U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
East Coast Airlines, Incorporated
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(Name of Small Business Issuer)
Delaware 14-1818396
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification Number)
C/O Sullivan, McBride, Hess & Youngblood, P.C.
4 Tower Place, Albany, NY 12203
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(Address of Principal Executive Offices including Zip Code)
(518) 438-5364
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(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act:
None
Securities to be Registered Under Section 12(g) of the Act:
Common Stock, Par Value $0.0001
(Title of Class)
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TABLE OF CONTENTS
Part I Page(s)
Item 1: Description of Business 3
Item 2: Plan of Operation 15
Item 3: Description of Property 16
Item 4: Security Ownership 14
Item 5: Directors, Executive Officers,
Promoters And Control Persons 17
Item 6: Executive Compensation 19
Item 7: Certain Relationships and Related
Transactions 19
Item 8: Description of Securities 19
Part II
Item 1: Market Price of and Dividends on the 20
Registrant's Common Equity and
Related Stockholder Matters
Item 2: Legal Proceedings 21
Item 3: Changes in and Disagreements with 21
Accountants
Item 4: Recent Sales of Unregistered
Securities 21
Item 5: Indemnification of Directors and
Officers 22
Part F/S
Financial Statements and Select 23
financial Data
Part III
Item 1: Index to Exhibits 32
A) Certificate of Incorporation 34-37
B) Corporate Charter and By Laws 38-47
C) Financial Information 48
Signatures 33
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Forward Looking Statements:
Certain information contained herein should be considered "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 which is subject to a number of risks and
uncertainties. The preparation of forward-looking statements requires the
use of estimates of future revenues, expenses, activity levels and economic
and market conditions, many of which are outside the control of East
Coast Airlines, Inc. ("Company") control. Specific factors that could cause
actual results to differ materially from those set forth in the forward-
looking statements include: economic conditions, labor costs; aviation fuel
costs; competitive pressures on pricing; weather conditions; government
legislation; consumer perceptions of the Company's products; demand for
air transportation in the markets intended to be served by the Company;
other operational matters discussed herein and other risks and
uncertainties.
Other factors and assumptions not identified above are also involved in the
preparation of forward-looking statements, and the failure of such other
factors and assumptions to be realized may also cause actual results to
differ materially from those discussed.
Item 1: Description of Business
Incorporated in November 1999, as a Delaware Corporation, East Coast
Airlines Inc. ("Company" or "ECA") intends to become a fully certified
Federal Aviation Regulation Part 121 air carrier.
East Coast's business purpose is to provide scheduled air service to small
and medium sized markets which have experienced either a total or partial
loss of air service as a result of shifts in emphasis by major airlines and
their regional counterparts. The Company's primary customer is expected
to be the business traveler, the individual most adversely impacted by
service disruption in these markets. ECA is intended to be an independent
carrier, not constrained by affiliation with any major airline. As such the
Company will be free to shape service to the market being served.
Starting with flight operations in New York State, ECA intends to expand
throughout the Northeast and then to the Middle Atlantic States.
The company intends to initiate service from as many as three cities within
the first year of operation. To meet this objective, the Company will need
to acquire a minimum of two aircraft.
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In New York ,the Northeast and the Middle Atlantic states, preliminary
marketing research has indicated that potential candidates for service
could be drawn from a selection of the following cities.
In New York -
- Olean
- Jamestown
- Elmira
- Binghamton
- Ithaca
In the Northeast
- Pittsfield, MA
In Middle Atlantic States
- Cumberland MD.
- Morgantown WV
- Dover DE
All of the locations noted appear to meet the desired criteria referenced
above. Final selection of origination points would be made prior to the
initiation of the certification process.
The primary emphasis however, during the first phase of operations would
be New York.
In addition to scheduled service, the Company intends to consider
initiating "on-demand" charter service from service points at or near the
points of scheduled service origination. Market research will have to be
completed prior to commitment to any program of this nature. If initiated,
such charters would be sold in the off hours such as nights and weekends
to maximize the utilization of assets while reducing the conflict with
scheduled service.
Airlines are essentially capital intensive service organizations. As such,
the investment in aircraft and ground support equipment as well as the
certification process would represent the preponderance of the use of
proceeds resulting from any capital formation program undertaken by the
Company.
The Airline Industry: Domestic airline travel has been impacted by the
deregulation of the industry, which occurred in 1978. Since that time,
governmental approval of route structures and pricing has been eliminated
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in favor of allowing market demand to dictate which routes are flown by
various air-carriers and at what price.
As a result of deregulation, the major and the regional airlines have carried
in excess of 700,000,000 passengers in 1999. This in contrast to the
200,000,000 transported in 1980. Deregulation has made airline travel
affordable. As a result, the American consumer has now embraced air
travel as the preferred means of conveyance. The airlines have also
established pricing policies that have insured affordability based on
advance purchases.
The predominant current practice by the major airlines is the use of the
"hub and spoke" concept whereby passengers are channeled by affiliated
regional airlines to a hub airport and consolidated with other arriving
passengers for transportation to an ultimate destination. In this manner,
load factors on aircraft are optimized for the benefit of economy of scale
but oftentimes, the transportation desires of the traveler are subrogated to
the needs of the airline to maintain these load factors.
The concept "hub and spoke" has created billion dollar commitments by
the airlines to various airports designated as "hubs". For example, US
Airways primary hubs are located in Pittsburgh and Philadelphia. Delta
Airlines primary hubs are located in Cincinnati and Salt Lake City;
Northwest Airlines, in Detroit and Minneapolis; and Southwest, in St.
Louis and Kansas City, Missouri. These financial commitments are now
driving the strategies of the various major airlines to achieve higher
"feeds" to the respective hubs.
The main strategy being used to increase the feed is the mandating by the
major airlines that their regional counterparts upgrade to aircraft carrying
between forty and seventy passengers and focus on those markets which
will support this equipment. This mandate represents a significant shift
from the capacity of current aircraft used by these regional counterparts.
Accordingly, this mandate is forcing the regional carriers to abandon or
reduce service to small and medium sized markets previously serviced,
profitably, with smaller nineteen seat passenger aircraft.
For the smaller to medium-sized communities seeking to maintain or seek
scheduled air service for the first time, these industry trends have reduced
the probability that service may be provided.
The business traveler who has to travel either to or from these
communities has been and will continue to be the most adversely
impacted.
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A number of Fortune 500 companies have expanded the use of corporate
aircraft to minimize the impact of the loss of air service.
In the Northeast, for example, Corning Glass maintains its own thirty
passenger corporate shuttle to Newark, New Jersey daily. They have
chosen to operate in this manner since no direct service exists from its
headquarters (located in Elmira/Corning New York) to Newark, which is a
key airport for international departures. USAirways, the primary carrier
serving the Corning area, only provides service direct to LaGuardia
airport, which significantly restricts corporate travel.
Equipment Choice: The airline intends to acquire and operate British
Aerospace Jetstream 32 EP aircraft. This aircraft is a pressurized nineteen
passenger airplane with a stand-up cabin as well as on-board lavatory
facilities. Pressurization is a key aircraft attribute that allows for flight
at altitudes where more favorable weather and aircraft performance
conditions may be found. Pressurization of an aircraft also maintains a
close to sea level cabin atmosphere at high altitude that generally
eliminates the need for continuous oxygen supply for passengers.
Further, the nineteen passenger aircraft will enhance ECA's initiative to
market its charter capability. Nineteen passenger aircraft are believed to
be highly desired by travel agents setting up leisure tours to gaming
institutions as well as corporations requiring the periodic shuttling of
personnel.
Competition: In the markets to be served by East Coast Airlines,
management believes that there will be no direct competition from other
air carriers.
Over the routes being considered in the target market areas, there is no
direct competition from other carriers. For example, a route from Elmira,
New York to Newark New Jersey would entail a flight time of one hour
direct. USAirways, the primary carrier would require two stops and seven
hours of travel to arrive at the same destination. USAir would charge a
roundtrip fare of approximately $900 for this service. ECA's non-
discount walkup fare is estimated at approximately $500. Both fares are
exclusive of any passenger facility charge (PFC) or Federal Excise Tax
(FET).
ECA will not operate in a "head to head" manner with any major carrier.
Any predatory movement by a major carrier toward ECA in any market
served by ECA would be closely examined and reacted to.
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Competition from a start up airline such as ECA is a possibility but
management views this as unlikely since the splitting of a market in the
locations chosen by ECA would not likely support the operations of two
carriers. Further, The two primary thresholds which need to be crossed
prior to the initiation of air service are financial and regulatory. Both are
interrelated. An entity must demonstrate to the satisfaction of the
Department of Transportation, that it has the financial resources to sustain
itself for six months without the benefit of operational revenue based on
the route structure being used for initial certification. This financing is
in addition to the capital requirement for equipment acquisition and
certification.
For ECA the total estimated financial requirement is $5,000,000. ECA
will operate nineteen passenger aircraft on a limited route structure. For
contrast purposes, an operator utilizing jet equipment such as a Boeing
737 will require financing in the range of $10,000,000- to $15,000,000- in
order to demonstrate financial fitness to the Department of Transportation.
The standards of certification are found under FAR Part121 and mandate
that any airline carrying passengers on aircraft of ten seats or more must
maintain a certain staffing profile as well as maintenance and operational
procedures to insure that Federal Aviation Administration regulations with
regard to safety are met. In the past operators of nineteen passenger
aircraft were able to operate under the less stringent requirements of FAR
Part 135.
However, indirect competition arises from carriers operating from cities
within a few hours driving time of the communities to be served by ECA.
For example, from such points, the carriers could offer deep price
discounts through advance purchasing or other means causing a certain
number of the travelers ECA seeks to attract to drive to these locations in
order to take advantage of the discounts being offered.
Except in the most remote areas in the United States, most travellers have
access to discounted airfares at major air centers within one to four hours
of surface transportation time. The Company believes that travellers
weigh the perceived value of the savings to be achieved against the added
transportation time; accordingly the added surface transport time may not
be a deterrent to the discretionary traveler.
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However, unlike the discretionary traveler, the business traveler, who is
the ECA's target customer, is significantly disadvantaged due to time and
scheduling constraints. The example noted previously with respect to the
comparative cost and travel times from Elmira, New York to Newark,
New Jersey are believed to be sufficient reason for the business and
discretionary traveler to chose ECA.
Marketing Strategy
The marketing efforts relating to scheduled air service will center on the
attainment of the following objectives.
- Low cost service,
- On time service, and
- Non stop, direct service when possible
The implementation of the Company's marketing plan prior to service
initiation will consist of a coordinated media program involving print,
television and radio. The frequency and content of any media would be
structured according to a time line, which would begin approximately
ninety days prior to beginning service from a given location.
It is also management's intent to engage in a speaker's program involving
presentations to civic and business organizations in the communities
where service is to be provided.
Risk Factors
Enumerated below are the primary risk factors management has identified
as having the greatest potential of adversely affecting the initiation and
continuation of operations.
1) Certification
The airline will be seeking certification as a Federal Aviation Regulation
Part 121 air carrier. The process is very difficult and there is no guarantee
that ECA will become certificated. In the event that ECA is unable to be
certified, all money spent in the process will have been lost.
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The certification under Part 121 involves an in-depth qualitative review of
every aspect of the operation of the airline as well as the financial plan to
support that operation. Representative of the nature of the process which
would take place are the following actions. The intent of the process is to
assure compliance with Part 121.
- Examination of overall administrative duties with a focus on the
command and control of all operations and the individuals involved.
- Analysis of all company manuals, policies and procedures relating to
the maintenance of the aircraft to be used. Included in this review is
also the qualification of the personnel and their respective work
histories.
- Examination of all manuals, policies and procedures relating to the
flight operations including the training syllabus for the subject aircraft
to be used.
- Actual in flight review of operational practices over the intended
routes to be flown including the observation and evaluation of the
administration of emergency procedures relating to mechanical,
weather, terrorist as well as medical situations which may occur. Also
included is the evaluation of Company dispatch practices which are
integral to flight operations since it is the dispatcher, who in
conjunction with the Captain of a flight, will determine an action to be
taken with respect to flight.
The certification process is lengthy and can take from six to nine months
to complete. It is estimated that the process will cost approximately one-
half million dollars.
2) Regulatory
The Federal Aviation Administration ("FAA") regulates all aspects of
flight and maintenance operations, airline operations and operational
specifications. In some circumstances, the FAA can compel an airline to
cease operations while compliance with Federal Aviation Regulations are
under review.
Such compliance reviews may be conducted at any time or for any reason
based solely on the judgement of FAA personnel. The FAA has the right,
on an unannounced basis, to inspect any aspect of the company's flight or
maintenance operations. In some cases, an inspection by the FAA can
also be prompted by a third party complaint.
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In similar fashion, the Department of Transportation ("DOT") oversees the
financial fitness of the airline. Statutes require that periodic financial and
operating reports be provided to the DOT. If in its judgment, subject to
certain guidelines, the DOT believes that the company does not have the
financial resource to continue operations, it has the administrative right to
suspend the operating certificate of the airline.
In the event either of these regulatory agencies causes an operational
stoppage for inspection purposes, the airline could be adversely impacted.
Depending upon the time involved until flight operations could be
restored, the company may be unable meet its financial obligations.
3) Fuel Costs
At current prices, fifty percent of the direct operating costs of an aircraft
are for fuel.
Due to the ability to make volume purchases of fuel, many major airlines
are able to hedge fuel cost increases through agreements with major oil
producers. ECA does not have this capability.
Should there be a significant increase in the cost of fuel, ticket prices
would have to be increased to accommodate the underlying fuel cost. Any
increase in ticket prices would have an immediate and adverse effect on
load factors and, therefore, operating revenue.
4) Competition
Once ECA has developed a profitable route, it is possible that other
carriers may attempt to provide service on the same route at fares below
those offered by ECA. Were this to occur, the Company's profitability
would be adversely impacted through either the loss of sales or the erosion
of profit margins related to ticket sales.
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5) Weather
The airline will be operating in the northeast, a region that is weather
sensitive insofar as scheduled operations are concerned. Any of the
following conditions can occur during the course of a calendar year, all of
which have the potential to create significant travel delays.
- Thunderstorms
- Fog
- In-flight icing
- Wind shear
- Turbulence
- Snowfall and blizzard condiditons
- Flooding
These same conditions may indirectly affect scheduled operations due to
their impact on the airspace infrastructure as well as direct effects on the
operational capability of the aircraft the Company intends to operate. In
the most adverse circumstances, such conditions have caused airlines to
suffer serious financial consequences as a result of operating limits and
public perception of the airline itself.
6) Employee Work Stoppage
The airline is intended to be a non-union organization. Should any
segment of the employee base (flight crews, maintenance, or other
personnel) attempt to become represented in a collective bargaining
process, work interruptions may be threatened or result which could cause
cessation of operations with a corresponding adverse financial impact.
7) Investment Not Liquid.
The Shares of Common Stock of the Company must be acquired for the
account of the subscriber for investment purposes only and cannot be
readily resold.
There is no established market for the Shares, and there can be no
assurance that any market for the Shares will ultimately develop. In the
most adverse circumstances, the Shares of Common Stock of the
Company could be deemed to be worthless.
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8) No Assurance of Success or Profitability.
There can be no assurance that the Company will be able to complete the
required certification process and commence operations. In addition, even
if the Company completes these phases, there can be no assurance that it
will be able to generate profits therefrom or to otherwise operate
successfully.
There can be no assurance that the Company will be able to secure enough
financing to commence certification and correspondingly initiate
operations. Should overall financing not be secured, any monies invested
up to the point of determination may be entirely lost.
In the event that the desired aircraft are not available at costs favorable to
the Company, certification would be delayed. Should cost effective
alternatives not be found in a timely manner, the certification process as
well as the initiation of service could also be jeopardized. In such instance
the viability of the financial plan could be questionable causing a threat of
loss of all funds invested in the startup and certification process.
9) Dependence on Current Management.
The Company's success will depend upon Messrs. Robert Salluzzo and
Charles Youngblood, the President and Vice President, respectively, of the
Company.
As officers and directors, it will be their responsibility to secure the
necessary certificates, equipment and personnel as well as oversee the
implementation of the Company's business plan.
While management has had experience in the aviation industry,
management has had no experience in the actual operation of an airline.
Also, in order to secure certification as a Part 121 air carrier, ECA will be
required to hire qualified personnel for the following positions.
- Director of Operations
- Chief Pilot
- Chief Inspector
- Chief of Maintenance
- Dispatch Personnel- Initially one to two individuals
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None these positions are currently staffed, and it will be necessary to have
these individuals hired prior to the start of the certification process.
10) No Assurance of Dividends.
There can be no assurance that the Company will pay dividends on its
capital stock in the foreseeable future. Even if profitable operations are
experienced, it would be the Company's near-term intent to reinvest profits
in the growth of the business.
11) Anticipated Dilution.
Dilution is a reduction in the value of the purchaser's investment
measured by the difference between the purchase price of the shares of
Common Stock and the net tangible book value of the shares after the
purchase takes place.
The Company anticipates that it will engage in future offerings of its stock
to raise the funds necessary to implement its business plan. In such
circumstances, holders of the Company's Common Stock will experience
dilution in their stock ownership of the Company.
12) "Penny Stock" Rules.
Should a market for the Shares of the Company's Common Stock develop,
the Shares will be subject to rules promulgated by the Securities and
Exchange Commission relating to "penny stocks," which apply to non-
NASDAQ companies whose stock trades at less than $5.00 per share or
whose tangible net worth is less than $2,000,000.
These rules require brokers who sell penny stocks to persons other than
established customers and "accredited investors" to complete certain
documentation, make suitability inquiries of investors, and provide
investors with certain information concerning the risks of trading in the
security.
These rules may have an effect on the ability of brokers to sell the
Company's Common Stock and may affect the development of a market
for the Company's Common Stock.
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13) Lack of Operating History
The Company is a start up company and has no operating history as the
Company was founded November 1999. The Company's business is
subject to most of the risks inherent in the establishment of a new business
enterprise. The Company's prospects are also subject to the risks,
expenses and uncertainties frequently encountered by companies in the
early stages of development in new and evolving markets for its air carrier
services.
The likelihood of success of the Company must be considered in light of
the expenses, difficulties, delays and unanticipated challenges encountered
in connection with the formation of a new business and the marketing of a
new product.
The Company may not become profitable. Even if the Company does
achieve profitability, it may not be able to sustain or increase profitability
on a regular basis.
The Company expects to significantly increase its research and
development, general and administrative, and marketing expenses. As a
result, ECA will need to generate a significant and rapidly growing
revenue stream to achieve and maintain profitability.
14) East Coast's business could grow at a rate that the company may
have difficulty managing the growth
The Company believes that it has the opportunity to experience a period of
rapid growth that could, under some circumstances, place a significant
strain on resources. In such case, if the Company fails to manage the
growth effectively, the quality of services will be impaired and financial
performance would suffer.
To manage such future growth effectively, ECA must integrate new
personnel, manage the expanded operations, invest in infrastructure and
obtain sufficient additional space to house its operations.
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15) The Company may need additional capital in the future and
additional financing may not be available.
East Coast forecasts its financing requirements to be $5,000,000 in order
to commence its business plan. The Company anticipates raising such
funds through sales of equity securities. Should such fundraising efforts
not generate a minimum of at least $2,000,000, then the plan of the
business would be exposed to failure. In such event, all funds invested in
the Company could be unrecoverable.
The funds raised in the offerings, combined with the revenues generated
from operations, are anticipated to be sufficient to meet the Company's
anticipated working capital and capital expenditure requirements for at
least the 6 months subsequent to the completion of the raising of the
minimum noted previously. The Company may need to raise additional
capital, however, to fund more rapid expansion, to develop new and to
enhance existing services to respond to competitive pressures, and to
acquire complementary business or technologies. The Company may not
be able to obtain additional financing on terms favorable to ECA, if at all.
If adequate funds are not available or are not available on terms favorable
to us, the Company may not be able to effectively execute its business
plan. Additionally, such funding will result in dilution to those
shareholders acquiring shares through this offering in both net tangible
book value as well as percentage ownership.
16) Lack of Public Market
No public market currently exists for the Common stock of the Company
and no assurances can be given that the Company will be successful in
that regard.
Item 2: Management `s Plan of Operation
Prior to service initiation from any point, the following actions are
required to be completed.
- Development of a capital formation strategy
- Certification of the airline, acquisition of aircraft and final selection of
service points.
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- Personnel hiring and training, including all flight as well as support
personnel such as dispatch and maintenance.
- Facilities preparation at selected origin and destination points.
- Reservation system selection and implementation.
- Establishment of ground handling agreements at all intended
destinations.
- Completion of marketing survey and analysis.
- Pre-sale of seats.
Management intends to complete these actions within a six month period.
The two critical elements in the process are the securing of necessary
capital and airline certification. Should delays be encountered in
completing either of these steps, then the Company will not be in a
position to initiate service within the six month timeline.
Item 3: Description of Property
The company has no properties or assets at this time and has no
agreements to acquire any properties. Acquisition of assets and operating
facilities is dependent on the ability to raise funds.
Upon commencing operations, the Company intends to lease office and
hangar space at one of the origination points in its route structure. The
Company believes that suitable facilities will be available to it under
favorable terms.
Item 4: Security Ownership
The following table sets forth for any person or group who is known to be
the beneficial owners of more than five per cent (5%) of any class of the
Company's voting securities.
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Title of Name and Address Of Percentage
Class Beneficial Owner Amount Of Class
Common Robert J. Salluzzo 475,000 shares 90.3%
Johnstown, New York
Common Charles G. Youngblood 25,000 shares 4.8%
Slingerlands, New York
Common All Officers and 500,000 shares 95.1%
Directors
Item 5: Directors, Executive Officers, Promoters And Control
Persons
The directors and officers of the Company are noted below.
Name Age Position
Robert J. Salluzzo CPA 53 President/CEO/Director
Charles G. Youngblood 42 Vice-President/Director
Mr. Salluzzo is also the Secretary of the Corporation and Mr. Youngblood
is also the Treasurer of the Corporation.
The above listed officers and directors will serve until the next annual
meeting of the shareholders or until their death, resignation, retirement,
removal, or disqualification, or until their successors have been duly
elected and qualified. Vacancies in the existing Board of Directors are
filled by majority vote of the remaining Directors. Officers of the
Company serve at the will of he Board of Directors. There are no
agreements or understandings for any officer or director to resign at the
request of another person and no officer or director is acting on behalf of
or will act at the direction of any other person.
Robert J. Salluzzo CPA - President / CEO / Director
Mr. Salluzzo is a commercial pilot rated in the Cessna Citation series of
business jets. From 1977 through 1985 he flew as a member of the flight
department of a Fortune Five Hundred company located in Albany, New
York.
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Mr. Salluzzo began his professional career with Price Waterhouse & Co.
in 1969, specializing in all areas of taxation relevant to multinational
corporations, high net worth individuals and various charitable and
personal benefit trusts. In 1976 he established his own accounting firm
focusing on the needs of emerging businesses. In this capacity, he was
involved in the structuring of multi-million dollar asset based credit
facilities as well as integrating funding from economic development
agencies into capital formation plans for development stage companies.
In 1985, he merged his firm into a major regional accounting firm located
in Albany, New York. Mr. Salluzzo was one of six partners responsible
for the substantial growth of the firm. In 1992 he retired to establish a
consulting practice aimed solely at the needs of emerging and
development stage companies with a concentration in aviation related
activities including business planning for airports.
Throughout his professional career, Mr. Salluzzo has been heavily
involved in aviation pursuits, not only as a pilot but also as a consultant in
various aviation matters to include airline certification and management.
He was primarily responsible in a consulting role for the construction of
two general aviation airports in New York State. He has consulted with
numerous communities on air service needs as well as being a guest
speaker at aviation seminars. He has also teamed with leading New York
State engineering firms in relation to various airport projects throughout
New York State.
Charles G. Youngblood - Vice President / Director
Mr. Youngblood is a practising attorney as well as a Certified Public
Accountant. He is a partner in the law firm of Sullivan, McBride, Hess &
Youngblood P.C. located in Albany, New York.
Mr. Youngblood's area of expertise is corporation law and in that regard
has been extensively involved in advising emerging entities with respect to
the appropriate corporate status and corporate situs to be used as well as
guiding principals as to internal organizational matters such as by law
structure, buy sell agreement and other succession issues. As a Certified
Public Accountant he is also able to integrate operational planning into
theadvisement offered.
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Mr. Youngblood was an adjucnt professor teaching undergraduate and
graduate courses in the taxation of corporate reorganizations as well as
general corporate taxation in the School of Business at the State
University at Albany.
He is a graduate of the Albany Law School of Union College as well as
graduate of Washington State University, having graduated with a
Bachelor of Arts Degree in Business Administration.
Item 6: Executive Compensation
None of the company's officers and or directors have received any
compensation for services from the inception to date. They have agreed to
serve without compensation until operations have commenced, which is
estimated as being as early as the fourth quarter of 2000 and predicated
upon success in fundraising and execution of the Company's business
plan.
No deferred compensation, pension, profit sharing, stock option or welfare
benefit plan or program have been adopted by the company for the benefit
of its officers or future employees.
Item 7: Certain Relationships and Related Transactions
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation
S-B.
Item 8: Description of Securities
The company's authorized capital stock consists of 20,000,000 shares of
$.0001 par value common stock. There are 526,000 shares issued and
outstanding.
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All shares of common stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to
be voted upon by shareholders. The shares of common stock have no
preemptive, subscription, conversion or redemption rights and may be
issued only as fully-paid non assessable shares. Cumulative voting in the
election of directors is not permitted, which means that the holders of a
majority of the issued and outstanding shares of common stock
represented at any meeting at which a quorum is present will be able to
elect the entire Board of Directors if they so choose and, in such event, the
holders of the remaining shares of Common Stock will not be able to elect
any directors. In the event of the liquidation of the company each
shareholder is entitled to receive a proportionate share of the Company's
assets available for distribution to shareholders after payment of liabilities
and after distribution in full of preferential amounts, if any. All shares of
the company's common stock are entitled to share pro rata in dividends
and distributions with respect to the common stock, as may be declared by
the board of Directors out of funds legally available therefor. The
company's transfer agent is Interwest Transfer Company, Inc. of Salt Lake
City, Utah.
Part II
Item 1: Market Price of and Dividends on the Registrant's Common
Equity and Related Stockholder Matters
There is no trading market for the Company's Common Stock, therefore
there is no market price. Further, there is no assurance that a trading
market will develop or, in the event trading activity is commenced, that it
will continue. The company intends to file with the NASD to secure a
ticker symbol as well as begin trading in the National Quotation Bureau
LLC "Pink Sheets."
The common stock of the company is considered to be a "penny stock"
within the definition of the Securities and Exchange Commission. For any
transaction involving a penny stock, unless exempt, the rules require (1)
that a broker or dealer approve a person's account for transactions in
penny stocks, (2) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased.
Page 20
<PAGE>
In order to approve an individual's account for transactions in penny
stocks, the broker or dealer must deliver, prior to any transaction in a
penny stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (a) sets forth the basis
on which the broker or dealer made the suitability determination and (b)
that the broker or dealer received a signed written agreement from the
investor prior to the transaction. Disclosure also has to be made abut the
risks of investing in penny stocks in both public offering and secondary
trading, and about commissions payable to both broker-dealer and the
registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny
stock transactions. Finally, monthly statements have to be sent disclosing
recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
The company has twenty-one shareholders including management who
hold shares of the common stock of the Company. (See Item 4. of Part I,
above.)
Item 2: Legal Proceedings
There is no litigation pending or threatened by or against the company.
There are no pending regulatory proceedings involving use of Counsel in
any capacity.
Item 3: Changes in and Disagreements with Accountants
The company has not changed accountants since its formation and there
are no disagreements with the accounting firm with respect to any
accounting policy adopted by the Company. There have been no
management letters submitted by the accountants highlighting any
reportable event requiring corrective action by the Company.
Item 4: Recent Sales of Unregistered Securities
The Company has sold and issued 526,000 shares of its Common Stock as
noted in the schedule below. A disclosure document was delivered to each
investor prior to sale. Certain of the shares were issued in reliance on
Rule 504 of Regulation D, as amended. Consistent with state
requirements, the Company is currently undertaking the registration of
these shares in Colorado for qualification of the securities as freely
Page 21
<PAGE>
trading. There were no underwriters or promoters used in connection with
the sale of these securities.
Range of
Dates Aggregate
For Title Of Amount of Offering Consid- Exempt- Issue
Sale Securities Securities Price eraton ion Status
May 2000 Common 500,000 $ 500 Cash Reg D Restricted
June 2000 Common 15,000 1,500 Cash Reg D Restricted
June 2000 Common 11,000 1,100 Cash Reg D Restricted
Totals 526,000 $3,100
Item 5: Indemnification of Directors and Officers
Section 145 of the General Corporation Law of Delaware provides that a
corporation may indemnify any person who was or is a party or is
threatened to be made a party to any action, suit or proceeding, 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), judgements, 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 interest of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. No indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
The Company's Certificate of Incorporation provides that the Company
will indemnify the officers and directors of the Company to the fullest
extent permitted under the laws of the State of Delaware. In that regard,
the Company is obligated to indemnify officers and directors of the
Company from and against any and all judgements, fines, amounts paid in
settlement, and reasonable expenses, including attorneys' fees, actually
and necessarily incurred by an officer or director as a result of any action
or proceeding, or any appeal therein, to the extent such amounts may be
indemnified under the laws of Delaware; and to pay any officer or director
of the Company in advance of the final disposition of any civil or criminal
proceeding, the expenses incurred by such officer or director in defending
Page 22
<PAGE>
such action or proceeding. The Company's obligation to indemnify its
officers and directors continues to individuals who have ceased to be
officers or directors of the Company, and to the heirs and personal
representatives of former officers and directors the Company.
Part F/S
Page
Report of Independent Certified Public Accountant 24
Balance Sheet 25
Statement of Loss 26
Statement of Cash Flows 27
Statement of Shareholders' Equity 28
Footnotes to Financial Statements 29 - 31
Page 23
<PAGE>
Report of Independent Certified Public Accountant
To the Shareholders of East Coast Airlines, Inc.
I have audited the accompanying balance sheet of East Coast Airlines, Inc.
as of May 31, 2000, and the related statements of loss, cash flows and
shareholders' equity for the period since inception (November 17, 1999)
then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit 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 audit provides 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 East Coast Airlines Inc. as of
May 31, 2000, and the results of its operations and its cash flows for the
period since inception ended May 31, 2000 in conformity with generally
accepted accounting principles.
The Company is in its start-up phase and has no operating history. The
Company presently does not have sufficient liquid assets to finance its
anticipated funding needs and obligations. If fundraising activities are not
successfully completed, the Company may not be able to meet its
obligations as they become due and, accordingly, may not be able to
continue its business operations as presently anticipated.
/s/ Daniel J. Baier
Daniel J. Baier, CPA, P.C.
Rochester, NY
June 7, 2000
Page 24
<PAGE>
East Coast Airlines, Inc. - A Development Stage Company
Balance Sheet
May 31, 2000
Assets
Cash $ 475
-----
Total Assets $ 475
=====
Liabilities and Shareholder's Equity
Accounts Payable $ 3,827
Taxes Payable 800
-----
Liabilities 4,627
-----
Common Stock - $.0001 Par Value - 20,000,000
Shares Authorized - 500,000 Shares Outstanding 50
Paid In Capital 450
Retained Deficit (4,652)
-----
Shareholder's Equity (4,152)
-----
Total Liabilities and Shareholder's Equity $ 475
=====
See Accompanying Footnotes to Financial Statements
Page 25
<PAGE>
East Coast Airlines, Inc. - A Development Stage Company
Statement of Loss from Inception (November 17, 1999) to May 31, 2000
Revenue $ -
Expenses
Legal and Accounting Expense 3,827
Miscellaneous Expenses 25
Franchise Taxes 800
-----
Total Expenses 4,652
-----
Net Loss $ (4,652)
=====
Shares of Common Stock Outstanding 500,000
=====
(Loss) per Common Share $ (0.009)
=====
See Accompanying Footnotes to Financial Statements
Page 26
<PAGE>
East Coast Airlines, Inc. - A Development Stage Company
Statement of Cash Flows from Inception (November 17, 1999) to May 31, 2000
(Uses) /
Sources of
Cash
Operating Cash Flow
(Loss) for period $ (4,652)
Less- Accounts Payable 3,827
Less- Franchise Taxes Payable 800
-----
Net Cash Used By Operations (25)
-----
Financing
Sale of Common Stock 500
-----
Net Cash From Financing 500
-----
Increase In Cash 475
Cash - Beginning -
-----
Cash - Ending $ 475
=====
Cash Paid for Interest $ -
=====
Cash Paid for Income Taxes $ -
=====
See Accompanying Footnotes to Financial Statements
Page 27
<PAGE>
East Coast Airlines, Inc. - A Development Stage Company
Statement of Shareholders' Equity
from Inception (November 17, 1999) to
May 31, 2000
<TABLE>
<S> <C> <S>
<S> <S> <S>
Number of Shares Common Stock
Paid-In Capital Deficit Total
Balance at Inception (Mid-November, 1999) - -
- - -
Sale of Common Stock 500,000 $ 50
$ 450 $ 500
Deficit for the period from Inception
to May 31, 2000
$ (4,652) (4,652)
--------- -------
--------- --------- --------
Balance at May 31, 2000 500,000 $ 50
$ 450 $ (4,652) $(4,152)
========= =======
========= ========= ========
</TABLE>
See Accompanying Footnotes to Financial Statements
Page 28
<PAGE>
East Coast Airlines, Inc. - A Development Stage Company
Footnotes to Financial Statements
May 31, 2000
Note 1 - Organization and Summary of Significant Accounting Policies
Organization:
The Company was incorporated in the State of Delaware on November 17, 1999.
The Company intends to become a fully certified Federal Aviation Regulation
Part 121 air carrier.
East Coast's business purpose is to provide scheduled air service to small
and medium sized markets which have experienced either a total or partial
loss of air service as a result of shifts in emphasis by major airlines and
their regional counterparts. The Company intends to be an independent
carrier, not affiliated with any major airline. Starting in operations in New
York State, the Company intends to expand throughout the Northeast and then
to the Middle Atlantic States
Development Stage Operations:
From inception through the end of calendar year 1999 there were no activities
conducted by the Company. Accordingly, financial transactions were first
recorded in calendar year 2000.
The Company is in its start-up phase and has no operating history. From
inception to May 31, 2000, the Company has not recognized any revenue; also,
the Company has not capitalized any costs associated with its start-up.
Estimates:
Management uses estimates and assumptions in preparing financial statements.
These estimates and assumptions affect the reported amounts of assets and
liabilities, and the reported revenues and expenses. Actual results could
differ from those estimates.
Comprehensive net income/loss:
The Company's financial statements reflect no items comprising other
comprehensive income or loss as prescribed by Statement of Financial
Accounting Standard ("SFAS") No. 130 - Reporting Comprehensive Income.
Accordingly, the loss shown in the Statement of Loss is equivalent to the
comprehensive net loss.
Loss per Common Share:
The Company's basic and diluted loss per share are substantially equivalent
and are computed by dividing the net loss for the period by the average
number of common shares outstanding for the period. In light of the Company's
limited period since inception, the number of shares outstanding at May 31,
2000 were deemed to be outstanding for the entire period for the purpose of
computing the loss per common share.
Page 29
<PAGE>
East Coast Airlines, Inc. - A Development Stage Company
Footnotes to Financial Statements
May 31, 2000
Revenue Recognition:
The Company has not recognized any revenue as it is in the early stage of its
start-up of operations.
Cash:
Cash consists of cash on deposit at a financial institution.
Income Taxes:
The Company has not recognized any provision for the tax benefits associated
with its loss from inception to May 31, 2000. Such loss may be carried
forward for tax- return purposes. However, the Company is unable to predict
the nature, timing and extent of near-term profitability; accordingly the
Company presently intends to recognize such carryforward benefits when
realized.
Note 2 - Development Stage Operations
The Company is in its start-up phase and has no operating history. The
Company's business is subject to most of the risks inherent in the
establishment of a new business enterprise. The likelihood of success of the
Company must be considered in light of the expenses, difficulties, delays
and unanticipated challenges encountered in connection with the formation of
a new business, raising operating and development capital, and the marketing
of a new product.
The Company presently does not have sufficient liquid assets to finance its
anticipated funding needs and obligations. If fundraising activities are not
successfully completed, the Company may not be able to meet its obligations
as they become due and, accordingly, may not be able to continue its
business operations as presently anticipated.
Note 3 - Common Stock
The Company has a single class of Common Stock with a par value of $0.0001
per share. There are 20 million shares authorized, and at May 31, 2000,
500,000 shares were issued and outstanding to officers of the Company.
In June 2000, additional 26,000 shares of Common Stock were issued for
aggregate proceeds of $2,600.
Page 30
<PAGE>
East Coast Airlines, Inc. - A Development Stage Company
Footnotes to Financial Statements
May 31, 2000
Such shares were issued without registration in reliance on an exemption in
federal securities laws that permits issuance of stock up to $1 million
without registration of the securities.
Note 4 - Subsequent Events
In June 2000, 26,000 shares of Common Stock were issued for aggregate
proceeds of $2,600.
Page 31
<PAGE>
Part III
Item 1: Index to Exhibits
Exhibit Page
3.1 Certificate of Incorporation 34-37
3.2 Corporate Charter and By Laws 38-47
27 Financial Data Schedule 48
Page 32
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf by the undersigned thereunto duly authorized.
East Coast Airlines, Inc
Date: June 12, 2000
By: /s/ Robert J. Salluzzo
Robert J. Salluzzo, President and
Chief Executive Officer
/s/ Charles G. Youngblood
Charles G. Youngblood, Vice President
In accordance with the Exchange Act, this registration statement has
been signed by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
Dated: June 12, 2000 /s/ Robert J. Salluzzo
Robert J. Salluzzo, Director
Dated: June 12 , 2000 /s/ Charles G. Youngblood
Charles G. Youngblood, Director
Page 33
<PAGE>
Exhibit 3.1 - Certificate of Incorporation
CERTIFICATE OF INCORPORATION
OF
EAST COAST AIRLINES, INC.
The undersigned, a natural person, for the purpose of
organizing a corporation for conducting the business and promoting
the purposes hereinafter stated, under the provisions and subject to the
requirements of the laws of the State of Delaware ( particularly
Chapter 1, Title 8 of the Delaware Code and the acts amendatory
thereof and supplemental thereto, and known, identified, and referred
to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called
the "corporation") is East Coast Airlines, Inc.
SECOND: The address, including street, number, city,
and county, of the registered office of the corporation in the State of
Delaware is 1013 Centre Road, City of Wilmington 19805, County of
New Castle; and the name of the registered agent of the corporation in
the State of Delaware at such address is Corporation Service
Company.
THIRD: The nature of the business and purposes to be
conducted and promoted by the corporation are as follows: to conduct
a regional airline primarily servicing the Eastern United States. To
conduct any lawful business, to promote any lawful purpose, and to
engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is Twenty Million
(20,000,000) shares. The par value of each of such shares is one one-
hundredth of one cent ($ .0001) dollars. All such shares are of one
class and are shares of Common Stock.
Page 34
<PAGE>
FIFTH: The name and the mailing address of the
incorporator are as follows:
NAME MAILING ADDRESS
Charles G. Youngblood 4 Tower Place
Albany, New York 12203
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is
proposed between this corporation and its creditors or any class of
them and/or between this corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation
under Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation,
as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths in value of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the
said compromise or arrangement and the said reorganization shall, if
sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
EIGHTH: For the management of the business and for
the conduct of the affairs of the corporation, and in further definition,
limitation, and regulation of the powers of the corporation and of its
directors and of its stockholders or any class thereof, as the case may
be, it is further provided:
Page 35
<PAGE>
1. The management of the business and the conduct of the
affairs of the corporation shall be vested in its Board of Directors. The
number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the Bylaws.
The phrase "whole Board" and the phrase "total number of directors"
shall be deemed to have the same meaning, to wit, the total number of
directors which the corporation would have if there were no vacancies.
No election of directors need be by written ballot.
2. After the original or other Bylaws of the corporation have
been adopted, amended, or repealed, as the case may be, in accordance
with the provisions of Section 109 of the General Corporation Law of
the State of Delaware, and, after the corporation has received any
payment for any of its stock, the power to adopt, amend, or repeal the
Bylaws of the corporation may be exercised by the Board of Directors
of the corporation; provided, however, that any provision for the
classification of directors of the corporation for staggered terms
pursuant to the provisions of subsection (d) of Section 141 of the
General Corporation Law of the State of Delaware shall be set forth in
an initial Bylaw or in a Bylaw adopted by the stockholders entitled to
vote of the corporation unless provisions for such classification shall
be set forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only
one class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the corporation shall be authorized to issue
more than one class of stock, no outstanding share of any class of
stock which is denied voting power under the provisions of the
certificate of incorporation shall entitle the holder thereof to the right
to vote at any meeting of stockholders except as the provisions of
paragraph (2) of subsection (b) of Section 242 of the General
Corporation Law of the State of Delaware shall otherwise require;
provided, that no share of any such class which is otherwise denied
voting power shall entitle the holder thereof to vote upon the increase
or decrease in the number of authorized shares of said class.
NINTH: The personal liability of the directors of the
corporation is hereby eliminated to the fullest extent permitted by the
provisions of paragraph (7) of subsection (b) of Section 102 of the
General Corporation Law of the State of Delaware, as the same may
be amended and supplemented.
Page 36
<PAGE>
TENTH: The corporation shall , to the fullest extent
permitted by the provisions of Section 145 of the General Corporation
Law of the State of Delaware, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have
power to indemnify under said Section from and against any and all of
the expenses, liabilities, or other matters referred to in or covered by
said section, and the indemnification provided for herein shall not be
deemed exclusive of any other rights to which those indemnified may
be entitled under any Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee, or agent and shall inure to the benefit of
the heirs, executors, and administrators of such person.
ELEVENTH: From time to time any of the provisions of
this certificate of incorporation may be amended, altered, or repealed,
and other provisions authorized by the laws of the State of Delaware at
the time in force may be added or inserted in the manner and at the
time prescribed by said laws, and all rights at any time conferred upon
the stockholders of the corporation by this certificate of incorporation
are granted subject to the provisions of this Article ELEVENTH.
Signed on November 17, 1999.
By: Charles G. Youngblood, Incorporator
Page 37
<PAGE>
Exhibit 3.2 - By Laws
3.2 Corporate Charter and By Laws
BY - LAWS
of
EAST COAST AIRLINES , INC.
ARTICLE I - OFFICES
SECTION I. REGISTERED OFFICE. - The
registered office shall be established and maintained at 1013 Centre
Road, Wilmington in the County of New Castle in the State of
Delaware.
SECTION 2. OTHER OFFICES. - The corporation
may have other offices, either within or with out the State of Delaware,
at such place or places as the Board of Directors may from time to
time appoint or the business of the corporation may require.
ARTICLE II - MEETING OF STOCKHOLDERS
SECTION I. ANNUAL MEETINGS. - Annual
meetings of stockholders for the election of directors and for such
other business as may be stated in the notice of the meeting, shall be
held at such place, either within or without the State of Delaware, and
at such time and date as the Board of Directors, by resolution, shall
determine and as set forth in the notice of meeting. In the event the
Board of Directors fails to so determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the
registered office of the corporation in Delaware on
If the date of the annual meeting shall fall upon a legal
holiday, the meeting shall be held on the next succeeding business day.
At each annual meeting, the stockholders entitled to vote shall elect a
Board of Directors and may transact such other corporate business as
shall be stated in the notice of the meeting.
SECTION 2. OTHER MEETINGS. - Meetings of
stockholders for any purpose other than the election of directors may
be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting.
Page 38
<PAGE>
SECTION 3. VOTING. - Each stockholder entitled
to vote in accordance with the terms and provisions of the Certificate
of Incorporation and these By-Laws shall be entitled to one vote, in
person or by proxy, for each share of stock entitled to vote by such
stockholder, but no proxy shall be voted after three years from its date
unless such proxy provides for a longer period. Upon the demand of
any stockholder, the vote for directors and upon any question before
the meeting shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided by
majority vote except as otherwise provided by the Certificate of
Incorporation or the laws of the State of Delaware.
SECTION 4. STOCKHOLDER LIST. -The officer
who has charge of the stock ledger of the corporation shall at least 10
days before each meeting of stockholders prepare a complete
alphabetical addressed list of the stockholders entitled to vote at the
ensuing election, with the number of shares held by each. Said list
shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall be available for inspection at the
meeting.
SECTION 5. QUORUM. - Except as otherwise
required by law, by the Certificate of Incorporation or by these By-
Laws, the presence, in person or by proxy, of stockholders holding a
majority of the stock of the corporation entitled to vote shall constitute
a quorum at all meetings of the stockholders. In case a quorum shall
not be present a any meeting, a majority in interest of the stockholders
entitled to vote thereat, present in person or by proxy, shall have power
to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock
entitled to vote shall be present. At any such adjourned meeting at
which the requisite amount of stock entitled to vote shall be
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed; but only those
stockholders entitled to vote at the meeting as originally noticed shall
be entitled to vote at any adjournment or adjournments thereof.
Page 39
<PAGE>
SECTION 6. SPECIAL MEETINGS. - Special
meetings of the stockholders, for any purpose, unless otherwise
prescribed by statute or by the Certificate of Incorporation, may be
called by the president and shall be called by the president or secretary
at the request in writing of a majority of the directors or stockholders
entitled to vote. Such request shall state the purpose of the proposed
meeting.
SECTION 7. NOTICE OF MEETINGS. - Written
notice, stating the place, date and time of the meeting, and the general
nature of the business to be considered, shall be given to each
stockholder entitled to vote thereat at his address as it appears on the
records of the corporation, not less than ten nor more than fifty days
before the date of the meeting.
SECTION 8. BUSINESS TRANSACTED. - No
business other than that stated in the notice shall be transacted at any
meeting without the unanimous consent of all the stockholders entitled
to vote thereat.
SECTION 9. ACTION WITHOUT MEETING. -
Except as otherwise provided by the Certificate of Incorporation,
whenever the vote of stockholders at a meeting thereof is required or
permitted to be taken in connection with any corporate action by any
provisions of the of the statutes or the Certificate of Incorporation or of
these By-Laws, the meeting and vote of stockholders may be
dispensed with, if all the stockholders who would have been entitled
by vote upon the action if such meeting were held, shall consent in
writing to such corporate action being taken.
ARTICLE III - DIRECTORS
SECTION I. NUMBER AND TERM. - The number
of directors shall be one (1). The directors shall be elected at the
annual meeting of the stockholders and each director shall be elected
to serve until his successor shall be elected and shall qualify. The
number of directors may not be less than three except that where all
the shares of the corporation are owned beneficially and of record by
either one or two stockholders, the number of directors may be less
than three but not less than the number of stockholders.
Page 40
<PAGE>
SECTION 2. RESIGNATIONS. - Any director,
member of a committee or other officer may resign at any time. Such
resignation shall be in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt
by the President or Secretary. The acceptance of a resignation shall
not be necessary to make it effective.
SECTION 3. VACANCIES. - If the office of any
director, member of a committee or other officer becomes vacant, the
remaining directors in office, though less than a quorum by a majority
vote, may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his successor shall be duly
chosen.
SECTION 4. REMOVAL. - Any director or
directors may be removed either for or without cause at any time by
the affirmative vote of the holders of a majority of all the shares of
stock outstanding and entitled to vote, at a special meeting of the
stockholders called for the purpose and the vacancies thus created may
be filled, at the meeting held for the purpose of removal, by the
affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE OR NUMBER. - The
number of directors may be increased by amendment of these By-
Laws by the affirmative vote of a majority of the directors, though less
than a quorum, or, by the affirmative vote of a majority in interest of
the stockholders, at the annual meeting or at a special meeting called
for that purpose, and by like vote the additional directors may be
chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.
SECTION 6. COMPENSATION. - Directors shall
not receive any stated salary for their services as directors or as
members of committees, but by resolution of the board a fixed fee and
expenses of attendance may be allowed for attendance at each
meeting. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
Page 41
<PAGE>
SECTION 7. ACTION WITHOUT MEETING. -
Any action required or permitted to be taken at any meeting of the
Board of Directors, or of any committee thereof, may be taken without
a meeting, if prior to such action a written consent thereto is signed by
all members of the board, or of such committee as the case may be,
and such written consent is filed with the minutes of proceedings of
the board or committee.
ARTICLE IV - OFFICERS
SECTION 1. OFFICERS. - The officers of the
corporation shall consist of a President, a Treasurer, and a Secretary,
and shall be elected by the Board of Directors and shall hold office
until their successors are elected and qualified. In addition, the Board
of Directors may elect a Chairman, one or more Vice-Presidents and
such Assistant Secretaries and Assistant Treasurers as it may deem
proper. None of the officers of the corporation need be directors. The
officers shall be elected at the first meeting of the Board of Directors
after each annual meeting. More than two offices may be held by the
same person.
SECTION 2. OTHER OFFICERS AND AGENTS. -
The board of Directors may appoint such officers and agents as it may
deem advisable, who shall hold their offices for such terms and shall
exercise such power and perform such duties as shall be determined
from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. - The Chairman of the
Board of Directors if one be elected, shall preside at all meetings of the
Board of Directors and he shall have and perform such other duties as
from time to time may be assigned to him by the Board of Directors.
SECTION 4. PRESIDENT. - The President shall be
the chief executive officer of the corporation and shall have the
general powers and duties of supervision and management usually
vested in the office of President of a corporation. He shall preside at
all meetings of the stockholders if present thereat, and in the absence
or non-election of the Chairman of the Board of Directors, at all
meetings of the Board of Directors, and shall have general supervision,
direction and control of the business of the corporation except as the
Board of Directors shall authorize the execution thereof in some other
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manner, he shall execute bonds, mortgages, and other contracts in
behalf of the corporation, and shall cause the seal to be affixed to any
instrument requiring it and when so affixed the seal shall be attested by
the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. - Each Vice-
President shall have such powers and shall perform such duties as shall
be assigned to him by the directors.
SECTION 6. TREASURER. - the Treasurer shall
have the custody of the corporate funds and securities and shall keep
full and accurate account of receipts and disbursements in books
belonging to the corporation. He shall deposit all moneys and other
valuables in the name and to the credit of the corporation in such
depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation
as may be ordered by the Board of Directors, or the President, taking
proper vouchers for such disbursements. He shall render to the
President and board of directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of all his
transactions as Treasurer and of the financial condition of the
corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such
amount and with such surety as the board shall prescribe.
SECTION 7. SECRETARY. - The Secretary shall
give, or cause to be given, notice of all meetings of stockholders and
directors, and all other notices required by law or by these By-Laws,
and in case of his absence or refusal or neglect so to do, any such
notice may be given by any person thereunto directed by the President,
or by the directors, or stockholders, upon whose requisition the
meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the corporation and of directors in a
book to be kept for that purpose. He shall keep in safe custody the seal
of the corporation, and when authorized by the Board of Directors,
affix the same to any instrument requiring it, and when so affixed, it
shall be attested by his signature or by the signature of any assistant
secretary.
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SECTION 8. ASSISTANT TREASURERS &
ASSISTANT SECRETARIES. - Assistant Treasurers and Assistant
Secretaries, if any, shall be elected and shall have such powers and
perform such duties as shall be assigned to them, respectively, by the
directors.
ARTICLE V
SECTION 1. CERTIFICATES OF STOCK. - Every
holder of stock in the corporation shall be entitled to have a certificate,
signed by, or in the name of the corporation by, the chairman or vice-
chairman of the board of directors, or the president or a vice-president
and the treasurer or an assistant treasurer, or the secretary of the
corporation, certifying the number of shares owned by him in the
corporation. If the corporation shall be authorized to issue more than
one class of stock or more than one series of any class, the
designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the
qualifications, limitations, or restrictions of such preferences an/or
rights shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such class or
series of stock, provided that, except as other wise provided in section
202 of the General Corporation Law of Delaware, in lieu of the
foregoing requirements, there may be set forth on the face or back of
the certificate which the corporation shall issue to represent such class
or series of stock, a statement that the corporation will furnish without
charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences an/or rights. Where a
certificate is countersigned (1) by a transfer agent other than the
corporation or its employee, or (2) by a registrar other than the
corporation or its employee, the signatures of such officers may be
facsimiles.
SECTION 2. LOST CERTIFICATES. - New
certificates of stock may be issued in the place of any certificate
therefore issued by the corporation, alleged to have been lost or
destroyed, and the directors may, in their discretion, require the owner
of the lost or destroyed certificate or his legal representatives, to give
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the corporation a bond, in such sum as they may direct, not exceeding
double the value of the stock, to indemnify the corporation against it
on account of the alleged loss of any such new certificate.
SECTION 3. TRANSFER OF SHARES. - The
shares of stock of the corporation shall be transferable only upon its
books by the holders thereof in person or by their duly authorized
attorneys or legal representatives, and upon such transfer the old
certificates shall be surrendered to the corporation by the delivery
thereof to the person in charge of the stock and transfer books and
ledgers, or to such other persons as the directors may designate, by
who they shall cancelled, and new certificates shall thereupon be
issued. A record shall be made of each transfer and whenever a
transfer shall be made for collateral security, and not absolutely, it
shall be so expressed in the entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE.
- In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the day of such meeting, nor more than
sixty days prior to any other action. A determination of stockholders
of record entitled to notice of or vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the
Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 5. DIVIDENDS. - Subject to the
provisions of the Certificate of Incorporation the Board of Directors
may, out of funds legally available therefor at any regular or special
meeting, declare dividends upon the capital stock of the corporation as
and when they deem expedient. Before declaring any dividends there
may be set apart out of any funds of the corporation available for
dividends, such sum or sums as the directors from time to time in their
discretion deem proper working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as
the directors shall deem conducive to the interests of the corporation.
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SECTION 6. SEAL. - The corporate seal shall be
circular in form and shall contain the name of the corporation, the year
of its creation and the words "CORPORATE SEAL DELAWARE."
Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
SECTION 7. FISCAL YEAR. - The fiscal year of
the corporation shall be determined by resolution of the Board of
Directors.
SECTION 8. CHECKS. - All checks, drafts, or other
orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation shall be signed by
the officer or officers, agent or agents of the corporation, and in such
manner as shall be determined from time to time by resolution of the
Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE.
-Whenever any notice is required by these By-Laws to be given,
personal notice is not meant unless expressly stated, and any notice so
required shall be deemed to be sufficient if given by depositing the
same in the United States mail, postage prepaid, addressed to the
person entitled thereto at his address as it appears on the records of the
corporation, and such notice shall be deemed to have been given on
the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided
by statute.
Whenever any notice whatever is required to be given
under the provisions of any law, or under the provisions of the
Certificate of Incorporation of the corporation or these By-Laws, a
waiver thereof in writing signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be
deemed proper notice.
ARTICLE VI - CLOSE CORPORATIONS: MANAGEMENT BY
SHAREHOLDERS
If the certificate of incorporation of the corporation
states
that the business and affairs of the corporation shall be managed by the
shareholders of the corporation rather than by a board of directors,
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then, whenever the context so requires the shareholders of the
corporation shall be deemed the directors of the corporation for
purposes of applying any provision of these by-laws.
ARTICLE VII - AMENDMENTS
These By-Laws may be altered and repealed and By-Laws
may be made at any annual meeting of the stockholders or at any
special meeting thereof if notice thereof is contained in the notice of
such special meeting by the affirmative vote of a majority of the stock
issued and outstanding or entitled to vote thereat, or by the regular
meeting of the Board of Directors, at any regular meeting of the Board
of Directors, or at any special meeting of the Board of Directors, if
notice thereof is contained in the notice of such special meeting.
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[LEGEND]
This schedule contains summary financial information
extracted from the Balance Sheet at May 31, 2000 and the
Statement of Loss for the period since inception (November
17, 1999) ended May 31, 2000 and is qualified in its
entirety by reference to such financial statements.
[/LEGEND]
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-END] MAY-31-2000
[CASH] 475
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 475
[PP&E] 0
[DEPRECIATION] 0
[TOTAL-ASSETS] 475
[CURRENT-LIABILITIES] 4627
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 50
[OTHER-SE] (4202)
[TOTAL-LIABILITY-AND-EQUITY] 475
[SALES] 0
[TOTAL-REVENUES] 0
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 4652
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 14
[INCOME-PRETAX] (4652)
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (4652)
[EPS-BASIC] (.01)
[EPS-DILUTED] (.01)
</TABLE>
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