal year 1997, 1998 or 1999. After completion
of the Offering, the Company will consider a small stipend for directors who are
not employees of the Company and/or participation in a stock option plan. The
Company reimburses all reasonable expenses incurred in connection with attending
meetings of the Board. Officers serve at the discretion of the Board and are
elected annually. No director is selected or serves pursuant to any special
arrangement or contract. (See "Description of Capital Stock.")
Executive Compensation
No executives received compensation from the Company in 1999.
Any bonuses would be awarded by the Board of Directors following a
review of our performance in the previous year and a judgment that such bonuses
were warranted. The Board may also choose additional forms of compensation if
the Company's and the individual's performance so warranted. The formula or
criteria for determining bonuses past 1999 has not yet been established.
Stock Option and Exercise Prices
The Company has no stock option plan at the present time and there are
no outstanding stock options that have been granted to anyone.
Employment Agreements.
We will enter into a new three-year employment agreement containing
confidentiality and non-compete provisions with all current officers and we
intend to negotiate similar agreements with new executive officers. We expect to
have these in place during the first quarter 2000. The employment agreements
will specify salary, other forms of compensation, termination and other
provisions to protect both our rights and those of the employee.
Each employment agreement also provides that the employee is entitled
to a bonus as determined by the board of directors, from time to time, and
options under the Company's Stock Option Plan. Each Employment Agreement
provides for a term of three years and is renewable upon mutual consent. The
employment agreements may be terminated for cause and, in the event of change in
control of the Company, each employee is entitled to a lump sum payment equal to
the greater of one year's salary or the baser salary and benefits that would
have been received by the employee if he/she had remained employed by us the
remainder of the three year term. The employment agreements also contain
confidentiality and non-competition provisions prohibiting the employee from
competing against us and disclosing trade secrets and other proprietary
information. Courts have often held that such non-compete agreements are
contrary to public policy and may easily not be enforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We believe that all of the transactions set forth in this document were
made on terms no less favorable to us than could have been obtained from
unaffiliated third parties. We intend that all future transactions, including
loans, between us and our officers, directors, principal shareholders and their
affiliates will be approved by a majority of the board of directors, including
outside directors, and be on terms no less favorable to us than could be
obtained from unaffiliated third parties.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of December 31, 1999 and as adjusted
to reflect the sale of the minimum and maximum amount of the Shares offered
hereby, by: (1) each person known by the Company to be the beneficial owner of
more than 5% of the Company's Common Stock; (2) each of the Company's directors;
(3) each of the Company's executive officers, (4) all directors and executive
officers of the Company as a group, and (5) all other stockholders as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned
Number Percent (%)
Prior to After After
Name of Beneficial Owner Offering Minimum Maximum
-------- ------- -------
<S> <C> <C> <C>
Scott Balmer 6,414,149 (100%) 6,414,149 (99%) 6,414,149 (87%)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Other Investors None
Total 1
Total shares sold in the Offering (Min) 100,000
Total shares sold in the Offering (Max) 1,000,000
</TABLE>
Price per share and form of consideration:
CERTAIN ARTICLES AND BYLAWS
The Certificate of Incorporation and Bylaws of the Company contain
certain provisions regarding the rights and privileges of shareholders. The
provisions of the Certificate of Incorporation and Bylaws are summarized below.
Reference is made to the full text of the Certificate and Bylaws. The following
summary is qualified in its entirety by such reference.
Size of Board and Election of Directors. The Certificate of
Incorporation provides that the number of Directors shall be fixed from time to
time as provided in the Bylaws. The Articles of Incorporation and Bylaws
currently provide for not less than one person to serve on the Board, but the
number of Directors may be changed (to not less than one) by amendment to the
Bylaws, which requires the vote of a majority of the Board. The Certificate
of Incorporation further provides that the Board may amend the Bylaws by
action taken in accordance with such Bylaws, except to the extent that any
matters under the Certificate of Incorporation or applicable law are
specifically reserved to the shareholders.
OPTION FOR SHAREHOLDERS OWNING MORE THAN 10%
The only shareholders owning more than 10 % are the founders. They have
not been granted any options.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 50,000,000
shares of common stock, par value $0.03. On December 31, 1999, 6,414,149 shares
of common stock were issued and outstanding and there is one holder of the
common stock. 50,000,000 preferred shares are authorized and 296,300 have been
issued and are outstanding.
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders and do not have cumulative voting
rights. The holders of a majority of the outstanding shares of Common Stock
represented at a meeting at which a quorum is present may elect all directors to
be elected at the meeting. Holders of the common stock may take action without a
meeting of stockholders if a consent in writing setting forth such action is
signed by the holders of the majority of all outstanding shares of Common Stock.
<PAGE>
The holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board of
Directors out of legally available funds. In the event of the liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining after payment of liabilities.
There are no preemptive rights, redemption or sinking fund provisions applicable
to the Common Stock. All outstanding shares of Common Stock are, and the shares
of Common Stock to be outstanding upon completion of the Offering will be, fully
paid and non-assessable. The dividends and liquidation rights of holders of
common stock are subject to the rights and preferences of the holders of shares
of any series of preferred stock that the Company may issue in the future.
LIMITATIONS OF DIRECTORS' LIABILITY AND INDEMNIFICATION OF DIRECTORS AND
OFFICERS
The Bylaws of the Company provide that directors of the Company will
not be personally liable for monetary damages to the Company or its shareholders
for breaches of their duties as directors except in instances involving
self-dealing, willful misconduct or recklessness, criminal violations or
liabilities involving the payment of taxes.
The Company has included provisions in its Bylaws providing for
indemnification of its directors and officers by the Company to the maximum
extent permitted under applicable law, including the advancement of expenses
incurred by a director or officer in any suit in which the director or officer
is involved. The Company believes that such actions will assist it in attracting
and retaining qualified individuals to serve as directors and officers.
Prospective investors should be aware, however, that the costs associated with
indemnifying a director or officer could be significant and, if not covered by
insurance, could adversely affect the Company's results of operations.
Furthermore, in situations where the Company has advanced litigation expenses to
a director or officer and the director or officer is required to repay the
expenses because it is ultimately determined that the director or officer is not
entitled to indemnification, the director or officer may not have sufficient
cash or assets to repay the expenses advanced.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the company of expenses incurred or
paid by a director, officer or controlling person of the Company 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 Company will submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
LIMITATIONS ON TRANSFER OF SHARES
There is currently no public market for the Company's Common Stock, and
there is little likelihood that an active trading market will develop in the
near future as a result of this Offering. The Offering Statement, of which this
Offering Circular is a part, has not yet been qualified with the Securities and
Exchange Commission pursuant to SB-2 under the Securities Act, and as such, the
Shares may not be freely traded under the federal securities laws until such
qualification has been made and shares properly registered in the states where
they are to be sold. The Shares, however, will have been registered in only a
limited number of states and may not be sold or otherwise transferred to persons
who are residents of any state in which the Shares have not yet been registered
unless they are subsequently registered or there exists an exemption from the
applicable state's registration requirements with respect to such sale or
transfer.
Following the Offering, the Company will be considered a "reporting"
issuer whose securities are not listed or subject to regulation under the 1934
Act. The Company has retained a broker-dealer to facilitate the sale of shares
under the Offering. Pursuant to Rule 15c2-11 of the 1934 Act, the Company will
provide continuing information about the Company to the broker-dealer during the
Offering period. However, in view of the relatively small size of the Offering
there is virtually no likelihood that a regular trading market will develop in
the near term if at all, or that if developed, it will be sustained. Accordingly
an investment in the Company's Common Stock should be considered highly
illiquid.
<PAGE>
TRANSFER AGENT AND ANNUAL REPORT
The Company will act as its own transfer agent. Each year the Company
will prepare and distribute to shareholders an Annual Report that describes the
nature and scope of the Company's business and operations for the prior year and
contains a copy of the Company's financial statements for its most recent year.
VALIDITY OF COMMON STOCK
The validity of the issuance of Common Stock offered hereby has been
passed upon for the Company by John Tansey, Esq., of Washington, D.C.
ACCOUNTING
The Company's audited financial statements contained herein show
the Company's position as of December 31, 1999 and are audited by the firm of
David T. Thomson, P.C., of Murray, Utah..
QUALIFIED SMALL BUSINESS ISSUER CAPITAL GAINS TAX EXCLUSION
In 1993, IRS Section 1202 was enacted to provide a 50-percent exclusion
of any gain from the sale of qualified small business stock." For the Shares to
qualify for the exclusion, several tests must be met. For instance the Shares
must be purchased directly from the Company, not in a later trading market, and
the Shares must be held for at least five years. In addition, a "qualified small
business" must not have more than $50 million in assets at all times before the
issuance of the stock and immediately thereafter. Further, at least 80 percent
of the assets must be used in the "active conduct of one or more qualified
trades or businesses" throughout the holding period. There are also limitations
on the persons who may use the exclusion. Prospective investors should consult
their own tax advisers as to the availability of the exclusion.
PLAN OF DISTRIBUTION
The Company is offering to sell up to 1,000,000 shares of Common Stock
at an offering price of $5.00 per share. The Company has agreed to pay to a
broker-dealer, Three Arrows Capital Corporation, 10101 Grosvenor Place #2016,
Rockville, MD 20852 (301) 897 3889 (the "Selling Agent") a sales commission of 5
percent, or $0.25 per share. In addition, the Company has issued warrants to the
broker-dealer to purchase shares at the Offering price, within five years
following effectiveness of the Offering as declared by the Commission, at the
rate of one warrant for each fifteen shares sold up to a maximum of 66,666
shares, and paid a fee of $9,950 for due diligence and consultation. Warrants to
be received by Three Arrows Capital Corp. are restricted from sale, transfer,
assignment or hypothecation for a period of one year from the effective date of
the offering except to officers or partners (not directors) of the underwriter
and members of the selling group and/or their officers or partners. Three Arrows
Capital Corp. is a registered broker-dealer with the NASD and is registered with
the states of New York, Maryland, Virginia and numerous other jurisdictions. The
Company has also agreed to indemnify the Selling Agent for any material
misstatement in its filing. The Company has no plans, proposals, arrangements,
or understandings with the Selling Agent, other than the warrants shares of the
Company's common stock, with regard to future transactions. No other material
relationships exist between the Selling Agent and the Company or its management.
No officers, employees, or directors of the Company will be paid a
commission in connection with the sale of any Shares nor will any officer,
employee or director of the Company undertake the sale of the shares. Sale of
the shares will only be undertaken by the underwriter. None of the principal
shareholders nor management of the Company nor the Underwriter will buy shares
in the Offering to meet the escrow. The Shares will be offered by the Selling
Agent on behalf of the Company primarily through direct solicitations, media
coverage, and posting of announcements.
<PAGE>
The Company reserves the right to reject any subscription in its
entirety or to allocate Shares among prospective investors. If any subscription
is rejected, funds received by the Company for such subscription will be
returned with interest and without deduction. The termination date of the
Offering is _______, 2001. Subscribers will be required to make certain
representations and warranties in the subscription agreement that should be
carefully read before signing.
Investors will have payment for stock deposited in an escrow account
in The Business Bank, 8399 Leesburg Pike, Vienna, VA 22101 by noon of the next
business day after receipt by the broker-dealer. If the minimum proceeds of
$500,000 are not raised, the Subscriber's funds will be promptly returned, with
interest, by the escrow date of _______, 2001. Escrowed funds will be invested
only in investments permissible under SEC Rule 15c2-4.
Within five days of its receipt of a subscription agreement from the
Selling Agent confirming that an accompanying check for the purchase price of
Shares has been received following escrow, the Company will send by first class
mail a written confirmation to notify the subscriber of the extent, if any, to
which subscription has been accepted by the Company. The Company reserves the
right to reject orders for the purchase of Shares in whole or in part. Not more
than thirty days following the mailing of its written confirmation, and upon
achieving the minimum number of total Shares to be sold, a subscriber's Common
Stock certificate will be mailed by first class mail. The Company shall not use
the proceeds paid by an investor until such time as escrow is broken.
Officers and directors of the Company are required to sign "lock-up"
agreements for any and all shares they own or have beneficial rights to own.
Such agreements specify that the holders will not sell or otherwise dispose of
any shares of common stock in any public market transaction including pursuant
to Rule 144 without the specific written approval of the underwriter, Three
Arrows Capital Corp. The agreements also specify that they may not exercise any
rights held by such holders to cause, for a period of twelve months following
the completion of this offering, without the specific written approval of the
underwriter.
<PAGE>
POWER SAVE INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
<TABLE>
<S> <C>
PAGE
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations 3
Statement of Stockholders' Equity 4-5
Statements of Cash Flows 6
Notes to Financial Statements 7-11
</TABLE>
<PAGE>
Independent Auditor's Report
Board of Directors and Stockholders
POWER SAVE INTERNATIONAL, INC.
I have audited the accompanying balance sheets of Power Save International,
Inc. (a development stage company) as of December 31, 1999 and 1998 and the
related statements of operations, stockholders' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on the
financial statements based on my audits. The financial statements of Power Save
International, Inc. for periods from inception (May 8, 1987) to December 31,
1997 were audited or compiled by other accountants and are not reported upon.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audits provided a
reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Power Save International, Inc.
of December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes 3 and 4, the
Company is in the development stage and has sustain significant losses from
inception to date and there is no assurance that the Company can realize
sufficient revenues from its products and services to attain profitable
operations. These matters raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans regarding those
matters is also discussed in Note 3 and 4. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Salt Lake City, Utah
February 17, 2000
<PAGE>
POWER SAVE INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Inception
Year Ended Through
-------------------------------------
December 31, December 31, December 31,
1999 1998 1999
----------------- ----------------- ----------------
<S> <C> <C> <C>
SALES, Net of Returns, Allowances and Discounts $ 69,986 $ 5,041 $ 587,581
COST OF SALES 67,261 589 352,207
Gross margin 2,725 4,452 235,374
EXPENSES:
Research and development costs - - 119,554
Depreciation and amortization 571 50,186 548,146
General and administrative expenses 61,592 13,709 637,439
TOTAL OPERATING EXPENSES 62,163 63,895 1,305,139
Net (loss) before other items (59,438) (59,443) (1,069,765)
OTHER INCOME
Nonrefundable option income - 23,000 23,000
Gain on sale of marketable securities 11,474 - 11,474
Reserve against product rights - (244,000) (244,000)
Dividend income 227 - 227
TOTAL OTHER INCOME 11,701 (221,000) (209,299)
NET (LOSS) BEFORE TAXES (47,737) (280,443) (1,279,064)
PROVISIONS FOR INCOME TAXES - - -
NET (LOSS) $(47,737) $ (280,443) $ (1,279,064)
EARNINGS (LOSS) PER SHARE $ (0.01) $ (0.04)
WEIGHTED AVERAGE SHARES OUTSTANDING 6,414,149 6,414,149
================= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
POWER SAVE INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
---------------- ----------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 53,227 $ 3,527
Accounts receivable 3,788 -
Marketable securities-available-for-sale 904,160 -
Deferred offering costs 12,450 -
------- -
Total Current Assets 973,625 3,527
-------- -----
PROPERTY, PLANT AND EQUIPMENT, at cost
Equipment 4,112 1,612
------ -----
4,112 1,612
Less accumulated depreciation 1,737 1,166
------ -----
Net property, plant and equipment 2,375 446
------ ---
OTHER ASSETS
Product rights, development costs and other intangible assets
net of reserve of $244,000 at December 31, 1999 and 1998 - -
-- -
Total Other Assets - -
-- -
TOTAL ASSETS $ 976,000 $ 3,973
========== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,056 $ 9,256
Advances from shareholder 218,753 134,994
-------- -------
Total Current Liabilities 220,809 144,250
-------- -------
STOCKHOLDERS' EQUITY:
Preferred stock; 50,000,000 shares authorized; $.03 par value; 296,300
shares issued and outstanding at December 31, 1999 and
no shares issued and outstanding at December 31, 1998 8,889 -
Capital stock, $.03 par value; 50,000,000 shares authorized;
6,414,149 shares issued and outstanding at December 31, 1999
and 1998 192,425 192,425
Additional paid-in capital 1,493,581 898,325
Deficit accumulated during the development stage (1,278,764) (1,231,027)
Accumulated other comprehensive income 339,060 -
-------- -
Total Stockholders' Equity (Deficit) 755,191 (140,277)
-------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 976,000 $ 3,973
========== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
POWER SAVE INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION (May 8, 1987) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated Accumulated
Additional During the Other
Preferred Stock Capital Stock Paid-in Development Comprehensive
Shares Amount Shares Amount Capital Stage Income Total
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of shares
for cash-May 1987 - $ - 100,000 $ 3,000 $ - $ - $ - $ 3,000
Issuance of shares
for cash-August 1987 - - 63,433 1,903 278,037 - - 279,940
Issuance of shares
for product rights
and other intangible assets - - 33 - - - - -
Sale of shares
to the public for $.30
per share-restated - - 74,334 2,230 20,070 - - 22,300
Deferred offering costs - - - - (7,892) - - (7,892)
Exchange of shares regarding
pooling of interest of subsidiaries:
Cancellation - - (63,467) (1,904) 1,904 - - -
Re-issuance - - 396,767 11,904 (11,904) - - -
Issuance of shares for services - - 30,500 915 - - - 915
Cancellation of shares-former officer - - (30,000) (900) (9,100) - - (10,000)
Issuance of shares to A.P.S.I.-merger - - 5,144,000 154,320 (109,320) - - 45,000
Issuance of shares for prepaid lease
and working capital - - 449,000 13,470 236,530 - - 250,000
Issuance of shares for services - - 95,000 2,850 - - - 2,850
Conversion of debt
to preferred stock 50,000 1,500 - - 498,500 - - 500,000
Exchange of preferred shares for
oil and gas properties 2,000,000 60,000 - - 9,940,000 - - 10,000,000
Issuance of shares for services - - 154,549 4,637 - - - 4,637
Net loss from inception through
December 31, 1996 - - - - - (908,706) - (908,706)
-- -- -- -- -- --------- -- ---------
Balance-December 31, 1996 2,050,000 61,500 6,414,149 192,425 10,836,825 (908,706) - 10,182,044
Net loss for the year ended
December 31, 1997 - - - - - (41,878) - (41,878)
-- -- -- -- -- -------- -- --------
Balance-December 31, 1997 2,050,000 61,500 6,414,149 192,425 10,836,825 (950,584) - 10,140,166
Cancellation of preferred shares
for oil and gas properties and
other outstanding preferred
shares (2,050,000) (61,500) - - (9,938,500) - - (10,000,000)
Net loss for the year ended
December 31, 1998 - - - - (280,443) - (280,443)
-- -- -- -- -- --------- ---------
Balance-December 31, 1998 - $ - 6,414,149 $192,425 $898,325 $(1,231,027) $ - $ (140,277)
Deficit
Accumulated Accumulated
Additional During the Other
Preferred Stock Capital Stock Paid-in Development Comprehensive
Shares Amount Shares Amount Capital Stage Income Total
-------------------------------------------------------------------------------------------------
Balance- December 31, 1998 - $ - 6,414,14 $ 192,425 $ 898,325 $(1,231,027) $ - $(140,277)
Additional contributed capital - - - - 11,545 - - 11,545
Issuance of preferred shares
for marketable securities 296,300 8,889 - - 583,711 - - 592,600
Comprehensive income:
Net loss for the year
ended December 31, 1999 - - - - - (47,737) - (47,737)
Other comprehensive
income (loss)
Unrealized gain
on securities - - - - - - 339,060 339,060
Comprehensive income - - - - - - - 291,323
-- -- -- -- -- -- -- -------
Balance-December 31, 1999 296,300 $ 8,889 6,414,149 $ 192,425 $1,493,581 $ (1,278,764) $ 339,060 $ 755,191
======== ======== ========== ========== ============ ============= ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
POWER SAVE INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Inception
Year Ended Through
-------------------------------------
December 31, December 31, December 31,
1999 1998 1999
----------------- ----------------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (47,737) $ (280,443) $ (1,279,064)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 571 50,186 548,146
Common stock issued for lease - - 225,000
Gain on sale of securities (11,474) - (11,474)
Reserve against assets and liabilities - 244,000 244,000
Changes in assets and liabilities:
(Increase) in accounts receivable (3,788) - (3,788)
(Increase) in deferred offering costs (12,450) - (12,450)
Increase in accounts payable (7,199) (6,303) 2,056
Increase in advances from shareholder 83,759 (4,954) 218,753
------- ------- -------
Net cash used in operating activities 1,682 2,486 (68,821)
------
CASH FLOWS FROM INVESTING ACTIVITIES:
Product rights, development costs and intangibles - - (244,000)
Increase in organization costs - - (36,408)
Acquisition of fixed assets (2,500) - (14,112)
------- -- --------
Net cash used in investing activities (2,500) - (294,520)
------- -- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of marketable securities 38,974 38,974
Proceeds from issuance of common stock, net 11,544 - 377,594
------- -- -------
Net cash provided by financing activities 50,518 - 416,568
------- -- -------
Net Increase (decrease) in Cash 49,700 2,486 53,227
CASH AT BEGINNING PERIOD 3,527 1,041 -
------ ------ -
CASH AT END OF PERIOD $ 53,227 $ 3,527 $ 53,227
========= ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Stock issued in exchange for goods and services $ - $ - $ 8,402
==== ==== =======
Cash paid for interest $ - $ - $ -
==== ==== ===
Cash paid for income taxes $ - $ - $ -
==== ==== ===
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
POWER SAVE INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY
Power Save International, Inc. (the Company), a Nevada corporation, was
re-incorporated on July 22, 1999. The original incorporation date of
the previous company was May 8, 1987 and the following financial
statements reflect activities from this date of inception. The company
is currently consulting, creating and providing commercial and
industrial energy efficient, engine driven or electrically driven
oxygen plants, air conditioning, refrigeration, compressed air and
electric generating plant designs and systems, for domestic and export
applications, from an inventory of energy technology related products,
developed over the years. The Company's products are being sold in the
eastern United States.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Power Save
International, Inc. (the Company) is presented to assist in
understanding the Company's financial statements. The financial
statements and notes are representations of the Company's management,
which is responsible for their integrity and objectivity. These
accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
Accounting method - The Company's financial statements are prepared
using the accrual method of accounting.
Inventories - Inventories consist of components and finished goods and
are stated at the lower of cost or market. Cost is determined using the
first-in first-out method.
Equipment - Equipment is stated at cost. Maintenance and repairs are
expensed as incurred. Depreciation is determined using the
straight-line method over the estimated useful lives of the assets,
which is three to ten years.
Product Rights - Product rights will be amortized over revenue
generating operations based on management's expectations of the life of
such technology acquired. In 1998, the remaining cost of the product
rights were reserved in total leaving a zero balance at December 31,
1999 and 1998. (see note 5).
Earnings (Loss) Per Share - The Company adopted Statement of
Financial Accounting Standard No. 128, "Earnings per
Share"("SFAS No. 128"), which is effective for annual periods ending
after December 15, 1997.
Earnings (loss) per share are computed based on the weighted average
number of shares actually outstanding as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
<S> <C> <C>
---- ----
Weighted number
of common
Shares used
6,414,149 6,414,149
========= =========
</TABLE>
No changes in the computations of diluted earnings per share amounts
are presented since there were no capital stock transactions that would
serve to dilute common shares.
7
<PAGE>
POWER SAVE INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
Income Taxes - The Company accounts for income taxes using the asset
and liability method. The differences between the financial statement
and tax bases of assets and liabilities is determined annually.
Deferred income tax assets and liabilities are computed for those
differences that have future tax consequences using the currently
enacted tax laws and rates that apply to the period in which they are
expected to affect taxable income. Valuation allowances are
established, if necessary, to reduce deferred tax asset accounts to the
amounts that will more likely than not be realized. Income tax expense
is the current tax payable or refundable for the period, plus or minus
the net change in the deferred tax asset and liability accounts.
Statement of Cash Flows - The Company considers (if and when they have
any) all highly liquid investments with maturities of three months or
less to be cash equivalents. The Company had no noncash investing and
financing transaction during 1999 and 1998.
Issuance of Shares for Services and Other Assets - Valuation of shares
for services and other acquired assets were based on the fair market
value of services received.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Comprehensive Income - The Company adopted Statement of Financial
Accounting Standard No. 130, "Comprehensive Income"("SFAS No. 130"),
which is effective for annual periods ending after December 15, 1997.
As provided by SFAS No. 130, reclassification adjustments to prior year
amounts are reported in a separate statement of comprehensive income
along with current year components of comprehensive income.
Reclassifications - Certain prior year amounts have been
reclassified to conform with 1999 classifications.
Marketable Securities - Marketable securities consist of common stock.
Marketable securities are stated at market value as determined by the
most recently traded price of each security at the balance sheet date.
All marketable securities are defined as trading securities or
available-for-sale securities under the provisions of SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
Management determines the appropriate classification of its investments
in marketable securities at the time of purchase and reevaluates such
determination at each balance sheet date. Securities that are bought
and held principally for the purpose of selling them in the near term
are classified as trading securities and unrealized holding gains and
losses are included in earnings. Debt securities for which the company
does not have the intent or ability to hold to maturity and equity
securities are classified as available-for-sale. Available-for-sale
securities are carried at fair value, with the unrealized gains and
losses, net of tax if applicable, reported as a separate component of
stockholders' equity in accumulated other comprehensive income. The
company at this time has no trading securities.
NOTE 3 - BASIS OF PRESENTATION AND CONSIDERATIONS RELATED TO CONTINUED
EXISTENCE
The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business. The Company incurred net losses of $47,737 and $280,443 for
the years ended December 31, 1999 and 1998, respectively. Additionally,
the Company has incurred losses of $1,279,064 from inception through
December 31, 1999. These factors, among others, raise substantial doubt
as to the Company's ability to obtain debt and/or equity financing and
achieve profitable operations.
8
<PAGE>
POWER SAVE INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - BASIS OF PRESENTATION AND CONSIDERATIONS RELATED TO CONTINUED
EXISTENCE - CONTINUED
The Company's management intends to raise additional operating funds
through equity and/or debt offerings. However, there can be no
assurance management will be successful in its endeavors. Ultimately,
the Company will need to achieve profitable operations in order to
continue as a going concern.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include
any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this
uncertainty.
NOTE 4 - DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined in Financial
Accounting Standards Board Statement No. 7. It has yet to commence
full-scale operations. From inception through the date of these
financial statements, the Company did not have any net income from
operations. At the current time, the Company has $976,000 in assets and
$220,809 in liabilities.
The Company has not yet generated significant revenue and has begun to
fund its operations through the issuance of equity. Accordingly, the
Company's ability to accomplish its business strategy and to ultimately
achieve profitable operations is dependent upon its ability to obtain
additional financing and execute its business plan. There can be no
assurance that the Company will be able to obtain additional funding,
and, if available, that the funding will be obtained on terms favorable
to or affordable by the Company. The Company's management is exploring
several funding options and expects to raise additional capital through
private placements to continue to develop the Company's operations
around its business plan. Ultimately, however, the Company will need to
achieve profitable operations in order to continue as a going concern.
NOTE 5 - PRODUCT RIGHTS
The company acquired certain product rights, development costs and
other intangible assets for $244,000 from H.C. Technology, Inc. (a then
related corporation). These assets were appraised on September 15, 1987
for $1,480,000 and such assets include product technology, employee
replacement costs, marketing programs, trade names, and other assets
with determinable value. Since the acquisition of these assets was a
number of years ago, the valuation carried on the books was reserved to
a zero value at December 31, 1999 and 1998. However, the management of
the company still believes that the assets acquired are of a value of
$244,000 as originally recorded on the books.
NOTE 6 - LICENSE FEE
The company had a license for a design of a thermal compression
hemispheric jet chiller to utilize a source of heat to provide chilled
water for use in refrigeration and air-conditioning systems to reduce
the energy consumption of systems in which they were to be
incorporated.
This license fee has expired and all related costs were fully amortized
at the end of 1998.
NOTE 7 - INCOME TAXES
Deferred income taxes arise from temporary differences resulting from
income and expense items reported for financial accounting and tax
purposes in different periods. Deferred taxes are classified as current
or non-current, depending on the classification of the assets and
liabilities to which they relate. Deferred taxes arising from temporary
differences that are not related to an asset or liability are
classified as current or non-current depending on the periods in which
the temporary differences are expected to reverse.
9
<PAGE>
POWER SAVE INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - INCOME TAXES - CONTINUED
Amounts for deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, December 31,
1999 1998
Deferred tax liability - unrealized gain $ 115,280 $ -
Use of NOL against deferred tax liability $ (115,280) $ -
Deferred tax asset, net of valuation allowances
as per below $ - $ -
</TABLE>
The following temporary differences gave rise to the deferred tax asset
at December 31, 1999 and December 31, 1998.
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
<S> <C> <C>
Tax benefit of reserve against product rights $ 82,960 $ 82,960
Tax liability of option income $ 7,820 (7,820)
--------------- -------------------
Valuation allowance for judgment of
realizability of net deferred tax benefit
in future years $ ( 90,780) $ (75,140)
</TABLE>
Because the Company has not generated taxable income since its
inception, no provision for income taxes has been made. For tax
purposes, the Company had available at December 31, 1999, net operating
loss ("NOL") carryforwards for regular Federal income tax purposes of
$1,029,423. The balance of NOL carryforwards of $1,029,423 will expire
as shown below. A valuation allowance of $350,004 has been established
for those tax credits which are not expected to be realized. The change
in the allowance during 1999 was $8,411.
<TABLE>
<CAPTION>
Year Ended
December 31,
<S> <C>
2002 $ 8
2003 13,546
2004 156,871
2005 162,877
2006 130,190
2007 113,298
2008 108,239
2009 95,943
2010 46,043
2011 76,349
2012 41,877
2013 59,445
2018 24,737
-------------
$1,029,423
</TABLE>
NOTE 8 - RELATED PARTY TRANSACTION
The Company currently utilizes office and manufacturing space on a rent
free basis from a major stockholder of the Company until revenue
generating operations commence. Management has deem the free rent to be
of nominal value to date. The same stockholder, director and
shareholder has made certain advances to the company on an interest
free basis, payable upon demand.
10
<PAGE>
POWER SAVE INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - NON-CASH TRANSACTIONS
The following noncash investing and financing activities occurred
during the period from inception through December 31, 1999:
The Company exchanged 50,000 shares of its preferred stock for certain
license fees valued at $500,000.
The Company issued certain shares of its common stock for a prepaid
lease valued at $225,000.
The Company exchanged 2,000,000 shares of preferred stock for oil and
gas properties valued at $10,000,000. This transaction was rescinded.
For financial statement purposes the transaction was treated as being
rescinded in 1997.
The Company exchanged 296,300 shares of preferred stock for marketable
securities valued at the time of exchange at $592,600.
NOTE 10 - STOCKHOLDERS' EQUITY
The Company and its assets were spun off from the previously owned
parent company when a majority interest of the common stock in the old
company was sold to a consulting group. The assets and liabilities were
transferred to the current corporation and all the activities from
inception through October 31, 1999 have remained with the current
company.
The Board of Directors has authorized a stock issuance totaling
1,000,000 shares of its common stock at $5.00 per share. The offering
will be filed under the Securities Act of 1933 or an exemption under
the Act.
The Company has paid certain deferred offering costs related to the
above mentioned offering totaling $12,450. It is expected that
additional legal and accounting costs will be incurred in relation to
the offering. If the current offering is successful, the costs will be
offset against any gross proceeds received. Otherwise, the costs will
be written off to expense in the year the offering is unsuccessful or
terminated.
The company has adopted SFAS 130, which requires presentation of
comprehensive income(net income plus all other changes in net assets
from non-owner sources) and its components in the financial statements.
The company has changed the format of its statements of stockholders'
equity to present comprehensive income. Accumulated other comprehensive
income or loss shown in the statements of stockholders' equity at
December 31, 1999, is solely comprised of the accumulated change in
unrealized gains and losses on marketable securities. There was no
other comprehensive income prior to 1999.
NOTE 12 - MARKETABLE SECURITIES
Marketable securities are carried on the balance sheet at their fair
value. As of December 31, 1999, the following applies to the company's
available-for-sale securities.
<TABLE>
<CAPTION>
<S> <C>
Cost $565,100
========
Unrealized gain $339,060
========
Market value $904,160
========
</TABLE>
As of the date of the audit report the market value of the
available-for-sale securities was $651,348.
<PAGE>
PART II
Information Not Required in prospectus
Item 13. Other Expenses of Issuance and Distribution.
The estimated expenses of this offering, all of which will be paid by
Registrant, are as follows:
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee $2,640
National Association of Securities Dealers, Inc. Fee 1,500
Nasdaq Listing Fee 6,000
Accounting Fees and Expenses 3,000
Registrant's Legal Fees and Expenses 1,500
Blue Sky Expenses and Counsel Fees 7,000
Printing and Engraving Fees 4,000
Transfer Agent and Registrar's Fees and Expenses 1,000
Document Preparation 9,950
Miscellaneous Expenses *
Total *
</TABLE>
________
* To be completed by amendment.
Item 14 Indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of Registrant pursuant to the provisions of its Restated
Articles of Incorporation, Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by Registrant for expenses incurred or paid by a director, officer or
controlling person of 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, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act, to
treat the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by Registrant under Rule 424(b)(1), or (4), or 497(h) under the
Securities Act as part of this registration statement as of the time the
Commission declared it effective.
(2) For determining any liability under the Securities Act, to treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
Item 15. Recent Sales of Unregistered Securities
There has been no recent sale of securities.
<PAGE>
Item 16. Exhibits.
(a) Exhibits:
1 Underwriting Agreement [Form].
3.1 Articles of Incorporation of Power Save International, Inc., Amendment
dated October 8, 1999.
3.2 By-Laws of Power Save International, Inc.
3.3 Specimen of Security.
3.4 Form of Subscription Agreement.
5.1 Opinion of Counsel.
10.1 Employment Contract between the Company and Balmer.* [Form]
10.6 Lock-Up Agreement between the Company and Balmer.* [Form]
10.11 Escrow Agreement between the Company, The Business Bank and Three Arrows.
23.1 Consent of the auditor, David T. Thomason, P.C.
23.2 Consent of John Tansey, Esq, (included in his opinion set forth in
Exhibit 5.1)
24 Power of Attorney (Signature Page).
* To be filed by amendment.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
pursuant to Rule 415 under the Securities Act, a post-effective amendment to
this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events which, individually
or in the aggregate, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in the total dollar value 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 Securities and Exchange
Commission (the "Commission") pursuant to Rule 424(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; (iii) To include any additional
or changed material information on the plan of distribution.
(2) For determining liability under the Securities Act, to treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Registrant hereby undertakes to provide to the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
<PAGE>
SIGNATURE PAGE
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2, and has duly caused this
registration statement to be signed on its behalf by the undersigned in the
State of Florida on March 22, 2000.
Registrant: Power Save International, Inc.
/s/ Scott Balmer
Scott Balmer
Chairman and Director
POWER OF ATTORNEY TO SIGN AMENDMENTS
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint Scott Balmer with full power to
act without the other, his true and lawful attorney-in-fact and agent for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments to this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same, as fully, for all intents and purposes, as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Burton D. O'Donald Director and CEO March 16, 2000
Burton D. O'Donald
/s/ Raymond H. Bolduc II President, COO, CFO March 16, 2000
Raymond H. Bolduc II
/s/ Victor V. Vurpillat VP, Aquisitions March 16, 2000
Victor V. Vurpillat
/s/ Mary Jane Balmer Director, Interim March 16, 2000
Mary Jane Balmer Secretary and Treasurer
</TABLE>
<PAGE>
<PAGE>
Exhibit 1
UNDERWRITING & SELLING AGREEMENT
In regard to the offerings being made by Power Save International, Inc.,
(PSI), or successors, in a stock offering under the Securities Act of 1933 or an
exemption, private placement, merger or acquisition, PSI agrees to pay to the
Three Arrows Capital Corp. (TAC):
1. A commission of 5.00% of the gross proceeds of the offering, contingent
upon achieving the minimum specified in the offering. Warrants on shares at
the offering price at the rate of one warrant per twelve shares sold,
effective at the minimum, are also granted. The term of the warrants to run
from the date of this Agreement and for four years from the end of the
offering period, not to exceed five years from the initial offering date,
and cannot be sold, transferred, assigned or hypothecated for at least one
year from the effective date of the offering. One demand registration right
is granted not to exceed five years from the effective date.
2. A due diligence fee of $4,000 and consulting fee of $5,950 plus mutually
agreed expenses including fees of any state where Three Arrows Capital
Corp. must register for the PSI offering. If the offering is terminated,
TAC will be reimbursed only for the actual, accountable, out-of-pocket
expenses.
3. Hold Three Arrows Capital Corp. and its agents harmless from, and indemnify
their agents for, any and all costs of investigation of claims, costs,
expenses, attorney fees or other liabilities or disbursements arising out
of any administrative investigation or proceeding or any litigation,
commenced or threatened, relating to this underwriting which stem from any
misstatements or incorrect information from PSI principals, employees,
directors or agents, including without limitation, the implementation of
this Agreement, the distribution of stock or funds, the investment of
funds, the interpretation of this Agreement or similar matters. The
Underwriter will not be indemnified for any claims, costs, expenses or
other liability arising from its bad faith or negligence or that of its
employees, officers, directors or agents.
4. All subscription checks will be mailed to TAC for prompt deposit to the
Escrow Account, at the escrow agent, no later than noon of the next
business day. Such funds will be handled in accordance with the Escrow
Agreement filed as an exhibit to the offering document. TAC will fully
comply with the provisions of Rules 2730, 2740, 2750 and 2420 of the NASD
Conduct Rules.
For PSI For TAC
Signature Signature
Name and Title Name and Title
Date Date
<PAGE>
Filed in the office of the Secretary of State of the State of Nevada, May 08,
1987 (No. 3485-87)
Articles of Incorporation of Florida-Pacific Corporation
The undersigned, acting as incorporator, pursuant to the provisions of the laws
of the State of Nevada relating to private corporations. Hereby adopts the
following Articles of Incorporation:
ARTICLE ONE. (NAME). The name of the corporation is: FLORIDA-PACIFIC
CORPORATION.
ARTICLE TWO. (LOCATION). The address of the corporation's principal office is
Suite 980, 50 West Liberty Street, in the City of Reno, County of Washoe, State
of Nevada, 89501. The initial agent for service of process at that address is
THE NEVADA AGENCY AND TRUST COMPANY.
ARTICLE THREE. (PURPOSES). The purposes for which the corporation is organized
are to engage in any activity or business not in conflict with the laws of the
State of Nevada or of the Untied States of America.
ARTICLE FOUR. (CAPITAL STOCK). The corporation shall have authority to issue an
aggregate of FIFTY MILLION (50,000,000) shares, par value ONE MIL ($0.001) per
share, for a total capitalization of $50,000.
The holders of shares of capital stock of the corporation shall not be entitled
to pre-emptive or preferential rights to subscribe to any unissued stock or any
other securities which the corporation may now or hereafter be authorized to
issue.
The corporation's capital stock may be issued and sold from time to time for
such consideration as may be fixed by the Board of Directors, provided that the
consideration so fixed is not less than par value.
<PAGE>
The stockholders shall not possess cumulative voting rights at all shareholders
meetings called for the purpose of electing a Board of Directors.
ARTICLE FIVE. (DIRECTORS). The affairs of the corporation shall be governed by a
Board of Directors of not less than three (3) persons. The name and addresses
of the first Board of Directors are:
WILLIAM R. THORNE, 15 East Fowler Avenue, Tampa, Florida, 33612 SUZY FROST,
Suite #500, 350 South Center Street, Reno, Nevada, 89501 EARLENE ROGERS, Suite
#906, 3050 Biscayne Boulevard, Miami, Florida, 33137 BARBARA ULRICH, Suite #404,
350 South Center Street, Reno, Nevada, 89501
ARTICLE SIX. (ASSESSMENT OF STOCK). The capital stock of the corporation, after
the amount of the subscription prices or par value has been paid in, shall not
be subject to pay debts of the corporation, and no paid up stock issued as fully
paid up shall ever be assessable or assessed.
ARTICLE SEVEN. (INCORPORATOR). The name and address of the incorporator of the
corporation is as follows:
CECIL A. WALKER, Suite #980, 50 West Liberty Street, Reno, Nevada, 89501
ARTICLE EIGHT. (PERIOD OF EXISTENCE). The period of existence of the corporation
shall be perpetual.
<PAGE>
ARTICLE NINE. (BY-LAWS). The initial By-Laws of the corporation shall be adopted
by its Board of Directors. The power to alter, amend, or repeal the By-Laws,
or to adopt new By-Laws, shall be vested in the Board of Directors, except as
otherwise may be specifically provided in the By-Laws.
ARTICLE TEN. (STOCKHOLDERS' MEETINGS). Meetings of stockholders shall be held at
such place within or without the State of Nevada as may be provided by the
By-Laws of the corporation. Special meetings of the stockholders may be called
by the President or any other executive officer of the corporation, the Board of
Directors, or any member thereof, or by the record holder or holders of at least
ten percent (10%) of all shares entitled to vote at the meeting. Any action
otherwise required to be taken at a meeting of the stockholders, except election
of directors, may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by stockholders having at least a
majority of the voting power.
IN WITNESS WHEREOF, the undersigned incorporator has hereunto fixed her
signature at Reno, Nevada this 7th day of May, 1987.
<PAGE>
STATE OF NEVADA, COUNTY OF CLARK
On this 5th day of December, 1988, before me, the undersigned, a Notary Public
in and for the State of Nevada, personally appeared Suzy Frost, the duly elected
Secretary of Power-Save International, Inc., known to me to be the person
described in and who executed the foregoing Amendment of the Articles of
Incorporation and who acknowledged to me that she executed the same freely and
voluntarily on behalf of and in her capacity as the Secretary of Power-Save
International, Inc. I have hereunto set my hand and affixed my official seal the
day and year first above written.
/s/ Mary Ellen Hopper
Mary Ellen Hopper, Notary Public
Residing in Clark County
[seal]
My Commission Expires: May 6, 1992
STATE OF FLORIDA
COUNTY OF _________
On this 6th day of December, 1988, before me, the undersigned, a Notary Public
in and for the State of Florida, personally appeared Norman Haugen, the duly
elected President of Power-Save International, Inc., known to me to be the
person described in and who executed the foregoing Amendment of the Articles of
Incorporation and who acknowledged to me that he executed the same freely and
voluntarily on behalf of and in his capacity as the President of Power-Save
International, Inc. I have hereunto set my hand and affixed my official seal the
day and year first above written.
Signed
Notary Public
Residing in __________ County
My Commission Expires: __________.
<PAGE>
State of Nevada Department of State [seal]
I, FRANKIE SUE DEL PAPA, Secretary of State of the State of Nevada, do hereby
certify that Florida-Pacific Corporation did on the EIGHTH day of MAY, 1987,
file in this office the original Articles of Incorporation; that said Articles
are now on file and of record in the office of the Secretary of State of the
State of Nevada, and furthur, that said Articles contain all the statements of
facts required by the law of the State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of
State, at my office in Carson City, Nevada, this EIGHTH day of MAY, A.D. 1987.
/s/ Frankie Sue Del Papa
Frankie Sue Del Papa
Secretary of State
By /s/ Beverly J. Davenport
Beverly J. Davenport
Deputy
[seal]
<PAGE>
Filed in the office of the Secretary of State of the State of Nevada, December
6, 1988
By: Suzy Frost, Suite 909, 101 Convention Center Drive, Las Vegas, Nevada, 89109
AMENDMENTS TO THE ARTICLES OF INCORPORATION OF FLORIDA-PACIFIC CORPORATION
We, the undersigned, being the Directors and Secretary and President of the
corporation, and in pursuance of the corporate laws of the State of Nevada,
being Chapter 78 of the Nevada Revised Statutes, do hereby adopt the following
Amendments to its Articles of Incorporation:
ARTICLE ONE (NAME) The name of the corporation is POWER-SAVE INTERNATIONAL, INC.
ARTICLE FOUR (CAPITAL STOCK) shall read as follows:
The corporation shall have authority to issue FIFTY MILLION (50,000,000 COMMON
shares par value ONE MIL ($0.001) per share, and FIFTY MILLION (50,000,000)
PREFERRED shares par value ONE MIL ($0.001) per share for a total capitalization
of $100,000.
The holders of shares of the corporation shall not be entitled to pre-emptive or
preferential rights to subscribe to any unissued stock or any other securities
which the corporation may now or hereafter be authorized to issue.
The corporation's stock may be issued and sold from time to time for such
consideration as may be fixed by the Board of Directors, provided that the
consideration so fixed is not less than par value.
The shareholders shall not possess cumulative voting rights.
The above amendments to the Articles of Incorporation were adopted by the
Shareholders of the Corporation on the 17th day of November, 1988 by a majority
vote of the outstanding shares of the corporation.
Dated this 21st day of November, 1988.
/s/ Suzy Frost
Suzy Frost, Secretary and Director
/s/ Norman Haugen
Norman Haugen, President and Director
<PAGE>
Filed in the office of the Secretary of State of the State of Nevada, July 21,
1993.
/s/ Dean Heller
Dean Heller, Secretary of State
CERTIFICATE OF RESOLUTION TO CHANGE THE RESIDENT AGENT AND/OR CHANGE OF LOCATION
OF PRINCIPAL OFFICE
Name of Corporation: POWER-SAVE INTERNATIONAL, INC. (#C3485-1987)
RESOLVED, that the resident agent and location of the principal office was:
Nevada Agency and Trust Company, 50 West Liberty Street, Suite 980, Reno, NV,
89501
THE ABOVE IS HEREBY CHANGED TO:
State Agent and Transfer Syndicate, Inc., 318 North Carson Street, Suite 314,
Carson City, NV, 89701
RESOLVED, that the President and Secretary of this corporation be and they are
thereby instructed to certify it and file a copy of this resolution in the
office of the Secretary of State of Nevada.
Date: 7/21/99
/s/ Scott Balmer
Scott Balmer, President
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT BY RESIDENT AGENT
State Agent and Transfer Syndicate, Inc. hereby accepts the appointment as
Resident Agent of the above named corporation.
Date: 7/21/99
/s/ Liana Comeaux
Liana Comeaux, Agent and Transfer Syndicate
<PAGE>
Filed in the office of the Secretary of State of the State of Nevada, October
08, 1999 (C3485-87)
/s/ Dean Heller
Dean Heller, Secretary of State
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION (After issuance of stock)
Name of Company: POWER-SAVE, LTD.
We the undersigned, Scott Balmer (President) and Mary Jane Balmer (Secretary) of
Power-Save, Ltd. do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened, held
on the 30th day of August 1999, adopted a resolution to amend the original
articles as follows:
Article One is hereby amended to read as follows:
The name of the corporation is POWER SAVE INTERNATIONAL, INC.
The number of shares of the corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation is 6,414,149; that the said change(s)
and amendment have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote therein.
/s/ Scott Balmer
Scott Balmer, President
/s/ Mary Jane Balmer
Mary Jane Balmer, Secretary
<PAGE>
BY LAWS OF POWER SAVE INTERNATIONAL, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I - OFFICES 1
Section 1. Principal Office 1
Section 2. Other Offices 1
ARTICLE II - MEETINGS OF THE SHAREHOLDERS 1
Section 1. Place of Meetings 1
Section 2. Annual Meetings 1
Section 3. Special Meetings 2
Section 4. Voting List 2
Section 5. Quorum 3
Section 6. Adjourned Meeting and Notice Thereof 3
Section 7. Organization 3
Section 8. Order of Business 3
Section 9. Voting 4
Section 10. Consent of Absentees 4
Section 11. Action Without Meeting 5
Section 13. Inspectors of Election 5
ARTICLE III - DIRECTORS 6
Section 1. Powers 6
Section 2. Number, Election and Term of Office 7
Section 3. Qualification 7
Section 4. Vacancies 7
Section 5. Resignations 8
Section 6. Removal 8
Section 7. When Board May Declare Vacancies 8
Section 8. Place of Meeting 8
Section 9. Regular Meetings 8
Section 10. Special Meetings 9
Section 11. Notice of Special Meetings 9
Section 12. Waiver of Notice 9
Section 12. Proxies 9
Section 13. Quorum 9
Section 14. Adjournment 9
Section 15. Notice of Adjournment 10
Section 16. Fees and Compensation 10
Section 17. Manifestation of Dissent 10
Section 18. Action Without Meeting 10
ARTICLE IV - COMMITTEES 10
Section 1. Designation 10
Section 2. Meetings 10
Section 3. Quorum and Voting 11
i
<PAGE>
Section 4. Waiver of Notice 11
Section 5. Removal 11
Section 6. Vacancies 11
Section 7. Action Without Meeting 11
ARTICLE V - OFFICERS 11
Section 1. Officers 11
Section 2. Election 11
Section 3. Subordinate Officers 12
Section 4. Removal and Resignation 12
Section 5. Vacancies 12
Section 6. Chairman of the Board 12
Section 7. President 12
Section 8. Executive Vice President 13
Section 9. Vice President 13
Section 10. Secretary 14
Section 11. Treasurer 14
Section 12. Delegation of Duties 15
ARTICLE VI - SHARES OF STOCK 15
Section 1. Certificates of Stock 15
Section 2. Record of Shareholders; Transfer of Shares 15
Section 3. Record Date and Closing Stock Books 16
Section 4. Registered Shareholders 16
Section 5. Lost Certificates 16
Section 6. Regulations; Appointment of Transfer Agents and Registrars 16
Section 7. Treasury Shares 16
Section 8. Fractional Shares 16
ARTICLE VII - EXECUTION OF INSTRUMENTS 17
Section 1. Contracts 17
Section 2. Checks and Drafts 17
Section 3. Deposits: Bank Accounts 17
Section 4. Loans 17
Section 5. Sale or Transfer of Securities Held by the Corporation 17
SECTION VIII - MISCELLANEOUS 18
Section 1. Fiscal Year 18
Section 2. Seal 18
Section 3. Annual Report 18
Section 4. Inspection of Corporation Records 18
Section 5. Dividends 18
ii
<PAGE>
ARTICLE IX - NOTICES 19
Section 1. Form of Notices 19
Section 2. Waiver of Notice 19
ARTICLE X - AMENDMENTS 19
Section 1. Who May Amend 19
ARTICLE XI - INDEMNIFICATION 19
Section 1. Indemnification: Actions Other Than by the Corporation 19
Section 2. Indemnification: Actions by the Corporation 20
Section 3. Right to Indemnification 20
Section 4. Authorization of Indemnification 21
Section 5. Advance Indemnification 21
Section 6. Non-Exclusive Indemnification 21
Section 7. Insurance 21
</TABLE>
<PAGE>
BYLAWS
ARTICLE I - OFFICES
Section 1. Principal Office. The principal office for the transaction
of the business of the Corporation in Florida is hereby fixed and located at
13864 S W 90th Avenue, Unit LL 108, Miami, FL 33176. The Board of Directors is
hereby granted full power and authority to change the principal office from one
location to another in said county. Any change shall be noted in the Bylaws by
the Secretary, opposite this section, or this section may be amended to state
the new location. As used herein and through these Bylaws, the term "principal
office" shall not necessarily be deemed to refer to the Corporation's
registered office, although it may be the same location as the Corporation's
registered office.
Section 2. Other Offices. Branch or subordinate offices may at any time be
established by the Board of Directors at any place or places where the
Corporation is qualified to do business or the business of the Corporation may
require.
ARTICLE II - MEETINGS OF THE SHAREHOLDERS
Section 1. Place of Meetings. All annual meetings of shareholders and
all other meetings of shareholders shall be held either at the principal office
of the Corporation or at any other place within or without the State of Nevada
as may be designated either by the Board of Directors or by the written consent
of the shareholders entitled to vote at the meeting holding at least a majority
of shares entitled to vote. The vote may be given either before or after the
meeting and filed with the Secretary of the Corporation.
Section 2. Annual Meetings. The annual meetings of shareholders shall
be held on:
Second Friday of September.
provided, however, that should a meeting day fall on a legal holiday, the
annual meeting of . shareholders shall be held at the same time and place on
the next full business day. The annual meeting may be held at any other time
which may be designated in a resolution by the Board of Directors or by the
written consent of the shareholders entitled to vote, at the meeting holding at
least a majority of the shares entitled to vote. At the annual meeting,
directors shall be elected, reports of the affairs of the Corporation shall be
considered, and any other business may be transacted which is within the powers
of the shareholders to transact and which may be properly brought before the
meeting.
1
<PAGE>
Written notice of each annual meeting shall be given to each
shareholder entitled to vote (unless call and notice is waived by the unanimous
consent of the shareholders), either personally or by mail or other means of
written communication, charges prepaid, addressed to the shareholders at their
addresses appearing on the books of the Corporation or given by them to the
Corporation for the purpose of notice. If a shareholder gives no address,
notice shall be deemed to have been given them if sent by mail or other means
of written communication addressed to the place where the principal office of
the Corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which the principal office is located.
Notices shall be sent to each shareholders entitled thereto not less than ten
(10) nor more than sixty (60) days before each annual meeting. The notices
shall specify the place, the day and the hour of the meeting and shall state
other matters, if any, as may be expressly required by statute.
Section 3. Special Meetings. Special meetings of the shareholders for
any Purpose or purposes, unless otherwise prescribed by statute, may
be called at any time by the President, or by resolution of the Board
of Directors, or by one or more shareholders holding not less than
one-third (1/3) of the issued and outstanding voting shares of the
Corporation, or may be held at any time without call or notice upon
unanimous consent of the shareholders. Except in special cases where
other express provision is made by statute, notice of special meetings
shall be given in the same manner and pursuant to the same notice
provisions as for annual meetings of shareholders. Notices of any
special meeting shall state, in addition to the place, day and hour of
the meeting, the purpose or purposes of the meeting. Business
transacted at any special meeting of the shareholders shall be limited
to the purposes stated in the notice.
Section 4. Voting List. The officer who has charge of the stock ledger
of the Corporation shall, before each shareholders' meeting, prepare a list of
all persons entitled to represent shares at such meeting, arranging the names
alphabetically, with the addresses of each shareholder and the number of shares
entitled to be voted by each shareholder set forth opposite their respective
names. That list and the share ledger, or a true and correct copy thereof,
shall be open to the examination of any shareholder, for any purpose germane to
the meeting, during regular business hours, for a period of at least ten (10)
days immediately preceding the convening of the shareholders' meeting and until
the close of the meeting and they shall be subject to inspection at any time
during that period by any shareholder or person representing a shareholder. The
list and share ledger shall be open for examination at the place specified in
the notice where the meeting is to be held.
Section 5. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote at a meeting, whether present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business, except as otherwise provided by
statute or the Certificate of Incorporation of the Corporation. When a quorum
is present. at any meetings a majority of the shares represented and entitled
to vote shall decide any question brought before the meeting. The shareholders
present at a duly called or held meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
2
<PAGE>
Section 6. Adjourned Meeting and Notice Thereof. Any shareholders' meeting,
annual or special, whether or not a quorum is present, may be adjourned from
time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy but in the absence of
a quorum no other business may be transacted.
When any shareholders' meeting, either annual or special, is
adjourned for thirty (30) days or more, or if after the adjournment a new
record date is fixed for the adjourned meeting, notice of the adjourned
meeting shall be given as in the case of an original meeting. Except as
aforesaid, it shall not be necessary to give any notice of the time and
place of the adjourned meeting or of the business to be transacted
thereat, other than by announcement at the adjourned meeting.
Section 7. Organization. The President shall call the meeting of
shareholders to order and shall act as Chairman unless the shareholders
present designate another person Chairman. The Secretary of the
Corporation shall act as Secretary at all meetings of shareholders, but in
the event of his absence or failure to act, the Chairman shall appoint
another person to act as Secretary.
Section 8. Order of Business. The order of business at the
annual meeting, and so far as practicable at all other meetings of the
shareholders, shall be:
(1) Galling meeting to order;
(2) Calling of roll and checking proxies;
(3) Proof of notice of meeting;
(4) Reading of any unapproved minutes;
(5) Reports of officers;
(6) Reports of committees;
(7) Election of directors;
(8) Unfinished business;
(9) New business; and
(10) Adjournment.
Section 9. Voting. At each meeting of the shareholders, each
shareholder having the right to vote shall be entitled to vote in person or
by proxy appointed by an instrument in writing, subscribed by such
shareholder and bearing a date not more than three (3) years prior to said
meeting, unless the instrument expressly provides for a longer period. Each
stockholder shall have one (1) vote for each share of stock having voting
power, registered in his name on the books of the Corporation, except that
the Board of Directors may fix a time, not more than sixty (60) days nor
less than ten (10) days preceding the date of any meeting of shareholders
as a record date for the determination of the shareholders entitled to
notice of and to vote at the meeting. Only registered shareholders on the
date so fixed shall be entitled to notice of the meeting, notwithstanding
any transfer of any shares on the books of the Corporation after any record
date so fixed. The Board of Directors may close the books of the
Corporation against any transfers of shares during any shareholders'
meeting or during any adjournment thereof; and the Board of Directors may
close the books against any transfers of shares during the whole or any
part of the period during which the books may be closed under the
provisions of this paragraph. Upon the demand of any stockholder,
3
<PAGE>
the vote for directors and the vote upon any question before the meeting shall
be by ballot. All elections shall be had and all questions decided by a
majority vote.
Section 10. Consent of Absentees. The transaction of any meeting of
shareholders, either annual or special, however called and noticed, shall be as
valid as though had as a meeting duly held after regular call and notice, if a
quorum be present either in person or by proxy, and if, either before or after
the meeting, each of the persons entitled to vote, not present in person, or by
proxy, signs a written waiver of notice, or a consent to the holding of such
meeting, or an approval of the minutes thereof All such waivers, consent or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. If a shareholder does not receive notice of a meeting,
but attends and participates in the meeting, he shall be deemed to have waived
notice of the meeting.
Section 11. Action Without Meeting. Any action which, under provisions
of the laws of the State of Nevada or under the provisions of the Articles of
Incorporation or under these Bylaws may be taken at a meeting of the
shareholders, may be taken without a meeting if a record or memorandum thereof
is made in writing and signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take that action at a meeting at which all shares entitled to vote thereon were
present and voted. The record or memorandum shall be filed with the Secretary
of the Corporation and made a part of the corporate records.
Section 12. Proxies. Any shareholder entitled to vote or execute
consents shall have the right to do so either in person or by one or more
agents authorized by proxy. The appointment of a proxy shall be in writing and
signed by the shareholder but shall require no other attestation and shall be
filed with the Secretary of the Corporation at or prior to the meeting. In no
event shall a proxy be appointed for a period of more than three (3) years. If
any shareholder appoints two or more persons to act as proxies and if the
instrument does not otherwise provide, then a majority of such persons present
at the meeting, or if only one shall be present, then that one shall have and
may exercise all of the power conferred by the instrument upon all of the
persons so appointed; and if the proxies are equally divided as to the right
and manner of voting in any particular case, the vote shall be divided among
the proxies. Any person holding shares in a representative or fiduciary
capacity which he may represent in person may represent them by proxy and
confer general or discretionary power upon a proxy. The authority of a proxy if
not coupled with an interest may be terminated at will. Unless otherwise
provided in the appointment, the proxy's authority shall cease eleven (11)
months after the appointment. The termination of a proxy's authority by act of
the shareholder shall, subject to the time limitation herein set forth, be
ineffective until written notice of the termination has been given to the
Secretary of the Corporation. Unless otherwise provided therein, an appointment
filed with the Secretary shall have the effect of revoking all proxy
appointments of prior date. A proxy's authority shall not be revoked by the
death or incapacity of the maker unless before the vote is cast or the
authority is exercised, written notice of such death or incapacity is given to
the Corporation.
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Section 13. Inspectors of Election. In advance of any meeting of shareholders,
the Board of Directors may appoint Inspectors of Election to act at the meeting
or any adjournment thereof. Inspectors of Election are not appointed, the
Chairman may, and on the request of any shareholder or his proxy shall, appoint
Inspector of Election at the meeting. The number of inspectors shall be either
one or three. If appointed at a meeting on the request of one or more
shareholders or proxies, the majority of shares present shall determine whether
one or three inspectors are to be appointed. In case any person appointed as
inspector fails or refuses to act, the vacancy may be filled by appointment by
the Board of Directors in advance of the meeting, or at the meeting by the
Chairman. An inspector need not be a shareholder of the Corporation, but no
person who is a candidate for office of the Corporation shall act as an
inspector.
The duties of Inspectors of Election shall include: determining the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies; receiving votes, ballots or consents; hearing
and determining all challenges and questions in any way arising in connection
with the right to vote; counting and tabulating all votes or consents;
determining the result and other acts as may be proper to conduct the election
or vote with fairness to all shareholders.
ARTICLE III - DIRECTORS
Section 1. Powers. Subject to limitations of the Articles of
Incorporation, of the Bylaws and of the laws of the State of Nevada as to
action to be authorized or approved by the shareholders, and subject to the
duties of directors as prescribed by the Bylaws, all corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
Corporation shall be controlled by, the Board of Directors. Without prejudice
to such general power, but subject to the same limitations, it is hereby
expressly declared that the directors shall have the power:
First: To select and remove all officers, agents and employees of the
Corporation, prescribe powers and duties for them as may not be
inconsistent with law, with the Articles of Incorporation or the
Bylaws, fix their compensation and require from them security for
faithful service.
Second: To conduct, manage and control the affairs and business of the
Corporation, and to make rules and regulations therefore not
inconsistent with law, or with the Articles of Incorporation or the
Bylaws, as they may deem best.
Third: To change the principal once for the transaction of the
business of the Corporation from one location to another within the
same county as provided in Article I, Section 1, hereof; to designate
any place within or without the State of Nevada for the holding of any
shareholders' meeting or meetings; to adopt, make and use a corporate
seal, and to prescribe the forms of certificates of stock, and to
alter. the form of the seal and certificates from time to time, as in
their judgment they may deem best, provided that the seal and
certificates shall at alt times comply with the provisions of law.
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Fourth: To authorize the issue of shares of stock of the Corporation
from time to time, upon lawful terms, in consideration of money paid,
labor done or services actually rendered, debts or securities
canceled, or tangible or intangible property actually received, or in
the case of shares issued as a dividend against amounts transferred
from surplus to stated capital.
Fifth: To borrow money and incur indebtedness for the purpose of the
Corporation, and to cause to be executed and delivered therefor, in
the corporate name, promissory notes, bonds, debentures, deeds of
trust, mortgages, pledges, hypothecation or other evidences of debt
and securities therefor.
Section 2. Number Election and Term of Office. The number of directors
which shall constitute the whole Board shall be not less than one (1). The
shareholders at any annual meeting may determine, the number which shall
constitute the Board and the number so determined shall remain fixed until
changed at a subsequent annual meeting. The directors shall be elected at each
annual meeting of the shareholders however, if any such annual meeting is not
held or the directors are not elected thereat, the directors may be elected at
any special meeting of shareholders held for that purpose. All directors shall
hold office until their resignation or respective successors are elected.
Section 3. Qualification. A director need not be a shareholder of the
Corporation.
Section 4. Vacancies. Vacancies in the Board of Directors may be
filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and each director so elected shall
hold office until his successor is elected at an annual or a special meeting of
the shareholders.
A vacancy or vacancies in the Board of Directors shall be deemed to
exist in case of the death, resignation or removal of any director, or if the
authorized number of directors be increased, or if the shareholders fail, at
any annual or special meeting of shareholders at which any director or
directors are elected, to elect the full authorized number of directors to be
voted for at that meeting.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 5. Resignations. Any director may resign at any time by giving
written notice of his resignation to the Board or Chairman of the Board or the
President or the Secretary. A resignation shall take effect at the time
specified therein or, if the time when it shall become effective is not
specified, immediately upon its receipt. Unless otherwise specified therein,
the acceptance of a resignation shall not be necessary to make it effective. If
the Board of Directors accepts the resignation of a director rendered to take
effect at a future time, the Board, including the director who
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has tendered his resignation, shall have power to elect a successor to take
office when the resignation is to become effective.
Section 6. Removal. The entire Board of Directors or any individual
director may be removed from office with or without cause by vote of
shareholders holding a majority of the outstanding shares entitled to vote at
any annual or special meeting of shareholders. In case the entire Board or any
one or more directors are so removed, new directors may be elected at the same
meeting of shareholders. .
Section 7. When Board May Declare Vacancies. The Board of Directors
shall declare vacant the offce of a director if he is declared of unsound mind
by an order of court or convicted of a felony, or may do so within sixty (60)
days after notice of his election if he does not attend a meeting of the Board
of Directors.
Section 8. Place of Meeting. Regular meetings of the Board of
Directors shall be held at any place within or without the State of Nevada
which has been designated from time to time by resolution of the Board or by
written consent of all members of the Board. In the absence of a designation,
regular meetings shall be held at the principal office of the Corporation.
Special meetings of the Board may be held either at a place so designated or at
the principal office.
Section 9. Regular Meetings. A regular annual meeting of the Board of
Directors for the purpose of election of officers of the Corporation and the
transaction of any other business shall be held each year immediately following
the adjournment of the annual shareholders' meeting and no notice of the
meeting to the elected director shall be necessary in order to legally
constitute the meeting, provided a majority of the whole Board shall be
present. If a majority of the Board is not present, then the regular annual
meeting may be held at a time fixed by the consent, in writing, of all of the
directors. Other regular meetings of the Board may be held without notice at
times determined by the Board.
Section 10. Special Meeting. Special meetings of the Board of
Directors for any purpose or purposes may be called at any time by the
President or, if he is absent or unable to act, by any Vice President or by any
two directors. No business shall be considered at any special meeting other
than .the purposes mentioned in the notice given to each director of the
meeting, except upon the unanimous consent of all directors.
Section 11. Notice of Special Meetings. Written notice of the time,
place and the purposes of all special meetings shall be delivered personally to
each director or sent to each director by mail or by other form of written
communication, charges prepaid, addressed to him at his address as shown on the
records of the Corporation or, if it is not so shown on the records or is not
readily ascertainable, at the place where meetings of the directors are
regularly held. If notice is mailed or telegraphed, it shall be deposited in
the United States Mail or delivered to the telegraph company in the place in
which the principal office of the Corporation is located at least five (5) days
prior to the time of the holding of the meeting. If notice is delivered as
above provided, it shall be so delivered at least twenty-four (24) hours prior
to the time of the holding of the meeting. Mailing, telegraphing
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or delivery in accordance with the requirements of this section 11 shall
be due, legal and personal notice.
Section 12. Waiver of Notice. Any actions taken or approved at
any meeting of the Board of Directors, however called and noticed or
wherever held, shall be as valid as though taken or approved at a meeting
duly held after regular call and notice, if a quorum be present and if;
either before or after the meeting, each of the directors not present
signs a written waiver of notice or a consent to holding the meeting or
an approval of the minutes thereof. All waivers, consents or approvals
shall be filed with the corporate record or made a part of the minutes of
the meeting. If a director does not receive notice of a meeting, but
attends and participates in the meeting, he shall be deemed to have
waived notice of the meeting.
Section 13. Quorum. At all meetings of the Board, a quorum shall
consist of a majority of the entire number of directors and the acts of a
majority of the directors present at a meeting at which a quorum is
present shall be the acts of the Board of Directors except as may be
otherwise specifically provided by statute or by the Articles of
Incorporation or by these Bylaws and except to adjourn as hereinafter
provided. When the Board consists of one director, then one director
shall constitute a quorum.
Section 14. Adjournment. A quorum of the directors may adjourn
any directors' meeting to meet again at a stated day and hour; provided,
however, that in the absence of a quorum at either a regular or special
meeting, the directors may adjourn to a later date but may not transact
any business until a quorum has been secured. At any adjourned meeting at
which a required number of directors shall be present, any business may
be transacted which might have been transacted at the meeting originally
notified.
Section 15. Notice of Adjournment. Notice of the time and place
of holding an adjourned meeting need not be given to absent directors if
the time and place are fixed at the meeting adjourned.
Section 16. Fees and compensation, Directors and members of
committees may receive compensation for their services, and reimbursement
for expenses as may be fixed or determined by resolution of the Board.
Section 17. Manifestation of Dissent. A director of the
Corporation who is present at a meeting of the Board of Directors at
which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent is entered in the minutes
of the meeting or unless he files his written dissent to the action with
the person acting as the secretary of the meeting before the adjournment
thereof or unless the director forwards his dissent by registered mail to
the Secretary of the Corporation immediately after the adjournment of the
meeting. The right to dissent shall not apply to a director who votes in
favor of an action.
Section 18. Action Without Meeting. Any action required or
permitted to be taken at a meeting of the directors may be taken without a
meeting if all members of the Board consent, individually or collectively,
to the action by signing a written record or memorandum thereof. The
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record or memorandum shall have the same effect as a unanimous vote of the
Board of Directors and shall be filed with the Secretary of the Corporation and
made a part of the corporate records.
ARTICLE IV - COMMITTEES
Section 1. Designation. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation, which
to the extent provided in the resolution and permitted by law shall have and
may exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation, except where action of the Board of
Directors is required by law, and may authorize the seal of the Corporation to
be affixed to all papers which may require it.
Section 2. Meetings. Each committee shall meet at times fixed by the
committee or on the call of the President. Notice of the time and place of the
meeting shall be given to each member of the committee in the manner provided
for the giving of notice to members of the Board of Directors of the time and
place of special meetings of the Board of Directors. Each committee shall keep
regular minutes of its proceedings which shall be reported to the directors at
their next annual meeting.
Section 3. Quorum and Voting. A majority of the members of a committee
shall constitute a quorum for the transaction of business. The act of the
majority of the members of the committee present at a meeting at which a quorum
is present shall be the act of the committee. In, the absence or
disqualification of a member of a committee, the committee member or members
present and hot disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint a replacement for any absent or disqualified
member. At all meetings of a committee, each member present shall have one (1)
vote which shall be cast by him in person.
Section 4. Waiver of Notice. Any actions taken or approved at any
meeting of a committee shall be as valid as though had at a meeting duly held
after regular call and notice, if a quorum is present and if, either before or
after the meeting, each of the members not present signs a written waiver of
notice or a consent to holding the meeting or an approval of the minutes
thereof.
Section 5. Removal . The entire committee or any individual member thereof may
be removed from the committee with or without cause by a vote of a majority of
the whole Board of Directors.
Section 6. Vacancies. Notwithstanding Section 3 above, the Board of Directors
shall fill all vacancies in a committee which may occur from time to time.
An absence from a meeting does not constitute a "vacancy" as the term is used
herein.
Section 7. Action Without Meeting . Any action which might be taken at
a meeting of, the committee may be taken without a meeting if a record or
memorandum thereof be made in writing and signed by all members of the
committee.
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ARTICLE V - OFFICERS
Section I. Officers. Unless otherwise stated in a resolution adopted
by the Board of Directors, the officers of the Corporation shall be a
President, Vice-President and a Secretary. The Corporation may also have, at
the discretion of the Board of Directors, a Chairman of the Board, one or more
Vice Presidents, one or more Assistant Secretaries, one or more Assistant
Treasurers, and other officers, in accordance with the provisions of Section 3
of this Article. One person may hold two or more offices.
Section 2. Election. The officers of the Corporation, except officers
appointed in accordance with the provisions of Section 3 or Section 5 of this
Article, shall be chosen annually by the Board of Directors, and each shall
hold his office until he resigns or is removed or otherwise disqualified to
serve, or his successor is elected and qualified.
Section 3. Subordinate Officers. The Board of Directors may appoint,
and may empower the President to appoint, other officers that the business of
the Corporation may require, each of whom shall hold office for periods, have
authority and perform duties provided in the Bylaws or as the Board of
Directors may from time to time determine.
Section 4. Removal and Resignation. Any officer may be removed, either
with or without cause, by the Board of Directors, at any regular or special
meeting thereof, or, except in case of any Officer chosen by the Board of
Directors, by any officer upon whom the power of removal is conferred by the
Board of Directors.
Any officer may resign at any time by giving written notice to the
Board of Directors, or to the President, or to the Secretary of the
Corporation. The resignation shall take effect at the date of the receipt of
notice or at any alternate time specified therein; and, unless otherwise
specified therein, the acceptance of the resignation shall not be necessary to
make it effective.
Section 5. Vacancies. A vacancy in an office because of death,
resignation, removal, disqualification or any other cause shall be filled in
the manner prescribed in the Bylaws for regular appointments to the office.
Section 6. Chairman of the Board. The Chairman of the Board shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform all other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the Bylaws.
Section 7. President . Subject to the powers and duties, if any,
assigned by the Board of Directors to the Chairman of the Board or any other
person so appointed, the President shall be the Chief Executive Officer of the
Corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
Corporation, including:
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(a) He shall preside at all meetings of the shareholders
and, in the absence of the Chairman of the Board, or if there be
none, at all meetings of the Board of Directors.
(b) He shall sign or countersign, as may be necessary, all
bills, notes, checks, contracts and other instruments pertaining to
the ordinary course of the Corporation's business and shall, with the
Secretary, sign the minutes of all shareholders' and directors'
meetings over which he presides.
(c) He shall execute bonds, mortgages and other contracts
requiring a seal under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly
delegated by the Board of Directors to some other officer or agent of
the Corporation.
(d) At the annual meeting of the shareholders, he shall
submit a complete report of the operations of the Corporation's
affairs as existing at the close of each year and shall report to the
Board of Directors from time to time all matters coming to his
attention and relating to the interest of the Corporation as should
be brought to the attention of the Board.
(e) He shall be an ex officio member of all standing
committees, if any; and he shall have those usual powers and duties
of supervision and management which pertain to the office of the
President and shall have other powers and duties prescribed by the
Board of Directors or the Bylaws.
Section 8. Executive Vice President. The Executive Vice President
shall be the executive officer of the Corporation next in authority to the
Chairman of the Board and the President, both of whom he shall assist in the
management of the business of the Corporation and in the implementation of
orders and resolutions of the Board of Directors. In the absence of the
Chairman of the Board and the President, he shall preside at all meetings of
the shareholders and of the directors, and shall exercise all other powers and
perform all other duties of the Chairman of the Board and the President; he
shall be an ex officio member of all standing committees; and he shall perform
any other duties -the 'Board of Directors may from time to time prescribe.
Section 9. Vice President. In the absence or disability of the
President, the Vice Presidents, in order of their rank as fixed by the Board
of Directors or, if not ranked, the Vice President designated by the Board of
Directors, shall perform all the duties of the President and, when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
President. The Vice Presidents shall have other powers and perform other
duties prescribed for them by the Board of Directors or the Bylaws.
Section 10. Secretary. The Secretary shall keep or cause to be
kept, at the principal office of the Corporation or any other place the
Board of Directors orders, a book of minutes of all meetings of directors and
shareholders, with the time and place of holding, whether regular or special,
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and, if special, how authorized, the notice thereof given, the names of those
present at directors' meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal
office of the Corporation or at the office of the Corporation's transfer
agent, a share ledger, showing the names of the shareholders and their
addresses, the number of classes of shares held by each, the number and date
of certificates issued for the same, and the number and date of cancellation
of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all
meetings of the shareholders and of the Board of Directors required by the
Bylaws or by law to be given, and she shall keep the seal of the Corporation
in safe custody. He shall also sign, with the President or Vice President, all
contracts, deeds, licenses and other instruments when so ordered he shall make
reports to the Board of Directors they request and shall also prepare reports
and statements required by the laws of the State of Nevada and shall perform
any other duties prescribed by the Board of Directors or by the Bylaws.
The Secretary shall allow any shareholder, on application, during
normal business hours, to inspect the share ledger. He shall attend to
correspondence and perform other duties incidental to him office or assigned
to her by the Board of Directors. The Assistant Secretary or Secretaries shall
perform the duties of the Secretary in the case of his absence or disability
and any other duties specified by the Board of Directors.
Section 11. Treasurer. The Treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct accounts of the
properties and business transactions of the Corporation, including account of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
surplus and shares. The books of account shall at all reasonable times be open
to inspection by a director.
The Treasurer shall deposit all monies and other valuables in the name
and to the credit of the Corporation with depositories designated by the Board
of Directors. He shall disburse the funds of the Corporation as ordered by the
Board of Directors, shall render to the President and directors, whenever they
request it, an account of all of his transactions as Treasurer and of the
financial condition of the Corporation, and shall have any other powers and
perform any other duties prescribed by the Board of Directors.
The Assistant Treasurer or Treasurers shall perform the duties of the
Treasurer in the event of his absence or disability and any other duties
prescribed by the Board of Directors.
Section 12. Delegation of Duties. In case of the absence or
disability of any officer of the Corporation or for any other reason that the
Board of Directors may deem sufficient, tile Board of Directors may, by a vote
of a majority of the whole Board, delegate for the time being, the powers or
duties or any of them, of an absent or disabled officer to any other officer
or to any directors.
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ARTICLE VI - SHARES OF STOCK
Section 1. Certificates of Stock. A certificate or certificates for
shares of the capital stock of the Corporation shall be issued to each
shareholder when shares are fully paid, showing the number of the shares of the
Corporation standing on the books in his name. All certificates shall be signed
by the President or a Vice President and the Secretary or an Assistant
Secretary, or be authenticated by facsimiles of the signatures of the President
and Secretary or by a facsimile of the signature of the President and the
written signature of the Secretary or an Assistant Secretary. Every certificate
authenticated by a facsimile of a signature must be countersigned by a transfer
agent or transfer clerk and registered by an incorporated bank or trust company
as registrar of transfer. Certificates shall be numbered and sealed with the
seal of the Corporation.
Section 2. Record of Shareholders: Transfer of Shares. There shall be
kept at the registered office of the Corporation in the State of Nevada a
record containing the names and addresses of all shareholders of the
Corporation, the number and class of shares held by each and the dates when
they became the owners of record thereof; provided, however, that the foregoing
shall not be required if the Corporation shall keep at its registered office
the address, including street number, if any, of the custodian of the record.
Duplicate lists may be kept in other state or states as may be determined by
the Board. Transfers of stock of the Corporation shall be made on the books of
the Corporation only upon authorization by the registered holder thereof or by
his attorney lawfully constituted in writing and on surrender and cancellation
of a certificate or certificates for a lice number of shares of the same class
properly endorsed or accompanied by a duly executed stock transfer power and
payment of all taxes thereon, with proof of authenticity of the signatures the
Corporation or its transfer agents may reasonably require.
Section 3. Record Date end Closing tuck Books. The Board of Directors
may fix a time as a record date for the determination of the shareholders
entitled to notice of and to vote at any meeting of shareholders or entitled to
receive any dividend or distribution, or any allotment of right, or to exercise
rights in respect to any change, conversion, or exchange of shares. The record
date so fixed shall be not more than sixty (60) days nor less than ten (10)
days prior to the date of the meeting or event for the purposes of which it is
fixed. When a record date is fixed, only shareholders of record on that date
are entitled to notice of and to vote at the meeting or to receive a dividend,
distribution, or allotment of rights, or to exercise the rights, as the case
may be, notwithstanding any transfer of any shares on the books of the
Corporation after the record date.
Section 4. Registered Shareholders. The Corporation shall be entitled
to recognize the holder of record of any share or shares of stock as the
exclusive owner thereof for all purposes, and accordingly, shall not be bound
to recognize any equitable or other claim to or interest in shares on the part
of any other person, whether or not it has notice thereof, except as otherwise
provided by law.
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Section 5. Lost Certificates. Except as hereinafter in this section
provided, no one certificate for shares shall be issued in lieu of an old one
unless the latter is surrendered and canceled at the same time. In case any
certificate for shares is lost, stolen, mutilated or destroyed, the Board of
Directors may authorize the issuance of a new certificate, upon terms and
conditions reasonably satisfactory to it, including indemnification of the
Corporation.
Section 6. Regulations: Appointment of Transfer Agents and Red. The
Board may make rules and regulations it deems expedient concerning the
issuance, transfer and registration of certificates for shares of stock.
It may appoint one or more transfer agents or registrars of transfer, or both,
and may require all certificates of stock to bear the signature of either or
both.
Section 7. Treasury Shares. Treasury shares, or other shares not at
the time issued and outstanding, shall not, directly or indirectly, be voted at
any meeting of the shareholders, or counted in calculating the actual voting
power of shareholders at any given time.
Section 8. Fractional Shares. Certificates of fractional shares of
stock may be issued at the discretion of the Board of Directors. The registered
ownership of any fractional share represented by a certificate or certificates
shall entitle the holder thereof to receive dividends, participate in the
corporate assets in the event of liquidation of the Corporation and to exercise
voting rights in person or by proxy.
ARTICLE VII - EXECUTION OF INSTRUMENTS
Section 1. Contracts. The Board or any authorized committee may
authorize any officer or officers, agent or agents, to enter into any contract
or to execute and deliver in the name and on behalf of the Corporation any
contract or other instrument, except certificates representing shares of stock
of the Corporation, and the authorization may be general or may be confined to
specific instances.
Section 2. Checks and Drafts. All checks, drafts or other orders for
the payment of money, notes, acceptances or other evidences of indebtedness
issued by or in the name of the Corporation shall be signed by the officer or
officers, agent or agents of the Corporation and in the manner specified by
resolution of the Board.
Section 3. Deposits; Bank Accounts. All funds of the Corporation not
otherwise employed shall be deposited to the credit of the Corporation in
banks, trust companies or other depositories designated by the Board or by an
officer or officers of the Corporation to whom power of designation is
delegated by the Board. The Board may make special rules and regulations with
respect to bank accounts, not inconsistent with the provisions of these Bylaws,
as it may deem expedient. Unless otherwise provided by resolution of the Board,
endorsements for deposit to the credit of the Corporation in any of its duly
authorized depositories may be made by hand-stamped legend in the name of the
Corporation or by written endorsement of any officer without countersignature.
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Section 4. Loans. No loans shall be contracted on behalf of the Corporation
unless authorized by the Board, but when authorized, unless a particular
officer or agent is directed to negotiate the same, may be negotiated, up to
the amount authorized, by the President or a Vice President or the Treasurer,
who are hereby severally authorized to execute and deliver in the name and
on behalf of the Corporation notes or other evidences of indebtedness
countersigned by the President or a Vice President for the amount of any loans
and to give security for the payment of any and all loans, advances and
indebtedness by hypothecating, pledging or transferring any part or all of the
property of the Corporation, real or personal, at any time owned by the
Corporation.
Section 5. Sale or Transfer of Securities Held by the Corporation
Stock certificates, bonds or other securities at any time owned by the
Corporation may be held on behalf of the Corporation or sold, transferred or
otherwise disposed of pursuant to authorization by the Board, or of any duly
authorized committee. Transfers from the name of the Corporation shall be made
by the signature of the President or a Vice President and the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary.
SECTION VIII - MISCELLANEOUS
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board.
Section 2. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the words "Corporate Seal" and the name of the state
under the laws of which the Corporation exists.
Section 3. Annual Report. The Board of Directors shall not be
required to send to shareholders an annual report of this Corporation.
Section 4. Inspection of Corporation Records. The share ledger or
duplicate share ledger, the books of account, copy of the Bylaws, as amended,
certified by the Secretary, and minutes of proceedings of the shareholders and
directors and of any committee of the Board of Directors shall be open for
inspection upon the written demand of any shareholder or holder of a voting
trust certificate, during the usual hours for business, and for a purpose
reasonably related to his interests as a shareholder or as the holder of a
voting trust certificate and shall be exhibited at any time when required by
the demand of ten percent (10%) of the shares represented at any shareholders'
meeting. Inspection may be made in person or by an agent or attorney and shall
include the right to make extracts. Demand of inspection other than at a
shareholders' meeting shall be made in writing, under oath, upon the President,
Secretary or Assistant Secretary of the Corporation at the Corporation's
registered or principal office. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a Power of Attorney or other writing which
authorizes the attorney or other agent to so act on behalf of the shareholder.
Section 5. Dividends. Dividends upon the shares of the capital
stock of the Corporation
15
<PAGE>
may be declared and paid out of surplus or, if there is no surplus, out of
net profits of the Corporation, to the extent permitted by the laws of the
State of Nevada, by the Board of Directors in their discretion at any
regular or special meeting. Dividends may be paid in cash, in property, or
in shares of capital stock.
Before payment of any dividend, there may be set aside out of the
funds of the Corporation available for dividends a sum or sums which the
directors, in their absolute discretion, think proper as a reserve fund to
meet contingencies, for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for any other purposes the
directors think conducive to the interests of the Corporation, and the
directors may modify or abolish any reserve in the manner in which it was
created.
ARTICLE IX NOTICES
Section 1. Form of Notices. Whenever, under the provisions of these
Bylaws, notice is required to be given to any director, officer or
shareholder, it shall not be construed to mean personal notice. Notice may
be given in writing, by mail, by depositing the same in the United States
Mail, in a postpaid sealed wrapper, addressed to the director, officer or
shareholder at the address which appears on the books of the Corporation;
or, in default of other address, to the director, officer or shareholder at
the general post office in the city where the Corporation's principal office
is located. Notice shall be deemed to be given at the time when it is mailed
in accordance with this section.
Section 2. Waiver of Notice. Any shareholder, director or officer
may waive an notice required to be given under these Bylaws by a written
waiver signed by the person, or persons, entitled to notice, whether before
or after the time stated therein, and the waiver shall be deemed equivalent
to the actual giving of notice.
ARTICLE X - AMENDMENTS
Section 1. Who May Amend. These Bylaws may be amended,
altered, changed or repealed by the affirmative vote of a majority of
the shares issued said outstanding, and entitled to vote thereat, at any
regular or special meeting of the shareholders if notice of the proposed
amendment, alteration, change or repeal is contained in the notice of
the meeting, or by the affirmative vote of the majority of the Board of
Directors at any regular or special meeting of the Board of Directors;
provided, however, that the Board of Directors shall have no power to adopt,
amend or alter any Bylaws fixing their number, qualifications,
classifications, term of office or the right of the shareholders to remove
them from office.
ARTICLE XI - INDEMNIFICATION
Section 1. Indemnification: Actions Other Than by the Corporation. The
Corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation)
by reason
16
<PAGE>
of the fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees, judgments, fines and amounts paid in settlement) actually and
reasonably incurred by him in connection with such action, suit or proceeding,
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests ofthe Corporation, and, with respect to any
criminal action or proceeding had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceedings by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
Section 2. Indemnification: Actions by the Corporation. The
Corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection with the defense or settlement of an action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation. The generality of the foregoing
notwithstanding, no indemnification shall be made in respect of any claim,
issue or matter as to which the person shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the
Corporation, unless and only to the extent that the court in which the action
or suit was brought determines that, despite the adjudication of liability but
in view of all the circumstances of the case, the person is fairly and
reasonably, entitled to indemnification.
Section 3. Right to Indemnification. To the extent that any present
or former director, officer, employee, any person who was or is serving at the
request of the Corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, any agent
of the Corporation or any person who is or was serving at the request of the
Corporation as an agent of another corporation, partnership, joint venture,
trust or other enterprise, has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 1 and 2 of
this Article XI, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
Section 4. Authorization of Indemnification. Any indemnification
under Sections I and 2 of this Article XI (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination by the Board of Directors that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in Section 1 and 2 of this
Article XI. If a quorum of disinterested directors cannot be assembled, the
disinterested shareholders may authorize indemnification under
17
<PAGE>
this section 4, by majority vote.
Section 5. Advance Indemnification. Expenses incurred by an officer or
director in defending a civil or criminal action; suit or proceeding may be
paid by the Corporation in advance of the final disposition of the action, suit
or proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of the director or officer to repay
the advance unless it is ultimately determined that he is entitled to be
indemnified by the Corporation as authorized in this Article XI. Expenses
incurred by other employees and agents may be paid upon terms and conditions,
if any, as the Board of Directors deems appropriate.
Section 6. Non-Exclusive Indemnification. The indemnification provided
by this Article XI shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any bylaw, agreement, vote
of shareholders or disinterested directors or otherwise, both as to action in
his ofcial capacity and as to action in another capacity while holding a
corporate office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of his
heirs, executors and administrators.
Section 7. Insurance. The Corporation shall have the power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership joint venture, trust or other enterprise against any
liability asserted against him and incurred by him, or arising out of his
service, in that capacity, whether or not the Corporation would have the power
to indemnify him against that liability under the provisions of this Article
XI.
CERTIFICATE OF SECRETARY
The undersigned, being the duly elected and acting Secretary of the
Corporation, hereby certifies that the foregoing Bylaws, after having been read
section by section, were approved by the director of this Corporation at its
first meeting of directors.
Dated this 23rd day of Julv, 1999.
/s/ Mary Jane Balmer
Mary Jane Balmer, Secretary
BY-LAWS OF A Nevada Corporation
ARTICLE I - OFFICES
The registered office of the Corporation in the State of Nevada shall be
located in the City and State designated in the Articles of Incorporation. The
Corporation may also maintain offices at such other places within or without
the State of Nevada as the Board of Directors may, from time to time,
determine.
ARTICLE 11 - MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings: (Chapter 78.310)
The annual meeting of the shareholders of the Corporation shall be held at the
time fixed, from time to time, by the Directors.
Section 2 -Special Meetings: (Chapter 78.310)
Special meetings of the shareholders may be called by the Board of Directors or
such person or persons authorized by the Board of Directors and shall be held
within or without the State of Nevada.
Section 3 - Place of Meetings: (Chapter 78.310)
Meetings of shareholders shall be held at the registered office of the
Corporation, or at such other places, within or without the State of Nevada as
the Directors may from time to time fix. If no designation is made, the meeting
shall be held at the Corporation's registered office in the state of Nevada.
Section 4 - Notice of Meetings: (Section 78.370)
(a) Written or printed notice of each meeting of shareholders, whether annual
or special, signed by the president, vice president or secretary, stating the
time when and place where it is to be held, as well as the purpose or purposes
for which the meeting is called, shall be served either personally or by mail,
by or at the direction of the president, the secretary, or the officer or the
person calling the meeting, not less than ten or more than sixty days before
the date of the meeting, unless the lapse of the prescribed time shall have
been waived before or after the taking of such action, upon each shareholder of
record entitled to vote at such meeting, and to any other shareholder to whom
the giving of notice may be required by law. If mailed, such notice shall be
deemed to be given when deposited in the United States mail, addressed to the
shareholder as it appears on the share transfer records of the Corporation or
to the current address, which a shareholder has delivered to the Corporation in
a written notice.
*Unless otherwise stated herein all references to "Sections" in these Bylaws
refer to those sections contained in Title 78 of the Nevada Private
Corporations Law.
NV Bylaws-1
<PAGE>
(b) Further notice to a shareholder is not required when notice of two
consecutive annual meetings, and all notices of meetings or of the taking of
action by written consent without a meeting to him or her during the period
between those two consecutive annual meetings; or all, and at least two payments
sent by first-class mail of dividends or interest on securities during a
12-month period have been mailed addressed to him or her at his or her address
as shown on the records of the Corporation and have been returned undeliverable.
Section 5 - Quorum: (Section 78.320)
- --------------------
(a) Except as otherwise provided herein, or by law, or in the Articles of
Incorporation (such Articles and any amendments thereof being hereinafter
collectively referred to as the "Articles of Incorporation"), a quorum shall be
present at all meetings of shareholders of the Corporation, if the holders of a
majority of the shares entitled to vote on that matter are represented at the
meeting in person or by proxy.
(b) The subsequent withdrawal of any shareholder from the meeting, after the
commencement of a meeting, or the refusal of any shareholder represented in
person or by proxy to vote, shall have no effect on the existence of a quorum,
after a quorum has been established at .such meeting.
(c) Despite the absence of a quorum at any meeting of shareholders, the
shareholders present may adjourn the meeting.
Section 6 - Voting and Acting- (Section 78.320 & 78.350)
(a) Except as otherwise provided by law, the Articles of Incorporation, or
these Bylaws, any corporate action, the affirmative vote of the majority of
shares entitled to vote on that matter and represented either in person or by
proxy at a meeting of shareholders at which a quorum is present, shall be the
act of the shareholders of the Corporation.
(b) Except as otherwise provided by statute, the Certificate of Incorporation,
or these bylaws, at each meeting of shareholders, each shareholder of the
Corporation entitled to vote thereat, shall be entitled to one vote for each
share registered in his name on the books of the Corporation. (c) Where
appropriate communication facilities are reasonably available, any or all
shareholders shall have the right to participate in any shareholders' meeting,
by means of conference telephone or any means of communications by which all
persons participating in the meeting are able to hear each other.
Section 7 - Proxies: (Section 78.355)
I
Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so either in person or by proxy, so long as such proxy is
executed in writing by the shareholder himself, his authorized officer,
director, employee or agent or by causing the signature of the stockholder to be
affixed to the writing by any reasonable means, including, but not limited to, a
facsimile signature, or by his attorney-in-fact there unto duly authorized in
writing. Every proxy shall be revocable at will unless the proxy conspicuously
states that it is irrevocable and the proxy is coupled with an interest. A
telegram, telex, cablegram, or similar transmission by the shareholder, or a
photographic, photostatic, facsimile, shall be treated as a valid proxy, and
treated as a substitution of the original proxy, so long as such transmission is
a complete reproduction executed by the shareholder. If it is determined that
the telegram, cablegram or
NV Bylaws-2
<PAGE>
other electronic transmission is valid, the persons appointed by the
Corporation to count the votes of shareholders and determine the validity of
proxies and ballots or other persons making those determinations must specify
the information upon which they relied. No proxy shall be valid after the
expiration of six months from the date of its execution, unless otherwise
provided in the proxy. Such instrument shall be exhibited to the Secretary at
the meeting and shall be filed with the records of the Corporation. If any
shareholder designates two or more persons to act as proxies, a majority of
those persons present at the meeting, or, if one is present, then that one has
and may exercise all of the powers conferred by the shareholder upon all of
the persons so designated unless the shareholder provides otherwise.
Section 8 - Action Without a Meeting: (Section 78.320)
Unless otherwise provided for in the Articles of Incorporation of the
Corporation, any action to be taken at any annual or special shareholders'
meeting, may be taken without a meeting, without prior notice and without a
vote if written consents are signed by a majority of the shareholders of the
Corporation, except however if a different proportion of voting power is
required by law, the Articles of Incorporation or these Bylaws, than that
proportion of written consents is required. Such written consents must be
filed with the minutes of the proceedings of the shareholders of the
Corporation.
ARTICLE III - BOARD OF DIRECTORS
Section 1 - Number Term Election and Qualifications: (Section 78.115, 78.330)
(a) The first Board of Directors and all subsequent Boards of the Corporation
shall consist of ( ), not less than 1 nor more than 9, unless and until
otherwise determined by vote of a majority of the entire Board of Directors.
The Board of Directors or shareholders all have the power, in the interim
between annual and special meetings of the shareholders, to increase or
decrease the number of Directors of the Corporation. A Director need not be a
shareholder of the Corporation unless the Certificate of Incorporation of the
Corporation or these Bylaws so require.
(b) Except as may otherwise be provided herein or in the Articles of
Incorporation, the members of the Board of Directors of the Corporation shall
be elected at the first annual shareholders' meeting and at each annual
meeting thereafter, unless their terms are staggered in the Articles of
Incorporation of the Corporation or these Bylaws, by a plurality of the votes
cast at a meeting of shareholders, by the holders of shares entitled to vote
in the election.
(c) The first Board of Directors shall hold office until the first annual
meeting of shareholders and until their successors have been duly elected and
qualified or until there is a decrease in the number of Directors.
Thereinafter, Directors will be elected at the annual meeting of shareholders
and shall hold office until the annual meeting of the shareholders next
succeeding his election, unless their terms are staggered in the Articles of
Incorporation of the Corporation (so long as at least one - fourth in number
of the Directors of the Corporation are elected at each annual shareholders'
meeting) or these Bylaws, or until his prior death, resignation or removal.
Any Director may resign at any time upon written notice of such resignation to
the Corporation.
NV Bylaws-3
(d) All Directors of the Corporation shall have equal voting power unless the
Articles of Incorporation of the Corporation provide that the voting power of
individual Directors or classes of Directors are greater than or less than that
of any other individual Directors or classes of Directors, and the different
voting powers may be stated in the Articles of Incorporation or may be dependent
upon any fact or event that may be ascertained outside the Articles of
Incorporation if the manner in which the fact or event tray operate on those
voting powers is stated in the Articles of Incorporation. If the Articles of
Incorporation provide that any Directors have voting power greater than or less
than other Directors of the Corporation, every reference in these Bylaws to a
majority or other proportion of Directors shall be deemed to refer to majority
or other proportion of the voting power of all the Directors or classes of
Directors, as may be required by the Articles of Incorporation.
Section 2 - Duties and Power: (Section 78.120)
----------------------------
The Board of Directors shall be responsible for the control and management of
the business and affairs, property and interests of the Corporation, and may
exercise all powers of the Corporation, except such as those stated under
Nevada state law, are in the Articles of Incorporation or by these Bylaws,
expressly conferred upon or reserved to the shareholders or any other person or
persons named therein.
Section 3 - Regular Meetings; Notice: (Section 78.310)
--------------------------------------
(a) A regular meeting of the Board of Directors shall be held either within or
without the State of Nevada at such time and at such place as the Board shall
fix.
(b) No notice shall be required of any regular meeting of the Board of
Directors and, if given, need not specify the purpose of the meeting; provided,
however, that in case the Board of Directors shall fix or change the time or
place of any regular meeting when such time and place was fixed before such
change, notice of such action shall be given to each director who shall not
have been present at the meeting at which such action was taken within the time
limited, and in the manner set forth in these Bylaws with respect to special
meetings, unless such notice shall be waived in the manner set forth in these
Bylaws.
Section 4 - Special Meetings; Notice: (Section 78.310)
--------------------------------------
(a) Special meetings of the Board of Directors shall be held at such time and
place as may be specified in the respective notices or waivers of notice
thereof.
(b) Except as otherwise required statute, written notice of special meetings
shall be mailed directly to each Director, addressed to him at his residence or
usual place of business, or delivered orally, with sufficient time for the
convenient assembly of Directors thereat, or shall be sent to him at such place
by telegram, radio or cable, or shall be delivered to him personally or given
to him orally, not later than the day before the day on which the meeting is to
be held. If mailed, the notice of any special meeting shall be deemed to be
delivered on the second day after it is deposited in the United States mails,
so addressed, with postage prepaid. If notice is given by telegram, it shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
A notice, or
<PAGE>
waiver of notice, except as required by these Bylaws, need not specify the
business to be transacted at or the purpose or purposes of the meeting.
(c) Notice of any special meeting shall not be required to be given to any
Director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5 - Chairperson:
The Chairperson of the Board, if any and if present, shall preside at all
meetings of the Board of Directors. If there shall be no Chairperson, or he or
she shall be absent, then the President shall preside, and in his absence, any
other director chosen by the Board of Directors shall preside.
Section 6 - Quorum and Adjournments: (Section 78.315)
-------------------------------------
(a) At all meetings of the Board of Directors, or any committee thereof, the
presence of a majority of the entire Board, or such committee thereof, shall
constitute a quorum for the transaction of business, except as otherwise
provided by law, by the Certificate of Incorporation, or these Bylaws.
(b) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, whether or not a quorum exists. Notice of such adjourned
meeting shall be given to Directors not present at time of the adjournment and,
unless the time and place of the adjourned meeting are announced at the time of
the adjournment, to the other Directors who were present at the adjourned
meeting.
Section 7 - Manner of Acting: (Section 78.315)
(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
(b) Except as otherwise provided by law, by the Articles of Incorporation, or
these bylaws, action approved by a majority of the votes of the Directors
present at any meeting of the Board or any committee thereof, at which a quorum
is present shall be the act of the Board of Directors or any committee thereof.
(c) Any action authorized in writing made prior or subsequent to such action,
by all of the Directors entitled to vote thereon and filed with the minutes of
the Corporation shall be the act of the Board of Directors, or any committee
thereof, and have the same force and effect as if the same had been passed by
unanimous vote at a duly called meeting of the Board or committee for all
purposes.
(c) Where appropriate communications facilities are reasonably available, any
or all directors shall have the right to participate in any Board of Directors
meeting, or a committee of the Board of
NV Bylaws-5
<PAGE>
Directors meeting, by means of conference telephone or any means of
communications by which all persons participating in the meeting are able to
hear each other.
Section 8 - Vacancies: (Section 78.335)
-----------------------
(a) Unless otherwise provided for by the Articles of Incorporation of the
Corporation, any vacancy in the Board of Directors occurring by reason of an
increase in the number of directors, or by reason of the death, resignation,
disqualification, removal or inability to act of any director, or other cause,
shall be filled by an affirmative vote of a majority of the remaining
directors, though less than a quorum of the Board or by a sole remaining
Director, at any regular meeting or special meeting of the Board of Directors
called for that purpose except whenever the shareholders of any class or
classes or series thereof are entitled to elect one or more Directors by the
Certificate of Incorporation of the Corporation, vacancies and newly created
directorships of such class or classes or series may be filled by a majority of
the Directors elected by such class or classes or series thereof then in
office, or by a sole remaining Director so elected.
(b) Unless otherwise provided for by law, the Articles of Incorporation or
these Bylaws, when one or more Directors shall resign from the board and such
resignation is effective at a fixture date, a majority of the directors, then
in office, including those who have so resigned, shall have the power to fill
such vacancy or vacancies, the vote otherwise to take effect when such
resignation or resignations shall become effective.
Section 9 - Resignation- (Section 78.335)
-------------------------
A Director may resign at any time by giving written notice of such resignation
to the Corporation.
Section 10 - Removal: (Section 78.335)
----------------------
Unless otherwise provided for by the Articles of Incorporation, one or more or
all the Directors of the Corporation may be removed with or without cause at
any time by a vote of two-thirds of the shareholders entitled to vote thereon,
at a special meeting of the shareholders called for that purpose, unless the
Articles of Incorporation provide that Directors may only be removed for cause,
provided however, such Director shall not be removed if the Corporation states
in its Articles of Incorporation that its Directors shall be elected by
cumulative voting and there are a sufficient number of shares cast against his
or her removal, which if cumulatively voted at an election of Directors would
be sufficient to elect him or her. If a Director was elected by a voting group
of shareholders, only the shareholders of that voting group may participate in
the vote to remove that Director.
Section 11 - Compensation: (Section 78.140)
---------------------------
The Board of Directors may authorize and establish reasonable compensation of
the Directors for services to the Corporation as Directors, including, but not
limited to attendance at any annual or special meeting of the Board.
<PAGE>
Section 12 - Committees: (Section 78.125)
-------------------------
Unless otherwise provided for by the Articles of Incorporation of the
Corporation, the Board of Directors, may from time to time designate from among
its members one or more committees, and alternate members thereof, as they deem
desirable, each consisting of one or more members, with such powers and
authority (to the extent permitted by law and these Bylaws) as may be provided
in such resolution. Unless the Articles of Incorporation or Bylaws state
otherwise, the Board of Directors may appoint natural persons who are not
Directors to serve on such committees authorized herein. Each such committee
shall serve at the pleasure of the Board and, unless otherwise stated by law,
the Certificate of Incorporation of the Corporation or these Bylaws, shall be
governed by the rules and regulations stated herein regarding the Board of
Directors.
ARTICLE IV - OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office:
(Section 78.130)
-----------------------------------------------------------------
(a) The Corporation's officers shall have such titles and duties as shall be
stated in these Bylaws or in a resolution of the Board of Directors which is
not inconsistent with these Bylaws. The officers of the Corporation shall
consist of a president, secretary and treasurer, and also may have one or more
vice presidents, assistant secretaries and assistant treasurers and such other
officers as the Board of Directors may from time to time deem advisable. Any
officer may hold two or more offices in the Corporation.
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
duly elected and qualified, subject to earlier termination by his or her death,
resignation or removal.
Section 2 - Resignation:
Any officer may resign at any time by giving written notice of such resignation
to the Corporation.
Section 3 - Removal:
Any officer elected by the Board of Directors may be removed, either with or
without cause, and a successor elected by the Board at any time, and any
officer or assistant officer, if appointed by another officer, may likewise be
removed by such officer.
Section 4 - Vacancies:
(a) A vacancy, however caused, occurring in the Board and any newly created
Directorships resulting from an increase in the authorized number of Directors
may be filled by the Board of Directors.
<PAGE>
Section 5 - Bonds:
The Corporation may require any or all of its officers or Agents to post a
bond, or otherwise, to the Corporation for the faithful performance of their
positions or duties.
Section 6 - Compensation:
The compensation of the officers of the Corporation shall be fixed from time to
time by the Board of Directors.
ARTICLE V - SHARES OF STOCK
Section 1 - Certificate of Stock: (Section 78.235)
----------------------------------
(a) The shares of the Corporation shall be represented by certificates or
shall be uncertificated shares.
(b) Certificated shares of the Corporation shall be signed, (either manually or
by facsimile), by officers or agents designated by the Corporation for such
purposes, and shall certify the number of shares owned by him in the
Corporation. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents, the transfer agent or
transfer clerk or the registrar of the Corporation may be printed or
lithographed upon the certificate in lieu of the actual signatures. If the
Corporation uses facsimile signatures of its officers and agents on its stock
certificates, it cannot act as registrar of its own stock, but its transfer
agent and registrar may be identical if the institution acting in those dual
capacities countersigns or otherwise authenticates any stock certificates in
both capacities. If any officer who has signed or whose facsimile signature has
been placed upon such certificate, shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of its issue.
(c) If the Corporation issues uncertificated shares as provided for in these
Bylaws, within a reasonable time after the issuance or transfer of such
uncertificated shares, and at least annually thereafter, the Corporation shall
send the shareholder a written statement certifying the number of shares owned
by such shareholder in the Corporation.
(d) Except as otherwise provided by law, the rights and obligations of the
holders of uncertificated shares and the rights and obligations of the holders
of certificates representing shares of the same class and series shall be
identical.
Section 2 - Lost or Destroyed Certificates- (Section 104.8405)
--------------------------------------------
The Board of Directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed if the owner:
(a) so requests before the Corporation has notice that the shares have
been acquired by a bona fide purchaser,
NV Bylaws-8
<PAGE>
(b) files with the Corporation a sufficient indemnity bond; and
(c) satisfies such other requirements, including evidence of such loss,
theft or destruction, as may be imposed by the Corporation.
Section 3 - Transfers of Shares: (Section 104.8401, 104.8406 & 104.8416)
---------------------------------
(a) Transfers or registration of transfers of shares of the Corporation shall
be made on the stock transfer books of the Corporation by the registered holder
thereof, or by his attorney duly authorized by a written power of attorney; and
in the case of shares represented by certificates, only after the surrender to
the Corporation of the certificates representing such shares with such shares
properly endorsed, with such evidence of the authenticity of such endorsement,
transfer, authorization and other matters as the Corporation may reasonably
require, and the payment of all stock transfer taxes due thereon.
(b) The Corporation shall be entitled to treat the holder of record of any
share or shares as the absolute owner thereof for all purposes and,
accordingly, shall not be bound to recognize any legal, equitable or other
claim to, or interest in, such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
Section 4 - Record Date: (Section 78.215 & 78.350)
-------------------------
(a) The Board of Directors may fix, in advance, which shall not be more than
sixty days before the meeting or action requiring a determination of
shareholders, as the record date for the determination of shareholders entitled
to receive notice of, or to vote at, any meeting of shareholders, or to consent
to any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividends, or allotment of any
rights, or for the purpose of any other action. If no record date is fixed, the
record date for shareholders entitled to notice of meeting shall be at the
close of business on the day preceding the day on which notice is given, or, if
no notice is given, the day on which the meeting is held, or if notice is
waived, at the close of business on the day before the day on which the meeting
is held.
(b) The Board of Directors may fix a record date, which shall not precede the
date upon which the resolution fixing the record date is adopted for
shareholders entitled to receive payment of any dividend or other distribution
or allotment of any rights of shareholders entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action.
(c) A determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless
the Board of Directors fixes a new record date for the adjourned meeting.
Section 5 - Fractions of Shares/Scrip: (Section 78.205) The Board of Directors
may authorize the issuance of certificates or payment of money for fractions of
a share, either represented by a certificate or uncertificated, which shall
entitle the holder to exercise voting rights, receive dividends and participate
in any assets of the Corporation in the event of liquidation, in proportion to
the fractional holdings; or it may authorize the
NV Bylaws-9
<PAGE>
payment in case of the fair value of fractions of a share as of the time when
those entitled to receive such fractions are determined; or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the manual or facsimile signature of an officer
or agent of the Corporation or its agent for that purpose, exchangeable as
therein provided for full shares, but such scrip shall not entitle the holder to
any rights of shareholder, except as therein provided. The scrip may contain any
provisions or conditions that the Corporation deems advisable. If a scrip ceases
to be exchangeable for full share certificates, the shares that would otherwise
have been issuable as provided on the scrip are deemed to be treasury shares
unless the scrip contains other provisions for their disposition.
ARTICLE VT - DIVIDENDS (Section 78.215 & 78.288)
-----------------------
(a) Dividends may be declared and paid out of any funds available therefor, as
often, in such amounts, and at such time or times as the Board of Directors may
determine and shares may be issued pro rata and without consideration to the
Corporation's shareholders or to the shareholders of one or more classes or
series.
(b)Shares of one class or series may not be issued as a share dividend to
shareholders of another class or series unless: (i) so authorized by the
Articles of Incorporation; (ii) a majority of the shareholders of the
class or series to be issued approve the issue; or (iii)there are no
outstanding shares of the class or series of shares that are authorized
to be issued.
ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and-shall be subject to
change by the Board of Directors from time to time, subject to applicable law.
ARTICLE VIII - CORPORATE SEAL (Section 78.065)
------------------------------
The corporate seal, if any, shall be in such form as shall be prescribed and
altered, from time to time, by the Board of Directors. The use of a seal or
stamp by the Corporation on corporate documents is not necessary and the lack
thereof shall not in any way affect the legality of a corporate document.
ARTICLE IX - AMENDMENT
Section 1 - By Shareholders:
All Bylaws of the Corporation shall be subject to alteration or repeal, and new
Bylaws may be made, by a majority vote of the shareholders at the time entitled
to vote in the election of Directors even though these Bylaws may also be
altered, amended or repealed by the Board of Directors.
Section 2 - By Directors: (Section 78.120)
--------------------------
The Board of Directors shall have power to make, adopt, alter, amend and
repeal, from time to time, Bylaws of the Corporation.
NV Bylaws-10
<PAGE>
ARTICLE X - WAIVER OF NOTICE: (Section 78.375)
----------------------------
Whenever any notice is required to be given by law, the Articles of
Incorporation or these Bylaws, a written waiver signed by the person or persons
entitled to such notice, whether before or after the meeting by any person,
shall constitute a waiver of notice of such meeting.
ARTICLE XI - INTERESTED DIRECTORS: (Section 78.140)
-----------------------------------
No contract or transaction shall be void or voidable if such contract or
transaction is between the corporation and one or more of its Directors or
Officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which tine or more of its Directors or
Officers, are directors or officers, or have a financial interest, when such
Director or Officer is present at or participates in the meeting of the Board,
or the committee of the shareholders which authorizes the contract or
transaction or his, her or their votes are counted for such purpose, if
(a) the material facts as to his, her or their relationship or interest
and as to the contract or transaction are disclosed or are known to the Board
of Directors or the committee and are noted in the minutes of such meeting, and
the Board or committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested Directors, even though
the disinterested Directors be less than a quorum; or
(b) the material facts as to his, her or their relationship or
relationships or interest or interests and as to the contract or transaction
are disclosed or are known to the shareholders entitled to vote thereon, and
the contract or transaction is specifically approved in good faith by vote of
the shareholders; or
(c) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by
the Board of Directors, a committee of the shareholders; or
(d) the fact of the common directorship, office or financial interest is
not disclosed or known to the Director or Officer at the time the transaction
is brought before the Board of Directors of the Corporation for such action.
Such interested Directors may be counted when determining the presence of a
quorum at the Board of Directors' or committee meeting authorizing the contract
or transaction.
ARTICLE XII - ANNUAL LIST OF OFFICERS, DIRECTORS, AND REGISTERED AGENT:
(section 78.150 & 78.165)
The Corporation shall, within sixty days after the filing of its Articles of
Incorporation with the Secretary of State, and annually thereafter on or before
the last day of the month in which the anniversary date of incorporation occurs
each year, file with the Secretary of State a list of its president, secretary
and treasurer and all of its Directors, along with the post office box or
street address, either residence or business, and a designation of its resident
agent in the state of Nevada. Such list shall be certified by an officer of the
Corporation.
NV Bylaws-11
<PAGE>
RESOLUTIONS ADOPTED BY INCORPORATOR
OF
- -------------------------
The undersigned, being the sole Incorporator of the corporation hereby
adopts the following resolutions:
(1) RESOLVED, that a copy of the Certificate of Incorporation of the
Corporation, together with the original receipt showing payment of
the statutory organization tax and filing fee, be inserted in the
Minute Book of the Corporation.
(2) RESOLVED, that the form of First By-Laws submitted to the meeting
be, and the same hereby are, adopted as and for the By-Laws of the
Corporation, and that a copy thereof be placed in the Minute Book
of the Corporation, directly following the Certificate of
Incorporation.
(3) RESOLVED, that the following persons be, and they hereby are,
elected as Directors of the Corporation, to serve until the first
annual meeting of shareholders, and until their successors are
elected and qualify:
Dated:
Incorporator
-1-
<PAGE>
Instructions for Organization of a Corporation with Sole Director/
Shareholder
A small corporation commonly is comprised of a Sole Director/Shareholder.
One must basically follow the same procedure to organize this type of small
corporation as it would if this corporation had more than one Director and /or
Shareholder. However there are some documents that are specific to this type of
organization that must be highlighted at this time. Specifically, the
"Resolution Adopted by the Sole Director/Shareholder" inserted in this booklet
as page 1. The Resolution requires close attention to detail when filling out
the following information:
1. Corporate Name;
2. Corporate officers: President, Vice President, Secretary and Treasurer. It
is important to note, that under Nevada law one individual may hold any
combination of officer positions in a corporation
3. The name of the Corporation' treasurer and the name and location of the
financial Institution where he/she is authorized to open up a bank
account on behalf of the Corporation.
4. Date;
5. Have Sole Director/Shareholder sign the resolution.
In addition, the share certificate marked "Specimen" should be removed from the
certificate book and inserted as Appendix A and a conformed copy of the Banking
resolution as Appendix B.
Instruction sheet
SPECIMEN OF SECURITY
Standard Stock Certificate
SUBSCRIPTION AGREEMENT
1. Subscription. Subject to the terms and conditions hereof the undersigned,
intending to be legally bound, irrevocably subscribes for and agrees to purchase
that number of shares of common stock ("Shares") of Power Save International,
Inc., a Nevada corporation (the "Company"), set forth on the signature page
hereof, for the price stated thereon. This subscription is made in connection
with an offering by the Company of up to 1,000,000 shares of its common stock
under a Regulation SB-2 qualification to the Securities Act of 1933, as amended.
This Offering will continue until the Company has sold a maximum of 1,000,000
shares totaling $5,000,000 or the termination date of May 1, 2001, whichever
occurs first. If the minimum is not achieved by the termination date,
subscriber's funds will be promptly returned with interest and without
deduction. 2. Representations and Warranties of Investor. The undersigned
represents and warrants to the Company that:
2.1 WARNING: (I) the Shares have not been registered under the Securities Act of
1933 and are being offered in reliance on an exemption from registration
pursuant to Regulation SB-2 thereunder; (II) there is presently no public market
for the Shares, nor is any such market expected to develop after the Offering;
and (III) the undersigned may not be able to liquidate his or her investment in
the event of an emergency. 2.2 The Shares are being purchased for the
undersigned's own account, without the intention of reselling or redistributing
the same; and the undersigned has made no agreement with others to subdivide,
sell, assign, transfer, pledge or otherwise dispose of the Shares.
2.3 WARNING: no federal or state agency has made any findings or determination
as to the fairness of an investment in, or any recommendation or endorsement
of, the Shares.
3. Irrevocability. The undersigned hereby acknowledges and agrees that, except
as otherwise provided by the laws of the State of Nevada, this subscription is
irrevocable and the undersigned is not entitled to cancel or withdraw it.
4. Joint and Several Undertaking; Entities. If more than one person is signing
this Agreement, each representation, warranty and undertaking herein shall be
the joint and several representation, warranty and undertaking of each such
person. If the undersigned is a partnership, corporation, trust or other entity,
the undersigned further represents and warrants that (I) the individual
executing this Agreement has full power and authority to execute and deliver
this Agreement on behalf of the undersigned; (II) the undersigned has full right
and power to perform its obligations pursuant to the provisions hereof; and
(III) the undersigned was not formed for the specific purpose of acquiring
Shares.
5. Survival. Each representation and warranty contained herein and all
information furnished by the undersigned to the Company is true, correct and
complete in all respects as of the date hereof, and the same will be true,
correct and complete as of the date on which this subscription is accepted by
the Company, as if made on such date. The undersigned undertakes to notify the
Company immediately of any change in the any representation, warranty, or other
information set forth herein.
6. Non-assignment. This Agreement shall not be assignable by the undersigned
without the prior written consent of the Company.
7. Acceptance by the Company. The Company reserves the right to accept or reject
any subscription in whole or in part in its sole and absolute discretion. No
subscription will be effective until accepted by the Company. If the Company
decides to reject a subscription, it will do so in writing within a reasonable
time after having received it.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
Within 5 days of its receipt of a subscription agreement from the Underwriter,
confirming that an accompanying check for the purchase price of Shares has been
received and following escrow, the Company will send by first-class mail a
written confirmation to notify the subscriber of the extent, if any, to which
subscription has been accepted by the Company. The Company reserves the right to
reject orders for the purchases of Shares in whole or in part. Not more than
thirty days following the mailing of its written confirmation, and upon
achieving the minimum number of total shares to be sold, a subscriber's Common
Stock certificate will be mailed by first-class mail. The company shall not use
the proceeds paid by an investor until such time as the minimum number of shares
has been sold nor until the Common Stock certificate evidencing such investment
has been mailed.
Funds will be deposited to an escrow account established in the
Company's name at The Business Bank, 8399 Leesburg Pike, Vienna, VA 22101.
Power Save International, Inc.
Subscription Agreement
Signature Page
The undersigned, by executing this Signature Page, agrees to all of the terms,
conditions, warranties and representations in the accompanying Subscription
Agreement, and subscribes for the number of shares of the Company's Common Stock
set forth below at a price of $5.00 per share.
Number of Shares Subscribed for: _________________________
Total Purchase Price: $_________________________
A check in the full amount of the purchase price, payable to "Power Save
International, Inc. Escrow Account" accompanies this executed Subscription
Agreement.
Form of Ownership:
__ Individual __ Partnership
__ Joint Tenants With Rights of __ Trust
survivorship (both sign) __ Limited Liability Company, LLC
__Tenants in Common (all sign) __ Corporation
INDIVIDUALS
- ----------------------------- ------------------------------ ----------
Signature of Subscriber Print Name Date
Mailing Address
- ----------------------------- ------------------------------
Telephone Number Social Security Number
- ----------------------------- ------------------------------ -----------
Signature of Subscriber Print Name Date
Mailing Address
- ----------------------------- ------------------------------
Telephone Number Social Security Number
CORPORATIONS, TRUSTS, PARTNERSHIPS, LLCs
Name of Corporation, Trust, Partnership or LLC
By: _________________________________ __________________________________
Signature of Authorized Representative Print Name
--------------------------------- ----------------------------------
Capacity of Authorized Representative Date
Mailing Address
*************************
Accepted as to ______________ Shares on ________________ , 199 _.
Power Save International, Inc.
By: _________________________________
Its: ______________________________
Please make your check payable to: Power Save International, Inc. Escrow
Account.
Mail to: 10101 Grosvenor Place #2016
Rockville, MD 20852-4681
Are you an officer or director of a publicly held company? ______
Are you over 21 years of age? ______
Name and address of employer _____________________________________________
- ----------------------------------------------------------------------
Occupation _______________________
Individual income over or under $200,000 ($300,000 with spouse)? ________
Net Worth over or under $645,000? ___________
Investment objective: conservative _____ speculative ______ income _____
Approved by Three Arrows Capital Corp. RR ____, SP ______
LAW OFFICES
JOHN T. TANSEY
1730 K STREET, N.W.
SUITE 304
WASHINGTON, D.C. 20006
TEL: (202) 506-1459
FAX: (202) 331-3759
March 27, 2000
Office of Small Business
Division of Corporation Finance
Securities and Exchange
Mail Stop 3-4
Washington, D. C. 20549
Re: Power Save International. Inc.
------------------------------
Ladies and Gentlemen:
The undersigned is a member of the Bar of the District of Columbia and
has acted as special counsel to Power Save International, Inc. ("the Company"),
in connection with the offering and sale of up to a maximum of one million
(1,000,000) shares of common stock of the Company ("the Shares").
In that capacity, I have made such inquiries of the officers of the
Company and have examined such corporate and other records, documents,
agreements, instruments, and certificates of officers of the Company and public
officials, and have examined such principles of law as I have deemed necessary
for the purposes of this opinion. I have assumed the genuineness of all
signatures and the authenticity of ail documents submitted to me as originals,
and the conformity to original documents of all documents submitted to me as
copies, whether certified or not.
In rendering this opinion, I have relied, inter alia, upon the
following documents:
(1) A copy of the Certificate of Incorporation filed with the Secretary of
State of Nevada on May 8, 1987;
(2) the Articles of Incorporation of the Company and amendments thereto;
(3) a copy of the by-laws of the Company;
(4) a copy of the corporate minutes book; and
(5) such other documents as I deemed necessary to examine.
The above documents are hereinafter collectively referred to as "the
Documents."
<PAGE>
Securities and Exchange Commission
Page 2
In addition to the aforesaid assumptions, I have assumed the following to
be true:
(a) The authenticity and completeness of the Documents;
(b) that the parties executing the Documents and such other documents
which were submitted to me possessed the requisite corporate
authority to sign the same;
(c) in the case of documents entered into by corporations, that the necessary
and legally binding corporate actions have occurred; and
(d) the legal capacity of all natural persons who signed the Documents.
Based upon the foregoing, and in reliance upon and subject to all of the
above assumptions, I am of the opinion that: (1) The Shares have been duly and
validly authorized; and, (2) after the registration statement filed by the
Company with the United States Securities and Exchange Commission ("the
Commission") respecting the Shares is declared effective by the Commission,
and upon issuance and delivery against receipt by the Company of the offering
price specified in the registration statement, the Shares will be legally and
validly issued, fully paid, and non-assessable.
This opinion is provided to you as a legal opinion and not as a guarantee
of the matters discussed herein. This opinion is rendered as of the date
hereof, is strictly limited to the matters expressly stated herein, and no
other opinions may be implied or inferred.
Sincerely yours,
/s/ John T.Tansey
John T. Tansey
cc: Mr. Scott Balmer
EXECUTIVE EMPLOYMENT AGREEMENT
Executive Employment Agreement ("Agreement") is made and effective this 15h day
of November, 1999, by and between Power Save International, Inc., a Delaware
corporation (the "Company") and Scott Balmer, ("Executive").
WHEREAS, the Company wishes to assure itself of the benefit of Executive's
services, experience and loyalty, and Executive has indicated his willingness to
provide his services, experience and loyalty on the terms and conditions set
forth herein:
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
other good and valuable consideration, the parties hereto agree as follows:
1. Employment.
Company hereby agrees to initially employ Executive as its Chief Operating
Officer and Executive hereby accepts such employment in accordance with the
terms of this Agreement and the terms of employment applicable to regular
employees of Company. In the event of any conflict or ambiguity between the
terms of this Agreement and terms of employment applicable to regular employees,
the terms of this Agreement shall control. Election or appointment of Executive
to another office or position, regardless of whether such office or position is
inferior to Executive's initial office or position, shall not be a breach of
this Agreement.
2. Duties of Executive.
The duties of Executive shall include the performance of all of the duties
typical of the office held by Executive and such other duties and
responsibilities as may be assigned by the Chairman of the Board of Directors
(the "Chairman") and/or the Directors of the Company.
3. Exclusivity.
(a) For so long as Executive is employed by Company, Executive shall, except as
may from time to time be otherwise agreed in writing by the Company, devote his
full time working hours, ability and attention to the business of the Company,
shall faithfully serve the Company, shall in all respects conform to and comply
with the lawful and reasonable directions and instructions given to him by the
Directors of the Company having authority over him and shall perform all duties
in a professional, ethical and businesslike manner and use his best efforts to
promote and serve the interests of the Company.
(b) For so long as Executive is employed by Company, Executive shall not,
directly or indirectly, render services to any other person or organization for
which he receives compensation without the prior written consent of the
Chairman, or otherwise engage in activities which would interfere significantly
with his faithful performance of his duties hereunder. Executive may perform
inconsequential services without direct compensation thereof or in connection
with the management of personal investments; provided that such activity does
not contravene the provisions of Section 7 hereof.
4. Compensation.
Executive shall be paid compensation during this Agreement as follows:
(a) An initial base salary of _________ per year, payable in equal installments
according to the Company's regular payroll schedule. The base salary shall be
adjusted at the end of each year of employment at the discretion of the Board of
Directors. Company shall be entitled to deduct or withhold all taxes and charges
that Company may be required to deduct or withhold from salary.
(b) An incentive bonus as consideration for Executive's termination of his
current employment to undertake the duties described herein and for the
covenants contained in Sections 7(b) and 7C below. This bonus will be in the
amount of _____________ payable on if Executive is still in the
employ of Company. Company shall be entitled to withhold all taxes and
charges that Company may be required to deduct or withhold from the bonus.
(c)Options pursuant to the Company's Stock Option Plan,
which plan is incorporated by reference as if set
forth herein in full, to purchase __________ shares of
Company Common Stock at an Option Price of ___ per share,
such option to be granted in the event that Executive is
employed by Company on that date.
5. Benefits.
(a) Holidays, Vacation, Sick Leave. Executive shall be entitled to such
holidays, vacation and sick leave as are afforded to senior officers of the
Company under its benefit plans, as and when such plans are adopted (and as
modified from time to time) by the Board of Directors.
(b) Medical Insurance. During this Agreement, company agrees to reimburse
Executive for the costs of continuing Executive" medical coverage with his prior
employer under applicable Federal Law (COBRA coverage). Executive shall be
responsible for payment of any federal or state income tax imposed upon these
benefits. (c) Expense Reimbursement. Executive shall be entitled to
reimbursement for all reasonable expenses, including travel and entertainment,
incurred by Executive in the performance of Executive's duties. Executive will
maintain records and written receipts as required by Company's policies and
procedures and as may be reasonable requested by the Chairman to substantiate
such expenses.
6. Rights to Work Product.
In consideration of Executive's original and continuing employment under this
Agreement, it is agreed and understood that Executive shall disclose to Company
all inventions, improvements, designs, information, reports, studies, other
tangible or intangible material of any nature whatsoever produced or as a result
of any of the services performed by Executive hereunder and all copies of any of
the foregoing. Executive hereby irrevocably grants, assigns, transfers and sets
over unto Company all right, title and interest of any kind, nature or
description in and to the above referenced work product and Executive shall not
be entitled to make use of the work product except as may be expressly permitted
in this Agreement. Executive agrees to execute: (i) any and all documents and;
(ii) provide all such assistance; as is reasonably requested by Company in
connection with the registration and protection by litigation or otherwise of
any patents, copyrights, trademarks or other proprietary rights in the work
product produced hereunder (including any reissues thereof).
7. Confidential Information and Noncompetition.
(a) Confidential Information. Executive recognizes that the services to be
performed by him/her hereunder are special, unique and extraordinary in that, by
reason of his employment hereunder, he may acquire or has acquired confidential
information and trade secrets concerning the operation of the Company, the use
or disclosure of which could cause Company substantial loss and damages that
could not be readily calculated and for which no remedy at law would be
adequate. Accordingly, in consideration of Executive's original and continued
employment by Company in a capacity in which he may receive or contribute to the
production of confidential information, Executive agrees and acknowledges that
all tangible and intangible information obtained or developed, and in connection
with the performance of this Agreement (including information developed by
Executive as part of his/her performance of services) which is so designated by
Company, shall be considered to be confidential and proprietary information
which contains valuable business information and trade secrets of company
relating to its business practices and critical to its competitive position in
the marketplace.
(i) Information publicly known that is generally employed by the trade at or
after the time Executive first learns of such information, or generic
information or knowledge which Executive would have learned in the course of
similar employment or work elsewhere in the trade, shall not be deemed part of
the company confidential information. (ii) All notes, materials or records, of
any kind, in any way incorporating or reflecting any of the Company confidential
information shall belong exclusively to company and Executive agrees to turn
over all copies of such materials in his control to Company upon termination of
this Agreement.
(iii) Executive agrees during the term of this Agreement and thereafter to
hold in confidence and not to directly or indirectly reveal, report,
publish, disclose or transfer any of the Company confidential
information to any person or utilize any of the Company confidential
information for any purpose, except in the course of his/her work for
the Company.
(iv) Executive agrees to notify Company promptly and in writing of any
circumstances of which Executive has knowledge relating to any possession, use
or knowledge of any portion of the Company confidential information by any
unauthorized person.
(b) No Competing Employment. For so long as Executive is employed by Company,
Executive shall not, unless he receives prior written consent from the Board of
Directors, directly or indirectly, own an interest in, manage, operate, join,
control, lend money or render financial or other assistance to or participate in
or be connected with, as an officer, employee, partner, stockholder, consultant
or otherwise, any individual, partnership, firm, corporation or other business
entity that materially competes with the Company.
(c) No Interference. During the term of this Agreement, Executive shall not,
whether for his own account or for the account of any other individual,
partnership, firm, corporation, or other business organization (other than the
Company), intentionally solicit, endeavor to entice away from Company or
otherwise interfere with the relationship of Company with, any person who is
employed by or otherwise engaged to perform services for Company (including, but
not limited to, any employees of Company's venture partners and independent
sales representatives or organizations) or any person or entity who is, or was
within the then most recent twelve (12) month period, a customer or client of
the Company.
8. Term and Termination
(a) The Initial Term of this Agreement shall commence on the effective date
noted above and it shall continue in effect for a period of __ year(s).
Thereafter, the Agreement shall be renewed upon the mutual written agreement of
Executive and Company. In the event that Company shall terminate this Agreement
without cause during the Initial Term, Executive shall, as severance pay and in
lieu of damages, be entitled to be paid an amount equal to the unpaid portion of
Executive's base annual salary and incentive bonus payment as well as
continuation of his/her medical benefits payments. In the event of such
termination, Executive shall not be entitled to any other compensation then if
effect, prorated or otherwise.
(b) This Agreement and Executive's employment may be terminated by Company at
its discretion effective an any time after the Initial Term, provided that in
such case, Executive shall be paid fifty percent (50%) of Executive's then
applicable base annual salary during this Agreement as well as continuation of
his medical benefits payments for a period of six (6) months. In the event of
such a discretionary termination, Executive shall not be entitled to receive any
incentive salary payment or any other compensation then in effect, prorated or
otherwise.
(c) This Agreement may be terminated by Executive at Executive's
discretion by providing at least ninety (90) days prior written notice to the
Company. In the even of termination by Executive pursuant to this subsection,
Company may immediately relieve Executive of all duties and immediately
terminate this Agreement, provided that Company shall pay Executive
at the then applicable base salary rate to the termination date
included in Executive's original termination notice.
(d) Company shall have the right to terminate Executive's employment immediately
for Cause. "Cause" shall mean: (1) conviction of a felony involving moral
turpitude, if the Board, in its sole discretion (reasonably applied) believes
that such conviction will have a significant adverse effect upon Executive's
ability to perform under this Agreement or a significant adverse effect upon the
Company; (11) commission of a material dishonest act or common law fraud against
Company or either of its venture partners or any parent, subsidiary or affiliate
of a venture partner; (III) habitual drunkenness or narcotic dependence during
working hours or otherwise materially interfering with Executive's duties
hereunder; (IV) excessive absenteeism not related to illness, sick leave or
vacations, but only after notice from Company followed by a repetition of such
excessive absenteeism; (V) any act or omission that constitutes a material
breach by Executive of his obligations or agreements under this Agreement or any
other written agreement between Executive and Company, or by the failure or
refusal of Executive to satisfactorily perform any duties reasonable required
hereunder, but only after notification by Company of such breach and a failure
or refusal of Executive to correct such breach within thirty (30) days of such
notification (other than by reason of the incapacity of Executive due to
physical or mental illness). In event of termination of the Agreement pursuant
to this Subsection 8(d), Executive shall be paid only at the then applicable
base salary rate up to and including the date of termination. Executive shall
not be paid any incentive salary payments or other compensation, prorated or
otherwise.
(e) In the event Company is acquired, or is the non-surviving party in a merger,
or sells all or substantially all of its assets, this Agreement shall not be
deemed terminated as a result thereof.
9. Notices.
Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
by certified mail, postage prepaid, or recognized overnight delivery services:
If to Company:
Power Save International, Inc.
5800 NW 64 Ave., Bldg. 26 #109,
Tamarac, FL 33319
Attn: Chairman and Treasurer
If to Executive:
Scott Balmer
5800 NW 64 Ave., Bldg. 26 #109,
Tamarac, FL 33319
10. Entire Agreement.
This Agreement constitutes the entire Agreement between the parties with respect
to the subject matter hereof and supersedes and merges all prior proposals,
understandings and all other agreements, oral or written between the parties
relating to such subject matter. Each party hereby acknowledges that it has not
entered into this Agreement in reliance upon any representation made by the
other party and not embodied herein.
11. Governing Law.
This Agreement shall be construed and enforced in accordance with the laws of
the State of Florida as if made in Florida for performance entirely
within the State of Florida.
12. Headings.
Headings used in this Agreement are provided for convenience only and shall not
be used to construe meaning or intent.
13. Assignment.
(a) By Executive. Neither this Agreement nor any right, duty, obligation or
interest hereunder may be assigned or delegated by Executive without the prior
express written approval of Company, which may be withheld by Company at
Company's absolute discretion.
(b) By Company. This Agreement and all of Company's rights and obligations
hereunder may be assigned, delegated or transferred by it to (I) any venture
partner of Company or to any parent, subsidiary or affiliate of any venture
partner; or (II) any business entity which at any time by merger, consolidation
or otherwise acquires all or substantially all of the assets of the Company or
to which Company transfers all or substantially all of its assets. Upon such
assignment, delegation or transfer, any such partner, parent, subsidiary,
affiliate or other business entity shall be deemed to be substituted for all
purposes as the Company hereunder. (c) Binding Effect. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto, any successors to
or assigns of Company and Executive's heirs and the personal representatives of
Executive's estate.
14. Severability.
If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
15. Arbitration.
(a) In the event that a dispute arises concerning the terms of this Agreement
the aggrieved party shall refer such dispute to arbitration as specified herein.
Such arbitration shall be held in the County of Baltimore, Virginia, in
accordance with the rules of the American Arbitration Association ("AAA Rules")
then in effect. Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction over the parties. The arbitrators shall
have the authority to grant any legal remedies that would be available in any
judicial proceeding instituted to resolve a disputed matter.
(b) The prevailing party in an action brought against the other to enforce the
terms of this Agreement or any rights or obligations hereunder, shall be
entitled to receive its reasonable costs and expenses of bringing such action
including its reasonable attorneys fees.
(c) No action, regardless of form, arising out of this Agreement, shall be
brought by Executive more than two (2) years after such cause of action shall
have accrued.
16. Miscellaneous.
(a) This Agreement may not be modified or altered except by a written instrument
executed by both parties. (b) The parties agree that each provision in this
Agreement is deemed equally essential to each party. (c) The failure of either
of the parties to insist upon strict performance of any of the provisions of
this Agreement shall not be construed as the waiver of any subsequent default of
a similar nature. (d) Either party shall be excused from performance and shall
not be liable for any delay in delivery or for non-delivery, in whole or in
part, caused by the occurrence of any contingency beyond the control of the
parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
Power Save International, Inc. Executive
By: ________________________ By: __________________________
Name: ______________________ Name: ________________________
Title: _______________________
Address:
5800 NW 64 Ave., Bldg 26 #109
Tamarac, FL 33319
LOCK-UP AGREEMENT
In connection with a stock offering under Regulation SB-2 of the
Securities Act of 1933, as amended, conducted by a company in which I hold a
substantial and founding interest, I agree to "Lock-Up" such securities for a
period of twelve months (365) days from the date of the end of the offering
period. Specifically, I agree that I will not sell all or any portion of my
holdings during that period without prior written approval of the Underwriter,
Three Arrows Capital Corp. The company in which I hold such shares is Power Save
International, Inc. and the estimated completion date of the offering is on or
before May 1, 2001.
---------------------------------
Signed
---------------------------------
Dated
ESCROW AGREEMENT
This ESCROW AGREEMENT is made and entered into this 15th day of April 2000 by
and between Power Save International, Inc. a Nevada Corporation (the
"Company"); Three Arrows Capital Corp.(the "Underwriter") and The Business Bank,
(the "Escrow Agent").
Background. Pursuant to the Offering of the Company dated on or about May 1,
2000, the Company is offering for sale through Three Arrows Capital Corp.,
1,000,000 shares of common stock (the "Shares"), $0.001 par value per share, of
the Company (the "Common Stock") at a price of $5.00 per share (the "Offering").
Those persons who desire to purchase shares ("Subscribers") are required to
execute and deliver to the Underwriter a subscription agreement ("Subscription
Agreement") and are required to pay the purchase price of the shares subscribed
for by check, directed or made payable, to the Escrow Agent as escrow agent for
the Company.
The sale of any shares pursuant to the Offering is subject to various
conditions, including the receipt of acceptable Subscriptions and payment in
respect of the shares of Common Stock. The purpose of this Escrow Agreement is
to assure that no proceeds of the Offering are disbursed to or on behalf of, the
Company until the conditions set forth herein shall be satisfied. Once
acceptable Subscriptions and funds for the minimum number of shares have been
received, the Escrow Agent, pursuant to this Escrow Agreement, funds will be
released to the Company. The parties hereto, wish to set forth herein the terms
and conditions governing the escrow account and the funds being delivered to and
held by the Escrow Agent.
NOW THEREFORE, in consideration of the mutual promises herein contained, each
intending to be legally bound hereby, the parties hereto agree as follows:
1. Escrow Agent. On behalf of the Subscribers, the Company hereby designates and
appoints The Business Bank as Escrow Agent to serve in accordance with the terms
and conditions of this Escrow Agreement and the Escrow Agent agrees to act as
such Escrow Agent in accordance with the terms and conditions of this Escrow
Agreement.
2. Creation of Escrow. At any time and from time to time after the date hereof
until completion of the Offering and Closing thereunder, the Underwriter shall
cause to be delivered to the Escrow Agent, from the Subscribers, funds or
instruments payable to the Escrow Agent as escrow agent representing the
purchase price of shares subscribed for by Subscribers. The Escrow Agent shall
accept and hold in escrow all such funds so received by it for deposit in escrow
hereunder (the "Escrowed Funds") until released as set forth herein. The Escrow
Agent shall maintain books and records of account detailing the source of all
funds received by the Escrow Agent.
3. Investment of Escrowed Funds. Pending release from escrow, the Escrowed Funds
shall be invested by the Escrow Agent in interest bearing short-term United
States government securities or other short-term federally insured money market
investments which are readily liquid. All interest accrued on the Escrowed Funds
or interest earned on the Escrowed Funds shall be retained by the Escrow Agent
as part of the Escrowed Funds and released in accordance with the provisions of
this Escrow Agreement. It is acknowledged and agreed that the Escrowed Funds,
including any interest or earnings thereon, are not assets or deposit
liabilities of the Escrow Agent or the Company, but constitute funds submitted
to the Escrow Agent by the Subscribers for safekeeping, pending disbursement in
accordance with the provisions of this Escrow Agreement.
4. Information. The Company has undertaken responsibility for tax reporting of
the interest or other amounts earned on the Escrowed Funds with respect to each
Subscriber in the event of the release of Escrowed Funds in accordance with the
provisions of Section 5(b) hereof, and disbursement of said interest or other
earnings to Subscribers. From time to time upon the request of the Underwriter
as agent for the Subscribers, the Escrow Agent shall furnish to the Underwriter
a statement of the amount of Escrowed Funds held by the Escrow Agent, the
approximate amount of any accrued interest thereon, and such information as the
Underwriter may reasonably request, The Escrow Agent shall immediately notify
the Underwriter if any check or instrument representing Escrowed Funds or other
purported transfer to Escrow Agent of Escrowed Funds fails to result in the
actual delivery of funds to the Escrow Agent.
5. Release of Escrowed Funds.
(a) Release of Escrowed Funds to the Company. Immediately upon the receipt of
the Officer's Certificate of the Company as described below, the Escrow Agent
shall release and deliver to the Company such portion of the Escrowed Funds as
represents payment of the purchase price of shares in respect of which the
Company has accepted Subscriptions plus all interest or other earnings accrued
on such portion of the Escrowed Funds. The Escrow Agent shall not release any
portion of the Escrowed Funds to the Company unless the following condition (the
"Condition") shall have been satisfied: it has received a certification of the
President or Chairman of the Board of Directors of the Company to the effect
that (i) the Company has received acceptable Subscriptions (including payment in
full of the purchase price) with respect to not less than 100,000 shares, and
has accepted Subscriptions with respect to not less than 100,000 shares, and all
terms of the Offering have been complied with. Such certification shall also
indicate the number of shares with respect to which Subscriptions have been
accepted and the number of shares, if any, and identity of the Subscribers with
respect to which Subscriptions have been rejected. Notwithstanding anything to
the contrary contained herein, the delivery of the foregoing certification shall
be in the sole discretion of the Company, and nothing contained herein shall
constitute any obligation, express or implied, of the Company to deliver such
certification, or to deliver it at any specified time.
(b) Release of Escrowed Funds to Subscribers. Immediately after receiving a
certification of the President or Chairman of the Board of Directors of the
Company to the effect that the Company has either (i) terminated the Offering in
whole or in part; or (ii) rejected, revoked or canceled in whole or in part any
Subscription; or if the Condition shall not have been satisfied prior to January
15, 2001 then the Escrow Agent shall return to the Subscriber whose Subscription
shall have been rejected, revoked or canceled, in whole or in part, as a result
of termination of the Offering, the failure of satisfaction of the Condition
prior to January 15, 2001 or otherwise, Escrowed Funds representing such
Subscriber's rejected, revoked or canceled payments, or all Subscribers'
payments in the event of termination of the Offering as a whole or the failure
of satisfaction of the Condition, without such Subscriber's share of any
interest or other earnings accrued on such portion of the Escrowed Funds.
6. Limitation of Liability. It is agreed that the duties of the Escrow Agent are
limited to those herein specifically provided and are ministerial in nature. It
is further agreed that the Escrow Agent shall incur no liability whatsoever
except by reason of its willful misconduct, gross negligence or bad faith. The
Escrow Agent shall be under no obligation in respect to amounts held in escrow
hereunder other than faithfully to follow the instructions herein contained or
delivered to the Escrow Agent in accordance with this Escrow Agreement. It shall
not be required to institute legal proceedings of any kind. It shall have no
responsibility for the genuineness or validity of any document or other item
deposited with it, and it shall be fully protected in acting in accordance with
the Escrow Agreement upon written instructions given to it and reasonably
believed by it to have been duly executed by the Company or Underwriter in
accordance herewith. The Company shall indemnify and hold the Escrow Agent
harmless with respect to anything done by the Escrow Agent in good faith in any
and all matters covered by this Agreement in accordance with the instructions or
provisions set forth herein. Neither the Escrow Agent nor any of its Officers,
Directors or employees have reviewed the Offering nor have they or do they make
any representations, or statements regarding the truth, accuracy or
effectiveness of the Offering.
7. Compensation. The Company shall pay all compensation, expenses and other
charges of the Escrow Agent relating to its services hereunder, including all
fees and commissions relating to the investment of the aforesaid escrowed funds,
for so long as the Escrow Agent holds any amount in Escrow hereunder. The Escrow
Agent shall not make any deduction or setoff of the amount of compensation for
its services hereunder (including all expenses, fees and commissions) against
the Escrowed Funds.
8. Resignation. The Escrow Agent, or any successor to it hereafter appointed,
may at any time resign by giving notice in writing to the Company and
Underwriter and, upon the appointment of a successor Escrow Agent as hereinafter
provided, shall be discharged from any further duties hereunder, In the event of
such resignation, a successor Escrow Agent, which shall be a bank or trust
company organized under the laws of the United States of America, shall be
appointed by the Company. Any such successor Escrow Agent shall deliver to the
Company and Underwriter a written instrument accepting such appointment
hereunder, and thereupon it shall succeed to all of the unaccrued rights and
duties of the Escrow Agent hereunder and shall be entitled to receive all of the
then remaining amounts held in escrow hereunder.
9. Termination. This Escrow Agreement shall terminate upon the earlier of, (i)
the receipt by the Escrow Agent of a written notice of termination signed by the
Company accompanied by sufficient certifications or other documentation to
verify that all Subscriptions and commitments to which the Escrowed Funds relate
shall have been accepted and certificates representing such Shares issued, or
rejected in whole; or (ii) the distribution of all of the Escrowed Funds in
accordance with this Escrow Agreement. Upon termination pursuant to clause (i)
above, the Escrow Agent shall deliver any Escrowed Funds remaining after return
to Subscribers of Escrowed Funds representing rejected Subscriptions as
instructed in such notice of termination in accordance with the provisions of
Section 5(b) hereof
10. Notices. Except as otherwise provided in this Agreement, any notice or other
communication hereunder shall be in writing and shall be deemed delivered upon
personal delivery or upon receipt if sent by facsimile transmission, express
delivery service or mailed by registered or certified first class mail, postage
prepaid, and addressed as follows:
To the Company: Power Save International, Inc.
5800 NW 64 Avenue, Bldg 26 #109
Tamarac, FL 33319
Attention: Scott Balmer, Chairman
Fax: 954 722 6417
To the Escrow Agent: The Business Bank
8399 Leesburg Pike
Vienna, VA 22101
Attention: Harold C. Rauner, President
Fax: 703 556 0654
To the Underwriter: Three Arrows Capital Corp.
10101 Grosvenor Place #2016
Rockville, MD 20852-4681
Attention: Ronald Peterson, President
Fax: (301) 493 4664
or to such other addresses or persons as the parties, from time to time, may
furnish one another by notice given in accordance with this section.
11. Miscellaneous.
(a) Assignment. This Escrow Agreement and the rights of the parties hereunder
may not be assigned by the Escrow Agent without the consent of the Company and
Underwriter, which consent may be withheld in the absolute discretion of the
Company and Underwriter, and any attempted assignment in Violation of this
Section 11 (a) shall be void. This Escrow Agreement and all action taken
hereunder in accordance with its terms shall be binding upon and inure to the
benefit of each of the parties hereto and its respective successors, permitted
assigns, heirs, and legal representatives.
(b) Amendment. This Escrow Agreement may be amended, consistent with the
protection of the interests of the Subscribers, upon written notice to the
Escrow Agent at any time by the Company or Underwriter, however the duties,
responsibilities or compensation of the Escrow Agent may not be modified without
its consent.
(c) Waiver, Waiver of any term or condition of this Escrow Agreement by any
party shall not be construed as a waiver of a subsequent breach or failure of
the same term or condition, or a waiver of any other term, or condition of this
Escrow Agreement.
(d) Governing Law. This Escrow Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.
(e) Integration. This Escrow Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and there are no
other agreements, covenants, representations or warranties except as set forth
herein.
(f) Authority. Each party executing this Escrow Agreement warrants its authority
to execute this Escrow Agreement.
(g) Counterparts. This Escrow Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
(h) Attorneys Fees. In the event Escrow Agent is required to seek legal advise,
take any legal action or defend any legal action the Company shall reimburse
Escrow Agent for all attorney's fees and costs associated therewith, which are
incurred by Escrow Agent.
(i) Beneficiaries. The terms and provisions of this Escrow Agreement shall
create no right in any person, firm or corporation other than the parties and
their respective successors and assigns and no third party shall have the right
to enforce of benefit from the terms hereof.
(j) Transmittal. The Underwriter specifically agrees to transmit all received
funds to the Escrow Agent no later than noon of the day following receipt.
(k) Commencement of the Offering. The Escrow Period will commence upon
qualification of the Offering by the Securities and Exchange Commission.
(l) Collected Funds. The phrase "collected funds" relates to the total amount
of funds received by the Escrow Agent from the Underwriter.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
signed the day and year first above written,
ATTEST:
Power Save International, Inc.
_______________________________ By: _____________________________
Name: _________________________ Name: _____________________________
Title: _________________________ Title: _____________________________
Three Arrows Capital Corp.
_______________________________ By: ____________________________
Name: _________________________ Name: ____________________________
Title: _________________________ Title: _____________________________
The Business Bank
_______________________________ By: ____________________________
Name: _________________________ Name: ____________________________
Title: _________________________ Title: _____________________________
David T. Thompson P.C.
Certified Public Accountant
Consent of Independent Accountant
I consent to the inclusion in the Offering Circular my report, which includes
an explanatory paragraph which discusses the Company's ability to continue as a
going concern, dated February 17, 2000, on my audit of the financial statements
of Power Save International, Inc. for the years ended December 31, 1999 and
1998.
/s/ David T. Thompson
David T. Thompson
P.C.
Salt Lake City, Utah
March 29, 2000
