REGISTRATION NO._______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
HARLEQUIN INVESTMENTS, INC.
(Exact name of small business issuer in its charter)
Colorado 5499 98-0219220
(State or other jurisdiction of (primary standard (I.R.S. Employer
incorporation or organization) industrial code) Identification Number)
HARLEQUIN INVESTMENTS, INC.
404 Scott Point Drive
Salt Spring Island, British Columbia V8K 2R2, CANADA
(250) 537-5732
(Address and telephone number of principal executive offices)
Agent for Service: With a Copy to:
Inge L. E. Kerster, President Arthur J. Frost
Harlequin Investments, Inc. Arthur J. Frost Ltd.
404 Scott Point Drive 7549 Heatherbrae Drive
Salt Spring Island, BC V8K 2R2, CANADA Phoenix, Arizona 85033
(250) 537-5732 (623) 849-2050
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
If this Form is filed to register additional securities for an Offering
pursuant to Rule 462(b) under the Securities Act, check the following box
and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same Offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act Registration Statement number of the earlier effective Registration
Statement for the same Offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Act Registration Statement number of the earlier effective Registration
Statement for the same Offering. [_]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount maximum maximum Amount of
Title of each class to be Offering aggregate registration
of Securities to be Registered Price Offering fee
Registered per unit price
__________________________________________________________________________
Class A Common Stock 1000000 .01 10000.00 2.80
________________________________________________________________________
The registration hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a) may determine.
SUBJECT TO COMPLETION [*****, 2000]
PROSPECTUS
*****, 2000
HARLEQUIN INVESTMENTS, INC.
404 Scott Point Drive
Salt Spring Island, BC V8K 2R2 CANADA
(250) 537-5732
1,000,000 Shares of Common Stock
This is the initial public Offering of common stock of Harlequin
Investments, Inc. and no public market currently exists for shares of our
common stock. The initial public Offering price is $0.01 per share of
common stock and was arbitrarily determined. The Offering is on a best-
efforts--no minimum basis. There is no minimum purchase requirement and no
arrangement to place funds in an escrow, trust, or similar account. We
anticipate that the Offering will close within 30 days of the date of
initial effectiveness.
We will amend and complete the information in this Prospectus. The
information in this Prospectus is not complete and may be changed. We may
not sell these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
This investment involves a high degree of risk.
See "Risk Factors" beginning on Page 2.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon
the adequacy or accuracy of this Prospectus. Any representation to the
contrary is a criminal offense.
TABLE OF CONTENTS
PART I--PROSPECTUS
PROSPECTUS SUMMARY..................................... 1
RISK FACTORS........................................... 2
USE OF PROCEEDS........................................ 3
DETERMINATION OF OFFERING PRICE........................ 3
SELLING SECURITY HOLDERS............................... 3
PLAN OF DISTRIBUTION................................... 3
LEGAL PROCEEDINGS...................................... 4
DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS.......................... 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.................................. 4
DESCRIPTION OF SECURITIES.............................. 5
INTEREST OF NAMED EXPERTS AND COUNSEL.................. 5
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES............................................ 5
DESCRIPTION OF BUSINESS................................ 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION......................................14
DESCRIPTION OF PROPERTY................................16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.........16
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS................................................16
EXECUTIVE COMPENSATION.................................16
FINANCIAL STATEMENTS..................................F-1
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE............................................F-7
SUMMARY
Harlequin Investments, Inc. (Harlequin) is a corporation formed under the
laws of the State of Colorado, on January 19th,2000, whose principal
executive offices are located in Salt Spring Island, British Columbia,
Canada.
Harlequin Investments, Inc. expects to use the net proceeds for
organizational purposes and to determine the feasibility of buying, selling and
brokering antiques and collectibles via the Internet. Should the plan prove to
be feasible, we intend to market sports antiques, collectibles and memorabilia
on a business to business, business to individual and individual to individual
basis. We have an established website name, www.thesportscollections.com and
if our business plan proves to be feasible we will proceed to build the
website, develop a further business plan and change the name of Harlequin
Investments, Inc. Thesportscollections.com.
Name, Address, and Telephone Number of Registrant
Harlequin Investments, Inc.
404 Scott Point Drive
Salt Spring Island, British Columbia V8K 2R2, CANADA
(250) 537-5732
(250) 538-0036 Fax
The Offering
Price per share Offered...............................0.01
Common Stock Offered by Harlequin Investments, Inc. 1,000,000 shares
Common Stock Outstanding Prior to Offering............2,500,000 shares
Common Stock Outstanding After Offering*..............3,000,000 shares
* Assumes sale of all shares offered
Risk Factors
You should carefully consider the following risk factors and all other
information contained in this Prospectus before purchasing our common
stock. Investing in Harlequin's common stock involves a high degree of
risk. Any of the following risks could adversely affect our business,
financial condition and results of operations and could result in a
complete loss of your investment.
Risks Related to the Business of Harlequin Investments, Inc.
Our success depends on a number of things that should be considered by
prospective investors. Harlequin Investments, Inc. is a new company and we
have no history of earnings or profit and there is no assurance that it
will operate profitably in the future. We cannot assure you that we will
provide a return on investment in the future.
Harlequin Investments, Inc. is in its earliest stages of development and
may never become profitable.
We are in the earliest stages of development and could fail before
implementing our business plan. Harlequin must be regarded as a "start up"
venture that will incur losses for the foreseeable future. We have no
operating history or revenues from operations, and face unforeseen costs,
expenses, problems and difficulties that could easily prevent us from ever
becoming profitable.
If our business plan proves not to be feasible, we may be considered a
blank check company which would restrict the re-sales of our stock.
We will be raising a limited amount of capital if and when this Offering is
fully subscribed to. The $10,000 received will be spent to determine the
feasibility of creating an online website that would provide buying,
selling and trading of antiques and collectibles. Should the results of
our projected study be negative we do not have an alternative business
plan, we might be subject to Rule 419 of the Securities Act and it is
entirely possible that we would be considered a "blank check company". If
Harlequin is considered to be a blank check company all monies raised and
securities issued would be required to be placed in escrow and the
securities could not be transferred.
Many states have passed laws, rules and regulations concerning blank check
companies and as a result, we could have a great deal of trouble raising
additional capital and have a very limited public market. Consider these
facts carefully before you invest.
Competition may severely affect our growth and financial stability.
If our study results in a positive recommendation and we are able to raise
the additional capital required to implement our full business plan, we
will still face a very stiff competition. The electronic commerce industry is
new, ever changing and very competitive. Harlequin Investments, Inc. expects
competition to intensify in the future. If we fail to attract and retain a
large customer base and our competitors establish a larger and better market
position it could result in a decline in revenue, if any, and of market share,
if any. It is easy to get into business on the Internet and new competitors
can launch sites at a relatively low cost. In addition, the Internet market for
antiques and collectibles is very competitive and no clear leader has been
established. We will compete with a variety of other companies, including
traditional retail antique and collectibles stores and the online retail
websites of some traditional retailers.
Dealers may not want to pay for our services as brokers and as a clearing
house for sales to other dealers.
If we do find it feasible to start our business we will be dependent on
attracting retail buyers who are looking for a specific item or items and
locating that item or items from dealers and individuals all over the
world. We will charge a commission to the dealer. The dealers may not
want to pay us a commission. If this happens, a large part of our business
plan would be non-operable resulting in less sales and profits , if any, and a
negative affect on our stock..
Conflicts of Interest May Arise Between Companies Owned by the Sole Officer and
Director.
Inge L. E. Kerster, the majority shareholder and sole officer and director
of Harlequin Investments, Inc., is also the majority shareholder and sole
officer and director of Xiang, Inc. and Belfleur Inc. Both of these
companies plan to investigate the feasibility of developing
Anitquecarcollections.com and antiquescollections.com, respectively. It is
possible that Ms. Kerster could devote more time and resources to any of the
three companies that is more likely to succeed.
Dependence on Key Personnel May Affect and/or Cause Harm to the Company.
Our future performance will be substantially dependent on the services of
senior management and other key personnel. The loss of the services of
any of our executives or other key employees, if and when we have them,
could harm our business. Our new business, should we decide it to be
feasible, will be dependent on attracting and retaining key employees. Such
personnel are in great demand by other online companies. We could well find
ourselves not only competing in the market place but also for quality, reliable
employees.
Dependence on One Individual Who Will Not Devote Her Full Time and
Attention to Harlequin Investments, Inc.'s Affairs Could Result in Delays
or Business Failure.
Inge Kerster is serving as our sole officer and director. Loss of her
services may hamper our ability to implement the business plan, and could
cause the stock of Harlequin Investments, Inc. to be worthless. We will be
heavily dependent upon Ms. Kerster's entrepreneurial skills and experience to
implement our business plan. Her inability to devote full time and attention
to the affairs of Harlequin Investments, Inc. could result in delay(s) in
getting into business, if we find the plan is feasible.
Harlequin does not have an employment agreement with Ms. Kerster and there
is no assurance that she will continue to manage its affairs in the future. We
could lose the services of Ms. Kerster, or she could decide to join a
competitor or otherwise compete with us directly or indirectly. This would
have a negative affect on our business and could cause the price of the stock
to be worthless. The services of Ms. Kerster would be difficult to replace.
Because investors will not necessarily be able to evaluate the merits of the
business decisions of Harlequin, they should carefully and critically assess
Ms. Kerster's background.
Dependence on One Individual Who Has No Experience in the Marketing and
Brokering of Antiques and Collectibles Could Result in Delays or Business
Failure.
Ms. Kerster has no experience in the sports collectibles and memorabilia
business on or off the Internet. Ms. Kerster is not an antique or
collectibles dealer by trade. We will likely need to rely on others who
understand that business. Because of this lack of experience Harlequin may
overestimate the marketability of the products and may underestimate the costs
and difficulties of selling or brokering the products. These
difficulties could prevent us from accurately determining the feasibility
of the business plan, limiting our profitability, if any, and decreasing
the value of our stock.
Dependence on Internet and computer technology may lead to interruptions or
delays in service to our customers.
The Internet is subject to rapidly changing technology, industry standards,
users' needs and frequent new service introductions. Our future success, if any
will depend on our use of leading technologies to provide seamless access for
our customers to our website. There can be no assurance that Harlequin will be
successful in adjusting to new technologies, developing new services or
improving existing services.
Our success will also depend on growth and expansion of the Internet to
expose our products and services to more and more potential clients. The
Internet may not be able to support the demands placed on it by continued
growth. The growth in volume of Internet traffic could cause shortages in
Internet addresses and overworked search engines. Such problems could have
negative affects on our operations and business.
The Company's website operations may be exposed to computer viruses,
hacking or similar disruptive problems caused by users, other Internet
sites, interconnecting networks and the various telephone networks.
Computer viruses or problems caused by third parties could lead to
interruptions, delays or cessation in service.
The Internet may not prove to be a viable long-term commercial marketplace
for a number of reasons. These could include inadequate or delayed
development of technology and performance improvements. The success of
Harlequin will depend, in large part, upon third parties maintaining the
facilities to provide a reliable network backbone with the speed, data
capacity, security and hardware necessary for reliable Internet access and
services.
Dependence on use of the Internet for commerce.
The business of selling goods over the Internet, particularly through
personal trading, is new and constantly changing. Our future revenues and
profits, if any, will be dependent upon the widespread acceptance of the
Internet and online services as a way of shopping by consumers and a way to
locate needed inventory by dealers. Rapid growth in the use of and
interest in the Internet and online services is very recent. This
acceptance and use may not continue. Even if the Internet is accepted
concerns about fraud, privacy and other problems may mean that a large
enough base of consumers will not adopt the Internet as a way to buy or
sell. In particular, our website will require users to make publicly
available their e-mail addresses and other personal information that some
people will not be willing to provide.
These concerns may increase as additional publicity over privacy issues on
the Internet increases. Market acceptance for our products and services
over the Internet is very uncertain. Even if use of the Internet and
electronic commerce continues to increase, the rate of growth, if any, of
the sports collectibles and memorabilia market could be less than the
online market for other products. Our rate of revenue growth and prospects for
profitability could therefore be less than that of other online merchants.
Our revenues, if any, will be dependent on our ability to manage growth.
In our feasibility study we must develop a plan or strategy to manage
potential growth. If we decide to go ahead with our business plan we could
well experience a period of heavy expansion in all areas of our business. We
need to have a plan to handle this potential growth in our customer base and
market. This expansion will place a significant strain on our management,
operational and financial resources. The areas that are put under severe
strain by our rate of growth would include the following:
The Website. We must constantly add new hardware, update software and add
new engineering expertise to handle the increased use of our website. This
may reduce our margins, if any. If we are unable to increase the capacity
of our systems at the pace of the demand for this capacity, our website may
become unstable and may cease to operate until the problem is dealt with. We
may experience downtime that could harm our business and anger users of our
website and reduce future revenues, if any.
Customer Support. We must expand our customer support operations to
accommodate the increased number of users and transactions. If we are
unable to hire and successfully train sufficient employees or contractors
in this area, users of our website may have negative experiences and
current and future revenues could suffer.
Customer Accounts. Our revenues are dependent on prompt and accurate
payment processes. If we are unable to enlarge our processing abilities to
accommodate the increasing number of transactions, our ability to collect
revenue will be harmed.
Inability to expand the company's systems may limit growth.
Another crucial answer that we will be looking for in the feasibility study is
what sort of volume is necessary to:
Pay all projected expenses and arrive at a "break-even" point;
Create enough profit in order to provide a acceptable return on the
stockholders' investment. At this point, without confirmation by the study, it
seems likely that we will have to generate a high volume of traffic and
transactions. The satisfactory performance, reliability and availability of
our website and processing systems will be critical to our ability to attract
and retain large numbers of users. Our revenues depend on the number of items
listed by users, the volume of user transactions and our success in locating
acceptable merchandise for our dealer-to-dealer service. If the volume of
traffic on our website or the number of items being listed for sale increases,
it may be necessary for us to expand and upgrade our technology, transaction
processing systems and network.
We may be unable to accurately project the rate or timing of increases, if
any, expand and upgrade our systems and infrastructure to accommodate any
increases. We plan to use systems developed by outside concerns to build,
develop and operate our service and for transaction processing, including
billing and collections processing. We will have to continually have these
specialist companies improve these systems in order to accommodate the
level of use of our website.
In addition, we may add new features and functionality to our services that
would result in the need to develop or license additional technologies. Our
inability to quickly add additional software and hardware or to upgrade our
technology, transaction processing systems or network infrastructure to handle
increased traffic or transaction volume could have adverse consequences. These
consequences could include system disruptions, slower response times, lower
levels of customer service and delays in reporting accurate financial
information.
Inability to Protect or Enforce Our Intellectual Property Rights Could Do
Serious Damage.
If our business plan proves to be feasible we intend to protect our
proprietary rights in products and services. While we may enter into
confidentiality and non-competition agreements with our employees and
contractors, these arrangements may or may not prevent someone from
developing a similar Internet business. We will register our trademarks
and service marks in the U.S. and internationally. Effective trademark,
service mark, copyright and trade secret protection may not be available in
every country in which our online services are made available. In fact, one
large question to be answered in our feasibility study is whether or not we
have any specific intellectual property to protect other than
www.thesportscollections.com., our domain name. You should carefully
consider that this Offering is to determine the feasibility of Harlequin's
proposed antique and collectibles business. Until we have some answers any
risk considered could be much greater.
Fraudulent Activities on Our Website May Cause Harm to the Company.
Our future success will depend largely upon sellers reliably delivering and
accurately representing their listed goods and buyers paying the agreed
purchase price. We anticipate that we will receive notice from users who did
not receive the goods that they purchased or if they were received the
condition of the goods was not as represented. While we can suspend the
accounts of users who fail to fulfill their obligations to other users, we do
not have the ability to guarantee that any products will be delivered as
represented. Our leverage with sellers is the refusal of thesportscollections.
com to do further business with the offending party.
In our listing agreement, we will require that all sold goods by a dealer
will have a money-back guarantee as to being "as advertised". Getting an
enforceable guarantee from an individual may be more difficult. Negative
publicity generated due to fraudulent or deceptive representations could
damage our reputation and affect the value of our domain name. We may
receive demands from users for reimbursement or threats of legal action.
This could be costly to deal with, divert management attention and
eliminate profits, if any.
Our liability under these conditions is just one of the items we must
examine in our feasibility study. If we find that we cannot protect
ourselves through guarantees by sellers and proper disclaimers as to
liability, we definitely will be unable to proceed and begin to get into
business.
If Our Study Indicates That the Proposed Business is Not Feasible, the
Alternatives May Not Suit You.
While management is very optimistic about the prospects of our proposed
business, the feasibility study may indicate otherwise. If this happens
one of several things could happen:
All funds would be spent by the study and we could be declared insolvent
and be forced into bankruptcy.
We could simply cease operations and become dormant.
We could seek additional funding from our officers, directors and
shareholders.
We could look for someone to buy the corporation, settle the debts, if any, and
take over from present management.
We could look for another concern that wants access to public markets,
combine with them and seek to salvage the shareholders' investment.
Inge Kerster, our only officer and director will be by far the largest
shareholder and could effectively elect to take any one of the above
options, or do nothing at all. There is a definite risk that whatever she
chooses to do, you may not agree. Please consider this carefully before
you decide to invest.
If Ms. Kerster should decide to acquire a new asset or enter into a new
business combination, this would likely include the issuance of a
significant amount of Harlequin's common stock. If this happens, it is
likely that a majority of the voting power would be transferred to new
investors. New investors may replace our present management. New
management may decide to go in an entirely new direction and present
stockholders or anyone investing in this Offering would have no say in that
direction. In such case, an investor could lose the entire investment on a
business decision it did not get to evaluate at the time of investing.
Our Inability to Rapidly Hire, Train and Manage New Employees May Limit Our
Sales Volume and Profits, If Any.
If management decides that the projected business is feasible we must be
able to hire, train and manage new employees at a rapid rate. If we are
unsuccessful in hiring, training and integrating new employees, our
business could be affected. Assembling a good staff is always subject to
errors in the hiring process. We will be competing with other concerns on
and off the Internet that are looking for good people. We may be unable to
hire, train, retain and manage required personnel.
Our Business is Dependent on the Development and Maintenance of our Web
Infrastructure.
Our success, should we decide to go ahead with the business plan, will
depend largely on the development and maintenance of the Web
infrastructure. This includes creation and maintenance of a reliable
network backbone with the necessary speed, data capacity and security. We
will also require timely development of complementary products such as high
speed modems for providing reliable Web access and services. The cost of
keeping up with new technical developments may in itself eliminate any chance
for profit and cause a failure of the business.
Financial risks
Harlequin Investments, Inc. Has No Operating History and Financial Results Are
Uncertain.
Harlequin Investments, Inc. is a young company with no history of earnings
or profit and there is no assurance that it will operate profitably in the
future. We face all the risks of a new business. As a result of our
limited operating history, it is difficult to accurately forecast its
potential revenue should our feasibility study indicate we proceed with our
business plan. There is no meaningful historical financial data upon which to
base planned operating expenses. Revenue and income potential is
unproven and the business model has not yet proven to be feasible. There is no
assurance that Harlequin will provide a return on investment in the
future or even be in business. An investor in our common stock must
consider the challenges, risks and uncertainties encountered by early-stage
companies using new and unproven business models in new and rapidly
evolving markets. These challenges include our ability to:
execute on Harlequin Investments, Inc.'s business model;
create brand recognition;
manage growth in Harlequin Investments, Inc.'s operations;
create a customer base cost-effectively;
retain customers;
access additional capital when required;
attract and retain key personnel.
Harlequin Investments, Inc. cannot be certain that its business model will
prove to be successful if we do have indications that it may be feasible.
We Will Definitely Need Additional Financing Which May Not Be Available and
That Will Likely Dilute Present Ownership Interests.
The ultimate success of Harlequin and its proposed website,
www.thesportscollections.com will depend on our ability to raise additional
capital. No commitments to provide additional funds have been made by
management or other shareholders. We have not investigated the
availability, source or terms of additional financing. When additional
capital is needed, there is no assurance that funds will be available from
any source or, if available, that they can be obtained on acceptable terms. If
not available our operations would be severely limited, and we would be unable
to implement our business plan, if it is indicated that it could be feasible.
Our website is not constructed or developed and is not
operating.
Risks related to the securities market
Our Common Stock Has No Prior Market and Prices May Decline After the
Offering.
There is no public market for the common stock of Harlequin Investments,
Inc. and no assurance can be given that a market will develop or that any
shareholder will be able to liquidate its investment without a long delay,
if at all. The trading market price of Harlequin Investments, Inc.'s
common stock may decline below the Offering price or disappear altogether.
If a market should develop, the price may be highly volatile. Factors such as
those discussed in this "Risk Factors" section may have an impact on the market
price of our securities.
Owing to the low price of the securities, many brokerage firms may not be
willing to deal in the securities. Even if a purchaser finds a
broker/dealer willing to deal in the common stock of Harlequin Investments,
Inc. the combination of brokerage commissions, state transfer taxes, if any,
and other selling costs may exceed the selling price. Further, most lending
institutions will not permit the use of such securities as collateral for
loans. Thus, a purchaser may be unable to sell or otherwise realize the value
invested in the stock.
Investors May Face Restrictions On the Resale of Harlequin Investments,
Inc. Stock Due to Federal Penny Stock Regulations.
The securities of Harlequin, when and if they become available for trading,
will be subject to the Securities and Exchange Commission rule that imposes
special sales practice requirements upon broker-dealers that sell such
securities to other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in
general terms: a)institutions with assets exceeding $5,000,000;
b)individuals having a net worth in excess of $1,000,000 or having an annual
income that exceeds $200,000 (or that, combined with a spouse's income, exceeds
$300,000).
For transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of purchasers of Harlequin Investments, Inc. securities to
buy or sell in any market that may develop.
The Commission has adopted a number of rules to regulate "penny stocks."
Such rules include Rules 3a51-1, 15g-1, 15g- 2, 15g-3, 15g-4, 15g-5, 15g-6
and 15g-7 under the Securities and Exchange Act of 1934.
Because Harlequin Investments, Inc. securities will constitute "penny
stock" within the meaning of the rules, the rules would apply to its
securities. The rules may further affect the ability of owners of Harlequin
Investments, Inc.'s shares to sell their securities in any market that may
develop for them. There may be a limited market for penny stocks, due to the
regulatory burdens on broker/dealers and the market among dealers may not be
active.
Investors in penny stock often are unable to sell stock back to the dealer
that sold them the stock. The mark-ups or commissions charged by the
broker/dealers could be greater than any profit a seller may make. Because
of large dealer spreads, investors may be unable to sell the stock
immediately back to the dealer at the same price the dealer sold the stock
to the investor. In some cases the stock may fall quickly in value.
Investors may be unable to reap any profit from any sale of the stock, if
they can sell it at all.
Shareholders should be aware that, according to the Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include:
control of the market for the security by one or a few broker-dealers that
are often related to the promoter or issuer;
manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases;
"boiler room" practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
excessive and undisclosed bid-ask differentials and markups by selling
broker/dealers; and the wholesale dumping of the same securities by promoters
and broker/dealers after prices have been manipulated to a desired level, along
with the inevitable collapse of those prices with consequent investor losses.
Summary of Penny Stock Risks.
1)Harlequin Investments, Inc. stock is a penny stock.
2)Some states will not allow you to sell to their citzens.
3)Some broker/dealers will not handle transactions in penny stocks.
4)SEC rules make selling your stock a cumbersome procedure.
5)Penny stock markets can be very volatile with large swings up or down.
Investors May Face Restrictions on the Resale of Harlequin Investments,
Inc. Stock Due To State Blue Sky Laws.
Because the securities of Harlequin Investments, Inc. have not been
registered for resale under the blue sky laws of any state, the holders of
such shares and those persons desiring to purchase them in any trading
market that may develop in the future should be aware that there may be
state blue sky law restrictions on the ability of investors to sell and on
purchasers to buy these securities. Each state has its own securities laws
often called "blue sky laws", which limit sales of stock to a state's
residents unless the stock is registered in that state or qualifies for an
exemption from registration. These laws also govern the reporting
requirements for broker/dealers and their registered representatives doing
business directly or indirectly in the state. Before a security is sold in a
state, there must be a registration in place to cover the transaction, and the
representative must be registered in that state, or otherwise be exempt from
registration.
We do not know whether our stock will be registered under the laws of any
state or states. A determination regarding registration will be made by
the broker/dealers, if any, that agree to serve as the market makers for
the stock of Harlequin Investments, Inc.
Accordingly, investors should consider the secondary market for Harlequin
Investments, Inc.'s securities to be a limited one. Investors may be
unable to resell their stock, or may be unable to resell it without the
significant expense of state registration or qualification.
Use of Proceeds
The net proceeds to Harlequin Investments, Inc. from the sale of the
1,000,000 shares of common stock offered hereby at an assumed initial
public Offering price of $.01 per share are estimated to be $10,000.
Harlequin expects to use the net proceeds for organizational purposes and
to conduct a search for and retain qualified consultants to assess the
feasibility of the business plan.
While there is no provision for it in the business plan or the proposed
study, we continually evaluate other business opportunities that may be
available to it, whether in the form of assets, acquisitions or business
combinations. Harlequin may use a portion of the proceeds for these
purposes. We are not currently a party to any contracts, letters of
intent, commitments or agreements and are not engaged in negotiations with
respect to any acquisitions.
Harlequin has not yet determined the amount of net proceeds to be used
specifically for any of the foregoing purposes. Accordingly, management
will have significant flexibility in applying the net proceeds of the
Offering.
Determination of Offering Price
The price of the Units in this Offering was arbitrarily set. The Offering
price is not an indication of and is not based upon the actual value of
Harlequin Investments, Inc. It bears no relationship to the book value,
assets, earnings or any other recognized criteria of value. The Offering
price should not be regarded as an indicator of the future market price of
the securities.
Selling Security Holders
There are no selling security holders.
Plan of Distribution
Harlequin Investments, Inc. will sell a maximum of 1,000,000 shares of its
common stock to the public on a "best efforts" basis. There can be no
assurance that any of these shares will be sold. The gross proceeds will
be $10,000 if all the shares offered are sold. No commissions or other
fees will be paid, directly or indirectly, by Harlequin or any of its
principals to any person or firm in connection with solicitation of sales
of the shares. We intend to apply to have our shares traded on the OTC
bulletin board.
Legal Proceedings
Harlequin Investments, Inc. is not a party to any pending legal proceeding
or litigation and none of its property is the subject of a pending legal
proceeding. Further, the officer and director knows of no legal
proceedings against Harlequin Investments, Inc. or its property
contemplated by any governmental authority.
Directors, Executive Officers, Promoters and Control Persons
The following table sets forth the name, age and position of each director
and executive officer of Harlequin Investments, Inc.:
Name Age Position
Inge L. E. Kerster 54 President, Secretary,
Treasurer, Director
In January, 2000, Ms. Kerster was elected as the sole officer and director
of Harlequin Investments, Inc. by the current shareholders, of whom she is
majority stockholder. She will serve until the first annual meeting of
shareholders and her successor(s) are elected and qualified. Thereafter,
directors will be elected for one-year terms at the annual shareholders'
meeting. Officers will hold their positions at the pleasure of the board
of directors, absent any employment agreement.
Biographical Information
Inge L. E. Kerster. Ms. Kerster became President and majority shareholder
in Harlequin Investments, Inc. on January 20, 2000. Ms. Kerster, is a
business and financial consultant and is President of Sandringham
Investments Limited specializing in the preparation and filing of
documentation for Canadian and other foreign citizens and corporations that
desire to become publicly trading in the United States. Ms. Kerster is
currently serving as an officer and director for several private companies and
companies seeking publicly trading status in the United States.
Ms. Kerster is the sole officer, and director of Xiang, Inc., Harlequin
Investments, Inc.., Nemo Enterprises, Inc., First Corporation, and
Lionheart Investments, Inc. all of which plan to register their securities
under The Securities Act or The Securities and Exchange Act.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of July 31, 2000, the issued and
outstanding common stock of Harlequin Investments, Inc. owned of record or
beneficially by each Executive Officer and Director and by each person who
owned of record, or was known by Harlequin Investments, Inc. to own
beneficially, more than 5% of its common stock, and the shareholdings of
all Executive Officers and Directors as a group. Each person has sole
voting and investment power with respect to the shares shown.
Shares Percentage of
Name Owned Shares Owned
Inge L. E. Kerster 150000 73.17
President, Secretary, Treasurer, and Director
404 Scott Point Drive
Salt Spring Island, BC V8K 2R2 Canada
All Executive Officers and Directors
as a Group (1 Individual).....................150000 73.17
Description of Securities
The following description of the capital stock of Harlequin Investments,
Inc. is a summary of the material terms of its capital stock. This summary
is subject to and qualified in its entirety by the Harlequin Investments,
Inc. Articles of Incorporation and Bylaws, which are included as exhibits
to the Registration Statement of which this Prospectus forms a part, and by
the applicable provisions of Colorado law.
The authorized capital stock of Harlequin Investments, Inc. consists of
110,000,000 shares: 100,000,000 shares of Common Stock having a par value
of $0.001 per share and 10,000,000 shares of Preferred Stock having a par
value of $0.001 per share.
The holders of shares of common stock of Harlequin Investments, Inc. do not
have cumulative voting rights in connection with the election of the Board
of Directors. This means that the holders of more than 50% of the shares
voting can elect all of the directors if they so choose and the holders of
the remaining shares will not be able to elect any directors.
The holders of shares of common stock are entitled to dividends, out of
funds legally available, when and as declared by the Board of Directors.
The Board of Directors has never declared a dividend and does not
anticipate declaring a dividend in the future. Each outstanding share of
common stock entitles the holder thereof to one vote per share on all
matters. The holders of the shares of common stock have no preemptive or
subscription rights. In the event of liquidation, dissolution or winding
up of the affairs of Harlequin Investments, Inc., holders are entitled to
receive, ratably, the net assets of Harlequin Investments, Inc. available
after payment of all creditors.
All of the issued and outstanding shares of common stock are duly
authorized, validly issued, fully paid, and non-assessable. To the extent
that additional shares of Harlequin's common stock are issued, the relative
interests of existing shareholders may be diluted.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
The Articles of Incorporation of Harlequin Investments, Inc., filed
herewith as Exhibit 3.1, provide that it will indemnify its officers and
directors to the full extent permitted by Colorado state law. The Bylaws of
Harlequin Investments, Inc., filed herewith as Exhibit 3.2, provide that it
will indemnify and hold harmless each person who was, is or is threatened
to be made a party to or is otherwise involved in any threatened
proceedings by reason of the fact that he or she is or was a director or
officer of Harlequin Investments, Inc. or is or was serving as a director,
officer, partner, trustee, employee, or agent of another entity, against
all losses, claims, damages, liabilities and expenses actually and
reasonably incurred or suffered in connection with such proceeding.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
TheBookCollections.com pursuant to the forgoing provisions or otherwise,
TheBookCollections.com has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in that Act and is, therefore, unenforceable.
Important Notice
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The words such as "anticipates", "believes", "plans",
"expects", "future", "intends" and similar expressions identify these
forward-looking statements. Harlequin Investments, Inc.'s actual results
could differ materially from those anticipated in these forward-looking
statements as the result of certain factors, including those set forth in
"Risk Factors" and elsewhere in this Prospectus.
Description of Business
General
Harlequin Investments, Inc. was incorporated under the laws of the State of
Colorado on January 19, 2000, and is in its early developmental and
promotional stages. To date, our only activities have been organizational,
raising our initial capital, developing the business plan and establishing
the need for a feasibility study. We have not commenced commercial
operations. We have no full time employees and own no real estate.
Harlequin Investments, Inc. through its website,
www.thesportscollections.com plans to operate a variety of Internet-related
services including:
an online B2B (Business-to-Business), B2C (Business-to-Consumer) and C2C
(Consumer-to-Consumer ) trading service, known as thesportscollections.com;
a service that establishes a clearing house or brokerage service to connect
sports memorabilia and collectibles retailers and wholesalers; and
a listing service for individuals seeking to buy or sell items via our
online Internet service. The Company is committed to pursuing all
commercial opportunities in the online person-to-person, business-to-
consumer and business-to-business trading service areas dealing with sports
antiques, collectibles and memorabilia.
Our business plan initially is to determine the feasibility of selling and
brokering these items and related products to specific markets. Should
Harlequin Investments, Inc. determine that the plan is feasible, it intends
to market sports collectibles and memorabilia and other associated
products to dealers, individuals, museums and other similar types of
customers. Besides buying and selling on our own account, we plan on
operating a central directory and clearing house to bring our customers and
suppliers together, wherever they are located.
As an example, a collector's estate is being liquidated and the executors
desire to expose the deceased's collection(s) to as many potential buyers
as possible. For a small fee our website will list and display all of the
products for sale including color photos and a complete description.
Anyone looking for a single piece or several objects will be able to view
our website and purchase those items there. Purchasers would also pay a
fee. Payment will be done by credit or debit card or by e-check.
Harlequin Investments, Inc. intends, if our feasibility study so indicates,
to develop and market an Internet application that enables sports
collectors to locate and purchase goods directly from dealers and other
specialty concerns or individuals whose items we are able expose to a
world-wide market. For the collectors and dealers involved, the site will
provide a sales outlet for their goods at a reasonable and acceptable
price. We believe that this service will generate a better profit margin,
compared to sales conducted through traditional distribution and wholesale
organizations.
Harlequin Investments, Inc. hopes that its projected feasibility study will
confirm our ability to establish an economic model that will be superior to
traditional marketing models. We provide a transaction service that
eliminates much of the traditional cost of sales for the seller, while
providing better prices for the consumer. The Harlequin projected website
will offer sports collectibles world-wide by generating descriptive web
pages featuring top quality photos of the pieces for sale. The site will
initially focus on the sale and marketing of items offered for sale by
dealers and individuals. We will continuously add new products to our
cataloging system as consumer confidence in Internet commerce and security
grows.
The objective is to create an Internet portal site that functions as a
search engine, a software application that enables the user to locate
information from a database or other archive. We will differ from typical
search engines in that all of the material displayed is merchandise that
can be purchased immediately from the offering party. A portal site is an
Internet site that functions as a starting point for world-wide web
sessions.
An Internet-based, centralized trading place offers the following benefits:
Facilitates buyers and sellers meeting, listing items for sale, exchanging
information, interacting with each other and ultimately buying and selling;
Allows buyers and sellers to trade directly, bypassing traditional
intermediaries and lowering costs for both parties;
Offers buyers global access with a significantly broader selection of goods
to purchase and provides sellers the opportunity to sell their goods
efficiently to a broader base of buyers;
Offers significant convenience, allows trading at all hours and provides
continuous updated information; and Fosters a sense of community through direct
buyer and seller communication, thereby enabling interaction between
individuals with mutual interests.
In addition, the community orientation, ease of direct buyer to seller
communication and efficient access to information on the trading history of
the buyer and seller can help reduce or eliminate the risks of online
trading. We believe there is a extremely good market opportunity existing
for an Internet-based, centralized trading facility that applies the unique
features of the Internet to make personal, world-wide trading easier.
As consumer confidence in Internet technology increases, the Internet is
expected to become the de facto research tool for locating the lowest-
priced source of everyday and specialized goods. We intend to capitalize
on this explosion. If the feasibility study is positive we hope be able to
put the team and the technology in place to successfully create, deploy,
and market an Internet service to provide direct purchasing at excellent
prices to consumers while eliminating many of the marketing costs of
sellers.
Regulation of the Internet.
In general, existing laws and regulations apply to transactions and other
activity on the Internet; however, the precise applicability of these laws
and regulations to the Internet is sometimes
uncertain. The vast majority of such laws were adopted prior to the advent
of the Internet and, as a result, do not deal with the unique issues of the
Internet or electronic commerce. Nevertheless, numerous federal and state
government agencies have already demonstrated significant activity in
promoting consumer protection and enforcing other regulatory and disclosure
statutes on the Internet.
Due to the increasing use of the Internet as a medium for commerce and
communication, it is possible that new laws and regulations may be enacted
with respect to the Internet and electronic commerce covering issues such
as user privacy, freedom of expression, advertising, pricing, content and
quality of products and services, taxation, intellectual property rights
and information security. The adoption of such laws or regulations and the
applicability of existing laws and regulations to the Internet may impair
the growth of Internet use and result in a decline in our sales.
A number of legislative proposals have been made at the federal, state and
local level, and by foreign governments, that would impose additional taxes
on the sale of goods and services over the Internet, and certain states
have taken measures to tax Internet-related activities. Although Congress
recently placed a three-year moratorium on new state and local taxes on
Internet access or on discriminatory taxes on electronic commerce, existing
state or local laws were expressly excepted from this moratorium. Further,
once this moratorium is lifted, some type of federal and/or state taxes may
be imposed upon Internet commerce. Such legislation or other attempts at
regulating commerce over the Internet may substantially impair the growth
of commerce on the Internet and, as a result, adversely affect the
opportunity of Harlequin Investments, Inc. to derive financial benefit from
such activities.
Part of the mandate given to the people or organization that will conduct
our feasibility study, if and when they are hired, will be to attempt to
cut through most of the speculation and arrive at a reasonable forecast as
to what future legislation may be.
E-commerce and the Internet today.
We have assembled some of the available data regarding Internet commerce
that will be a portion of the information that is to be digested in order
to complete our study as to feasibility.
Web Commerce: 1996 $2.6 billion
200 $220 billion
Web Users: 1996 28 million
200 175 million
(Source: Ziff Davis)
Nearly one trillion will be spent on Information Technology (IT) in 2000,
representing about 60 percent of all capital spending compared to just 10%
of all capital spending in 1980.
(Source: NUA)
Nearly half of US Internet users have purchased a product or service
online.
(Source: A. C. Nielsen-May 11, 2000)
Consumers who have used the Internet since 1995 spend an average of $ 388
per transaction while those who have been online for a year only spend an
average of $ 187 per transaction. The equivalent figure for those who have
been using the Internet since 1997 is $ 298.
(Source: National Association of Business Economics)
An estimated 120 million Internet users, or 40 percent of the total number
online, have already made an online purchase, according to a study from the
Angus Reid Group. Over 50 % of all online transactions were made in the
USA. US users made an average of 7 purchases in the three months before
the survey, spending an average of $828. The worldwide average spent by an
individual in the same period was less than $500.
75% of online shoppers in the US and Canada pay for e-commerce purchases by
credit card. Direct bank drafts, bank transfers and cash on delivery are
the other most favored payments methods. 93% of Internet shoppers around
the world said they were "somewhat satisfied" or "extremely satisfied" with
their online shopping experience.
(Source: Angus Reid Group)
Internet advertising revenue more than doubled in 1999, coming to a year-
end total of $ 4.62 billion.
(Source: Internet Advertising Bureau [IAB])
As of March, 2000 there were a world-wide total of 304,360,000 Internet
connections. The breakdown is as follows:
Africa 2,589,000
Asia/Pacific 68,900,000
Europe 83,350,000
Middle East 1,900,000
USA & Canada 136,860,000
South Africa 10,740,000
(Source: Various; Methodology - Compiled by: Nua Internet Surveys)
Financial results from the first quarter of this year show that while
Amazon nearly doubled it's revenue, it sustained bigger losses than during
the same period last year. Despite this, sales were up 95 percent from
USD294 million in 1999 to USD574 million in 2000.
(Source: Reuters)
Global e-commerce will be worth 7.0 trillion dollars by 2004. 50% of global
sales will come from the US.
(Source: Forrester)
Employees.
Harlequin Investments, Inc. is a development stage company and currently
has no employees. We are currently managed by Inge Kerster, our sole
officer and director. We look to Ms. Kerster for her entrepreneurial
skills and talents.
Management plans to use consultants, attorneys and accountants to conduct
the planned feasibility study and does not plan to engage any full-time
employees until the results of that study are properly evaluated. We may
hire employees in the future based on the projected size of the market and
the compensation necessary to retain qualified employees. A portion of any
employee compensation could include the right to acquire stock in Harlequin
Investments, Inc., which would dilute the ownership interest of holders of
existing shares of its common stock.
Available Information and Reports to Securities Holders.
Harlequin Investments, Inc. has filed with the Securities and Exchange
Commission a Registration Statement on Form SB-2 with respect to the common
stock offered by this Prospectus. This Prospectus, which is a part of the
Registration Statement, does not contain all of the information set forth
in the Registration Statement or the attached exhibits and schedules. For
further information with respect to Harlequin Investments, Inc. and its
common stock, see the Registration Statement and the exhibits and
schedules. Any document we file may be read and copied at the Commission's
Public Reference Room located at 450 Fifth Street N.W., Washington D.C.
20549, and the public reference rooms in New York, New York, and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further
information about the public reference rooms. The Harlequin Investments,
Inc. filings with the Commission are also available to the public from the
Commission's website at http://www.sec.gov.
Upon completion of this Offering we will become subject to the information
and periodic reporting requirements of the Securities Exchange Act and will
file periodic reports, proxy statements and other information with the
Commission. Such periodic reports, proxy statements and other information
will be available for inspection and copying at the Commission's public
reference rooms, and the website of the Commission.
Management's Discussion and Analysis or Plan of Operation
The following discussion assumes that the results of the proposed
feasibility study are positive and we go on to put the full business plan
into affect. If this should be the case it is certain that Harlequin
Investments, Inc. will need to seek a large capital injection. We have not
had any discussions with anyone about this needed capital nor do we intend
to do so until the study is completed.
Harlequin Investments, Inc. will establish several online services on the
proposed website, www.thesportscollections.com. These services will
include:
Extensive inventory listings of participating antique and collectable
dealers for browsing and for sale to the general public and other dealers;
A listing service for architectural and decorating accents available for
sale for renovations, redecorating or new building;
A listing service displaying items for sale from individuals sellers;
A free "items wanted" service that informs sellers as to a specific item or
items that are required either by a dealer, architect, designer or
individual; and
An alerting system designed to flag listings that seem to fill the "items
wanted" listings.
This www.thesportscollections.com site will serve as a centralized trading
place for buyers and sellers to meet, negotiate sales, and finally
consummate transactions directly, thereby bypassing the time and expense of
intermediaries. We plan to collect a transaction fee from both sides.
Site Implementation.
The Belfleur website is fairly simple in nature. Preliminary inquiries
with website builders and developers have indicated that the biggest
obstacle will be the capacity required. Dealers will list some or all of
their inventory, complete with a color picture option. Early success in
marketing these inventories should lead to more and more items for sale.
This heavy load of listings may well require separate listing categories to
make browsing and purchasing easier. Estimated time to construct and test
website: six to nine months. Estimated cost: $500,000 to $1000,000.
Numerous factors affect the time of commerce site implementation including
the following:
Number of features implemented. Adding features to a site takes
development and testing time;
Degree of customized versus packaged software used. Highly customized
sites take longer to develop than those relying heavily on functions
provided off the shelf;
Complete back-end integration, often crucial for a high-quality customer
satisfaction;
Technical expertise of staff. A shortage of technical skills plagues site
implementation. It is common for members of site development teams to work
with a package for the first time, learning as they go along.
Clarity of vision. Numerous decisions about partners, business processes,
a site's feature set, and look and feel all affect the time necessary to
develop a site. When decisions change during the course of development
building time lengthens.
Website development is more than implementing a system. It is about
building a business. Two aspects of site development have a major impact on
overall development time: business process design and partner selection.
Business process design entails numerous decisions about the day-to-day
operation of an online business and includes everything from the sequence
of steps in an online transaction to the maintenance of a site. Sites must
make decisions about dozens of operational questions, including the
following:
Product information. Where to obtain it? What are the processes for
updating, approving, and releasing it to the site?
Non-product site content. Who creates it? approves it? how and when is
it released?
Merchandising. Staffing and process decisions on everything from product
selection to product presentation and site promotions.
Shipping charges. Is shipping free? Is it charged at a flat rate, or is
it a percentage of order value?
Items wanted. How should a site conduct customer communications relating
to them?
Returns. Who pays for return shipping? Is a return materials authorization
(RMA) required, or are return shipping labels included in outbound
shipments?
Customer e-mail. Does the site accept customer inquiries via e-mail? Who
is expected to handle them? What response time is targeted?
Live customer service. Is it available by phone or live chat? During what
hours?
Partner selection is a vital element of launching a commerce site. It can
take months for a Web venture to identify and come to agreements with the
variety of partners involved in the operation of a site. Each partner may
present its own business process questions, as well as training and
integration issues. Most commerce sites end up contracting with several of
the following types of partners:
* Credit and Debit card processors
* Fulfillment partner
* Call center
* Shipping carriers
* Web site host
There are literally hundreds of vital questions to be asked and answered
about implementing a full business plan. Some of these will be identified
and answered by our projected feasibility study. Others will be asked by
the website builder/developer and hopefully answered by us.
Website Launch Estimated Expenditures.
It now costs an average of $536,000 to develop a website and an annual
average of $591,000 to maintain it.
E-commerce sites cost $836,000 to build and $1,000,000 to maintain every
year. Maintenance costs do not include salaries or overhead costs.
(Source: Association of National Advertisers)
Harlequin Investments, Inc. was incorporated in January, 2000 and in the
near future, subject to the results of a planned feasibility study and
subsequent financing, will enter the preparatory stage of building an
Internet site for the marketing of antiques and collectibles and other
related products. We plan to begin with the hiring of consultants to
determine the feasibility of the project. If the results of that study are
positive we will continue with the next steps: financing and developing
proprietary data base programming and web server configuration. The
estimated total cost of this program is $250,000.
The estimated cost of the web site to launch date is estimated at $850,000.
Our website is not up and operational nor will it be until these
preliminary steps have taken place.
In the first year of operations, starting sometime in the first half of the
year 2001 Harlequin Investments, Inc. will require an additional $2,000,000
to fully develop the website and establish and sustain an extensive
marketing program. It is expected that approximately $2,000,000 in
advertising costs will be incurred in the first year to assist in the
launching of the site. Funding requirements could increase significantly
in year two, depending on the success of the marketing program in year one.
Should anticipated results be generated, the company proposes to raise up
to $20,000,000 in year two through a public Offering of securities, of
which $10,000,000 would be allocated to marketing costs.
There are no revenues as of the date of this Prospectus. Harlequin
Investments Inc. has not constructed or activated its website.
Harlequin Investments, Inc. is conducting this offering, in part, because
it believes that an early registration of its equity securities will
minimize some of the barriers to capital formation that otherwise exist. By
having a registration statement in place, we believe that we will be in a
better position, either to conduct a future public offering of our
securities or to undertake a private placement with registration rights,
than if it were a completely private company. Registering its shares will
help minimize the liquidity discounts we may otherwise have to take in a
future financing because investors will have a high degree of confidence
that the Rule 144(c)(1) public information requirement will be satisfied
and a public market will exist to effect Rule 144(g) broker transactions.
Harlequin Investments, Inc. believes that the cost of registering its
securities, and undertaking the required disclosure obligations will be
more than offset by being able to get better terms for future financing
efforts. No specific investors have been identified, but our management
has general knowledge of an investor class interested in investing in
companies that have some measure of liquidity.
Description of Property
Harlequin Investments, Inc. is provided some office space and telephone
answering facilities within the office of its officer and director. We pay
no rent and own no real estate.
Certain Relationships and Related Transactions
No director, executive officer or nominee for election as a director of
Harlequin Investments, Inc. and no owner of five percent or more of the
outstanding shares or any member of their immediate family has entered into
or proposed any transaction in which the amount involved exceeds $10,000.
Ms. Kerster is president and majority shareholder of Sandringham
Investments, Limited, a British Columbia corporation providing consulting
services to Canadian companies desiring to become trading entities in the
United States.
Market for Common Equity and Related Stockholder Matters
No established public market exists for the securities of Harlequin
Investments, Inc. We have no common equity subject to outstanding purchase
options or warrants and we have no securities convertible to common equity.
There is no common equity that can be sold pursuant to Rule 144 of the
Securities Act or that Harlequin Investments, Inc. has agreed to register
under the Securities Act for sale by shareholders. Except for this
offering there is no common equity that is being or has been publicly
proposed to be, publicly offered.
As of June 30, 2000, the fiscal year-end there was 205,000 shares issued
and outstanding. All of these shares were issued under Rule 4 (a) and are
subject to the re-sale restrictions of Rule 144.
To date we have not paid any dividends on our common stock and do not
expect to pay any dividends in the foreseeable future.
Executive Compensation
No officer or director has received any remuneration from Harlequin
Investments, Inc. Although there is no current plan in existence it is
possible that we will adopt a plan to pay or accrue compensation to its
officers and directors for services rendered related to the implementation
of the business plan. We have no stock option, retirement, incentive or
profit sharing plan or program for the benefit of officers, directors or
employees but the Board of Directors may recommend the adoption of one or
more of such programs in the future. No one receives any compensation from
Harlequin Investments, Inc. and we do not have a compensation policy or
committee.
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
AUDIT REPORT
JUNE 30, 2000
Janet Loss, C.P.A., P.C.
Certified Public Accountant
1780 S. Belaire, Suite 500
Denver, Colorado 80222
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX TO FINANCIAL STATEMENTS
TABLE OF CONTENTS
ITEM PAGE
Report of Certified Public Accountant..................... 1
Balance Sheet, June 30, 2000 ............................. 2
Statement of Operations, for the
Period January 19, 2000 (Inception)
Through June 30, 2000 ............................... 3
Statement of Stockholders' Equity
(Deficit), January 19, 2000 (Inception)
Through June 30, 2000..................................... 4
Statement of Cash Flows for the
Period From January 19, 2000 (Inception)
Through June 30, 2000 .................................. 5
Notes to Financial Statements 6-7
Janet Loss, C.P.A., P.C.
Certified Public Accountant
1780 South Belaire, Suite 500
Denver, Colorado 80210
(303) 782-0878
INDEPENDENT AUDITOR'S REPORT
Board of Directors
HARLEQUIN INVESTMENTS, INC.
404 Scott Point Drive
Salt Spring Island, BC V8K 2R2 Canada
Ladies and Gentlemen:
I have audited the accompanying Balance Sheet of Harlequin Investments, Inc. (A
Development Stage Enterprise) as of June 30, 2000 and the Statements of
Operations, Stockholders' Equity, and Cash Flows for the period January 19,
2000 (Inception) through June 30, 2000. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audits.
My examination was made in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audits to
obtain reasonable assurance as to whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that our audit provides a
reasonable basis for our opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Harlequin Investments, Inc.
(a development stage enterprise) as of June 30, 2000, and the results of its
operations and changes in its cash flows for the period from January 19, 2000
(Inception) through June 30, 2000, in conformity with generally accepted
accounting principles.
Janet Loss, C.P.A., P.C.
August 22, 2000
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
AS AT JUNE 30, 2000
ASSETS
CURRENT ASSETS:
CASH 788
TOTAL CURRENT ASSETS 788
TOTAL ASSETS 788
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: 0
STOCKHOLDERS' EQUITY:
COMMON STOCK, $0.001 PAR
VALUE; 100,000,000 SHARES
AUTHORIZEDAND 210,000 SHARES
ISSUED AND OUTSTANDING 210
PREFERRED STOCK, $0.001 PAR
VALUE - 10,000,000 AUTHORIZED
NONE ISSUED AND OUTSTANDING 0
ADDITIONAL PAID-IN CAPITAL 1140
(DEFICIT) ACCUMULATED DURING
THE DEVELOPMENT STAGE (562)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 788
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 788
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 19, 2000 (INCEPTION)
THROUGH JUNE 30, 2000
REVENUES: 0
OPERATING EXPENSES:
DOCUMENT PREPARATION AND FILING FEES 550
OFFICE EXPENSES 12
TOTAL OPERATING EXPENSES 562
NET (LOSS) FOR THE PERIOD (562)
NET (LOSS) PER SHARE (0.01)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 210,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD JANUARY 19, 2000 (INCEPTION)
THROUGH JUNE 30, 2000
DEFICIT
COMMON PREFERRED ACCUMULATED
STOCK COMMON STOCK PREFERRED OTHER DURING THE TOTAL
NUMBER STOCK NUMBER OF STOCK PAID IN DEVELOPEMENT STOCKHOLDERS
OF SHARES AMOUNT SHARES AMOUNT CAPITAL STAGE EQUITY
COMMON
STOCK
ISSUED
JANUARY
19, 2000
FOR
SERVICES 150000 150 0 0 0 0 150
COMMON
STOCK
ISSUE
May 31,
2000
for cash 60000 60 0 0 1140 0 1200
(Loss)
for the
period 0 0 0 0 0 (562) (562)
_____________________________________________________________________________
BALANCES
June 30,
2000 210000 210 0 0 0 (562) 788
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 19, 2000 (INCEPTION)
THROUGH JUNE 30, 2000
CASH FLOWS PROVIDED BY (USED FOR)
CASH FLOWS FROM (BY) OPERATING
ACTIVITIES:
NET INCOME (LOSS) FOR THE PERIOD (562)
CASH FLOWS FROM INVESTING ACTIVITIES: 0
CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
ISSUANCE OF COMMON STOCKS 1,350
INCREASE (DECREASE) IN CASH FOR THE PERIOD 788
CASH, BEGINNING OF PERIOD 0
CASH, END OF PERIOD 0
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE I - ORGANIZATION AND HISTORY
The Company is a Colorado Corporation and the Company has been in the
development stage since its formation on January 19, 2000.
The Company's only activities have been organizational, directed at acquiring
its principle assets, raising its initial capital and developing its business
plan.
NOTE II - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DEVELOPMENT STAGE ACTIVITIES
The Company has been in the development stage since inception.
ACCOUNTING METHOD
The Company records income and expenses on the accrual method.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, cash on deposit, and highly
liquid investments with maturities generally of three months or less. At June
30, 2000, there were no cash equivalents.
YEAR END
The Company has elected to have a fiscal year ended June 30.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that effect the reported amounts of assets and liabilities at the date of
financial statements, as well as revenues and expenses reported for the
periods presented. The Company regularly assesses these estimates and, while
actual results may differ management believes that the estimates are
reasonable.
NOTE III - RELATED PARTY TRANSACTIONS
None.
PART II - Information Not Required in Prospectus
Indemnification of Officers and Directors
The Articles of Incorporation of Harlequin Investments, Inc. filed as
Exhibit 3.1 provide that it must indemnify its directors and officers to
the fullest extent permitted under Colorado law against all liabilities
incurred by reason of the fact that the person is or was a director or
officer of Harlequin Investments, Inc. or a fiduciary of an employee
benefit plan, or is or was serving at the request of Harlequin Investments,
Inc. as a director or officer, or fiduciary of an employee benefit plan, of
another corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise.
The effect of these provisions is potentially to indemnify Harlequin
Investments, Inc.'s directors and officers from all costs and expenses of
liability incurred by them in connection with any action, suit or
proceeding in which they are involved by reason of their affiliation with
Harlequin Investments, Inc.. Pursuant to Colorado law, a corporation may
indemnify a director, provided that such indemnity shall not apply on
account of:
(a) acts
or omissions of the director finally adjudged to be intentional
misconduct or a knowing violation of law;
unlawful distributions; or any transaction with respect to which it was finally
adjudged that such director personally received a benefit in money, property,
or services to which the director was not legally entitled.
The Bylaws of Harlequin Investments, Inc., filed as Exhibit 3.2, provide
that it will indemnify its officers and directors for costs and expenses
incurred in connection with the defense of actions, suits, or proceedings
against them on account of their being or having been directors or
officers, absent a finding of negligence or misconduct in office.
Harlequin Investments, Inc.'s Bylaws also permit it to maintain insurance
on behalf of its officers, directors, employees and agents against any
liability asserted against and incurred by that person whether or not
Harlequin Investments, Inc. has the power to indemnify such person against
liability for any of those acts.
Other Expenses of Issuance and Distribution
The amounts set forth are estimates except for the SEC registration fee:
Amount to
be Paid
SEC registration fee 2.80
Printing and engraving expenses
Attorneys' fees and expenses 8,000.00
Accountants' fees and expenses 1,500.00
Transfer agent's and registrar's
fees and expenses 500.00
Miscellaneous 100.00
Total 10,102.80
The Registrant will bear all expenses shown above.
Recent Sales of Unregistered Securities
Set forth below is information regarding the issuance and sales of
Harlequin Investments, Inc.'s securities without registration since its
formation. No such sales involved the use of an underwriter and no
commissions were paid in connection with the sale of any securities.
On January 20, 2000 Harlequin Investments, Inc. issued 150,000 shares of
its common stock to its sole officer and director, Inge L. E. Kerster.
These shares were issued pursuant to Rule 4 (2) of the Securities Act and
were for the expense, time and effort to incorporate, organize and prepare
our initial business plan.
On April 1, 2000 Harlequin Investments, Inc. issued 5,000 shares of its common
stock to each of eleven individuals at a price of $0.02 per share. These
shares were issued in reliance on Rule 4 (2) of the Act.
Exhibits
The following exhibits are filed as part of this Registration Statement:
Exhibit
Number Description
3.1 Articles of Incorporation
3.2 Bylaws
4.2 Stock Subscription Agreement
5.1 Opinion re: legality
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (see Exhibit 5.1)
27.1 Financial Data Schedule
Undertakings
The Registrant hereby undertakes that it will:
(1)File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(a) Include any Prospectus required by section 10(a)(3) of the Securities Act;
(b) Reflect in the Prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the Registration
Statement; and
(c) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each post-
effective amendment as a new Registration Statement of the securities offered,
and the Offering of the securities of the securities at that time to be the
initial bona fide Offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the Offering.
(4) Provide to the Underwriters at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names
as required by the Underwriters to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned,
thereunto
duly authorized, in the Village of Ganges, Salt Spring Island, British
Columbia, Canada, on August 10, 2000.
Harlequin Investments, Inc.
/S/ Inge L. E. Kerster
Inge L. E. Kerster, President
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
Signature Title Date
/S/ Inge L. E. Kerster President, Secretary, August 10, 2000
Treasurer and Director
EXHIBIT 3.1 ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
OF
HARLEQUIN INVESTMENTS, INC.
**************************************************************
The undersigned, acting as incorporator, pursuant to the provisions of the laws
of the State of Colorado relating to private corporations, hereby adopts the
following Articles of Incorporation:
ARTICLE ONE. (NAME)
The name of the corporation is: HARLEQUIN INVESTMENTS, INC.
ARTICLE TWO. (RESIDENT AGENT) The
initial agent for service of process is Jerald L. Woods, 518 17th Street,
Suite 566, Denver, State of Colorado 80202
ARTICLE THREE. (PURPOSES) The purposes for which the corporation is
organized are to engage in any activity or business not in conflict with
the laws of the State of Colorado or of the United States of America, and
without limiting the generality of the foregoing, specifically: -
I.
(OMNIBUS). To have to exercise all the powers now or hereafter conferred by
the laws of the State of Colorado upon corporations organized pursuant to the
laws under which the corporation is organized and any and all acts amendatory
thereof and supplemental thereto.
II. (CARRYING ON BUSINESS OUTSIDE STATE). To conduct and carry on its
business or any branch thereof in any state or territory of the United States
or in any foreign country in conformity with the laws of such state, territory,
or foreign country, and to have and maintain in any state, territory, or
foreign country a business office, plant, store or other facility.
III. (PURPOSES TO BE CONSTRUED AS POWERS). The purposes specified herein
shall be construed both as purposes and powers and shall be in no wise limited
or restricted by reference to, or inference from, the terms of any other
clause in this or any other article, but the purposes and powers specified
in each of the clauses herein shall be regarded as independent purposes and
powers, and the enumeration of specific purposes and powers shall not be
construed to limit or restrict in any manner the meaning of general terms
or of the general powers of the corporation; nor shall the expression of
one thing be deemed to exclude another, although it be of like nature not
expressed.
ARTICLE FOUR. (CAPITAL STOCK) The corporation shall have authority to
issue an aggregate of ONE HUNDRED AND TEN MILLION (110,000,000) shares of
stock, par value ONE MILL ($0.001) per share divided into two (2) classes of
stock as follows for a total capitalization of ONE HUNDRED AND TEN THOUSAND
DOLLARS ($110,000).
NON-ASSESSABLE COMMON STOCK: ONE HUNDRED MILLION (100,000,000) shares of
Common stock, Par Value ONE MILL ($0.001) per share, and
PREFERRED STOCK: TEN MILLION (10,000,000) shares of Preferred stock, Par
Value ONE MILL ($0.001) per share.
All capital stock when issued shall be fully paid and non-assessable. No
holder of shares of capital stock of the corporation shall be entitled as
such to any pre-emptive or preferential rights to subscribe to any unissued
stock, or any other securities, which the corporation may now or hereafter
be authorized to issue.
The corporation's capital stock may be issued and sold from time to time
for such consideration as may be fixed by the Board of Directors, provided
that the consideration so fixed is not less than par value.
Holders of the corporation's Common Stock shall not possess cumulative
voting rights at any shareholders meetings called for the purpose of
electing a Board of Directors or on other matters brought
before stockholders meetings, whether they be annual or special.
ARTICLE FIVE. (DIRECTORS). The
affairs of the corporation shall be governed by a Board of Directors of not
more than fifteen (15) nor less than one (1) person. The name and address
of the first Board of Directors is:
NAME ADDRESS
Rebecca M.E. Kerster 960 SE Highway 101
Suite A159
Lincoln City Oregon 97367
ARTICLE SIX.
(ASSESSMENT OF STOCK). The capital stock of the corporation, after the
amount of the subscription price or par value has been paid in, shall not be
subject to pay debts of the corporation, and no paid up stock and no stock
issued as fully paid up shall ever be assessable or assessed.
ARTICLE SEVEN. (INCORPORATOR). The name and address of the
incorporator of the corporation is as follows:
NAME ADDRESS
Rebecca M.E. Kerster 960 SE Highway 101
Suite A159
Lincoln City, Oregon 97367
ARTICLE EIGHT. (PERIOD OF EXISTENCE). The period of existence of the
Corporation shall be perpetual.
ARTICLE NINE. (BY-LAWS) Its Board of Directors shall adopt the
initial By-laws of the corporation. The power to alter, amend, or repeal the
By-laws, or to adopt new By-laws, shall be vested in the Board of Directors,
except as otherwise may be specifically provided in the By-laws.
ARTICLE TEN. (STOCKHOLDERS' MEETINGS). Meetings of stockholders shall be
held at such place within or without the State of Colorado as may be provided
by the By-laws of the corporation. The President or any other executive
officer of the corporation, the Board of Directors, or any member may call
special meetings of the stockholders thereof, or by the record holder or
holders of at least ten percent (10%) of all shares entitled to vote at the
meeting. Any action otherwise required to be taken at a meeting of the
stockholders, except election of directors, may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed
by stockholders having at least a majority of the voting power.
ARTICLE ELEVEN. (CONTRACTS OF CORPORATION) No
contract or other transaction between the corporation and any other
corporation, whether or not a majority of the shares of the capital stock
of such other corporation is owned by this corporation, and no act of this
corporation shall be any way be affected or invalidated by the fact that
any of the directors of this corporation are pecuniarily or otherwise
interested in, or are directors or officers of such other corporation. Any
director of this corporation, individually, or any firm of which such
director may be a member, may be a party to, or may be pecuniarily or
otherwise interested in any contract or transaction of the corporation;
provided, however, that the fact that he or such firm is so interested
shall be disclosed or shall have been known to the Board of Directors of
this corporation, or a majority thereof; and any director of this
corporation who is also a director or officer of such other corporation, or
who is so interested, may e counted in determining the existence of a
quorum at any meeting of the Board of Directors of this corporation that
shall authorize such contract or transaction, and may vote thereat to
authorize such contract or transaction, with like force and effect as if he
were no such director or officer of such other corporation or not so
interested.
ARTICLE TWELVE. (LIABILITY OF DIRECTORS AND OFFICERS) No director or
officer shall have any personal liability to the corporation or its
stockholders for damages for breach of fiduciary duty as a director or
officer, except that this Article Twelve shall not eliminate or limit the
liability of a director or officer for (I) acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or (ii) the
payment of dividends in violation of the Colorado Revised Statutes.
IN WITNESS WHEREOF. The undersigned incorporator has hereunto affixed
his/her signature at Denver, Colorado, this 17th day of January, 2000.
/s/ REBECCA M.E. KERSTER
EXHIBIT 3.2
BYLAWS OF HARLEQUIN INVESTMENTS, INC.
CONTENTS OF INITIAL BYLAWS
ARTICLE PAGE
1.00 CORPORATE CHARTER AND BYLAWS
1.01 Corporate Charter Provisions 4
1.02 Registered Agent or Office-Requirement
of Filing Changes with Secretary of State 4
1.03 Initial Business Office 4
1.04 Amendment of Bylaws 4
2.00 DIRECTORS AND DIRECTORS' MEETINGS
2.01 Action Without Meeting 5
2.02 Telephone Meetings 5
2.03 Place of Meetings 5
2.04 Regular Meetings 5
2.05 Call of Special Meeting 5
2.06 Quorum 6
2.07 Adjournment-Notice of Adjourned Meetings 6
2.08 Conduct of Meetings 6
2.09 Powers of the Board of Directors 6
2.10 Board Committees-Authority to Appoint 7
2.11 Transactions with Interested Directors 7
2.12 Number of Directors 7
2.13 Term of Office 7
2.14 Removal of Directors 8
2.15 Vacancies 8
2.15(a)Declaration of Vacancy 8
2.15(b)Filling Vacancies by Directors 8
2.15(c)Filling Vacancies by Shareholders 8
2.16 Compensation 9
2.17 Indemnification of Directors and Officers 9
2.18 Insuring Directors, Officers, and Employees 9
3.00 SHAREHOLDERS' MEETINGS
3.01 Action Without Meeting 9
3.02 Telephone Meetings 10
3.03 Place of Meetings 10
3.04 Notice of Meetings 10
3.04 Voting List 10
3.05 Votes per Share 11
3.07 Cumulative Voting 11
3.08 Proxies 11
3.09 Quorum 12
3.09(a) Quorum of Shareholders 12
3.09(b) Adjourn for Lack or Loss of Quorum 12
3.10 Voting by Voice or Ballot 12
3.11 Conduct of Meetings 12
3.12 Annual Meetings 12
3.13 Failure to Hold Annual Meeting 13
3.14 Special Meetings 13
4.00 OFFICERS
4.01 Title and Appointment 13
4.01(a) Chairman 13
4.01(b) President 14
4.01(c) Vice President 14
4.01(d) Secretary 14
4.01(e) Treasurer 15
4.01(f) Assistant Secretary or Assistant
Treasurer 15
4.02 Removal and Resignation 15
4.03 Vacancies 16
4.04 Compensation 16
5.00 AUTHORITY TO EXECUTE INSTRUMENTS
5.01 No Authority Absent Specific Authorization 16
5.02 Execution of Certain Instruments 16
6.00 ISSUANCE AND TRANSFER OF SHARES
6.01 Classes and Series of Shares 17
6.02 Certificates for Fully Paid Shares 17
6.03 Consideration for Shares 17
6.04 Replacement of Certificates 17
6.05 Signing Certificates-Facsimile Signatures 18
6.06 Transfer Agents and Registrars 18
6.07 Conditions of Transfer 18
6.08 Reasonable Doubts as to Right to Transfer 18
7.00 CORPORATE RECORDS AND ADMINISTRATION
7.01 Minutes of Corporate Meetings 18
7.02 Share Register 19
7.03 Corporate Seal 19
7.04 Books of Account 19
7.05 Inspection of Corporate Records 20
7.06 Fiscal Year 20
7.07 Waiver of Notice 20
8.00 ADOPTION OF INITIAL BYLAWS 20
ARTICLE ONE-CORPORATE CHARTER AND BYLAWS
1.01 CORPORATE CHARTER PROVISIONS
The Corporation's Charter authorizes one hundred million (100,000,000)
shares of common stock (par value $ .001) and ten million (10,000,000) shares
of Preferred stock (par value $ .001) to be issued. The officers and transfer
agents issuing shares of the Corporation shall ensure that the total number
of shares outstanding at any given time does not exceed this number. Such
officers and agents shall advise the Board at least annually of the
authorized shares remaining available to be issued. No shares shall be
issued for less than the par value stated in the Charter. Each Charter
provision shall be observed until amended by Restated Articles or Articles
of Amendment duly filed with the Secretary of State.
1.02 REGISTERED AGENT AND OFFICE-REQUIREMENT OF FILING CHANGES WITH SECRETARY
OF STATE The address of the Registered Office provided in the Articles of
Incorporation, as duly filed with the Secretary of State for the State of
Colorado, is: 518 17TH Street, Suite 566, Denver, Colorado 80202.
The name of the Registered Agent of the Corporation at such address, as
set forth in its Articles of Incorporation, is: Jerald L. Woods.
The Registered Agent or Office may be changed by filing a Statement of
Change of Registered Agent or Office or Both with the Secretary of State, and
not otherwise. Such filing shall be made promptly with each change.
Arrangements for each change in Registered Agent or Office shall ensure
that the Corporation is not exposed to the possibility of a default
judgment. Each successive Registered Agent shall be of reliable character
and well informed of the necessity of immediately furnishing the papers of
any lawsuit against the Corporation to its attorneys.
1.03 INITIAL BUSINESS OFFICE
The address of the initial principal business office of the Corporation is
hereby established as: 404 Scott Point Drive, Salt Spring Island, BC V8K
2R2 Canada.
The Corporation may have additional business offices within the State of
Colorado and where it may be duly qualified to do business outside of
Colorado, as the Board of Directors may from time to time designate or the
business of the Corporation may require.
1.04 AMENDMENT OF BYLAWS
The Shareholders or Board of Directors, subject to any limits imposed by
the Shareholders, may amend or repeal these Bylaws and adopt new Bylaws. All
amendments shall be upon advice of counsel as to legality, except in
emergency. Bylaw changes shall take effect upon adoption unless otherwise
specified. Notice of Bylaws changes shall be given in or before notice
given of the first Shareholders' meeting following their adoption.
ARTICLE TWO-DIRECTORS AND DIRECTORS' MEETINGS
2.01 ACTION BY CONSENT OF BOARD WITHOUT MEETING
Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, and shall have the same force and effect as a
unanimous vote of Directors, if all members of the Board consent in writing
to the action. Such consent may be given individually or collectively.
2.02 TELEPHONE MEETINGS
Subject to the notice provisions required by these Bylaws and by the
Business Corporation Act, Directors may participate in and hold a meeting by
means of conference call or similar communication by which all persons
participating can hear each other. Participation in such a meeting shall
constitute presence in person at such meeting, except participation for the
express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
2.03 PLACE OF MEETINGS
Meetings of the Board of Directors shall be held at the business office of
the Corporation or at such other place within or without the State of Nevada as
may be designated by the Board.
2.04 REGULAR MEETINgS
Regular meetings of the Board of Directors shall be held, without call or
notice, immediately following each annual Shareholders' meeting, and at
such other regularly repeating times as the Directors may determine.
2.05 CALLOF SPECIAL MEETING
Special meetings of the Board of Directors for any purpose may be called
at any time by the President or, if the President is absent or unable or
refuses to act, by any Vice President or any two Directors. Written notices
of the special meetings, stating the time and place of the meeting, shall be
mailed ten days before, or telegraphed or personally delivered so as to be
received by each Director not later than two days before, the day appointed
for the meeting. Notice of meetings need not indicate an agenda. Generally,
a tentative agenda will be included, but the meeting shall not be confined
to any agenda included with the notice.
Meetings provided for in these Bylaws shall not be invalid for lack of
notice if all persons entitled to notice consent to the meeting in writing or
are present at the meeting and do not object to the notice given. Consent may
be given either before or after the meeting.
Upon providing notice, the Secretary or other officer sending notice shall
sign and file in the Corporate Record Book a statement of the details of the
notice given to each Director. If such statement should later not be found
in the Corporate Record Book, due notice shall be presumed.
2.06 QUORUM
The presence throughout any Directors' meeting, or adjournment thereof, of
a majority of the authorized number of Directors shall be necessary to
constitute a quorum to transact any business, except to adjourn. If a
quorum is present, every act done or resolution passed by a majority of the
Directors present and voting shall be the act of the Board of Directors.
2.07 ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS
A quorum of the Directors may adjourn any Directors' meeting to meet again
at a stated hour on a stated day. Notice of the time and place where an
adjourned meeting will be held need not be given to absent Directors if the
time and place is fixed at the adjourned meeting. In the absence of a
quorum, a majority of the Directors present may adjourn to a set time and
place if notice is duly given to the absent members, or until the time of
the next regular meeting of the Board.
2.08 CONDUCT OF MEETINGS
At every meeting of the Board of Directors, the Chairman of the Board, if
there is such an officer, and if not, the President, or in the President's
absence, a Vice President designated by the President, or in the absence of
such designation, a Chairman chosen by a majority of the Directors present,
shall preside. The Secretary of the Corporation shall act as Secretary of
the Board of Directors' meetings. When the Secretary is absent from any
meeting, the Chairman may appoint any person to act as Secretary of that
meeting.
2.09 POWERS OF THE BOARD OF DIRECTORS
The business and affairs of the Corporation and all corporate powers shall be
exercised by or under authority of the Board of Directors, subject to
limitations imposed by law, the Articles of Incorporation, any applicable
Shareholders' agreement, and these Bylaws.
2.10 BOARD COMMITTEES-AUTHORITY TO APPOINT
The Board of Directors may designate an executive committee and one or more
other committees to conduct the business and affairs of the Corporation to
the extent authorized. The Board shall have the power at any time to change
the powers and membership of, fill vacancies in, and dissolve any
committee. Members of any committee shall receive such compensation as the
Board of Directors may from time to time provide. The designation of any
committee and the delegation of authority thereto shall not operate to
relieve the Board of Directors, or any member thereof, of any
responsibility imposed by law.
2.11 TRANSACTIONS WITH INTERESTED DIRECTORS
Any contract or other transaction between the Corporation and any of its
Directors (or any corporation or firm in which any of its Directors are
directly or indirectly interested) shall be valid for all purposes
notwithstanding the presence of that Director at the meeting during which
the contract or transaction was authorized, and notwithstanding the
Directors' participation in that meeting. This section shall apply only if
the contract or transaction is just and reasonable to the Corporation at
the time it is authorized and ratified, the interest of each Director is
known or disclosed to the Board of Directors, and the Board nevertheless
authorizes or ratifies the contract or transaction by a majority of the
disinterested Directors present. Each interested Director is to be counted
in determining whether a quorum is present, but shall not vote and shall
not be counted in calculating the majority necessary to carry the vote.
This section shall not be construed to invalidate contracts or transactions
that would be valid in its absence.
2.12 NUMBER OF DIRECTORS
The number of Directors of this Corporation shall be not less than one or more
than fifteen. No Director need be a resident of Nevada or a Shareholder.
The number of Directors may be increased or decreased from time to time by
amendment to these Bylaws. Any decrease in the number of Directors shall
not have the effect of shortening the tenure which any incumbent Director
would otherwise enjoy.
2.13 TERM OF OFFICE
Directors shall be entitled to hold office until their successors are elected
and qualified. Election for all Director positions, vacant or not vacant,
shall occur at each annual meeting of the Shareholders and may be held at
any special meeting of Shareholders called specifically for that purpose.
2.14 REMOVAL OF DIRECTORS
The entire Board of Directors or any individual Director may be removed from
office by a vote of Shareholders holding a majority of the outstanding
shares entitled to vote at an election of Directors. However, if less than
the entire Board is to be removed, no one of the Directors may be removed
if the votes cast against his removal would be sufficient to elect him if
then cumulatively voted at an election of the entire Board of Directors. No
director may be so removed except at an election of the class of Directors
of which he is a part. If any or all Directors are so removed, new
Directors may be elected at the same meeting. Whenever a class or series of
shares is entitled to elect one or more Directors under authority granted
by the Articles of Incorporation, the provisions of this Paragraph apply to
the vote of that class or series and not to the vote of the outstanding
shares as a whole.
2.15 VACANCIES
Vacancies on the Board of Directors shall exist upon the occurrence of any of
the following events: (a) the death, resignation, or removal of any
Director; (b) an increase in the authorized number of Directors; or (c) the
failure of the Shareholders to elect the full authorized number of
Directors to be voted for at any annual, regular, or special Shareholders'
meeting at which any Director is to be elected.
2.15(a)DECLARATION OF VACANCY
A majority of the Board of Directors may declare vacant the office of a
Director if the Director: (a) is adjudged incompetent by a court order; (b)
is convicted of a crime involving moral turpitude; (c) or fails to accept
the office of Director, in writing or by attending a meeting of the Board
of Directors, within thirty (30) days of notice of election.
2.15(b) FILLING VACANCIES BY DIRECTORS
Vacancies other than those caused by an increase in the number of Directors may
be filled temporarily by majority vote of the remaining Directors, though
less than a quorum, or by a sole remaining Director. Each Director so
elected shall hold office until a qualified successor is elected at a
Shareholders' meeting.
2:15(c) FILLING VACANCIES BY SHAREHOLDERS
Any vacancy on the Board of Directors, including those caused by an increase in
the number of Directors shall be filled by the Shareholders at the next
annual meeting or at a special meeting called for that purpose. Upon the
resignation of a Director tendered to take effect at a future time, the
Board or the Shareholders may elect a successor to take office when the
resignation becomes effective.
2.16 COMPENSATION
Directors shall receive such compensation for their services as Directors as
shall be determined from time to time by resolution of the Board. Any
Director may serve the Corporation in any other capacity as an officer,
agent, employee, or otherwise, and receive compensation therefor.
2.17 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Board of Directors shall authorize the Corporation to pay or reimburse any
present or former Director or officer of the Corporation any costs or
expenses actually and necessarily incurred by that officer in any action,
suit, or proceeding to which the officer is made a party by reason of
holding that position, provided, however, that no officer shall receive
such indemnification if finally adjudicated therein to be liable for
negligence or misconduct in office. This indemnification shall extend to
good-faith expenditures incurred in anticipation of threatened or proposed
litigation. The Board of Directors may in proper cases, extend the
indemnification to cover the good-faith settlement of any such action,
suit, or proceeding, whether formally instituted or not.
2.18 INSURING DIRECTORS, OFFICERS, AND EMPLOYEES
The Corporation may purchase and maintain insurance on behalf of any Director,
officer, employee, or agent of the Corporation, or on behalf of any person
serving at the request of the Corporation as a Director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or
other enterprise, against any liability asserted against that person and
incurred by that person in any such corporation, whether or not the
Corporation has the power to indemnify that person against liability for
any of those acts.
ARTICLE THREE-SHAREHOLDERS' MEETINGS
3.01 ACTION WITHOUT MEETING
Any action that may be taken at a meeting of the Shareholders under any
provision of the Nevada Business Corporation Act may be taken without a
meeting if authorized by a consent or waiver filed with the Secretary of
the Corporation and signed by all persons who would be entitled to vote on
that action at a Shareholders' meeting. Each such signed consent or waiver,
or a true copy thereof, shall be placed in the Corporate Record Book.
3.02 TELEPHONE MEETINGS
Subject to the notice provisions required by these Bylaws and by the Business
Corporation Act, Shareholders may participate in and hold a meeting by
means of conference call or similar communication by which all persons
participating can hear each other. Participation in such a meeting shall
constitute presence in person at such meeting, except participation for the
express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
3.03 PLACE OF MEETINGS
Shareholders' meetings shall be held at the business office of the Corporation,
or at such other place within or without the State of Nevada as may be
designated by the Board of Directors or the Shareholders.
3.04 NOTICE OF MEETINGS
The President, the Secretary, or the officer or persons calling a Shareholders'
Meeting. shall give notice, or cause it to be given, in writing to each
Director and to each Shareholder entitled to vote at the meeting at least
ten (10) but not more than sixty (60) days before the date of the meeting.
Such notice shall state the place, day, and hour of the meeting, and, in
case of a special meeting, the purpose or purposes for which the meeting is
called. Such written notice may be given personally, by mail, or by other
means. Such notice shall be addressed to each recipient at such address as
appears on the Books of the Corporation or as the recipient has given to
the Corporation for the purpose of notice. Meetings provided for in these
Bylaws shall not be invalid for lack of notice if all persons entitled to
notice consent to the meeting in writing or are present at the meeting in
person or by proxy and do not object to the notice given, Consent may be
given either before or after the meeting. Notice of the reconvening of an
adjourned meeting is not necessary unless the meeting is adjourned more
than thirty days past the date stated in the notice, in which case notice
of the adjourned meeting shall be given as in the case of any special
meeting. Notice may be waived by written waivers signed either before or
after the meeting by all persons entitled to the notice.
3.05 VOTING LIST
At least ten (10), but not more than sixty (60), days before each
Shareholders' meeting, the officer or agent having charge of the
Corporation's share transfer books shall make a complete list of the
Shareholders entitled to vote at that meeting or any adjournment thereof,
arranged in alphabetical order, with the address and the number of shares
held by each. The list shall be kept on file at the Registered Office of
the Corporation for at least ten (10) days prior to the meeting, and shall
be subject to inspection by any Director, officer, or 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, during the
whole time of the meeting, to the inspection of any Shareholder. The
original share transfer books shall be prima facie evidence as to the
Shareholders entitled to examine such list or transfer books or to vote at
any meeting of Shareholders. However, failure to prepare and to make the
list available in the manner provided above shall not affect the validity
of any action taken at the meeting.
3.06 VOTES PER SHARE
Each outstanding share, regardless of class, shall be entitled to one (1) vote
on each matter submitted to a vote at a meeting of Shareholders, except to
the extent that the voting rights of the shares of any class or classes are
limited or denied pursuant to the Articles of Incorporation. A Shareholder
may vote in person or by proxy executed in writing by the Shareholder, or
by the Shareholder's duly authorized attorney-in-fact.
3.07 CUMULATIVE VOTING
No shareholder shallhave the right to cumulative voting.
3.08 PROXIES
A Shareholder may vote either in person or by proxy executed in writing by
the Shareholder or his or her duly authorized attorney in fact. Unless
otherwise provided in the proxy or by law, each proxy shall be revocable
and shall not be valid after eleven (11) months from the date of its
execution,
3.09 QUORUM
3.09(a)
QUORUM OF SHAREHOLDERS
As to each item of business to be voted on, the presence (in person or
by proxy) of the persons who are entitled to vote a majority of the
outstanding voting shares on that matter shall constitute the quorum
necessary for the consideration of the matter at a Shareholders' meeting.
The vote of the holders of a majority of the shares entitled to vote on the
matter and represented at a meeting at which a quorum is present shall be
the act of the Shareholders' meeting.
3.09(b)
ADJOURNMENT FOR LACK OR LOSS OF QUORUM
No business may be transacted in the absence of a quorum, or upon the
withdrawal of enough Shareholders to leave less than a quorum, other than
to adjourn the meeting from time to time by the vote of a majority of the
shares represented at the meeting.
3.10 VOTING BY VOICE OR BALLOT
Elections for Directors need not be by ballot unless a Shareholder demands
election by ballot before the voting begins.
3.11 CONDUCT OF MEETINGS
Meetings of the Shareholders shall be chaired by the President, or, in the
President's absence, a Vice President designated by the President, or, in
the absence of such designation, any other person chosen by a majority of
the Shareholders of the Corporation present in person or by proxy and
entitled to vote. The Secretary of the Corporation, or, in the Secretary's
absence, an Assistant Secretary, shall act as Secretary of all meetings of
the Shareholders. In the absence of the Secretary or Assistant Secretary,
the Chairman shall appoint another person to act as Secretary of the
meeting.
3.12 ANNUAL MEETINGS
The time, place, and date of the annual meeting of the Shareholders of the
Corporation, for the purpose of electing Directors and for the transaction
of any other business as may come before the meeting, shall be set from
time to time by a majority vote of the Board of Directors. If the day fixed
for the annual meeting shall be on a legal holiday in the State of Nevada,
such meeting shall be held on the next succeeding business day. If the
election of Directors is not held on the day thus designated for any annual
meeting, or at any adjournment thereof, the Board of Directors shall cause
the election to be held at a special meeting of the Shareholders as soon
thereafter as possible.
3.13 FAILURE TO HOLD ANNUAL MEETING
If, within any 13-month period, an annual Shareholders' Meeting is not held,
any Shareholder may apply to a court of competent jurisdiction in the
county in which the principal office of the Corporation is located for a
summary order that an annual meeting be held.
3.14 SPECIAL MEETINGS
A special Shareholders' meeting may be called at any time by. (a) the
President; (b) the Board of Directors; or (c) one or more Shareholders
holding in the aggregate one-tenth or more of all the shares entitled to
vote at the meeting. Such meeting may be called for any purpose. The party
calling the meeting may do so only by written request sent by registered
mail or delivered in person to the President or Secretary. The officer
receiving the written request shall within ten (10) days from the date of
its receipt cause notice of the meeting to be sent to all the Shareholders
entitled to vote at such a meeting. If the officer does not give notice of
the meeting within ten (10) days after the date of receipt of the written
request, the person or persons calling the meeting may fix the time of the
meeting and give the notice. The notice shall be sent pursuant to Section
3.04 of these Bylaws. The notice of a special Shareholders' meeting must
state the purpose or purposes of the meeting and, absent consent of every
Shareholder to the specific action taken, shall be limited to purposes
plainly stated in the notice, notwithstanding other provisions herein.
ARTICLE FOUR-OFFICERS
4.01 TITLE AND APPOINTMENT
The officers of the Corporation shall be a President and a Secretary, as
required by law. The Corporation may also have, at the discretion of the
Board of Directors, a Chairman of the Board, one or more Vice Presidents, a
Treasurer, one or more Assistant Secretaries, and one or more Assistant
Treasurers. Any two or more offices, including President and Secretary,
may be held by one person. All officers shall be elected by and hold office
at the pleasure of the Board of Directors, which shall fix the compensation
and tenure of all officers.
4.01(a) CHAIRMAN OF THE BOARD
The Chairman, if there shall be such an officer, shall, if present, preside at
the meetings of the Board of Directors and exercise and perform such other
powers and duties as may from time to time be assigned to the Chairman by
the Board of Directors or prescribed by these Bylaws.
4.01(b) PRESIDENT
Subject such supervisory powers, if any, as may be given to the Chairman, if
there is one, by the Board of Directors, the President shall be the chief
executive officer of the Corporation and shall, subject to the control of
the Board of Directors, have general supervision, direction, and control of
the business and officers of the Corporation. The President shall have the
general powers and duties of management usually vested in the office of
President of a corporation; shall have such other powers and duties as may
be prescribed by the Board of Directors or the Bylaws; and shall be ex
officio a member of all standing committees, including the executive
committee, if any. In addition, the President shall preside at all meetings
of the Shareholders and in the absence of the Chairman, or if there is no
Chairman, at all meetings of the Board of Directors.
4.01(c) VICE PRESIDENT
Any Vice President shall have such powers and perform such duties as from time
to time may be prescribed by these Bylaws, by the Board of Directors, or by
the President. In the absence or disability of the President, the senior or
duly appointed Vice President, if any, shall perform all the duties of the
President, pending action by the Board of Directors when so acting, such
Vice President shall have all the powers of, and be subject to all the
restrictions on, the President.
4.01(d) SECRETARY
The Secretary shall:
(1) See that all notices are duly given in accordance with the provisions of
these Bylaws and as required by law. In case of the absence or disability of
the Secretary. or the Secretary's refusal or neglect to act, notice may be
given and served by an Assistant Secretary or by the Chairman, the
President, any Vice President, or by the Board of Directors.
(2) Keep the minutes of corporate meetings, and the Corporate Record Book, as
set out in Section 7.01 hereof.
(3) Maintain, in the Corporate Record Book, a record of all share certificates
issued or canceled and all shares of the Corporation canceled or
transferred.
(4) Be custodian of the Corporation's records and of any seal which the
Corporation may from time to time adopt. when the Corporation exercises its
right to use a seal, the Secretary shall see that the seal is embossed on
all share certificates prior to their issuance and on all documents
authorized to be executed under seal in accordance with the provisions of
these Bylaws
(5) In general, perform all duties incident to the office of Secretary, and
such other duties as from time to time may be required by Sections 7.01, 7.02,
and 7.03 of these Bylaws, by these Bylaws generally, by the Board of
Directors, or by the President.
4.01(e) TREASURER
The Treasurer shall:
(1)Have charge and custody of, and be responsible for, all funds and securities
of the Corporation, and deposit all funds in the name of the Corporation in
those banks, trust companies, or other depositories that shall be selected
by the Board of Directors.
(2)Receive, and give receipt for, monies due and payable to the Corporation.
(3) Disburse or cause to be disbursed the funds of the Corporation as may be
directed by the Board of Directors, taking proper vouchers for those
disbursements.
(4) If required by the Board of Directors or the President, give to the
Corporation a bond to assure the faithful performance of the duties of the
Treasurer's office and the restoration to the Corporation of all corporate
books, papers, vouchers, money, and other property of whatever kind in the
Treasurer's possession or control, in case of the Treasurer's death,
resignation, retirement, or removal from office. Any such bond shall be in
a sum satisfactory to the Board of Directors, with one or more sureties or
a surety company satisfactory to the Board of Directors.
(5) In general, perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to the Treasurer by
Sections 7.O4 and 7.05 of these Bylaws, by these Bylaws generally, by the
Board of Directors, or by the President.
4.01(f) ASSISTANT SECRETARY AND ASSISTANT TREASURER
The Assistant Secretary or Assistant Treasurer shall have such powers and
perform such duties as the Secretary or Treasurer, respectively, or as the
Board of Directors or President may prescribe. In case of the absence of
the Secretary or Treasurer, the senior Assistant Secretary or Assistant
Treasurer, respectively, may perform all of the functions of the Secretary
or Treasurer.
4.02 REMOVAL AND RESIGNATION
Any oficer may be removed, either with or without cause, by vote of a majority
of the Directors at any regular or special meeting of the Board, or, except
in case of an officer chosen by the Board of Directors, by any committee or
officer upon whom that power of removal may be conferred by the Board of
Directors. Such removal shall be without prejudice to the contract rights,
if any, of the person removed. Any officer may resign at any time by giving
written notice to the Board of Directors, the President, or the Secretary
of the Corporation. Any resignation shall take effect on the date of the
receipt of that notice or at any later time specified therein, and, unless
otherwise specified therein, the acceptance of that resignation shall not
be necessary to make it effective.
4.03 VACANCIES
Upon the occasion of any vacancy occurring in any office of the Corporation,
by reason of death, resignation, removal, or otherwise, the Board of
Directors may elect an acting successor to hold office for the unexpired
term or until a permanent successor is elected.
4.04 COMPENSATION
The compensation of the officers shall be fixed from time to time by the Board
of Directors, and no officer shall be prevented from receiving a salary by
reason of the fact that the officer is also a Shareholder or a Director of
the Corporation, or both.
ARTICLE FIVE-AUTHORITY TO EXECUTE INSTRUMENTS
5.01 NO AUTHORITY ABSENT SPECIFIC AUTHORIZATION
These Bylaws provide certain authority for the execution of instruments. The
Board of Directors, except as otherwise provided in these Bylaws, may
additionally authorize any officer or officers, agent or agents, to enter
into any contract or execute and deliver any instrument in the name of and
on behalf of the Corporation, and such authority may be general or confined
to specific instances. Unless expressly authorized by these Bylaws or the
Board of Directors, no officer, agent, or employee shall have any power or
authority to bind the Corporation by any contract or engagement nor to
pledge its credit nor to render it pecuniarily liable for any purpose or in
any amount.
5.02 EXECUTION OF CERTAIN INSTRUMENTS
Formal contracts of the Corporation, promissory notes, deeds, deeds of trust,
mortgages, pledges, and other evidences of indebtedness of the Corporation,
other corporate documents, and certificates of ownership of liquid assets
held by the Corporation shall be signed or endorsed by the President or any
Vice President and by the Secretary or the Treasurer, unless otherwise
specifically determined by the Board of Directors or otherwise required by
law.
ARTICLE SIX-ISSUANCE AND TRANSFER OF SHARES
6.01 CLASSES AND SERIES OF SHARES
The corporation may issue one or more classes or series of shares, or both. Any
of these classes or series may have full, limited, or no voting rights, and
may have such other preferences, rights, privileges, and restrictions as
are stated or authorized in the Articles of Incorporation. All shares of
any one class shall have the same voting, conversion, redemption, and other
rights, preferences, privileges, and restrictions, unless the class is
divided into series, If a class is divided into series, all the shares of
any one series shall have the same voting, conversion, redemption, and
other. rights, preferences, privileges, and restrictions. There shall
always be a class or series of shares outstanding that has complete voting
rights except as limited or restricted by voting rights conferred on some
other class or series of outstanding shares.
6.02 CERTIFICATES FOR FULLY PAID SHARES
Neither shares nor certificates representing shares may be issued by the
Corporation until the full amount of the consideration has been received
when the consideration has been paid to the Corporation, the shares shall
be deemed to have been issued and the certificate representing the shares
shall be issued to the shareholder.
6.03 CONSIDERATION FOR SHARES
Shares may be issued for such consideration as may be fixed from time to time
by the Board of Directors, but not less than the par value stated in the
Articles of Incorporation. The consideration paid for the issuance of
shares shall consist of money paid, labor done, or property actually
received, and neither promissory notes nor the promise of future services
shall constitute payment nor partial payment for shares of the Corporation.
6.04 REPLACEMENT OF CERTIFICATES
No replacement share certificate shall be issued until the former certificate
for the shares represented thereby shall have been surrendered and
canceled, except that replacements for lost or destroyed certificates may
be issued, upon such terms, conditions, and guarantees as the Board may see
fit to impose, including the filing of sufficient indemnity.
6.05 SIGNING CERTIFICATES-FACSIMILE SIGNATURES
All share certificates shall be signed by the officer(s) designated by the
Board of Directors. The signatures of the foregoing officers may be
facsimiles. If the officer who has signed or whose facsimile signature has
been placed on the certificate has ceased to be such officer before the
certificate issued, the certificate may be issued by the Corporation with
the same effect as if he or she were such officer on the date of its
issuance.
6.06 TRANSFER AGENTS AND REGISTRARS
The Board of Directors may appoint one or more transfer agents or transfer
clerks, and one or more registrars, at such times and places as the
requirements of the Corporation may necessitate and the Board of Directors
may designate. Each registrar appointed, if any, shall be an incorporated
bank or trust company, either domestic or foreign.
6.07 CONDITIONS OF TRANSFER
The party in whose name shares of stock stand on the books of the Corporation
shall be deemed the owner thereof as regards the Corporation, provided that
whenever any transfer of shares shall be made for collateral security, and
not absolutely, and prior written notice thereof shall be given to the
Secretary of the Corporation, or to its transfer agent, if any, such fact
shall be stated in the entry of the transfer.
6.08 REASONABLE DOUBTS AS TO RIGHT TO TRANSFER
When a transfer of shares is requested and there is reasonable doubt as to the
right of the person seeking the transfer, the Corporation or its transfer
agent, before recording the transfer of the shares on its books or issuing
any certificate therefor, may require from the person seeking the transfer
reasonable proof of that person's right to the transfer. If there remains a
reasonable doubt of the right to the transfer, the Corporation may refuse a
transfer unless the person gives adequate security or a bond of indemnity
executed by a corporate surety or by two individual sureties satisfactory
to the Corporation as to form, amount, and responsibility of sureties. The
bond shall be conditioned to protect the Corporation, its officers,
transfer agents, and registrars, or any of them, against any loss, damage,
expense, or other liability for the transfer or the issuance of a new
certificate for shares.
ARTICLE SEVEN-CORPORATE RECORDS AND ADMINISTRATION
7.01 MINUTES OF CORPORATE MEETINGS
The Corporation shall keep at the principal office, or such other place as the
Board of Directors may order, a book recording the minutes of all meetings
of its Shareholders and Directors, with the time and place of each meeting,
whether such meeting was regular or special, a copy of the notice given of
such meeting, or of the written waiver thereof, and, if it is a special
meeting, how the meeting was authorized. The record book shall further show
the number of shares present or represented at Shareholders' meetings, and
the names of those present and the proceedings of all meetings.
7.02 SHARE REGISTER
The Corporation shall keep at the principal office, or at the office of the
transfer agent, a share register showing the names of the Shareholders,
their addresses, the number and class of shares issued to each, the number
and date of issuance of each certificate issued for such shares, and the
number and date of cancellation of every certificate surrendered for
cancellation. The above information may be kept on an information storage
device such as a computer, provided that the device is capable of
reproducing the information in clearly legible form. If the Corporation is
taxed under Internal Revenue Code Section 1244 or Subchapter S, the Officer
issuing shares shall maintain the appropriate requirements regarding
issuance.
7.03 CORPORATE SEAL
The Board of Directors may at any time adopt, prescribe the use of, or
discontinue the use of, such corporate seal as it deems desirable, and the
appropriate officers shall cause such seal to be affixed to such
certificates and documents as the Board of Directors may direct.
7.04 BOOKS OF ACCOUNT
The Corporation shall maintain correct and adequate accounts of its properties
and business transactions, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus, and shares. The
corporate bookkeeping procedures shall conform to accepted accounting
practices for the Corporation's business or businesses. subject to the
foregoing, The chart of financial accounts shall be taken from, and
designed to facilitate preparation of, current corporate tax returns. Any
surplus, including earned surplus, paid-in surplus, and surplus arising
from a reduction of stated capital, shall be classed by source and shown in
a separate account. If the Corporation is taxed under Internal Revenue Code
Section 1244 or Subchapter S, the officers and agents maintaining the books
of account shall maintain the appropriate requirements.
7.05 INSPECTION OF CORPORATE RECORDS
A Director or Shareholder demanding to examine the Corporation's books or
records may be required to first sign an affidavit that the demanding party
will not directly or indirectly participate in reselling the information
and will keep it confidential other than in use for proper purposes
reasonably related to the Director's or Shareholder's role. A Director who
insists on examining the records while refusing to sign this affidavit
thereby resigns as a Director.
7.06 FISCAL YEAR
The fiscal year of the Corporation shall be as determined by the Board of
Directors and approved by the Internal Revenue Service. The Treasurer shall
forthwith arrange a consultation with the Corporation's tax advisers to
determine whether the Corporation is to have a fiscal year other than the
calendar year. If so, the Treasurer shall file an election with the
Internal Revenue Service as early as possible, and all correspondence with
the IRS, including the application for the Corporation's Employer
Identification Number, shall reflect such non-calendar year election.
7.07 WAIVER OF NOTICE
Any notice required by law or by these Bylaws may be waived by execution of a
written waiver of notice executed by the person entitled to the notice. The
waiver may be signed before or after the meeting.
ARTICLE EIGHT--ADOPTION OF INITIAL BYLAWS
The foregoing bylaws were adopted by the Board of Directors on February 25,
2000.
/S/ Inge L. E. Kerster
President, Treasurer and Director
Inge L. E. Kerster
Attested to, and certified by: /S/ Anthony V. Feimann
Secretary
Anthony V. Feimann
EXHIBIT 4.2
SUBSCRIPTION AGREEMENT
HARLEQUIN INVESTMENTS, INC.
404 Scott Point Drive
Salt Spring Island, BC V8K 2R2
The undersigned, ________________________ does hereby subscribe for 5000
common shares of the capital stock of HARLEQUIN INVESTMENTS, INC. at a
price of $ US .02 per share for a total of One Hundred United States
dollars (US$ 100.00)
The shares subscribed for will be full paid, non-assessable and will be
free trading if and when the Company is accepted for trading on the OTC
Bulletin Board,
A share certificate will be held in trust until such time as the Company's
stock is accepted for trading, a copy will be mailed to the address
indicated below within fourteen days of the date of this subscription
The share certificate should be made out and entered into the corporate
records, as follows
Name: __________________________________Phone: ____________
Address:________________________________________________
The purchaser warrants that the shares purchased herein are for investment
purposes only and not for re-sale or distribution.
The purchaser hereby warrants and confirms that he/she is a close friend or
business acquaintance of the officer or director signing the acceptance of
this subscription.
A copy of this Subscription Agreement executed by an officer of the Company
shall constitute a receipt for funds received.
Signed, on this the ____ day of __________, 2000
Purchaser: ___________________________
By: __________________________
Received from _____________________________, the sum of One Hundred United
States dollars, being payment in full for 5,000 common shares of the
capital stock of HARLEQUIN INVESTMENTS, INC.
_____________________________________
Anthony S. Feimann, Secretary
