UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-SB12(g)
GENERAL FORM FOR REGISTRANTS OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the
Securities Exchange Act of 1934
PIEDMONT, INC.
(Name of Small Business Issuer in its charter)
Utah 33-0052057
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3700 Susan St., Ste. 200,
Santa Ana, California 92704
(Address of principal executive officers) (Zip Code)
Issuer's telephone number:(949) 770-2578; Fax 603-375-6582
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of Class)
PIEDMONT, INC. FORM 10-SB
TABLE OF CONTENTS PAGE
PART I
ITEM 1. Description of Business 3
ITEM 2. Management's Discussion and Analysis or
Plan of Operation 14
ITEM 3. Description of Property 15
ITEM 4. Security Ownership of Certain Beneficial
Owners and Management 15
ITEM 5. Directors, Executive Officers, Promoters
and Control Persons 16
ITEM 6. Executive Compensation 17
ITEM 7. Certain Relationships and Related Transaction 17
ITEM 8. Description of Securities 17
PART II
ITEM 1. Market Price of and Dividends on Registrant's
Common Equity and Other Shareholder Matters 19
ITEM 2. Legal Proceedings 21
ITEM 3. Changes in and Disagreements with Accountants 21
ITEM 4. Recent Sales of Unregistered Securities 21
ITEM 5. Indemnification of Directors and Officers 22
PART F/S
Financial Statements 22
PART III
ITEM 1. Index to Exhibits 22
ITEM 2. Description of Exhibits 29
Signatures 29
ITEM 1. DESCRIPTION OF BUSINESS
Special Note Regarding Forward-Looking Statements.
This registration statement on Form 10-SB contains forward-
looking statements that involve risks and uncertainties that
address:
- business strategies;
- expectations regarding our strategy;
- our financial condition or results of operations;
- forecasts;
- trends, including growth, in the electronic
commerce market and;
- new products.
Forward-looking statements generally can be identified by
the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "intends," "plans," "should," "seeks,"
"pro forma," "anticipates," "estimates," "continues," or other
variations thereof (including their use in the negative), or by
discussions of strategies, opportunities, plans or intentions.
Such statements include but are not limited to statements under
the captions "Risk Factors," "Use of Proceeds," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," "Business," as well as captions elsewhere in this
prospectus. A number of factors could cause results to differ
materially from those anticipated by such forward-looking
statements, including those discussed under "Risk Factors" and
"Business."
In addition, such forward-looking statements necessarily depend
upon assumptions and estimates that may prove to be incorrect.
Although we believe that the assumptions and estimates reflected
in such forward-looking statements are reasonable, we cannot
guarantee that our plans, intentions or expectations will be
achieved. The information contained in this registration
statement, including the section discussing risk factors,
identifies important factors that could cause such differences.
BACKGROUND
PIEDMONT, INC. (the Company) is a Utah corporation formed on June
29, 1983, under the name of Teal Eye, Inc. Its principal place
of business is located at 3700 Susan Street, Ste. 200, Santa Ana,
California 92704. The Company merged with Terzon Corporation and
changed its name to Terzon Corporation in 1984. It subsequently
changed its name to Candy Stripers Candy Corporation. It was
engaged in the business of manufacturing and selling candy and
gift items to hospital gift shops across the country. The Company
was traded over the counter (OTCBB) for several years. It ceased
the candy manufacturing operations and filed for Chapter 11
Bankruptcy protection in 1989. After emerging from Bankruptcy in
1991, it was dormant until September, 1997 when the Company
attempted an acquisition of Fort Stockton Oil & Gas Co., Texas.
The acquisition agreement was canceled by mutual consent in
April, 1998. The Company changed its name to Piedmont, Inc. in
January, 1998.
The nature of the Company's business is the development of an on-
line shopping mall ("cybermall") on the Internet which offers a
range of goods and services for sale to consumers over the
Internet. Our primary web site is www.PiedmontCyberMall.com. We
have six different retail websites which sell toys, electronics,
health and beauty, sporting goods, gifts, books, music and
videos.
Our intent is to provide value to both the end-user and to our
vendors by providing a range of goods and services in one
location. We believe that our vendors may see increased traffic
from customers arriving at our web site for the purpose of
browsing for an unrelated product or service.
The Company is filing this registration statement on a voluntary
basis, pursuant to section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), in order to ensure that
public information is readily accessible to all shareholders and
potential investors, and to increase the Company's access to
financial markets. The Company anticipates that it will continue
to file such reports, notwithstanding the fact that it may not
otherwise be required to file a registration statement under
Section 12(g) of the Exchange Act.
INDUSTRY BACKGROUND
The Internet is a world-wide series of interconnected electronic
and/or computer networks. Individuals and companies recently have
recognized that the technological capabilities of the Internet
provide a medium not only for the promotion and communication of
ideas and concepts, but also for the presentation and sale of
information, goods and services. The Internet has been accessible
principally through personal computers, but recently several
companies have announced "Web TV" and hand-held wireless
products designed to provide access to the Internet through
alternative devices. We believe that the new Web TV and wireless
products will increase the number of people shopping on-line
through the Internet.
The terms "Electronic Commerce" and "Internet commerce" encompass
the use of the Internet for selling goods and services. The use
of the Internet as a marketing and advertising tool is enhanced
by the ability to communicate information through the Internet to
a large number of individuals, businesses and other entities.
Because of the "virtual" nature of electronic commerce, an on-
line presence in the form of a web site for merchants can reduce
significantly or eliminate the costs of maintaining a physical
retail facility. On-line merchants can also achieve significant
savings by eliminating traditional product packaging, print
advertising and other point of purchase materials. Marketing on
the Internet can be especially advantageous for smaller companies
because it removes many physical and capital barriers to entry
and levels the competitive playing field by allowing smaller
companies to compete with larger companies effectively.
The unique characteristics of the Internet create a number of
advantages for online retailers and have dramatically affected
the manner in which companies distribute goods and services.
Specifically, online retailers use the Internet to:
1. provide consumers with a broad selection of products and
services, increased information and enhanced convenience;
2. operate with reduced overhead costs and greater
economies of scale;
3. frequently adjust featured selections, editorial content
and pricing, providing significant merchandising
flexibility;
4. "display" a larger number of products than traditional
retailers at lower cost; and obtain demographic and
behavioral data about customers, increasing opportunities
for direct marketing and personalized services.
The Internet also provides a powerful and convenient means for
consumers to order products and services. As a result of the
increased use of the Internet and the benefits of online
retailing, we believe consumer spending on the Internet will
grow rapidly.
INTERNET SECURITY
One of the largest barriers to a potential customer's
willingness to conduct commerce over the Internet is the
perceived ability of unauthorized persons to access and use
personal information about the user, such as credit card account
numbers, social security numbers and bank account information.
Concerns about the security of the Internet include the
authenticity, verification and certification of who users are,
and privacy protection for access to private information
transmitted over the Internet. We believe recent advances in
this area greatly have reduced the possibility of such
unauthorized access or use, which in turn may increase
acceptance by consumers of electronic commerce. We are not aware
of any occasion in which a user's credit card was
misappropriated while transacting business on our web site. "See
Risk Factors--Insecure transmission of confidential information
and third party misconduct could hurt consumer confidence in
Internet commerce."
Our current electronic commerce services use secure sockets
layer, or SSL, protocol. SSL supports a fully digital encrypted
session (up to128-bit, depending on the browser) between the web
browser and the web server. This security method provides a high
level of encryption protection for our users' credit card
numbers, bank account numbers, and other personal information.
To our knowledge, we have never experienced any significant
problems with security. However, we cannot assure you that we
will never experience such a problem in the future. See "Risk
Factors Insecure transmission of confidential information and
third party misconduct could hurt consumer confidence in
Internet commerce."
ELECTRONIC COMMERCE SERVICES
Electronic commerce services include the ability to import,
organize and retrieve products electronically, process
transactions securely, and receive credit card payments over the
Internet. We have contracted with various third party providers
to create or service the various components of our web site,
such as our credit software, auction software and contest
software. Depending on the agreement, third party providers
receive up-front payment or transaction fees, or a combination
of both. We do not own any proprietary rights to the software
used to power the various components of our web site. See
"Business - Intellectual Property."
PRODUCTS AND SERVICES
The nature of the Company's business is the development of an
on-line shopping mall ("cybermall") on the Internet which
offers a range of goods and services for sale to consumers over
the Internet. Our primary web site is
www.PiedmontCyberMall.com. We have six different retail websites
which sell toys, electronics, health and beauty, sporting goods,
gifts, books, music and videos.
Our intent is to provide value to both the end-user and to our
vendors by providing a range of goods and services in one
location. We believe that our vendors may see increased traffic
from customers arriving at our web site for the purpose of
browsing for an unrelated product or service.
We intend to devote the majority of our advertising and
marketing efforts to develop the Piedmont Cyber Mall name. The
PiedmontCyberMall.com website is divided into the following six
areas of interest and products for sale, which will guide users
to the products and services available: toys, electronics,
health and beauty, sporting goods, gifts, books, music and
videos. We offer the ability to purchase these items in each
individual storefront on our website by the user submitting an
order on-line and entering a credit card number. The product is
then shipped directly to the customer. We receive a monthly
commission on all sales through our various stores by virtue of
a resellers agreement with Vstore, a Vcommerce Company. The
hosting, creation, maintaining and order processing and
fulfillment are handled by Vstore. Vcommerce Corporation is the
leading provider of outsourced commerce on the Web. Vcommerce
offers companies a comprehensive and scalable end-to-end
solution that quickly and seamlessly integrates e-commerce into
their existing businesses. The Vcommerce infrastructure includes
all the hosting, transaction processing, customer service,
order fulfillment and merchandising and marketing programs
necessary to power successful online retailers. Comprised of
more than one million products across thousands of categories,
Vcommerce connects its commerce partners to the most extensive
supplier network on the Web. A privately held company, Vcommerce
is funded by Archery Capital, Benchmark Capital, CMGI @Ventures,
and Pequot Capital Management.
Users also can register for a newsletter which provides updates
regarding special and sale items. We receive a percentage of all
sales resulting from these links from purchases made on other
shopping web sites or other Internet retailers. We will also
have affiliate revenue sharing arrangements with approximately
100 other shopping web sites and Internet retailers.
STRATEGY
Our strategy is to continue to develop the
PiedmontCyberMall.com web site by adding new features such as a
membership generator and database, a fully automated contest
software, credit software, a database to maintain credit
balances, a shopping cart system, and the auction software. We
also intend to open additional virtual stores selling different
products from those in our present stores and a food court which
will specialize in up-scale items such as wine, cheeses and
caviar.
SALES AND MARKETING
We intend to attract visitors to our web site in order to
increase our advertising revenue and sales of products offered
by us and our merchants through a combination of advertising and
promotion efforts. Although we currently do not have the cash
resources to engage in large scale or high profile advertising
campaigns, we intend to raise additional funds in the future in
order to increase our advertising by conducting direct mail
campaigns targeted to computer households, placing
advertisements in newspapers, and eventually through radio and
television campaigns.
We intend to pursue several avenues relating to sales and
marketing in the next year of operations. We believe that on-
line affiliations are one of the most efficient formats for
brand building and we currently are weighing affiliations with
portals and service providers due to their strength with our
target customer bases.
COMPETITION
The on-line commerce market is new, rapidly evolving and
intensely competitive. Our current or potential competitors
include (i) e-commerce solution providers that provide shopping
cart based transaction products such as: Yahoo/Viaweb, Icat and
Pandesic; (ii) Web developers that incorporate E-commerce
products in their solutions such as Mercantec, Hiway and
Simplenet; (iii) on-line shopping malls and auction houses such
as The Internet Mall, Branch Mall, iMall, the Yahoo Store,
Amazon.com, eBay and Zauction; and (iv) product search software
and comparison shopping sites such as Excite's Jengo, Yahoo
Junglee, MSN's Sidewalk.com and Webmarket.com.
We believe the principal competitive factors in this market are
brand recognition, selection, personalized services,
convenience, price, accessibility, customer service, quality of
search tools, quality of editorial and other site content,
reliability and speed of fulfillment. We are a development stage
company with limited resources and operating history. Most of
our competitors have longer operating histories, larger customer
bases, greater brand recognition and significantly greater
financial, marketing and other resources than we do. Some of
our competitors may be able to secure merchandise from vendors
on more favorable terms, devote greater resources to marketing
and promotional campaigns, adopt more aggressive pricing or
inventory availability policies and devote substantially more
resources to web site and systems development than we can.
Increased competition may result in reduced operating margins,
loss of market share and a diminished brand franchise.
GOVERNMENT REGULATIONS
We currently are not subject to direct regulation by any
government agency, other than regulations applicable to
businesses in general. For example, the formation of a licensed
insurance agency web site to sell insurance will be subject to
all of the laws and regulations applicable to insurance agencies
generally. However, there currently are few laws or regulations
directly applicable to Internet access or electronic commerce.
It is possible that in the future laws and regulations may be
adopted with respect to the Web, covering issues such as user
privacy, pricing, characteristics and quality of products and
services. Moreover, the application of existing laws in various
jurisdictions governing issues such as property ownership, sales
and other taxes, libel and personal privacy is uncertain and
may take years to resolve.
INTELLECTUAL PROPERTY
We do not possess any patents. We rely on a combination of
trademark, copyright and trade secret laws to protect our
proprietary rights. We are in the process of registering the
trademark "Piedmont Cyber Mall" in the United States. In
addition, we own most of the domain names of the web sites
appearing in our cybermall.
RISK FACTORS
The Company's business is subject to numerous risk factors
including, but not limited to, the following:
RISKS RELATED TO OUR BUSINESS
WE ANTICIPATE FUTURE LOSSES AND NEGATIVE CASH FLOW, WHICH MAY
LIMIT OR DELAY OUR ABILITY TO BECOME PROFITABLE.
We have incurred losses since our inception and expect to
experience operating losses and negative cash flow for the
foreseeable future. We anticipate our losses will continue to
increase from current levels because we expect to incur
additional costs and expenses related to:
- brand development, marketing and other promotional
activities;
- the continued development of our Web site;
- the expansion of our product offerings and Web site
content; and
- development of relationships with strategic
business partners.
Our ability to become profitable depends on our ability to
generate and sustain substantially higher net sales while
maintaining reasonable expense levels. If we do achieve
profitability, we cannot be certain that we would be able to
sustain or increase profitability on a quarterly or annual basis
in the future.
OUR OPERATING RESULTS ARE VOLATILE AND DIFFICULT TO
PREDICT.
The following are material factors that may harm our business
or cause our operating results to fluctuate:
- our inability to obtain new customers at reasonable cost,
retain existing customers or encourage repeat purchases;
- seasonality;
- our inability to adequately maintain, upgrade and develop our
Web site;
- the ability of our competitors to offer new or enhanced Web
sites, services or products;
- our inability to obtain product lines from our suppliers;
- the availability and pricing of merchandise from vendors; and
- increases in the cost of online or offline advertising.
Any change in one or more of these factors could reduce our
gross margins in future periods. Due to our limited operating
history, it is difficult to predict the seasonal pattern of our
sales and the impact of seasonality on our business and financial
results. In the future, our seasonal sales patterns may become
more pronounced, and may cause a shortfall in net sales as
compared to expenses in a given period.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY AGAINST CURRENT AND
FUTURE COMPETITORS.
We expect competition in online sales through cybermall stores to
intensify in the future. Increased competition is likely to
result in price pressure, reduced gross margins and loss of
market share, any of which could seriously harm our net sales and
operating results. In addition, the retail industry is intensely
competitive. We currently or potentially compete with a variety
of other companies, including:
- traditional retailers of our products;
- brand owners of the products we sell;
- other online retailers of our products; and
- catalog retailers.
Many of our competitors have advantages over us including longer
operating histories, greater brand recognition and significantly
greater financial, sales and marketing and other resources. In
addition, traditional store-based retailers offer customers
benefits that are not obtainable over the Internet, such as
enabling customers to physically inspect a product before
purchase and not incurring costs associated with maintaining a
Web site. See "Business --Competition".
IF WE ARE UNABLE TO BUILD AWARENESS OF THE COMPANY'S WEBSITE, WE
MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST COMPETITORS WITH
GREATER NAME RECOGNITION AND OUR SALES COULD BE ADVERSELY
AFFECTED.
If we are unable to economically achieve or maintain a leading
position in online commerce or to promote and maintain our brand,
our business, results of operations and financial condition could
suffer. We believe that the importance of brand recognition will
increase as more companies engage in commerce over the Internet.
Development and awareness of our brand will depend largely on our
success in increasing our customer base. If our consumers do not
perceive us as offering a desirable way to purchase merchandise,
we may be unsuccessful in promoting and maintaining our brand.
Furthermore, in order to attract and retain customers and to
promote and maintain our brand in response to competitive
pressures, we plan to increase our marketing and advertising
budgets and otherwise to increase substantially our financial
commitment to creating and maintaining brand loyalty among
vendors and consumers. See "Business -- Strategy", " Sales and
Marketing" and "-- Competition".
IF WE ENTER NEW BUSINESS CATEGORIES THAT DO NOT ACHIEVE MARKET
ACCEPTANCE, OUR BRAND AND REPUTATION COULD BE DAMAGED AND WE
COULD FAIL TO ATTRACT NEW CUSTOMERS.
If we launch or acquire a new department or product category that
is not favorably received by consumers, our brand or reputation
could be damaged. This damage could impair our ability to attract
new customers, which could cause our net sales to fall below
expectations. An expansion of our business will require
significant additional expenses, and strain our management,
financial and operational resources. This type of expansion would
also subject us to increased risk. We may choose to expand our
operations by developing other new departments or product
categories, promoting new or complementary products, expanding
the breadth and depth of products and services offered or
expanding our market presence through relationships with third
parties. In addition, we may pursue the acquisition of other new
or complementary businesses, products or technologies.
IF OUR STRATEGY TO SELL PRODUCTS OUTSIDE OF THE UNITED STATES IS
NOT SUCCESSFUL, OUR INCREASES IN OPERATING EXPENSES MAY NOT BE
OFFSET BY INCREASED SALES.
If we are not able to successfully market, sell and distribute
our products in foreign markets or if certain risks and
uncertainties of doing business in foreign markets prove
insurmountable then these factors could have a material adverse
effect on our future global operations, and consequently, on our
operating margins. Although we currently may not sell merchandise
to customers outside the United States, we intend to do so in the
future. We do not currently have any Web site content localized
for foreign markets, and we cannot be certain that we will be
able to establish a global presence. In addition, there are
certain risks inherent in doing business on a global level,
including:
- regulatory requirements;
- export restrictions;
- tariffs and other trade barriers;
- difficulties in staffing and managing foreign operations;
- difficulties in protecting intellectual property rights;
- longer payment cycles;
- problems in collecting accounts receivable;
- political instability;
- fluctuations in currency exchange rates; and
- potentially adverse tax consequences.
IF WE EXPERIENCE PROBLEMS WITH OUR THIRD-PARTY SHIPPING
SERVICES, WE COULD LOSE CUSTOMERS.
We rely on our suppliers for shipping services who in turn rely
upon third-party carriers, primarily Federal Express and UPS, for
product shipments. We are therefore subject to the risks,
including employee strikes and inclement weather, associated with
these carriers' ability to provide delivery services to meet our
customer's shipping needs. In addition, failure to deliver
products to our customers in a timely manner would damage our
reputation and brand.
OUR OPERATING RESULTS DEPEND ON OUR INTERNALLY DEVELOPED WEB
SITE. IF THE SITE DOES NOT PERFORM SATISFACTORY, WE COULD LOSE
CUSTOMERS AND NET SALES COULD BE REDUCED.
The satisfactory performance, reliability and availability of our
Web site is critical to our operating results, as well as to our
ability to attract and retain customers and maintain adequate
customer service levels. Any system interruptions that result in
the unavailability of our Web site or reduced performance of our
suppliers transaction systems would reduce the volume of sales
and the attractiveness of our service offerings. This would
seriously harm our business, operating results and financial
condition.
OUR NET SALES COULD DECREASE IF OUR SUPPLIERS' ONLINE SECURITY
MEASURES FAIL.
Our relationships with our customers may be adversely affected if
the security measures that our suppliers use to protect their
personal information, such as credit card numbers, are
ineffective. If, as a result, we lose many customers, our net
sales could decrease.
THE LOSS OF THE SERVICES OF ONE OR MORE OF OUR KEY PERSONNEL, OR
OUR FAILURE TO ATTRACT, ASSIMILATE AND RETAIN OTHER HIGHLY
QUALIFIED PERSONNEL IN THE FUTURE, COULD DISRUPT OUR OPERATIONS
AND RESULT IN LOSS OF NET SALES.
Our future performance will depend on the continued services of
our management and key personnel and the ability to attract
additional management and key personnel. The loss of the services
of one or more of our key personnel could seriously interrupt our
business. We depend on the continued services and performance of
our senior management and other key personnel. Our relationships
with these officers and key employees are at will and none of our
officers or key employees is bound by an employment agreement for
any specific term.
RISKS RELATED TO OUR INDUSTRY
WE DEPEND ON INCREASING USE OF THE INTERNET AND ON THE GROWTH OF
ONLINE COMMERCE.
Our future revenues substantially depend upon the increased
acceptance and use of the Internet and other online services as a
medium of commerce. Rapid growth in the use of the Internet, the
Web and online services is a recent phenomenon. As a result,
acceptance and use may not continue to develop at historical
rates and a sufficiently broad base of customers may not adopt,
and/or continue to use, the Internet and other online services as
a medium of commerce. Demand and market acceptance for recently
introduced services and products over the Internet are subject to
a high level of uncertainty and there exist few proven services
and products. In addition, the Internet may not be accepted as a
viable long-term commercial marketplace for a number of reasons,
including potentially inadequate development of the necessary
network infrastructure or delayed development of enabling
technologies and performance improvements. If the Internet
continues to experience significant expansion in the number of
users, frequency of use or bandwidth requirements, the
infrastructure for the Internet may be unable to support the
demands placed upon it. In addition, the Internet could lose its
viability as a commercial medium due to delays in the development
or adoption of new standards and protocols required to handle
increased levels of Internet activity, or due to increased
governmental regulation. Changes in, or insufficient availability
of, telecommunications services to support the Internet also
could result in slower response times and adversely affect usage
of the Internet generally.
Our business, financial condition and results of operations would
be seriously harmed if:
- use of the Internet, the Web and other online
services does not continue to increase or increases more
slowly than expected;
- the infrastructure for the Internet, the Web and other online
services does not effectively support expansion that may
occur;
- the Internet, the Web and other online services do
not become a viable commercial marketplace; or
- traffic to our Web site decreases or fails to
increase as expected or if we spend more than we expect to
attract visitors to our Web site.
IF WE ARE UNABLE TO ACQUIRE THE NECESSARY WEB DOMAIN NAMES,
OUR BRAND AND REPUTATION COULD BE DAMAGED AND WE COULD LOSE
CUSTOMERS.
We may be unable to acquire or maintain Web domain names relating
to our brand in the United States and other countries in which we
may conduct business. As a result, we may be unable to prevent
third parties from acquiring and using domain names relating to
our brand, which could damage our brand and reputation and take
customers away from our Web site. We currently hold the
"PiedmontCyberMall.com" domain name and may seek to acquire
additional domain names. Governmental agencies and their
designees generally regulate the acquisition and maintenance of
domain names. The regulation of domain names in the United States
and in foreign countries is subject to change in the near future.
The changes in the United States are expected to include a
transition from the current system to a system that is controlled
by a non-profit corporation and the creation of additional top-
level domains. Governing bodies may establish additional top-
level domains, appoint additional domain name registrars or
modify the requirements for holding domain names.
WE MAY NEED TO CHANGE THE MANNER IN WHICH WE CONDUCT OUR
BUSINESS IF GOVERNMENT REGULATION INCREASES.
The adoption or modification of laws or regulations relating to
the Internet could adversely affect the manner in which we
currently conduct our business. In addition, the growth and
development of the market for online commerce may lead to more
stringent consumer protection laws, both in the United States and
abroad, that may impose additional burdens on us. Laws and
regulations directly applicable to communications or commerce
over the Internet are becoming more prevalent. The United States
Congress recently enacted Internet laws regarding children's
privacy, copyrights, taxation and the transmission of sexually
explicit material. The European Union recently enacted its own
privacy regulations. Laws regulating the Internet, however,
remain largely unsettled, even in areas where there has been some
legislative action. It may take years to determine whether and
how existing laws such as those governing intellectual property,
privacy, libel, and taxation apply to the Internet. In order to
comply with new or existing laws regulating online commerce, we
may need to modify the manner in which we do business, which may
result in additional expenses. For instance, we may need to spend
time and money revising the process by which we fulfill customer
orders to ensure that each shipment complies with applicable
laws. We may need to hire additional personnel to monitor our
compliance with applicable laws. We may also need to modify our
software to further protect our customers' personal information.
WE MAY BE SUBJECT TO LIABILITY FOR THE INTERNET CONTENT THAT WE
PUBLISH.
As a publisher of online content, we face potential liability for
defamation, negligence, copyright, patent or trademark
infringement, or other claims based on the nature and content of
materials that we publish or distribute. If we face liability,
then our reputation and our business may suffer. In the past,
plaintiffs have brought these types of claims and sometimes
successfully litigated them against online companies. In
addition, we could be exposed to liability with respect to the
unauthorized duplication of content or unauthorized use of other
parties' proprietary technology.
OUR NET SALES COULD DECREASE IF WE BECOME SUBJECT TO SALES OR
OTHER TAXES.
If one or more states or any foreign country successfully asserts
that we should collect sales or other taxes on the sale of our
products, our net sales and results of operations could be
harmed. We do not currently collect sales or other similar taxes
for physical shipments of goods. However, one or more local,
state or foreign jurisdictions may seek to impose sales tax
collection obligations on us. In addition, any new operation
could subject our shipments in other states to state sales taxes
under current or future laws. If our suppliers become obligated
to collect sales taxes, our customers may be discouraged from
purchasing products from us because they have to pay sales tax,
causing our net sales to decrease. As a result, our suppliers may
need to lower prices to retain these customers which would result
in decreased gross profit.
RISKS RELATED TO SECURITIES MARKETS
WE MAY BE UNABLE TO MEET OUR FUTURE CAPITAL REQUIREMENTS.
We cannot be certain that additional financing will be available
to us on favorable terms when required, or at all. If we raise
additional funds through the issuance of equity, equity-related
or debt securities, the securities may have rights, preferences
or privileges senior to those of the rights of our common stock
and our stockholders may experience additional dilution. We
require substantial working capital to fund our business. Since
our inception, we have experienced negative cash flow from
operations and expect to experience significant negative cash
flow from operations for the foreseeable future. We currently
anticipate that our available funds will be sufficient to meet
our anticipated needs for working capital and capital
expenditures through at least the next 12 months. After that, we
may need to raise additional funds.
NO PUBLIC MARKET FOR OUR COMMON STOCK CURRENTLY EXISTS AND AN
ACTIVE TRADING MARKET MAY NOT DEVELOP OR BE SUSTAINED.
There has been no public market for our common stock. We cannot
be certain that an active trading market for our common stock
will develop or be sustained.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following information should be read in conjunction with the
consolidated financial statements and notes thereto appearing
elsewhere in the Form 10-SB.
The costs and expenses associated with the preparation and filing
of this registration statement have been paid for by an advance
from a shareholder of the Company. It is anticipated that the
Company will require only nominal capital to maintain the
corporate viability of the Company and necessary funds will most
likely be provided by the Company's officers and directors in the
immediate future. However, unless the Company is able to obtain
significant outside financing, there is substantial doubt about
its ability to continue as a going concern.
Risk Factors and Cautionary Statements
This Registration Statement contains certain forward- looking
statements. The Company wishes to advise readers that actual
results may differ substantially from such forward-looking
statements. Forward- looking statements involve risks and
uncertainties that could cause actual results to differ
materially from those expressed in or implied by the statements,
including, but not limited to, the following: the ability of the
Company to meet its cash and working capital needs, the ability
of the Company to maintain its existence as a viable entity, and
other risks detailed in the Company's periodic report filings
with the Commission.
Plan of Operation
Piedmont develops Internet resources to provide internet users
with a comprehensive web site where they can obtain goods and
services. We are in the process of implementing our business
model and entering into contracts with merchants who can provide
the goods and services to be sold through our web site. We
launched our website www.PiedmontCyberMall.com, in July, 2000. We
currently intend to raise additional capital in the next six
months, either in the form of equity, debt, or a combination
thereof. Additional funding may be unavailable, or if it is
available, the terms of such financing may be unacceptable to us.
We expect our future revenue to be derived from several sources
including: (i) retail sales of goods to consumers; (ii)
commissions or royalties paid by strategic partners for orders
received through us; (iii) advertising on our web sites, and (iv)
fees for electronic commerce services and fees paid by store
vendors featured on our web site.
We expect to hire between three to four additional employees in
the next six months, depending on demand for the products and
services we offer and the growth of our operations generally, as
may be necessary to sustain growth and to remain competitive. The
nature of our business is the development of an on-line shopping
mall ("cybermall") on the Internet which offers a range of goods
and services for sale to consumers over the Internet. Our primary
web site is www.PiedmontCyberMall.com.
We have six different retail websites ("storefronts") which sell
toys, electronics, health and beauty, sporting goods, gifts,
books, music and videos.
Employees The Company's has two employees at the present time
which are the Company's officers and directors, who will devote
as much time as the Board of Directors determine is necessary to
carry out the affairs of the Company. We expect to hire between
three to four additional employees in the next six months,
depending on demand for the products and services we offer and
the growth of our operations generally, as may be necessary to
sustain growth and to remain competitive.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company at present has no interest in any real property. The
Company neither owns nor leases any real property. Office
services are provided without charge by a director. Such costs
are immaterial to the financial statements, and accordingly, have
not been reflected therein.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth each person known to the Company,
as of August 4, 2000, to be a beneficial owner of five percent
(5%) or more of the Company's common stock, by the Company's
directors individually, and by all of the Company's directors and
executive officers as a group. Except as noted, each person has
sole voting and investment power with respect to the shares
shown.
Title of Name/Address Shares Percentage
Class of Owner Owned Beneficially
Owned
_______________________________________________________________________
Common Vincent van den Brink 20,000 .20 %
3700 Susan St., Ste. 200
Santa Ana, CA 92626
Rita Thomas 20,000 .20 %
3700 Susan St., Ste. 200
Santa Ana, CA 92626
Villa Nova Mgmt. Co., Inc. (1) 9,737,229 96.5 %
1800 Boulder Hwy
Henderson, NV 89104
Directors and Officers 40,000 .40%
as a group
5. Villa Nova Management Co., Inc. is majority owned by Dr.
Sandra Sawyer, former President and Director of the Company. Dr.
Sawyer resigned from the Company in 1998.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS.
Members of the Company's Board of Directors of the Company serve
until the next annual meeting of the shareholders, or until their
successors have been elected. Executive officers serve at the
pleasure of the Board of Directors.
There are no agreements for any officer or director to resign at
the request of any other person, and none of the officers or
directors named below are acting on behalf of, or at the
direction of, any other person.
The Company's officers and directors will devote such time to the
business on an as-needed basis, which is expected to require ten
to twenty hours each per month.
Information as to the directors and executive officers of the
Company is as follows:
Name/Address Age Position
Vincent van den Brink 59 President/Director
3700 Susan St., Ste. 200
Santa Ana, CA 92704
Rita Thomas 54 Secretary/Director
3700 Susan St., Ste. 200
Santa Ana, CA 92704
Vincent van den Brink has been President and Director of the
Company since 1998. Since October 1997 to present, he has been a
Financial Consultant with Airway Capital, Costa Mesa, California,
providing asset based lending, factoring, equipment leasing, and
export financing for various businesses. From June 1985 until May
1997, he was a Business Consultant writing business plans and
business development plans for companies across the country.
Since 1978 to present, in addition to working for the above
companies, he has been operating an export business providing
export consulting, export products and sourcing products for
international clients. Mr. Van den Brink is the
Secretary/Treasurer of Theinternetcorp.net, Inc. and President of
Morgan Clark Management Co., Inc., both of which are public
reporting companies. He holds a Bachelor's degrees in automotive
engineering from the Auto Technische School in Apeldoorn,
Netherlands. He is fluent in English, Dutch, German and
Afrikaans.
Rita Thomas, age 54, is president of Thomas & Associates, a
paralegal services firm in Orange, California. From 1990 to
present Ms. Thomas has provided legal support services including
document and information research, teaching and litigation staff
support for various legal firms. From 1985 to April, 1990, Ms.
Thomas owned and operated Select Care Products, Inc., a company
offering individual distributorship programs for pet care
products. Ms. Thomas has been a financial consultant and an
independent Life and Health Insurance Agent and Broker between
1986 and present. Between 1961 and 1989, Ms. Thomas has taught in
public school and private school from kindergarten through
university level in Louisiana, Virginia, Texas, Pennsylvania,
Colorado, and California. Ms. Thomas was Director of Paralegal
Studies, Orange Coast College, California from 1989 to 1991 where
she was involved in administration of student and teacher
activities and counseling of legal studies and teaching in legal
and computer classes. Ms. Thomas is the President and Director of
Mill Creek Research, Inc. and Regency Capital West, Inc., both of
which are public reporting companies. Between 1965 and 1967, Ms.
Thomas received her degrees in BA Education and MEd. from McNeese
State University, Lake Charles, Louisiana where she was Director
of Childcare Center. Ms. Thomas received her juris doctorate
degree in 1985 from Western State University, Fullerton,
California.
ITEM 6. EXECUTIVE COMPENSATION.
The Company's directors do not receive any compensation for their
services rendered to the Company, nor have they received such
compensation in the past. They have agreed to act without
compensation until authorized by the Board of Directors, which is
not expected to occur until the Company has generated revenues
from operations. As of the date of this registration statement,
the Company has no funds available to pay directors. Further, the
directors are not accruing any compensation pursuant to any
agreement with the Company.
On December 27, 1997, the stockholders approved setting aside
500,000 shares of common stock for an employee stock bonus plan,
the terms of which are to be determined by the Board of
Directors.
As of August 4, 2000, no stock has been issued under the plan.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
ITEM 8. DESCRIPTION OF SECURITIES.
Common Stock
The Company's Articles of Incorporation authorized the issuance
of 140,000,000 shares consisting of 100,000,000 shares of common
stock, $0.001 par value, and 40,000,000 shares of preferred
stock, $0.001 par value, of which 10,093,195 shares of common
stock were issued and are now outstanding. All shares are non-
assessable, without pre-emptive rights, and do not carry
cumulative voting rights. Holders of common shares are entitled
to one vote for each share on all matters to be voted on by
shareholders. Also, common shareholders are entitled to share
ratably in dividends, if any, as may be declared by the Company
from time-to-time, from funds legally available. In the event of
a liquidation, dissolution, or winding up of the Company, the
holders of shares of common stock are entitled to share on a pro-
rata basis all assets remaining after payment in full of all
liabilities.
Management is not aware of any circumstances in which additional
shares of any class or series of the Company's stock would be
issued to management or promoters, or affiliates or associates of
either.
Preferred Stock
The Company's Articles of Incorporation authorizes the issuance
of 40,000,000 shares of preferred stock, $0.001 par value, none
of which have been issued. The Company currently has no plans to
issue any preferred stock. The Company's Board of Directors has
the authority, without action by the shareholders, to issue all
or any portion of the authorized but unissued preferred stock in
one or more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion rights,
and other rights of such series. The preferred stock, if and
when issued, may carry rights superior
to those of common stock; however no preferred stock may be
issued with rights equal or senior to the preferred stock without
the consent of a majority of the holders of then-outstanding
preferred stock.
The Company considers it desirable to have preferred stock
available to provide increased flexibility in structuring
possible future acquisitions and financings, and in meeting
corporate needs which may arise. If opportunities arise that
would make the issuance of preferred stock desirable, either
through public offering or private placements, the provisions for
preferred stock in the Company's Certificate of Incorporation
would avoid the possible delay and expense of a shareholders
meeting, except as may be required by law or regulatory
authorities. Issuance of the preferred stock could result,
however, in a series of securities outstanding that will have
certain preferences with respect to dividends and liquidation
over the common stock. This could result in dilution of the
income per share and net book value of the common stock.
Issuance of additional common stock pursuant to any conversion
right which may be attached to the terms of any series of
preferred stock may also result in dilution of the net income per
share and the net book value of the common stock. The specific
terms of any series of preferred stock will depend
primarily on market conditions, terms of a proposed acquisition
or financing, and other factor existing at the time of issuance.
Therefore it is not possible at this time to determine in what
respect a particular series of preferred stock will be superior
to the Company's common stock or any other series of preferred
stock which the Company may issue. The Board of Directors does
not have any specific plan for the issuance of preferred stock at
the present time, and does not intend to issue any preferred
stock at any time except on terms which it deems to be in the
best interest of the Company and its shareholders.
The issuance of preferred stock could have the effect of making
it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. Further, certain
provisions of Utah law could delay or make more difficult a
merger, tender offer, or proxy contest involving the Company.
Although such provisions are intended to enable the Board of
Directors to maximize shareholder value, they may have the effect
of discouraging takeovers which could be in the best interests of
certain shareholders. There is no assurance that such provisions
will not have an adverse effect on the market
value of the Company's stock in the future.
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED SHAREHOLDER MATTERS.
The Company's common stock is not quoted on the over-the-counter
market or on any other recognized market or exchange. Management
has not undertaken any discussions, preliminary or otherwise,
with any prospective market maker concerning the participation of
such market maker in the after-market for the Company's
securities. There is no assurance that a trading market will ever
develop or, if such a market does develop, that it will continue.
Market Price
The ability of an individual shareholder to trade their shares in
a particular state may be subject to various rules and
regulations of that state. A number of states require that an
issuer's securities be registered in their state or appropriately
exempted from registration before the securities are permitted to
trade in that state. Presently, the Company has no plans to
register its securities in any particular state.
Although there is presently no market for the Company's shares of
common stock, if a market does develop it is likely that the
shares will be subject to the provisions of Section 15(g) and
Rule 15g-9 of the Exchange Act, commonly referred to as the
"penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-
9(d)(1) incorporates the definition of penny stock as that used
in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity
security that has a market price less than $5.00 per share,
subject to certain exceptions. Rule 3a51-1 provides that any
equity security is considered to be a penny stock unless that
security is: registered and traded on a national securities
exchange meeting specified criteria set by the Commission;
authorized for quotation on The NASDAQ Stock Market; issued by a
registered investment company; excluded from the definition on
the basis of price (at least $5.00 per share) or the issuer's net
tangible assets; or exempted from the definition by the
Commission. If the Company's shares are deemed to be a penny
stock, trading in the shares will be
subject to additional sales practice requirements on broker-
dealers who sell penny stocks to persons other than established
customers and accredited investors, generally persons with assets
in excess of $1,000,000 or annual income exceeding $200,000, or
$300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must make
a special suitability determination for the purchase of such
securities and must have received the purchaser's written consent
to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules
require the delivery, prior to the first transaction, of a risk
disclosure document relating to the penny stock market. A
broker-dealer also must disclose the commissions payable to both
the broker-dealer and the registered representative, and current
quotations for the securities. Finally, monthly statements must
be sent disclosing recent price information for the penny stocks
held in the account and information on the limited market in
penny stocks. Consequently, these rules may restrict the ability
of broker-
dealers to trade and/or maintain a market in the Company's common
stock and may affect the ability of shareholders to sell their
shares.
The National Association of Securities Dealers, Inc. ("NASD"),
which administers The Nasdaq Stock Market, has recently made
changes in the criteria for initial listing on The Nasdaq Small
Cap Market and for continued listing. For initial listing, a
company must have net tangible assets of $4 million,
market capitalization of $50 million or net income of $750,000 in
the most recently completed fiscal year or in two of the last
three fiscal years. For initial listing, the common stock must
also have a minimum bid price of $4.00 per share. In order to
continue to be included on The Nasdaq Stock Market, a company
must maintain $2,000,000 in net tangible assets and a $1,000,000
market value of its publicly-traded securities. In addition,
continued inclusion requires two market-makers and a minimum bid
price of $1.00 per share.
There can be no assurances that the Company will qualify its
securities for listing on The Nasdaq Stock Market or some other
national exchange, or be able to maintain the maintenance
criteria necessary to insure continued listing. The failure of
the Company to qualify its securities or to meet the relevant
maintenance criteria after such qualification in the future may
result in the discontinuance of the inclusion of the Company's
securities on a national exchange. In such events, trading, if
any, in the Company's securities may then continue in the over-
the-counter market. As a result, a shareholder may find it more
difficult to dispose of, or to obtain accurate quotations as to
the market value of, the Company's securities.
As of the date hereof, the Company has issued and outstanding
10,093,195 shares of common stock, 9,859,329 of which are deemed
"restricted securities" as defined by the Securities Act. These
restricted shares are held by present officers and directors of
the Company, and past officers and directors, and one control
entity. The Company has 637 shareholders.
Restricted shares that have been beneficially owned for more than
one year may be eligible for sale under Rule 144, subject to the
volume and other limitations set forth by such Rule. In general,
under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated) who has beneficially owned restricted
shares of the Company for at least one year, including any person
who may be deemed to be an "affiliate" of the Company (as the
term "affiliate" is defined under the Act), is entitled to sell,
within any three-month period, an amount of shares that does not
exceed the greater of (i) the average weekly trading volume in
the Company's common stock, as reported through the automated
quotation system of a registered securities association, during
the four calendar weeks preceding such sale or (ii) 1% of the
shares then outstanding. A person who is not deemed to be an
"affiliate" of the Company and has not been an affiliate for the
most recent three months, and who has held restricted shares for
at least two years would be entitled to sell such shares without
regard to the resale limitations of Rule 144.
Dividend Policy
The Company has not declared or paid cash dividends or made
distributions in the past, and the Company does not anticipate
that it will pay cash dividends or make distributions in the
foreseeable future. The Company currently intends to retain and
invest future earnings to finance its operations.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
There are no changes in nor disagreements with the Company's
Accountant.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On November 24, 1997, Villa Nova Management Co., Inc., signed an
acquisition agreement with Pilaras Oil and Gas, Inc., to acquire
100% of the stock of Fort Stockton Oil and Gas, a subsidiary of
Pilaras Oil and Gas. This contract was assigned to the Company
on November 28 for common stock in the Company. However, on
April 21, 1998, the contract was cancelled by mutual consent.
The stock issued to Villa Nova Management was retained as payment
in preparing proxy statements, amending the Articles of
Incorporation, and other legal services. The Board of Directors
reaffirmed the previous issuance of 9,737,229 shares of common
stock (76,000,000 shares split to 760,000 shares and 8,977,229
post split) for $7,000 consisting of $2,000 for services and
$5,000 for rent.
During the year ended November 30, 1998, the Company issued
124,100 shares of common stock for services rendered. The stock
was issued at par value because the stock has no market value and
the value of the services rendered could not be determined.
During the year ended November 30, 1999, the Company issued
70,000 shares of common stock for services rendered. The stock
was issued at par value because the stock has no market value and
the value of the services rendered could not be determined.
The issuance of these restricted shares was exempt from
registration under the Securities Act of 1933 by reason of
Sections 3(b) and 4(2) as a private transaction not involving a
public distribution. In connection with these private
transaction, the Company believes that each purchaser (i) was
aware that the securities had not been registered under federal
securities laws, (ii) acquired the securities for his/her/its own
account for investment purposes and not with a view to or for
resale in connection with any distribution for purpose of the
federal securities laws, (iii) understood that the securities
would need to be indefinitely held unless registered or an
exemption from registration applied to a proposed disposition and
(iv) was aware that the certificate representing the securities
would bear a legend restricting their transfer.
These shares were issued in a private transaction in accordance
with the exemption from registration afforded by Sections 3(b)
and 4(2) of the Securities Act. No transfers of stock have
occurred since November 30, 1999. No advertising or general
solicitation was employed in offering the shares. The securities
were offered for investment only and not for the purpose of
resale or distribution, and the transfer thereof was
appropriately restricted.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the provisions of the Utah Revised Business
Corporation Act (the "Utah Act"), the Company has the power to
indemnify an individual made a party to a proceeding because they
are or were a director, against liability incurred in the
proceeding, if such individual acted in good faith and in a
manner reasonably believed to be in, or not opposed to, the best
interest of the Company and, in a criminal proceeding, they had
no reasonable cause to believe their conduct was unlawful.
Indemnification under this provision is limited to reasonable
expenses incurred in connection with the proceeding. The Company
must indemnify a director or officer who is successful, on the
merits of otherwise, in the defense of any proceeding or in
defense of any claim, issue, or matter in the proceeding, to
which they are a party to because they are or were a director of
officer of the Company, against reasonable expenses incurred by
them in connection with the proceeding or claim with respect to
which they have been successful. Pursuant to the Utah Act, the
Company's Board of Directors may indemnify its officers,
directors, agents, or employees against any loss or damage
sustained when acting in good faith in the performance of their
corporate duties.
The Company may pay for or reimburse reasonable expenses incurred
by a director, officer employee, fiduciary or agent of the
Company who is a party to a proceeding in advance of final
disposition of the proceeding provided the individual furnishes
the Company with a written affirmation that their conduct was in
good faith and in a manner reasonably believed to be in, or not
opposed to, the best interest of the Company, and undertake to
pay the advance if it is ultimately determined that they did not
meet such standard of conduct.
Also pursuant to the Utah Act, a corporation may set forth in its
articles of incorporation, by-laws or by resolution, a provision
eliminating or limiting in certain circumstances, liability of a
director to the corporation or its shareholders for monetary
damages for any action taken or any failure to take
action as a director. This provision does not eliminate or limit
the liability of a director (i) for the amount of a financial
benefit received by a director to which they are not entitled;
(ii) an intentional infliction of harm on the corporation or its
shareholders; (iii) for liability for a violation of Section 16-
10a-842 of the Utah Act (relating to the distributions made in
violation of the Utah Act); and (iv) an intentional violation of
criminal law. To date, the Company has not adopted such a
provision in its Articles of Incorporation, By-Laws, or by
resolution. A corporation may not eliminate or limit the
liability of a director for any act or omission occurring prior
to the date when such provision becomes effective. The Utah Act
also permits a corporation to purchase and maintain liability
insurance on behalf of its directors, officers, employees,
fiduciaries or agents.
Transfer Agent
The Company has engaged Atlas Stock Transfer Corp., Salt Lake
City, Utah as its transfer agent.
PART F/S
[CAPTION]
INDEPENDENT AUDITORS' REPORT
Board or Directors
Piedmont, Inc.
Santa Ana, California
We have audited the balance sheet of Piedmont, Inc., formerly
Candy Stripers Candy Corporation, as of May 31, 2000, November
30, 1999 and November 30, 1998, and the related statements of
operations, stockholders' equity and cash flows for the period
December 1, 1999 to May 31, 2000, and the years ended November
30, 1999 and November 30, 1998. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Piedmont, Inc. at May 31, 2000, November 30, 1999 and November
30, 1998, and the results of its operations and cash flows for
the period of December 1, 1999 to May 31, 2000, and the years
ended November 30, 1999 and November 30, 1998, in conformity with
generally accepted accounting principles.
Kurt D. Saliger
______________________
Kurt D. Saliger, C.P.A.
(Nevada State License No. 2335)
Certified Public Accountant
Las Vegas, Nevada
July 10, 2000
<TABLE>
<CAPTION>
PIEDMONT, INC.
(Formerly Candy Stripers Candy Corporation)
BALANCE SHEET
<S> <C> <C> <C>
May 31, November 30,
2000 1999 1998
ASSETS
CURRENT ASSETS:
Cash $ 0 $ 0 $ 70
Stock subscriptions
TOTAL CURRENT ASSETS $ 0 $ 70
OTHER ASSETS:
TOTAL ASSETS $ 0 $ 0 $ 70
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1137 $ 1137 $ 950
Sales tax payable
Loans payable
______ ______ ______
TOTAL CURRENT LIABILITIES $ 1137 $ 1137 $ 950
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
authorized 40,000,000 shares;
no shares issued
Common stock, $.001 par value,
authorized 100,000,000 issued:
November 30,1998 10,023,295 10,023
November 30,1999 10,093,295 10,093
May 31, 1999 10,093,295 10,093
Additional paid-in capital 3,646,297 3,646,297 3,646,297
Accumulated loss (3,657,527) (3,657,527) (3,657,202)
TOTAL STOCKHOLDERS' EQUITY (1137) (1137) (880)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 0 $ 0 $ 70
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PIEDMONT, INC.
(Formerly Candy Stripers Candy Corporation)
STATEMENT OF OPERATIONS
<S> <C> <C> <C>
December 1, 1999 For the year ended
to November 30,
May 31, 2000 1999 1998
---------------- ------------------
REVENUE:
Sales $ 0 $ 0 $ 0
Miscellaneous income
TOTAL REVENUE
EXPENSES:
Rent 5,000
Bank charges 80
Professional fees 325 950
License and taxes
Office supplies
Telephone
Interest expense
Services rendered 2,124
$ 0
TOTAL EXPENSES (325) (8,154)
---------------- ------------------
OTHER INCOME:
Forgiveness of debt
GAIN (LOSS) BEFORE TAXES 0 (325) (8,154)
State Tax 0 -
NET INCOME (LOSS) AFTER TAXES $ 0 $(325) $ (8,154)
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
PIEDMONT, INC.
(Formerly Candy Stripers Candy Corporation)
STATEMENT OF STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C> <C>
Additional
Preferred Common Stock paid-in Accumulated
Stock Shares Amount capital loss
--------- -------------------- ---------- -----------
Balance, November 30, 1997 0 23,299,085 23,299 3,625,897 (3,649,048)
December 15, 1997, issued 72,000 72
for services rendered,
at par value
December 15, 1997, issued
for fees to prepare proxy
statement and to amend
Articles of Incorporation,
at par value 76,000,000 76,000 (76,000)
December 30, 1997, reverse
stock split, 100-1 (98,377,119) (98,377) 98,377
February 6, 1998, issued
for proposed acquisition
of Fort Stockton Oil &
Gas, Inc. 8,977,229 8,977 (1,977)
June 9, 1998, issued for
services rendered 52,100 52
Net loss, year ended
November 30, 1998 0 (8,154)
--------- -------------------- ---------- -----------
Balance, November 30, 1998 0 10,023,295 10,023 3,646,297 (3,657,202)
December 1, 1998, issued for
services rendered 60,000 60
August 19, 1999, issued for
services rendered 10,000 10
Net loss, year ended
November 30, 1999 0 (325)
--------- ---------------------- --------- -----------
10,093,295 10,093 3,646,297 (3,657,527)
Net income, December 1, 1999
to May 31, 2000 0
--------- ---------------------- --------- -----------
Balance, May 31, 2000 --------- ---------------------- --------- -----------
10,093,295 10,093 3,646,297 (3,657,527)
See accompanying notes to financial statements.
</TABLE>
[CAPTION]
<TABLE>
PIEDMONT, INC.
(Formerly Candy Stripers Candy Corporation)
STATEMENT OF CASH FLOWS
<S> <C> <C> <C>
December 1, 1999 For the year ended
to November 30,
May 31, 2000 1999 1998
---------------- ------------------
Cash Flows from Operating Activities:
Net income (loss) $ (325) $ (8,154)
Stock issued for services 70 7,124
Decrease in assets
Increase (decrease) in
Liabilities 0 185 950
Net Cash Flows from Operating
Activities - (70) (80)
Cash Flows from Investing Activities: - - -
Cash Flows from Financing Activities:
Stock subscriptions
Cancel stock 0
Net Cash Flows from Financing
Activities - -
Net increase (decrease) in cash - (70) (80)
Cash, beginning of period 0 70 150
Cash, end of period $ 0 $ 0 $ 70
See accompanying notes to financial statements.
</TABLE>
[CAPTION]
PIEDMONT, INC.
(Formerly Candy Stripers Candy Corporation)
NOTES TO FINANCIAL STATEMENTS
May 31, 2000, November 30, 1999 and November 30, 1998
NOTE 1 - HISTORY, ACCOUNTING POLICIES AND PROCEDURES
The Company was incorporated June 29, 1983 under the laws of the
State of Utah as Teal Eye, Inc. On September 7, 1984, the
Company merged with Terzon Corp. and amended its Articles of
Incorporation changing the Company name to Terzon Corp. On
September 7, 1984, the Company amended its Articles of
Incorporation changing its name to Candy Stripers Candy
Corporation. On January 6, 1998, the Company amended its
Articles of Incorporation changing its name to Piedmont, Inc.
On November 24, 1997, Villa Nova Management Co., Inc., signed an
acquisition agreement with Pilaras Oil and Gas, Inc., to acquire
100% of the stock of Fort Stockton Oil and Gas, a subsidiary of
Pilaras Oil and Gas. This contract was assigned to the Company
on November 28 for common stock in the Company. However, on
April 21, 1998, the contract was cancelled by mutual consent.
The stock issued to Villa Nova Management was retained as payment
in preparing proxy statements, amending the Articles of
Incorporation, and other legal services.
On December 22, 1997, the stockholders authorized 40,000,000
shares of preferred stock at $.001 par value, the terms and
conditions of which are to be set by the Board of Directors. As
of May 31, 2000, no shares of preferred stock had been issued.
On December 30, 1997, the Company authorized a 100-1 reverse
stock split reducing the outstanding stock by 98,377,119 shares.
The Board of Directors reaffirmed the previous issuance of
9,737,229 shares of common stock (76,000,000 shares split to
760,000 shares and 8,977,229 post split) for $7,000 consisting of
$2,000 for services and $5,000 for rent.
During the year ended November 30, 1998, the Company issued
124,100 shares of common stock for services rendered. The stock
was issued at par value because the stock has no market value and
the value of the services rendered could not be determined.
During the year ended November 30, 1999, the Company issued
70,000 shares of common stock for services rendered. The stock
was issued at par value because the stock has no market value and
the value of the services rendered could not be determined.
The nature of the Company's business is the development of
websites, including consultation and design, for the sale of
retail products. The Company is presently contracting with
various companies for the resale of home gift items and expects
to have its website fully functional within 60 days.
The Company has adopted the following accounting policies and
procedures:
1. The Company uses the accrual method of accounting.
2. Earnings (loss) per share is calculated using a weighted
averaged number of shares of common stock outstanding.
3. The Company has elected a fiscal year ending November 30th.
NOTE 2 - EMPLOYEE STOCK OPTION PLAN
On December 27, 1997, the stockholders approved setting aside
500,000 shares of common stock for an employee stock bonus
plan, the terms of which are to be determined by the Board of
Directors.
NOTE 3 - WARRANTS AND OPTIONS
There are no warrants or stock options outstanding to acquire
any additional shares of common stock of the Company,
NOTE 4 - GOING CONCERN
The Company's financial statements have been presented on a going
concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business.
As shown in the financial statements, the Company has incurred
substantial operating losses for the past several years and has
an excess of liabilities over assets at May 31, 2000. The
Company's ability to continue as a going concern is contingent
upon its ability to operate profitably, to obtain additional
equity investment, or to merge with an operating company.
PART III
ITEM 1. Index to Exhibits
The following exhibits are filed with this Registration
Statement:
Exhibit Exhibit Name
a. Articles of Incorporation of Teal Eyes, Inc.
b. Amendment to Articles of Incorporation of Teal
Eyes, Inc.
c. Amendment to Articles of Incorporation of Terzon
Corporation.
d. Amended and Restated Articles of Incorporation of
Candy Stripers Candy Corp.
e. By-Laws of Teal Eyes, Inc.
27 Financial Data Schedule
________________
ITEM 2. Description of Exhibits
See Item 1 above.
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act
of 1934, the registrant caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
organized.
PIEDMONT, INC.
(Registrant)
Date: August 17, 2000
By: Vincent van den Brink
________________________________
Vincent van den Brink, President
[CAPTION]
EXHIBIT 3.1
ARTICLE OF INCORPORATION OF TEAL EYE, INC.
We, the undersigned, natural persons of the age of twenty-
one or more, for the purpose of organizing a corporation
pursuant to the Utah Business Act, do hereby adopt the
following Articles of Incorporation for such corporation
ARTICLE I
NAME: The name or the corporation is TEAL EYE, INC.
ARTICLE II
DURATION: The existence of the corporation shall be
perpetual unless dissolved according to law.
ARTICLE III
PURPOSE: The purposes for which the corporation is
organized are (1) to make, manufacture, distribute and sell
all and any kinds of ceramic goods; (2) to invest money in
legitimate and productive enterprises and (3) to engage in
any lawful act or activity for which a corporation may be
organized under the Utah Business Corporation Act, other
than the banking business, the trust company business, or
the practice of a profession permitted to be incorporated
by the Utah Business Corporation Act.
ARTICLE IV
CAPITALIZATION: The aggregate number of shares which
this corporation shall have authority to issue is Fifty
Million (50,000,000) shares of common voting stock, par
value of One Mill ($.001) per share. All stock of the
corporation shall be of the same class and have the same
rights and preferences. There shall be no pre-emptive
rights.
ARTICLE V
MINIMUM PAID IN CAPITAL: The corporation shall not
commence business until consideration of the value of at
least One Thousand Dollars ($1,000) has been received by it
for the issuance of such shares.
ARTICLE VI
REGISTERED OFFICE AND AGENT: The address of this
corporation's initial registered office and the name of its
original registered agent at such address is:
Roger Nemelka 460 West 200 South Aurora, Utah 84620
ARTICLE VII
INITIAL BOARD OF DIRECTORS: The number of the
directors constituting the initial Board of Directors of
the corporation is three (3) and the names and addresses of
persons who are to serve as directors until the first
annual meeting of shareholders or until their successors
are elected and qualified are:
Roger Nemelka
460 West 200 South
Aurora, Utah 84620
David Hadley11
West Miller
Murray, Utah 84107
Jaylene Nemelka
460 West 200 South
Aurora, Utah 84620
ARTICLE VIII
OFFICERS: Officers of this corporation shall include
President, one or more Vice-Presidents, a Secretary and a
Treasurer. The President, Vice-President or Vice-Presidents, the
Secretary and the Treasurer shall be elected by the Board of
Directors and may, but need not be, elected from the members of
the Board.
ARTICLE IX
NON-ASSESSABILITY OF STOCK: Shares of stock of this
corporation shall be non-assessable for any purpose. The private
property of the stockholders shall not be liable for the debts,
obligations or liabilities of this corporation.
ARTICLE X
INDEMNIFICATION: Any person made a party to or involved
in any civil, criminal or administrative action, suit or
proceeding by reason of the fact that he or his testator or
intestate is or was director, officer, or employee of the
corporation, or any corporation which he, the testator, or
intestate serves as such at the request of the corporation shall
be indemnified by the corporation against expenses reasonably
incurred by him or imposed by him in connection with or resulting
from the defense or such action, suit or proceeding and in
connection with or resulting from any appeal therein, except with
respect to matters as to which it is adjudged in such action,
suit or proceeding that such officer, director, or employee was
liable to the corporation, or to such other corporation for
negligence or misconduct in the performance of his duty. As used
herein the term "expenses" shall include obligations incurred by
such persons for the fees, judgments, awards, fines, penalties
and amounts paid in satisfaction of judgment or in settlement of
any action, suit or proceeding, except amounts paid to the
corporation or such other corporation by him. A judgment or
conviction whether based on plea of guilty or nolo-contendre or
its equivalent or after trial shall not of itself be deemed an
adjudication that such director, officer or employee is liable to
the corporation, or such other corporation, for negligence or,
misconduct in the performance of his duties. Determination of
the rights of such indemnification and the amount thereof may be
made at the option of the person to be indemnified pursuant to
the procedure set forth in the By-Laws or by any of the following
procedures: a. Order of the Court or administrative body or
agency having jurisdiction of the action, suit or proceeding;
b. Resolution adopted by a majority of the Quorum of Board
of Directors of the corporation without counting in such majority
a quorum any directors who have incurred expense in connection
with such action, suit or proceeding;
c. If there is no Quorum of Directors who have not incurred
expense in connection with such action, suit or proceeding, then
by resolution by the majority of the committee of stockholders
and directors appointed by the Board of Directors;
d. Resolution adopted by a majority of the Quorum of
Directors entitled to vote at any meeting; or
e. Order of any Court having jurisdiction over the
corporation. Any such determination that a payment by way of
indemnity should be made will be binding upon the corporation,
such right of indemnification shall not be exclusive of any other
right which such directors, officers and employees of the
corporation end the other persons above-mentioned may have or
hereafter acquire and, without limiting the generality of such
statements, they shall be entitled to their respective rights or
indemnification under any By-Laws, Agreement, vote of
stockholders, provisions of law, or otherwise as well as their
rights under this Article. The provisions of this Article shall
apply to any member of any committee appointed by the Board of
Directors as fully as though such persons had been a director,
officer, or employee of the corporation.
ARTICLE Xl
INCORPORATORS:
Roger Nemelka
460 West 200 South
Aurora, Utah 84620
David Hadley
11 West Miller
Murray, Utah 84107
Jaylene Nemelka
460 West 200 South
Aurora, Utah 84620
IN WITNESS WHEREOF, we the undersigned original
incorporators herein above-named have set our hands this 24th day
of June, 1983.
Roger Nemelka
_____________________
ROGER NEMELKA
David Hadley
_____________________
DAVID HADLEY
Jaylene Nemelka
_____________________
JAYLENE NEMELKA
[CAPTION]
EXHIBIT 3.2
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the applicable provisions of the Utah Business
Corporations Act, the undersigned Corporation adopts the
following Articles of Amendment to its Articles of Incorporation
by stating the following:
FIRST: The present name of the corporation is Teal Eye,
Inc.
SECOND: The following amendments to its Articles
of Incorporation were adopted by the shareholders of the
corporation on July 17, 1984, in the manner prescribed by Utah
law.
1. Article I is amended to read as follows:
ARTICLE I-NAME
The name of the corporation (hereinafter called the Corporation)
is Terzon Corporation.
2. Article IV is amended to read as follows:
ARTICLE IV-CAPITALIZATION
The aggregate number of shares which this corporation shall
have authority to issue is One Hundred Million (100,000,000)
shares of common voting stock, par value of Qne Mill ($.001) per
share. All stock of the corporation shall be of the sane class
and have the same rights and preferences. There shall be no pre-
emptive rights and no cumulative voting.
THIRD: The number of shares of the Corporation outstanding and
entitled to vote at the time of the adoption of said amendment
was 2,600,000 shares.
FOURTH: The number of shares voted for such amendments was
2,120,000 and the number voted against such amendments was None.
DATED this 17th day of July, 1984.
Attest:
TEAL EYE, INC.
Jaylene Nemelka
By: Roger Nemelka
______________________
Secretary, President
VERIFICATION )
STATE OF UTAH ):. ss
COUNTY OF SALT LAKE}
The undersigned being first duly sworn, deposes and states:
that the undersigned is the Secretary of Teal Eye, Inc., that the
undersigned has read the Articles of Amendment and knows the
contents thereof and that the sane contains a truthful statement
of the amendment duly adopted by the stockholders of the
Corporation.
Jaylene Nemelka
_____________________
Secreatry
VERIFICATION )
STATE OF UTAH ):. ss
COUNTY OF SALT LAKE}
Before me the undersigned Notary Public in and for the said
County and State, personally appeared the President and Secretary
of Teal Eye, Inc., a Utah corporation, and signed the foregoing
Articles of Amendment as their own free and voluntary act and
deed pursuant to a corporate resolution for the uses and purposes
set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
17th day of July, 1984.
My Commission Expires:
Thomas G. Kimble
Nov 1, 1985
NOTARY PUBLIC residing at
Salt Lake County, Utah
(Seal)
[CAPTION]
EXHIBIT 3.3
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF TERZON CORPORATION
Pursuant to the applicable provisions of the Utah
Business Corporations Act, the undersigned Corporation adopts the
following Articles of Amendment to its Articles of Incorporation
by stating the following:
FIRST: The present name of the corporation is Terzon
Corporation.
SECOND: The following amendments to its Articles of
Incorporation were adopted by the shareholders of the
corporation on September 7, 1984, in the manner prescribed by
Utah law.
1. Article I is amended as follows:
ARTICLE I - NAME
The name of the corporation (hereinafter called the
Corporation) is Candy Stripers Candy Corporation.
THIRD: The number of shares of the Corporation outstanding
at the time of the adoption of said amendment and the number of
shares entitled to vote thereon was 11,267,500.
FOURTH: The number of shares voted for such amendments was
8,161,591 and the number voted against such amendments was -0-.
DATED this 7th day of September, 1984.
Attest:
TERZON CORPORATION
George C. Terzis
By: Chris Terzis
_________________________________
George C. Terzis, Secretary
Chris Terzis, President
[CAPTION]
EXHIBIT 3.4
AMENDED & RESTATED
ARTICLES OF INCORPORATION
OF CANDY STRIPERS CANDY CORPORATION
The undersigned, SANDRA S. SAWYER , VINCENT VAN DEN BRINK,
and RITA THOMAS hereby certify that:
ONE: They are the duly elected and acting President and
Secretary, respectively, and constitute the Board of Directors
of CANDY STRIPERS CANDY CORPORATION, (the "Corporation").
TWO: The Articles of Incorporation of the Corporation shall
be amended and restated to read in full as follows:
"FIRST: The present name of the corporation is CANDY
STRIPERS CANDY CORPORATION, which is hereby amended and changed
to PIEDMONT, INC. (the "Corporation").
SECOND: The principal office of the Corporation in the State
of Utah is located at 1981 E. 4800 South, Ste. 100, Salt Lake
City, Utah 84117. The name and address of the registered agent of
the Corporation is Interwest Transfer Co., Inc., P.O. Box 17136,
Salt Lake City, Utah 84117.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized
under the Utah General Corporation Law.
FOURTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the
Corporation, and for further definition, limitation and
regulation of the powers of the Corporation and of its directors
and stockholders:
A. The governing board of this Corporation shall
be known as the board of directors (the "Board of Directors" or
the "Board") and its members all be known as directors, and the
number of directors may from time to time be increased or
decreased by resolution of the Board of Directors, provided that
the number of directors shall not be reduced to less than three
(3). The Board of Directors shall be divided into three classes,
as nearly equal in number as possible, and the term of office for
each respective class of directors shall be so arranged that the
term of office of directors of one class shall expire at each
successive annual meeting of stockholders, and in all cases as to
each director until their successor shall be elected and shall
qualify, or until his earlier resignation, removal from office,
death or incapacity. At each annual meeting of stockholders after
the first annual meeting, the number of directors equal to the
number of directors of the class whose term expires at the time
of such meeting (or such greater or lesser number as would be
required by an increase or decrease in the size of the Board of
Directors) shall be elected to hold office until the third
succeeding annual meeting of stockholders after their election.
This Article FOURTH may not be amended or repealed without the
affirmative vote of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of the shares entitled to vote
thereon.
B. Special meetings of stockholders of the
Corporation may be called only by the Chairman of the Board or
the President or by the Board of Directors acting pursuant to a
resolution adopted by a majority of the Whole Board. For purposes
of these Amended and Restated Articles of Corporation, the term
"Whole Board" shall mean the total number of authorized directors
whether or not there exists any vacancies in previously
authorized directorships.
FIFTH: A. The total number of shares of all classes
of stock which the Corporation shall have authority to issue is
One Hundred forty million (140,000,000), consisting of One
Hundred million (100,000,000) shares of common stock, par value
one-tenth of one cent ($0.001) per share (the "Common Stock")
and Forty million (40,000,000) shares of preferred stock, par
value one-tenth of one cent ($0.001) per share (the "Preferred
Stock").
B. COMMON STOCK. The shares of Common Stock
shall have no pre-emptive or preferential rights of subscription
concerning further issuance or authorization of any securities of
the Corporation. Each share of Common Stock shall entitle the
holder thereof to one vote, in person or by proxy. The holders of
the Common Stock shall be entitled to receive dividends if, as
and when declared by the Board of Directors.
The Common Stock may be issued from time to
time in one or more series and shall have such other relative,
participant, optional or special rights, qualifications,
limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions providing for the
issuance of such Common Stock from time to time adopted by the
Board of Directors pursuant to authority so to adopt which is
hereby vested in the Board of Directors.
C. PREFERRED STOCK. The Preferred Stock may be
issued from time to time in one or more series and (a) may have
such voting powers, full or limited, or may be without voting
powers; (b) may be subject to redemption at such time or times
and at such prices; (c) may be entitled to receive dividends
(which may be cumulative or non-cumulative) at such rate or
rates, on such conditions, and at such times, and payable in
preference to, or in such relation to, the dividends payable on
any other class or classes or series of stock; (d) may have such
rights upon the dissolution of, or upon any distribution of the
assets of, the Corporation; (e) may be made convertible into, or
exchangeable for, shares of any other class or classes or of any
other series of the same or any other class or classes of stock
of the Corporation, at such price or prices or at such rates of
exchange, and with such adjustments and (f) shall have such other
relative, participating, optional or special rights,
qualifications, limitations or restrictions thereof as shall
hereafter be stated and expressed in the resolution or
resolutions providing for the issuance of such Preferred Stock
from time to time adopted by the Board of Directors pursuant to
authority so to do which is hereby vested in the Board of
Directors.
At any time from time to time when authorized by
resolution of the Board of Directors and without any action by
its shareholders, the Corporation may issue or sell any shares of
its stock of any Class or series, whether out of the unissued
shares thereof authorized by these Amended and Restated Articles
of Incorporation, as amended, or out of shares of its stock
acquired by it after the issue thereof, and whether or not the
shares thereof so issued or sold shall confer upon the holders
thereof the right to exchange or convert such shares for or into
other shares of stock of the Corporation of any class or classes
or any series thereof. When similarly authorized, but without any
action by its shareholders, the Corporation may issue or grant
rights, warrants or options, in bearer or registered or such
other form as the Board of Directors may determine, for the
purchase of shares of the stock of any class or series of the
Corporation within such period of time, or without limit as to
time, of such aggregate number of shares, and at such price per
share, as the Board of Directors may determine. Such rights,
warrants or options may be issued or granted separately or in
connection with the issue of any bonds, debentures, notes,
obligations or other evidences of indebtedness or shares of the
stock of
any class or series of the Corporation and for such consideration
and on such terms and conditions as the Board of Directors, in
its sole discretion, may determine. In each case, the
consideration to be received by the Corporation for any such
shares so issued or sold shall be such as shall be fixed from
time to time by the Board of Directors.
D. The capital stock, after the amount of the
subscription price, or par value, has been paid in, shall not be
subject to assessment.
E. No holder of shares of stock of the Corporation
shall be entitled as of right to purchase or subscribe for any
part of any unissued stock of this Corporation or of any new or
additional authorized stock of the Corporation of any class
whatsoever, or of any issue of securities of the Corporation
convertible into stock, whether such stock or securities be
issued for money or for a consideration other than money or by
way of dividend, but any such unissued stock or such new or
additional authorized stock or such securities convertible into
stock may be issued and disposed of to such persons, firms,
corporations and associations, and upon such terms as may be
deemed advisable by the Board of Directors without offering to
stockholders of record or any class of stockholders upon the same
terms or upon any terms.
SIXTH: A. Subject to the rights of the holders of any
series of Preferred Stock to elect additional directors under
specified circumstances, the number of directors shall be fixed
from time to time exclusively by the Board of Directors pursuant
to a resolution adopted by a majority of the Whole Board.
B. Subject to the rights of the holders of any
series of Preferred Stock then outstanding, newly created
directorships resulting from any increase in the authorized
number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall, unless otherwise
provided by law or by resolution of the Board of Directors, be
filled only by a majority vote of the directors then in office,
though less than a quorum, and directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders
at which the term of office of the class to which they have been
chosen expires. No decrease in the authorized number of directors
shall shorten the term of any incumbent director.
C. Advance notice of stockholder nominations for
the election of directors and of business to be brought by
stockholders before any meeting of the stockholders of the
Corporation shall be given in the manner provided in the by-laws
of the Corporation.
D. Subject to the rights of the holders of any
series of Preferred Stock then outstanding, any directors, or the
entire Board of Directors, may be removed from office at any
time, but only for cause and only by the affirmative vote of the
holders at least fifty percent (50%) of the voting power of all
of the then-outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors, voting together as a single class.
SEVENTH: The Board of Directors is expressly empowered to
adopt, amend or repeal by-laws of the Corporation. Any adoption,
amendment or repeal of the by-laws of the Corporation by the
Board of Directors shall require the approval of a majority of
the Whole Board. The stockholders shall also have power to adopt,
amend or repeal the by-laws of the Corporation; provided,
however, that, in addition to any vote of the holders of any
class or series of stock of the Corporation required by law or by
these Amended and Restated Articles of Corporation, the
affirmative vote of the holders of at least fifty percent (50%)
of the voting power of all of the then-outstanding shares of the
capital stock of the Corporation entitled to vote generally in
the election of directors, voting together as a single class,
shall be required to adopt, amend or repeal any provision of the
by-laws of the Corporation.
EIGHTH: The Corporation reserves the right to amend or
repeal any provision contained in this Amended and Restated
Articles of Incorporation in the manner prescribed by the laws of
the State of Utah and all rights conferred upon stockholders are
granted subject to this reservation; provided, however, that,
notwithstanding any other provision of this Amended and Restated
Articles of Incorporation or any provision of law that might
otherwise permit a lesser vote or no vote, but in addition to any
vote of the holders of any class or series of the stock of this
Corporation required by law or by this Amended and Restated
Articles of Incorporation, the affirmative vote of the holders of
at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all the then-outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of
Directors, voting together as a single class, shall be required
to amend or repeal this Article EIGHTH, Article SIXTH, Article
SEVENTH, or Article NINTH.
NINTH: The Board of Directors of the Corporation, when
evaluating any offer of another party to (a) make a tender or
exchange offer for any equity security of the Corporation, (b)
merge or consolidate the Corporation with another corporation or
(c) purchase or otherwise acquire all or substantially all of the
properties and assets of the Corporation, may, in connection with
the exercise of its judgment in determining what is in the best
interests of the Corporation and its stockholders, give due
consideration to (i) all relevant factors, including without
limitation the social, legal, environmental and economic effects
on the employees, customers, suppliers and other affected
persons, firms and corporations, and on the communities and
geographical areas in which the Corporation and its subsidiaries
operate or are located and on any of the businesses and
properties of the Corporation or any of its subsidiaries, as well
as such other factors as the directors deem relevant, (ii) not
only the financial consideration being offered in relation to the
then current market price for the Corporation's outstanding
shares of capital stock, but also in relation to the then current
value of the Corporation in a freely negotiated transaction and
in relation to the Board of Directors' estimate of the future
value of the Corporation (including the unrealized value of its
properties and assets) as an independent going concern, and (iii)
the obligations of the Corporation, and any of its subsidiaries,
to provide stable, reliable services on a continuing or long term
basis.
TENTH: A director or officer of the Corporation shall have
no personal liability to the Corporation or its stockholders for
damages for breach of fiduciary duty as a director or officer,
except for (a) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law; or (b) the
payment of dividends in violation of the applicable statutes of
Utah. If the Utah General Corporation Law is amended after
approval by the stockholders of this Article TENTH to authorize
corporate action further eliminating or limiting the personal
liability of directors or officers, the liability of a director
or officer of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Utah General Corporation Law,
as so amended from time to time. No repeal or modification of
this Article TENTH by the stockholders shall adversely affect any
right or protection of a director or officer of the Corporation
existing by virtue of this Article TENTH at the time of such
repeal or modification.
ELEVENTH: A. The Corporation shall indemnify and hold
harmless 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, by reason of the fact that he or she is or was or
has agreed to become a director or officer of the Corporation or
is serving at the request of the Corporation as a director or
officer of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise or by reason of
actions alleged to have been taken or omitted in such capacity or
in any other capacity while serving as a director or officer. The
indemnification of directors and officers by the Corporation
shall be to the fullest extent authorized or permitted by
applicable law, as such law exists or may hereafter be amended
(but only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than
permitted prior to the amendment). The indemnification of
directors and officers shall be against all loss, liability and
expense (including attorneys fees, costs, damages, judgments,
fines, amounts paid in settlement and ERISA excise taxes or
penalties) actually and reasonably incurred by or on behalf of a
director or officer in connection with such action, suit or
proceeding, including any appeal; provided, however, that with
respect to any action, suit or proceeding initiated by a director
or officer, the Corporation shall indemnify such director or
officer only if the action, suit or proceeding was authorized by
the Board of Directors of the Corporation, except with respect to
a suit for the enforcement of rights to indemnification or
advancement of expenses in accordance with Section C below.
B. The expenses of directors and officers incurred as a
party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative shall be paid by the Corporation
as they are incurred and in advance of the final disposition of
the action, suit or proceeding; provided, however, that if
applicable law so requires, the advance payment of expenses shall
be made only upon receipt by the Corporation of an undertaking by
or on behalf of the director or officer to repay ail amounts so
advanced in the event that it is ultimately determined by a final
decision, order or decree of a court of competent jurisdiction
that the director or officer is not entitled to be indemnified
for such expenses under this Article ELEVENTH.
C. Any director or officer may enforce his or
her rights to indemnification or advance payments for expenses in
a suit brought against the Corporation if his or her request for
indemnification or advance payments for expenses is wholly or
partially refused by the Corporation or if there is no
determination with respect to such request within 60 days from
receipt by the Corporation of a written notice from the director
or officer for such a determination. If a director or officer is
successful in establishing in a suit his or her entitlement to
receive or recover an advancement of expenses or a right to
indemnification, in whole or in part, he or she shall also be
indemnified by the Corporation for costs and expenses incurred in
such suit. It shall be a defense to any such suit (other than a
suit brought to enforce a claim for the advancement of expenses
under Section B of this Article ELEVENTH where the required
undertaking, if any, has been received by the Corporation) that
the claimant has not met the standard of conduct set forth in the
Utah General Corporation Law. Neither the failure of the
Corporation to have made a determination prior to the
commencement of such suit that indemnification of the director or
officer is proper in the circumstances because the director or
officer has met the applicable standard of conduct nor a
determination by the Corporation that the director or officer has
not met such applicable standard of conduct shall be a defense to
the suit or create a presumption that the director or officer has
not met the applicable standard of conduct. In a suit brought by
a director or officer to enforce a right under this Section C or
by the Corporation to recover and advancement of expenses
pursuant to the terms of an undertaking, the burden of proving
that a director or officer is not entitled to be indemnified or
is not entitled to an advancement of expenses under this Section
C or otherwise, shall be on the Corporation.
D. The right to indemnification and to the
payment of expenses as they are incurred and in advance of the
final disposition of the action, suit or proceeding shall not be
exclusive of any other right to which a person may be entitled
under these Amended and Restated Articles of Incorporation or any
by-law, agreement, statute, vote of stockholders or disinterested
directors or otherwise. The right to indemnification under
Section A above shall continue for a person who has ceased to be
a director or officer and shall inure to the benefit of his or
her heirs, next of kin, executors, administrators and legal
representatives.
E. The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer,
employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any
loss, liability or expense, whether or not the Corporation would
have the power to indemnify such person against such loss,
liability or expense under the Utah General Corporation Law.
F. The Corporation shall not be obligated to
reimburse the amount of any settlement unless it has agreed to
such settlement. If any person shall unreasonably fail to enter
into a settlement of any action, suit or proceeding within the
scope of Section A above, offered or assented to by the opposing
party or parties and which is acceptable to the Corporation,
then, notwithstanding any other provision of this Article
ELEVENTH, the indemnification obligation of the Corporation in
connection with such action, suit or proceeding shall be limited
to the total of the amount at which settlement could have been
made and the expenses incurred by such person prior to the time
the settlement could reasonably have been effected.
G. The Corporation may, to the extent authorized
from time to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses to any
employee or agent of the Corporation or to any director, officer,
employee or agent of any of its subsidiaries to the fullest
extent of the provisions of this Article ELVENTH subject to the
imposition of any conditions or limitations as the Board of
Directors of the Corporation may deem necessary or appropriate.
TWELFTH: In the event of a conflict between the terms of
these Amended and Restated Articles of Incorporation and the By-
Laws of the Corporation, the terms and provisions of these
Amended and Restated Articles of Incorporation shall govern.
THREE: The foregoing amendment and restatement of the
Articles of Incorporation has been approved by the Board of
Directors of the Corporation on December 29, 1997.
FOUR: The foregoing amendment and restatement was approved
by the holders of the requisite number of shares of the
Corporation in accordance the Utah Revised Business Corporation
Act on December 22, 1997. The total number of outstanding shares
entitled to vote with respect to the foregoing amendment and
restatement of the Articles of Incorporation was 99,371,085
shares of Common Stock. The number of shares voting in favor of
the foregoing amendment and restatement of the Articles of
Incorporation was 84,069,421, which equaled or exceeded the vote
required, such required vote being a majority of the outstanding
shares of Common Stock.
WE, THE UNDERSIGNED, being the members of the Board of
Directors of the Corporation, for the purpose of adopting these
Amended and Restated Articles of Incorporation under the laws of
the State of Utah do make, file and record these Amended and
Restated Articles of Incorporation, do certify that the facts
herein stated are true, and, accordingly, have hereto set our
hand and seal this 29th day of December, 1997.
(SEAL)
By: Sandra S. Sawyer
Name: SANDRA S. SAWYER
Title: Director, President
By: Vincent van den Brink
Name: VINCENT VAN DEN BRINK
Title: Director, Secretary, Treasurer
By: Rita Thomas
Name: RITA THOMAS
Title: Director
[CAPTION]
EXHIBIT 3.5
BY-LAWS OF
TEAL EYE, INC.
ARTICLE I
OFFICES
Section 1. The registered office shall be located in Aurora,
Utah.
Section 2. The corporation may also have offices at such
other places both within and without the state of Utah as the
board of directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held in the state of California at such place
as may be fixed from time to time by the board of directors.
Section 2. Annual meetings of shareholders shall be held on the
fourth Friday in the month of March if not a legal holiday, and
if the fourth Friday is a legal holiday, then on the following
Friday, at 10:00 A.M., at which the shareholders shall elect by a
plurality vote a board of directors, and transact such other
business as may be properly brought before the meeting. Section
3. Written or printed notice of the annual meeting stating the
place, day and hour of the meeting shall be delivered not less
than ten nor more than fifty days before the date of the meeting,
either personally or by mail, by or at the direction of the
president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such
meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any
purpose other than the election of directors may be held at such
time and place within or without the state of Utah as shall be
stated in the notice of meeting or in a duly executed waiver of
notice thereof.
Section 2. Special meetings of he shareholders, for
any purpose or purposes may be called by the chairman of the
board or the president and shall be called by the president or
secretary at the request in writing of a majority of the board of
directors, or at the request in writing of shareholders owning
one-tenth of all the outstanding shares of the corporation. Such
request shall state the purpose or purposes of the proposed
meeting. Business transacted at any special meeting of
shareholders shall be 1imited to the purposes stated in the
notice.
Section 3. Written or printed notice of a special
meeting stating the place, day and hour of the meeting and the
purpose of purposes for which the meeting is called, shall be
delivered not less than ten nor more than fifty days before the
date of the meeting, either personally or by mail, by or at the
direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record
entitled to vote at such meeting,
Section 4. The business transacted at any special
meeting of shareholders shall be limited to the purposes stated
in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of
stock issued and outstanding and entitled to vote, represented in
person or by proxy, shall constitute a quorum at all meetings of
the shareholders for the transaction of business except as
otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders
present in person or represented by proxy shall have the power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall
be present or represented any business may be transacted which
might have been transacted at the meeting as originally notified.
Section 2. If a quorum is present the affirmative vote
of a majority of the shares of stock represented at the meeting
shall be the act of the shareholders unless the vote of a greater
number of shares of stock is required by law or the articles of
incorporation.
Section 3. Each outstanding share of stock, having
voting power shall be entitled to one vote on each matter
submitted to a vote at a meeting of shareholders. A shareholder
may vote either in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a
meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect
to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be not less
than five nor more than 7. Directors need not be residents of
the state of Utah nor shareholders of the corporation. The
directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each
director elected shall serve until the next succeeding annual
meeting and until his successor shall have been elected and
qualified.
Section 2. Vacancies and newly created directorships
resulting from any increase in the number of directors may be
filled by a majority of the directors then in office, though less
than a quorum, and the directors so chosen shall hold office
until the next annual election and until their successors are
duly elected and shall qualify.
Section 3. The business affairs of the corporation shall
be managed by its board of directors which may exercise all such
powers of the corporation and do all such lawful acts and things
as are not by statute or by the articles of incorporation or by
these by-laws directed or required to be exercised or done by the
shareholders.
Section 4. The directors may keep the books of the
corporation, except such as are required by law to be kept within
one state, outside the state of Utah, at such place or places as
they may from time to time determine.
Section 5. The board of directors, by the affirmative
vote of a majority of the directors then in office, and
irrespective of any personal interest of any of its members,
shall have the authority to establish reasonable compensation of
all directors for services to the corporation as directors,
officers or otherwise.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular
or special, may be held either within or without the state of
Utah.
Section 2. The first meeting of each newly elected
board of directors shall be held at such time and place as shall
be fixed by the vote of the shareholders at the annual meeting
and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting,
provided a quorum shall be present, or it may convene at such
place and time as shall be fixed by the consent in writing of all
the directors.
Section 3. Regular meetings of the board of directors
may be held upon such notice, or without notice, and at such time
and at such place as shall from time to time be determined by the
board.
Section 4. Special meetings of the board of directors
may be called by the president on five days notice to each
director, either personally or by mail or by telegram; special
meetings shall be called by the president or secretary in like
manner and on like notice on the written request of two
directors.
Section 5. Attendance of a director at any meeting
shall constitute a waiver of notice of such meeting, except where
a director attends for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice
of such meeting.
Section 6. A majority of the directors shall
constitute a quorum for the transaction of business unless a
greater number is required by law or by the articles of
incorporation. The act of a majority of the directors present at
any meeting at which a quorum is present shall be the act of the
board of directors, unless the act of a greater number is
required by statute or by the articles of incorporation. If a
quorum shall not be present at any meeting of directors, the
directors present may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present.
Section 7. Any action required or permitted to be taken
at a meeting of the directors may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be
signed by all of the directors entitled to vote with respect to
the subject matter thereof.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted
by a majority of the number of directors fixed by the by-laws or
otherwise, may designate two or more directors to constitute an
executive committee which, to the extent provided in such
resolution, shall have and exercise all of the authority of the
board of directors in the management of the corporation, except
as otherwise required by law. Vacancies in the membership of the
committee shall be filled by the board of directors, The
executive committee shall keep regular minutes of its proceedings
and report the same to the board when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the articles of incorporation or of these bylaws, notice is
required to be given to any director or shareholder, it shall not
be construed to mean personal notice, but such notice may be
given in writing, by mail, addressed to such director or
shareholder, at his or her address as it appears on the records
of the corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also
be given by telegram.
Section 2. Whenever any notice whatever is required to
be given under the provisions of the statutes or under the
provisions of the articles of incorporation or these by-laws, a
waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be
chosen by the board of directors and shall be a president, a vice
president, a secretary, and a treasurer. The board of directors
may also choose additional vice-presidents, and one or more
assistant secretaries and assistant treasurers.
Section 2. The board of directors at its first meeting
after each annual meeting of shareholders shall choose a
president, one or more vice-presidents, a secretary and a
treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and
perform such duties as shall be determined form time to time by
the board of directors.
Section 4. The salaries of all officers and agents of
the corporation shall be fixed by the board of directors,
Section 5. The officers of the corporation shall hold
office until their successors are chosen and qualify. Any officer
elected or appointed by the board of directors may be removed at
any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief
executive officer of the corporation, shall preside at all
meetings of shareholders and the board of directors, shall have
general and active management of the business of the corporation
and shall see that all orders and resolutions of the board of
directors are carried into effect,
Section 7. The president 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.
THE VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the
board of directors, shall in the absence or disability of the
president, perform the duties and exercise the powers of the
president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of
the board of directors and all meetings of the shareholders and
record all the proceedings of the meetings of the corporation and
of the board of directors in a book to be kept for that purpose
and shall perform 1 ike duties for the standing committees when
required. The secretary shall give, or cause to be given, notice
of all meetings of the shareholders and special meetings of the
board of directors, and shall perform such other duties as may be
prescribed by the board of directors or president, under whose
supervision he or she shall be. The secretary shall have custody
of the corporate seal and he or she, or an assistant secretary,
shall have the authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his or
her signature or by the signature of such assistant secretary.
The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the
affixing of his or her signature.
Section 10. The assistant secretary, or if there be
more than one, the assistant secretaries in the order determined
by the board of directors, shall in the absence or disability of
the secretary perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such
depositories as may be designated by the board of directors.
Section 12. The treasurer shall disburse the funds of the
corporation as may be ordered by the board of directors, taking
proper vouchers for such disbursements, and shall render to the
president and the board of directors, at its regular meetings, or
when the board of directors so requires, an account of all his or
her transactions as treasurer and of the financial condition of
the corporation.
Section 13. If required by the board of
directors, the treasurer shall give the corporation a bond in
such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful
performance of the duties of his or her office and for the
restoration to the corporation, in case of death, resignation,
retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his or her
possession or under his or her control belonging to the
corporation.
Section 14. The assistant treasurer or, it there shall be
more than one, the assistant treasurers in the order determined
by the board of directors, shall in the absence or disability of
the treasurer, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
ARTICLE X
CERTIFICATES AND SHARES
Section 1. The shares of the corporation shall be
represented by certificates signed by the president or a vice-
president and the secretary or an assistant secretary of the
corporation, and may be sealed with the seal of the corporation
or a facsimile thereof.
When the corporation is authorized to issue shares of more
than one class there shall be set forth upon the face or back of
the certificate, or the certificate shall have a statement that
the corporation will furnish to any shareholder upon request and
without charge, a full statement of the designation, preferences,
limitations, and relative rights of the shares of each class
authorized to be issued and, if the corporation is authorized to
issue any preferred or special class in series, the variations in
the relative rights and preferences between the shares of each
such series so far as the same have been fixed and determined and
the authority of the board of directors to fix and determine the
rel at ive rights and preferences of subsequent series.
Section 2. The signatures of the officers of the
corporation upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent, or registered
by a registrar, other than the corporation itself or an employee
of the corporation. In case 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.
LOST CERTIFICATES
Section 3. The board of directors may direct a new
certificate to be issued in place of any certificate previously
issued by the corporation alleged to have been lost or destroyed.
When authorizing such issue of a new certificate, the board of
directors in its discretion and as a condition precedent to the
issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems
adequate, to protect the corporation from any claim that may be
made against it with respect to any such certificate alleged to
have been lost or destroyed.
TRANSFER OF SHARES
Section 4. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate representing
shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto, and
the old certificate cancelled and the transaction recorded upon
the books of the corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders,
or any adjournment thereof or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for
any other proper purpose, the board of directors may provide that
the stock transfer books shall be closed for a stated period but
not to exceed, in any case, fifty days. If the stock transfer
books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders,
such books shall be closed for at least ten days immediately
preceding such meeting. In lieu of closing the stock transfer
books, the board of directors may fix in advance a date as the
record date for any such determination of shareholders, such date
in any case to be not more than fifty days and, in case of a
meeting of shareholders, not less than ten days prior to the date
on which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or
the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be
bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or
not its shall have express or other notice thereof, except as
otherwise provided by the laws of Utah.
LIST OF SHAREHOLDERS
Section 7, The officer or agent having charge of the
transfer books for shares shall make, at least ten days before
each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, arranged in alphabetical order,
with the address of each and the number of shares held by each,
which list, for a period of ten days prior to such meeting, shall
be kept on file at the registered office of the corporation and
shall be subject to inspection by any shareholder at any time
during usual business hours. The list shall also be produced and
kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole
time of the meeting. The original share ledger or transfer book,
or a duplicate of thereof, shall be prima facie evidence as to
who are the shareholders entitled to examine such list or share
ledger or transfer book or to vote at any meeting of the
shareholders.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the Articles
of Incorporation relating thereto, if any, dividends may be
declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in
property or in shares of the capital stock, subject to any
provisions of the articles of incorporation.
Section 2, Before payment of any dividend, there may be
set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to time, in
their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests
of the corporation, and the directors may modify or abolish any
reserve in the manner it was created.
CHECKS
Section 3. All checks or demands for money and notes of
the corporation shall be signed by such officer or officers or
such other person or persons as the board or directors may from
time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed
thereon, the name of the corporation, the year of its
organization and the words "Corporate Seal, Utah". The seal may
be used by causing it or a facsimile thereof to be impressed or
affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or
repealed or new by-laws may be adopted by the affirmative vote of
a majority of the board of directors at any regular or special
meeting of board.
No by-law shall be adopted by the directors which shall
require more than a majority of the voting shares for a quorum at
a meeting of shareholders, or more than a majority of the votes
cast to constitute action by the shareholders, except where
higher percentages are required by law or by the articles of
incorporation. The shareholders shall have the right to change
or repeal any by-laws adopted by the directors.
Section 2. These by-laws may be altered, amended or
repealed or new by-laws may be adopted at any regular or special
meeting of shareholders at which a quorum is present or
represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed alteration,
amendment or repeal be contained in the notice of such meeting.
[CAPTION]
EXHIBIT 27
[TYPE]EX-27
[DESCRIPTION]FINANCIAL DATA SCHEDULE
[ARTICLE]5
[MULTIPLIER]1
PERIOD-TYPE> 12-MOS 6-MOS
[FISCAL-YEAR-END] NOV-30-1999 NOV-30-1999
[PERIOD-START] DEC-01-1998 DEC-01-1999
[PERIOD-END] NOV-30-1999 MAY-31-2000
[CASH] 0 0
[SECURITIES] 0 0
[RECEIVABLES] 0 0
[ALLOWANCES] 0 0
[INVENTORY] 0 0
[CURRENT-ASSETS] 0 0
[PP&E] 0 0
[DEPRECIATION] 0 0
[TOTAL-ASSETS] 0 0
[CURRENT-LIABILITIES] 1137 1137
[BONDS] 0 0
[PREFERRED-MANDATORY] 0 0
[PREFERRED] 0 0
[COMMON] 10,093 10,093
[OTHER-SE] 0 0
[TOTAL-LIABILITY-AND-EQUITY] 0 0
[SALES] 0 0
[TOTAL-REVENUES] 0 0
[CGS] 0 0
[TOTAL-COSTS] 0 0
[OTHER-EXPENSES] 0 0
[LOSS-PROVISION] 0 0
[INTEREST-EXPENSE] 0 0
[INCOME-PRETAX] 0 0
[INCOME-TAX] 0 0
[INCOME-CONTINUING] 0 0
[DISCONTINUED] 0 0
[EXTRAORDINARY] 0 0
[CHANGES] 0 0
[NET-INCOME] 0 0
[EPS-BASIC] (.00) (.00)
[EPS-DILUTED] (.00) (.00)
