U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Delaware 7336 33-0953557 -------- ---- ---------- (State or other (Primary Standard Industrial (I.R.S. Employer jurisdiction of Classification Code Number) Identification No.) incorporation or organization) 18335 Mt. Langley Street, Fountain Valley, California 92708 ----------------------------------------------------- ----- (Address of registrant's principal executive offices) (Zip Code) |
Thomas E. Stepp, Jr.
Stepp Law Group
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
The offering price per share for the selling security holders was estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 of Regulation C.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
Preliminary Prospectus Artescope, Inc., a Delaware corporation
6,210,000 Shares of Common Stock
This prospectus relates to 6,210,000 shares of common stock of Artescope, Inc., a Delaware corporation, which are issued and outstanding shares of our common stock, acquired by the selling security holders in private placement transactions which were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933. There currently is no market for our common stock, and we have not applied for listing or quotation on any public market. We will not receive any of the proceeds from the sale of those shares being offered.
See "Risk Factors" on pages 5 to 9 for factors to be considered before investing in the shares of our common stock.
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 the prospectus. Any representation to the contrary is a criminal offense.
The information in this prospectus is not complete and may be changed. The selling security holders 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.
The date of this prospectus is August 1, 2001.
Subject to completion.
TABLE OF CONTENTS
Prospectus Summary .......................................................4 Risk Factors..............................................................5 Use of Proceeds...........................................................9 Determination of Offering Price...........................................9 Dilution....... ........................................................9 Selling Security Holder...................................................9 Plan of Distribution.....................................................10 Legal Proceedings........................................................11 Directors, Executive Officers, Promoters and Control Persons.............11 Security Ownership of Certain Beneficial Owners and Management...........12 Description of Securities................................................12 Interest of Named Experts and Counsel....................................13 Disclosure of Commission Position on Indemnification for Securities Act Liabilities..............................................................13 Organization Within Last Five Years......................................14 Description of Business..................................................14 Management's Discussion and Analysis of Financial Condition and Results of Operations............................................................16 Description of Property..................................................17 Certain Relationships and Related Transactions...........................17 Market for Common Equity and Related Stockholder Matters.................19 Executive Compensation...................................................19 Financial Statements.....................................................19 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............................................................39 Legal Matters............................................................39 Experts..................................................................39 Additional Information...................................................40 Indemnification of Directors and Officers................................40 Other Expenses of Issuance and Distribution..............................41 Recent Sales of Unregistered Securities..................................41 Exhibits.................................................................41 Undertakings.............................................................42 Signatures ...........................................................43 Power of Attorney........................................................44 |
Prospectus Summary
------------------
Our business: We provide graphic design services to various commercial
and corporate entities. Our services primarily include
commercial digital graphics design and production services
relating to digitally created print, graphics and
multimedia services. These services include the production
and distribution of marketing materials and providing
on-demand printing services.
Our graphic design services range from print media,
catalogues on CD-ROM, trade show graphics and web page
design and development. The design and production of these
products involve a wide range of marketing, advertising
and media imaging and digital printing using cutting-edge
software and digital printing equipment. Our primary focus
is on design, however, we work closely with various third
parties to meet our client's dual needs for graphic design
and production.
Our state of We were incorporated in Delaware on March 2, 2000 as 411
organization: Place.com, Inc. On February 28, 2001, we changed our name
to Artescope, Inc.
Number of shares The selling security holders want to sell 6,210,000
being offered: shares of our common stock. The offered shares
were acquired by the selling security holders in private
placement transactions which were exempt from the
registration and prospectus delivery requirements of the
Securities Act of 1933.
Number of shares 6,210,000 shares of our common stock are issued and
outstanding after outstanding. We have no other securities issued.
offering:
Estimated use of We will not receive any of the proceeds from the sale of
proceeds: those shares being offered.
|
RISK FACTORS
In addition to the other information in this prospectus, the following risk factors should be considered carefully in evaluating our business before purchasing any of our shares of common stock. A purchase of our common stock is speculative and involves a lot of risks. No purchase of our common stock should be made by any person who is not in a position to lose the entire amount of his investment.
Because we are a new company with losses since our formation and we anticipate that we will lose money in the foreseeable future, we may not be able to achieve profitable operations.
We were incorporated in March 2000. We have a limited operating history and may face difficulties encountered by early stage companies in new and rapidly evolving markets. Our prospects must be considered speculative, considering the risks, expenses, and difficulties frequently encountered in the establishment of a new business, specifically the risks inherent in developmental stage companies. We expect to continue to incur significant operating and capital expenditures and, as a result, we expect significant net losses in the future and we will need to generate significant revenues to achieve and maintain profitability. We may not be able to achieve profitable operations.
We are dependent on Parker Printing, Inc. for our printing and finishing services because we do not currently have any other source for printing and finishing services.
Printing and finishing is a companion service to our graphic design services and currently is source of revenue. In the event that we cannot use the printing services of Parker Printing, Inc., we will need to develop a relationship with another printer. Our failure to develop another relationship with a different printer will significantly affect our ability to generate revenues.
We do not have a written agreement with Parker Printing, Inc. Parker Printing, Inc. has no obligation to provide printing services to us and, therefore, Parker Printing, Inc. may terminate our relationship at any time. In the event that Parker Printing, Inc. terminates our relationship, we will not be able to offer printing services until we establish a relationship with another printer. Our inability to offer printing services will affect our ability to generate revenues.
The nature of our graphic design and printing business is such that our operating results may fluctuate due to a number of factors, such as subjective customer preferences and overall trends in the economy.
The graphic design industry is highly subjective and success depends on our ability to produce innovative, cutting-edge and dynamic designs that suit each client's individual needs and preferences. Additionally, we anticipate that our operating results will fluctuate as a result of a number of factors, including overall trends in the economy and customer buying patterns, which are characterized by individual orders from customers rather than long-term contracts. Furthermore, graphic design is a creative effort which is time intensive and requires both conceptualization of the design and the translation of that concept into a visual product through the use of computer and digital imaging software. As such, we do not believe that we will be able to forecast for more than a few months in advance, the number, size and profitability of printing and design jobs in a given period. Consequently, the timing of projects in any quarter could have a significant impact on financial results in that quarter.
Because the graphic arts market is relatively new, we do not know if our services will gain market acceptance. Failure to gain market acceptance will significantly hinder our ability to generate revenues.
The demand for graphic arts in the area of website design, development and publishing is relatively new and extremely dependent on the success and growth of the e-commerce industry. The commercial market for traditional graphic arts services and products is extremely subjective and subject to sudden changes in consumer preferences. Therefore, we do not know if our products and services will generate widespread market acceptance. Several factors may contribute to our products and services not achieving broad market acceptance, which include:
o failure to build brand recognition of Artescope;
o increased competition among other graphic design houses;
o decreased demand for web page development and publishing
o failure to generate innovative and distinctive designs;
o failure to acquire, maintain and use state-of-the-art designing and
printing equipment and software;
o failure or stagnation of the e-commerce industry; and
o failure of clientele to use our graphic design and/or printing
services.
The technologies we use in our graphics business are subject to rapid technological change and could cause us to make significant capital investment in new equipment.
Newer technologies, techniques or products for graphic design, and the other ancillary services we offer, could be developed with better performance than the technologies that we use. The availability of new and better technologies could require us to make significant investments in technology, render our current technology obsolete and have a significant negative impact on our business and results of operations. Furthermore, technological changes, such as improvements or advancements in computer aided or digital design software, will require a significant investment on our part. Our inability to make significant capital investment in new equipment will hinder our ability to generate revenues.
Our officers and directors are engaged in other activities that could have conflicts of interest with us. Therefore, our officers and directors may not devote sufficient time to our affairs.
The persons serving as our officers and directors have existing responsibilities and may have additional responsibilities to provide management and services to other entities. As a result, conflicts of interest between us and the other activities of those entities may occur from time to time, in that our officers and directors shall have conflicts of interest in allocating time, services, and functions between the other business ventures in which they may be or become involved and our affairs.
Significant decreases in prices of digital graphics equipment could harm our business by decreasing the demand for our services, lowering the barriers to market entry and increasing market competitiveness.
A significant reduction in the price of digital graphics equipment could reduce the demand for our products and services by making it economically more attractive for other businesses to buy their own digital graphics equipment and begin to compete with us. Furthermore, decreases in digital graphics equipment and software prices could result in smaller business ceasing to use our services to create basic and simplistic graphic arts projects. In addition, printing and design equipment price decreases could force us to reduce our fees in response to this reduction in demand or as a means to remain competitive with digital graphics service providers.
Our business is subject to interruptions because we depend on Parker Printing, Inc. for our printing services.
Our business is particularly sensitive to meeting deadlines and performing services for numerous clients on an overnight basis. Our printing and finishing operations are performed exclusively by Parker Printing, Inc., and such operations are dependent on the availability of continuous computer, electrical and telephone service. As a result, any disruption of day-to-day operations could adversely affect our ability to provide services and meet deadlines. Any interruption in our ability to provide services, however brief, could result in us being unable to satisfy the needs of clients and could adversely affect our reputation within the industry.
We may not be able compete effectively with other digital graphics companies that have more resources and experience than us.
We compete with a substantial number of other general commercial printing companies, advertising agencies and graphic design firms. We also have competition from small fragmented print shops and graphic design firms that operate in the same geographic areas as we do. The major competitive factors in our business are the quality of customer service, the quality of finished products and price. Our ability to compete effectively in providing customer service and quality finished products is primarily dependent on the level of sophistication and creativity of our products, the availability of equipment and the ability to perform the services with speed and accuracy.
Many of our competitors have substantially greater financial, technical, managerial, marketing and other resources than we do and they may compete more effectively than we can. If our competitors offer graphic arts services at lower prices than we do, we may have to lower the prices we charge, which will adversely affect our results of operations. Furthermore, many of our competitors are able to obtained more experienced and talented graphic artists who create more compelling and engaging print, graphics and web media designs.
Our officers, directors and principal security holders own approximately 72.45% of our outstanding shares of common stock, allowing these shareholders to determine matters requiring approval of our shareholders.
Our directors, officers and principal security holders, taken as a group, beneficially own, in the aggregate, approximately 72.45% of our outstanding shares of common stock. Such concentrated control of the company may adversely affect the price of our common stock. Our principal security holders may be able to control matters requiring approval by our security holders, including the election of directors. Such concentrated control may also make it difficult for our shareholders to receive a premium for their shares of our common stock in the event we merge with a third party or enter into a different transaction which requires shareholder approval. In addition, certain provisions of Delaware law could have the effect of making it more difficult or more expensive for a third party to acquire, or of discouraging a third party from attempting to acquire, control of us.
We lack a public market for shares of our common stock, which may make it difficult for investors to sell their shares.
There is no public market for shares of our common stock. We cannot guaranty that an active public market will develop or be sustained. Therefore, investors may not be able to find purchasers for their shares of our common stock. Should there develop a significant market for our shares, the market price for those shares may be significantly affected by such factors as our financial results and introduction of new products and services. Factors such as announcements of new or enhanced services by us or our competitors and quarter-to-quarter variations in our results of operations, as well as market conditions in our sector may have a significant impact on the market price of our shares. Further, the stock market has experienced extreme volatility that has particularly affected the market prices of stock of many companies and that often has been unrelated or disproportionate to the operating performance of those companies.
Because we lack a public market for shares of our common stock, the offering price of the shares will be arbitrarily determined by the selling security holders. Therefore, investors may lose all or part of their investment if the price of their shares is too high.
Our common stock is not publicly traded and we do not participate in the OTC Bulletin Board, an electronic quotation medium for securities traded outside the Nasdaq Stock Market. We cannot guaranty that an active public market for our stock will develop or be sustained. Therefore, the offering price of shares of our common stock may be arbitrarily determined by the selling security holders. Accordingly, purchasers may lose all or part of their investments if the price of their shares is too high. A purchase of our stock in this offering would be unsuitable for a person who cannot afford to lose his entire investment.
We are registering all of the issued and outstanding shares of common stock, including those shares owned by our officers and directors. The selling security holders, including our officers and directors, may sell all of their shares as soon as possible, which could significantly decrease the price of our common stock and reduce our officers' and directors' desire to see us succeed.
All of the stock owned by the selling security holders, including our officers and directors, will be registered by the registration statement of which this prospectus is a part. The selling security holders, including our officers and directors, may sell some or all of their shares immediately after they are registered. In the event that the selling security holders sell some or all of their shares, the price of our common stock could decrease significantly. We cannot assure you that the officers and directors will not sell some or all of their shares as soon as they are registered.
Information in this prospectus contains "forward looking statements" which can be identified by the use of forward-looking words, such as "believes", "estimates", "could", "possibly", "probably", "anticipates", "estimates", "projects", "expects", "may", "will", or "should" or other variations thereon or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. The following matters constitute cautionary statements identifying important factors with respect to
those forward-looking statements, including certain risks and uncertainties, that could cause actual results to vary materially from the future results anticipated by those forward-looking statements. Among the key factors that have a direct bearing on our results of operations are the effects of various governmental regulations, the fluctuation of our direct costs and the costs and effectiveness of our operating strategy. Other factors could also cause actual results to vary materially from the future results anticipated by those forward-looking statements.
We will not receive any proceeds from the sale of shares of our common stock being offered by the selling security holders.
Factors Used to Determine Share Price. The selling security holders may sell our common stock at prices then prevailing or related to the then current market price or at negotiated prices. The offering price has no relationship to any established criteria of value, such as book value or earnings per share. Additionally, because we have no significant operating history and have not generated any revenues to date, the price of our common stock is not based on past earnings, nor is the price of the shares of our common stock indicative of current market value for the assets owned by us. No valuation or appraisal has been prepared for our business and potential business expansion.
The shares offered for sale by the selling security holders are already outstanding and, therefore, do not contribute to dilution.
The following table sets forth the number of shares, which may be offered for sale from time to time by the selling security holders. The shares offered for sale constitute all of the shares known to us to be beneficially owned by the selling security holders. None of the selling security holders has held any position or office with us, except as specified in the following table. Other than the relationships described below, none of the selling security holders had or have any material relationship with us. Thomas E. Stepp, Jr.; Michael J. Muellerleile, Deron M. Colby, Richard Reincke, and Amy Pontillas are employees of Stepp Law Group, which serves as our legal counsel.
-------------------------------- ------------------------------ ----------------------------------- ----------------------------- Ryan A. Neely 600,000 600,000 0 -------------------------------- ------------------------------ ----------------------------------- ----------------------------- Michael Perisi 500,000 500,000 0 -------------------------------- ------------------------------ ----------------------------------- ----------------------------- Michael Cazale 50,000 50,000 0 -------------------------------- ------------------------------ ----------------------------------- ----------------------------- Christopher Cazale 12,500 12,500 0 -------------------------------- ------------------------------ ----------------------------------- ----------------------------- Philip Nabal 200,000 200,000 0 -------------------------------- ------------------------------ ----------------------------------- ----------------------------- John D. Muellerleile 225,000 225,000 0 -------------------------------- ------------------------------ ----------------------------------- ----------------------------- Christine Miller 50,000 50,000 0 -------------------------------- ------------------------------ ----------------------------------- ----------------------------- Arika Earley 12,500 12,500 0 -------------------------------- ------------------------------ ----------------------------------- ----------------------------- Rick Justice 50,000 50,000 0 -------------------------------- ------------------------------ ----------------------------------- ----------------------------- Michael Hawks 150,000 150,000 0 -------------------------------- ------------------------------ ----------------------------------- ----------------------------- Eric Kennedy 25,000 25,000 0 -------------------------------- ------------------------------ ----------------------------------- ----------------------------- Lisa Black 5,000 5,000 0 ================================ ============================== =================================== ============================= |
The selling security holders may sell our common stock in the over-the-counter market, or on any securities exchange on which our common stock is or becomes listed or traded, in negotiated transactions or otherwise. The selling security holders may sell our common stock at prices then prevailing or related to the then current market price or at negotiated prices. The shares will not be sold in an underwritten public offering.
The shares may be sold directly or through brokers or dealers. The methods by which the shares may be sold include:
o purchases by a broker or dealer as principal and resale by
such broker or dealer for its account;
o ordinary brokerage transactions and transactions in
which the broker solicits purchasers; and
o privately negotiated transactions.
Brokers and dealers engaged by selling security holders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from selling security holders or, if any such broker-dealer acts as agent for the purchaser of such shares, from such purchaser, in amounts to be negotiated. Broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share, and, to the extent such broker-dealer is unable to do so acting as agent for a selling security holder, to purchase as principal any unsold shares at the price required to fulfill the broker-dealer commitment to such selling security holder. Broker-dealers who acquire shares as principal may resell those shares from time to time in the over-the-counter market or otherwise at prices and on terms then prevailing or then related to the then-current market price or in negotiated transactions and, in connection with such resales, may receive or pay commissions.
The selling security holders and any broker-dealers participating in the distributions of the shares may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act of 1933. Any profit on the sale of shares by the selling security holders and any commissions or discounts given to any such broker-dealer may be deemed to be underwriting commissions or discounts. The shares may also be sold pursuant to Rule 144 under the Securities Act of 1933 beginning one year after the shares were issued.
We have filed the Registration Statement, of which this prospectus forms a part, with respect to the sale of the shares by the selling security holders. We cannot guaranty that the selling security holders will sell any or all of the offered shares.
Under the Securities Exchange Act of 1934 and the regulations thereunder, any person engaged in a distribution of the shares of our common stock offered by this prospectus may not simultaneously engage in market making activities with respect to our common stock during the applicable "cooling off" periods prior to the commencement of such distribution. Also, the selling security holders are subject to applicable provisions which limit the timing of purchases and sales of our common stock by the selling security holders.
We have informed the selling security holders that, during such time as they may be engaged in a distribution of any of the shares we are registering by this Registration Statement, they are required to comply with Regulation M. In general, Regulation M precludes any selling security holder, any affiliated purchasers and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of the distribution until the entire distribution is complete. Regulation M defines a "distribution" as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a "distribution participant" as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution.
Regulation M prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security, except as specifically permitted by Rule 104 of Regulation M. These stabilizing transactions may cause the price of our common stock to be more than it would otherwise be in the absence of these transactions. We have informed the selling security holders that stabilizing transactions permitted by Regulation M allow bids to purchase our common stock if the stabilizing bids do not exceed a specified maximum. Regulation M specifically prohibits stabilizing that is the result of fraudulent, manipulative, or deceptive practices. Selling security holders and distribution participants are required to consult with their own legal counsel to ensure compliance with Regulation M.
There are no legal actions pending against us nor are any legal actions contemplated by us at this time.
Executive Officers and Directors. We are dependent on the efforts and abilities of certain of our senior management. The interruption of the services of key management could have a material adverse effect on our operations, profits and future development, if suitable replacements are not promptly obtained. We anticipate that we will enter into employment agreements with each of our key executives. We cannot guaranty that each executive will remain with us during or after the term of his or her employment agreement. In addition, our success depends, in part, upon our ability to attract and retain other talented personnel. Although we believe that our relations with our personnel are good and that we will continue to be successful in attracting and retaining qualified personnel, we cannot guaranty that we will be able to continue to do so. Our officers and directors will hold office until their resignations or removal.
Our directors and principal executive officers are as specified on the following table:
======================== =============== ==================================== Name Age Position ------------------------ --------------- ------------------------------------ Renee Y. Close 26 President, Secretary, and a Director ------------------------ --------------- ------------------------------------ Bernard P. Colacchio 32 Treasurer and a Director ======================== =============== ==================================== |
Renee Y. Close. Ms. Close has been our president, secretary, treasurer and one of our directors since our inception. Ms. Close is responsible for the management of our day-to-day operations as well as our graphic design services. From 1998 to 2001, Ms. Close has worked as a graphic designer for Creative Design & Media, Inc., a Delaware corporation, where she is responsible for designing advertisements, logos, stationery, brochures and displays as well as recreating art for site plans, floor plans, and maps. Ms. Close graduated in 1997 from California State University, Fullerton with a Bachelor of Arts degree in communications with an emphasis in advertising. In addition, Ms. Close possesses a Microsoft Certification for Microsoft Office and Windows products, which she earned in 1998. Ms. Close is not an officer or a director of any reporting company.
Bernard P. Colacchio. Mr. Colacchio has been our treasurer and one of our directors since February 2001. Mr. Colacchio is responsible for our printing and finishing services. Mr. Colacchio currently devotes approximately ten hours per week to our operations, but anticipates that he will devote significantly more hours when we complete our development. Since 1993, Mr. Colacchio has been vice president of Parker Printing, Inc., a California corporation which engages in publishing, printing and finishing graphic and print media. Mr. Colacchio is not an officer or a director of any reporting company.
Renee Y. Close is the sister-in-law of Bernard P. Colacchio. There are no orders, judgments, or decrees of any governmental agency or administrator, or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining any of our officers or directors from engaging in or continuing any conduct, practice or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security, or any aspect of the securities business or of theft or of any felony, nor are any of the officers or directors of any corporation or entity affiliated with us so enjoined.
The following table sets forth certain information regarding the beneficial ownership of our common stock as of August 1, 2001 by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and named executive officers, and all of our directors and executive officers as a group.
================= ======================================== ==================================== =========================
Title of Class Name of Beneficial Owner Amount of Beneficial Owner Percent of Class
----------------- ---------------------------------------- ------------------------------------ -------------------------
Common Stock Renee Y. Close
18335 Mt. Langley Street 600,000 shares, president, 9.66%
Fountain Valley, CA 92708 secretary and a director
----------------- ---------------------------------------- ------------------------------------ -------------------------
Common Stock Bernard P. Colacchio
18335 Mt. Langley Street 1,500,000 shares, treasurer 24.15%
Fountain Valley, CA 92708 and a director
----------------- ---------------------------------------- ------------------------------------ -------------------------
Common Stock Thomas E. Stepp, Jr.
1301 Dove Street, Suite 460 400,000 shares 6.44%
Newport Beach, CA 92660
----------------- ---------------------------------------- ------------------------------------ -------------------------
Common Stock Michael Muellerleile
1301 Dove Street, Suite 460 400,000 shares 6.44%
Newport Beach, CA 92660
----------------- ---------------------------------------- ------------------------------------ -------------------------
Common Stock Ryan A. Neely
513 Calle Amigo 600,000 shares 9.66%
San Clemente, CA 92673
----------------- ---------------------------------------- ------------------------------------ -------------------------
Common Stock Michael Perisi
308 Evening Canyon 500,000 shares 8.05%
Corona Del Mar, CA 92625
----------------- ---------------------------------------- ------------------------------------ -------------------------
Common Stock Jack Obrey
21145 Felipa Road 500,000 shares 8.05%
Yorba Linda, CA 92887
----------------- ---------------------------------------- ------------------------------------ -------------------------
Common Stock All directors and named executive
officers as a group 2,100,000 shares 33.81%
================= ======================================== ==================================== =========================
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Thomas E. Stepp, Jr. and Michael J. Muellerleile are employees of Stepp Law Group, which serves as our legal counsel.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. In accordance with Securities and Exchange Commission rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.
Changes in Control. Our management is not aware of any arrangements which may result in "changes in control" as that term is defined by the provisions of Item 403(c) of Regulation S-B.
We are authorized to issue 50,000,000 shares of $.001 par value common stock and 5,000,000 shares of $.001 par value preferred stock. As of August 1, 2001, 6,210,000 shares of our common stock were issued and outstanding.
Each shareholder of our common stock is entitled to a pro rata share of cash distributions made to shareholders, including dividend payments. The holders of our common stock are entitled to one vote for each share of record on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of our directors or any other matter. Therefore, the holders of more than 50% of the shares voted for the election of those directors can elect all of the directors. The holders of our common stock are entitled to receive dividends when, as and if declared by our Board of Directors from funds legally available therefor. Cash dividends are at the sole discretion of our Board of Directors. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment of our liabilities and after provision has been made for each class of stock, if any, having any preference in relation to our common stock. Holders of shares of our common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to our common stock.
Dividend Policy. We have never declared or paid a cash dividend on our capital stock. We do not expect to pay cash dividends on our common stock in the foreseeable future. We currently intend to retain our earnings, if any, for use in our business. Any dividends declared in the future will be at the discretion of our Board of Directors and subject to any restrictions that may be imposed by our lenders.
No expert or our counsel was hired on a contingent basis, or will receive a direct or indirect interest in us, except as specified below, or was a promoter, underwriter, voting trustee, director, officer, or employee of the company, at any time prior to the filing of this Registration Statement.
Thomas E. Stepp, Jr., Michael J. Muellerleile, Deron M. Colby, Richard C. Reincke and Amy Pontillas are employees of Stepp Law Group, which serves as our legal counsel. Thomas E. Stepp, Jr. owns 400,000 shares of our common stock. Michael J. Muellerleile owns 400,000 shares of our common stock. Deron M. Colby owns 300,000 shares of our common stock. Richard C. Reincke owns 300,000 shares of our common stock. Amy Pontillas owns 100,000 shares of our common stock.
Article Six of our Certificate of Incorporation provides, among other things, that our directors shall not be personally liable to us or our shareholders for monetary damages for breach of fiduciary duty as a director, except for liability:
o for any breach of such director's duty of loyalty to us or
our security holders;
o for acts or omissions not in good faith or which involv
intentional misconduct or a knowing violation of law;
o liability for unlawful payments of dividends or unlawful
stock purchase or redemption by us; or
o for any transaction from which such director derived any
improper personal benefit.
Accordingly, our directors may have no liability to our shareholders for any mistakes or errors of judgment or for any act of omission, unless the act or omission involves intentional misconduct, fraud, or a knowing violation of law or results in unlawful distributions to our shareholders.
Article VI of our Bylaws also provides that our officers and directors shall be indemnified and held harmless by us to the fullest extent permitted by the provisions of Section 145 of the Delaware General Corporation Law.
Indemnification Agreements. We will enter into indemnification agreements with each of our executive officers. We will agree to indemnify each such person for all expenses and liabilities, including criminal monetary judgments, penalties and fines, incurred by such person in connection with any criminal or civil action brought or threatened against such person by reason of such person being or having been our officer or director or employee. In order to be entitled to indemnification by us, such person must have acted in good faith and in a manner such person believed to be in our best interests. With respect to criminal actions, such person must have had no reasonable cause to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have 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.
Transactions with Promoters. Ryan A. Neely was issued 600,000 shares of our common stock in exchange for his services as our promoter. The value of the services performed by Mr. Neely was approximately $600.
Our Background. We were incorporated in Delaware on March 2, 2000 as 411 Place.com, Inc. On February 28, 2001, we changed our name to Artescope, Inc.
Our Business. We provide a wide range of graphic design services to various commercial and corporate entities. Our services primarily include commercial digital graphics design and production services relating to digitally created print, graphics and multimedia services. These services include the production and distribution of time-sensitive marketing materials and providing on-demand printing services.
Our graphic design services range from print media, catalogues on CD-ROM, trade show graphics and web page design and development. The design and production of these products involve a wide range of marketing, advertising and media imaging and digital printing using cutting-edge software and digital printing equipment. Our services primarily center on the development of visual images and concepts. In order for these images and concepts to be realized we engage in and work closely with third parties to print and produce tangible and digital media products for our clients.
Graphic communications services provided by us include digital communications, document management, offset printing, digital printing, data output, bindery, fulfillment services, mailing services and outsource services. We print brochures, booklets, confirmations of trade, client statements and adhesive books to meet the daily, weekly and monthly needs of our customers.
Our primary source of revenue is from print media design projects involving catalogs, circulars, brochures, packaging, photography, annual reports, and corporate identity development. Our secondary source of revenue is derived from Internet services such as web design, production and development.
Our Printing Services. We market the printing and finishing services of Parker Printing, Inc., a California corporation. Parker Printing, Inc. has no obligation to supply printing and finishing services to us and, therefore, Parker Printing, Inc. may terminate our relationship at any time. We do not have a written agreement with Parker Printing, Inc., although we believe that Parker Printing, Inc. will continue to provide printing and finishing services to us. Our belief that Parker Printing, Inc. will continue to provide printing and finishing services is based on the fact that our treasurer, director and principal shareholder, Bernard P. Colacchio, is the vice president of Parker Printing, Inc.
Our Target Markets and Marketing Strategy. We believe that our primary target market will consist of small and medium size commercial and corporate entities that desire digital graphics design and production services relating to digitally created print, graphics and multimedia services. Our marketing strategy is to promote our services and products and attract businesses to our website. Our marketing initiatives include:
o utilizing direct response print advertisements placed
primarily in small business, entrepreneurial, and special
interest magazines;
o links to industry focused websites;
o advertising by television, radio, banners, affiliated
marketing and direct mail; and
o presence at industry tradeshows.
Growth Strategy. Our objective is to become a dominant provider of graphics design and production services. Our strategy is to provide clients with exceptional personal service and high quality digital graphics design. Key elements of our strategy include:
o increase our relationships with businesses;
o increase our relationships with third party providers of
digital products and services;
o continue and expand our website;
o provide additional services for businesses and consumers; and
o pursue relationships with joint venture candidates. We will
attempt to establish joint ventures with companies that will
support our business development.
Our Website www.artescope.com. Our current website displays our corporate logo and contact information and provides a general description of the creative services that we provide as well as our production capabilities. We anticipate that our website will be developed to allow potential customers to acquaint themselves with our portfolio of prior print and virtual media.
Our Competition. The graphic communications services industry and general commercial printing industry in the United States is highly competitive. The graphic communications industry, which designs advertisements, logos, stationery, brochures and displays as well as recreating art for site plans, floor plans, and maps, is highly competitive. The commercial printing industry, which produces and distributes these designs, is also subject to competitive pressures. In each of the lines of business in which we provide services, we compete with a variety of companies, many of which have greater financial and other resources than us, or are subsidiaries or divisions of larger organizations. In particular, the industry is characterized by a small number of large, dominant organizations. We cannot guaranty that we will be able to compete effectively against the larger companies in this industry. During recent periods of economic downturn, excess production capacity in our business sectors has resulted in more competitive pricing. In addition, a significant source of competition is the in-house capability of our target customer base. We cannot guaranty that these businesses will outsource more of their printing and document management needs or that such businesses will continue to seek such outsourcing services.
We compete with a substantial number of other general commercial printing companies, advertising agencies and graphic design firms. We also have competition from small fragmented print shops and graphic design firms that operate in the same geographic areas as we do. The major competitive factors in our business are the quality of customer service, the quality of finished products and price. Our ability to compete effectively in providing customer service and quality finished products is primarily dependent on the level of sophistication and creativity of our products, the availability of equipment and the ability to perform the services with speed and accuracy. We believe we compete effectively in all of these areas.
Many of our competitors have substantially greater financial, technical, managerial, marketing and other resources than we do and they may compete more effectively than we can. If our competitors offer graphic arts services at lower prices than we do, we may have to lower the prices we charge, which will adversely affect our results of operations. Furthermore, many of our competitors are able to obtained more experienced and talented graphic artists who create more compelling and engaging print, graphics and web media designs.
Government Regulation. We are subject to regulation under various federal, state and local laws relating to employee safety and health, and to the generation, storage, transportation, disposal and emission into the environment of hazardous substances. We believe that we are in material compliance with such laws and regulations. Although compliance with such laws and regulations in the future may entail additional capital expenditures, we do not anticipate that such expenditures will be material.
Our Research and Development. We are not currently conducting any research and development activities, other than the development of our website. We do not anticipate conducting such activities in the near future.
Our Intellectual Property. We do not presently own any patents, trademarks, licenses, concessions or royalties, although we have filed a state trademark application for our corporate logo with the California trademark office. Our success may depend in part upon our ability to preserve our trade secrets, obtain and maintain patent protection for our technologies, products and processes, and operate without infringing the proprietary rights of other parties. However, we may rely on certain proprietary technologies, trade secrets, and know-how that are not patentable. Although we may take action to protect our unpatented trade secrets and our proprietary information, in part, by the use of confidentiality agreements with our employees, consultants and certain of our contractors, we cannot guaranty that
o these agreements will not be breached;
o we would have adequate remedies for any breach; or
o our proprietary trade secrets and know-how will not otherwise
become known or be independently developed or discovered by
competitors.
We cannot guaranty that our actions will be sufficient to prevent imitation or duplication of either our products and services by others or prevent others from claiming violations of their trade secrets and proprietary rights.
We own the Internet domain name www.artescope.com. Under current domain name registration practices, no one else can obtain an identical domain name, but someone might obtain a similar name, or the identical name with a different suffix, such as ".org", or with a country designation. The regulation of domain names in the United States and in foreign countries is subject to change, and we could be unable to prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our domain names.
Employees. As of August 1, 2001, we have two part time employees. We do not currently anticipate that we will hire any employees in the next six months, unless we generate significant revenues. We believe our future success depends in large part upon the continued service of our key senior management personnel and our ability to attract and retain managerial personnel. From time-to-time, we anticipate that we will use the services of independent contractors and consultants to support our expansion and business development.
Facilities. Our executive, administrative and operating offices are located at 18335 Mt. Langley Street, Fountain Valley, California 92708. Bernard P. Colacchio, our Treasurer and a Director, currently provides office space to us at no charge.
Liquidity and Capital Resources. We have cash of $26,321 as of June 30, 2001. Our total assets were approximately $26,731 as of June 30, 2001. Our total liabilities were approximately $2,500 as of June 30, 2001. In May 2001, we sold 1,635,000 shares of our common stock for $0.02 per share. The net proceeds from the sale of those shares were $32,700. Those proceeds were used to provide us with additional working capital.
Results of Operations.
Revenues. We have realized revenues of approximately $1,495 from design services that we provided during the period ended June 30, 2001. We anticipate that we will generate more revenues as we expand customer base.
Operating Expenses. For the period ended June 30, 2001, our total expenses were approximately $10,464. The majority of those expenses were legal and professional fees of $8,985. For the period ended June 30, 2001, we experienced a net loss of approximately $8,969.
Liquidity and Capital Resources. We had no cash of as of December 30, 2000. Our president, secretary, director and principal shareholder, Renee Y. Close, has paid our expenses since March 2000. We anticipate that Ms. Close will pay our expenses in the event that we do not generate revenues or obtain additional working capital.
Results of Operations. We did not yet realize any revenue from operations for the period from March 2, 2000, our date of formation, through December 31, 2000. Our expenses of approximately $5,575 consist of start-up costs from formation through December 31, 2000.
Our Plan of Operation for the Next Twelve Months. We provide graphic design services to commercial and corporate entities. Our services primarily include commercial digital graphics design and production services relating to digitally created print, graphics and multimedia services.
To effectuate our business plan during the next twelve months, we must increase our current customer base. We anticipate that we will use revenues generated to expand our operations. However, we may not be able to expand our operations effectively. Our failure to market and promote our services will harm our business and future financial performance.
In the opinion of management, available funds will satisfy our working capital requirements through January 2002. Our forecast for the period for which our financial resources will be adequate to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors. We anticipate that we may need to raise additional capital to expand our operations. Such additional capital may be raised through public or private financing as well as borrowings and other sources. We cannot guaranty that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then our ability to expand our operations may be adversely affected. If adequate funds are not available, we believe that our officers and directors will contribute funds to pay for our expenses. Therefore, we have not contemplated any plan of liquidation in the event that we do not generate revenues.
We are not currently conducting any research and development activities, other than the development of our website. We do not anticipate conducting such activities in the near future. In the event that we expand our customer base, then we may need to hire additional employees or independent contractors as well as purchase or lease additional equipment.
Property held by us. As of the date specified in the following table, we held the following property:
============================= =================== ======================
Property June 30, 2001 December 31, 2000
----------------------------- ------------------- ----------------------
Cash $26,321 $0.00
----------------------------- ------------------- ----------------------
Property and Equipment $0 $0.00
============================= =================== ======================
|
Our Facilities. Our executive, administrative and operating offices are located at 18335 Mt. Langley Street, Fountain Valley, California 92708. Bernard P. Colacchio, our treasurer and one of our directors, currently provides office space to us at no charge. We do not have a written lease or sublease agreement and Mr. Colacchio does not expect to be paid or reimbursed for providing office facilities.
Related Party Transactions. There have been no related party transactions, except for the following:
Bernard P. Colacchio, our treasurer and one of our directors, is the vice president of Parker Printing, Inc. and currently provides office space to us at no charge. Mr. Colacchio, through Parker Printing, Inc. also provides us with printing and finishing services.
With regard to any future related party transaction, we plan to fully disclose any and all related party transactions, including, but not limited to, the following:
o disclosing such transactions in prospectus' where required;
o disclose in any and all filings with the Securities and Exchange
Commission, where required;
o obtain uninterested directors consent; and
o obtain shareholder consent where required.
Reports to Security Holders. Our securities are not listed for trading on any exchange or quotation service. We are not required to comply with the timely disclosure policies of any exchange or quotation service. The requirements to which we would be subject if our securities were so listed typically include the timely disclosure of a material change or fact with respect to our affairs and the making of required filings. Although we are not required to deliver an annual report to security holders, we intend to provide an annual report to our security holders, which will include audited financial statements.
When we become a reporting company with the Securities and Exchange Commission, the public may read and copy any materials filed with the Securities and Exchange Commission at the Security and Exchange Commission's Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may also obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Securities and Exchange Commission. The address of that site is http://www.sec.gov.
708,900 shares of our common stock can be sold pursuant to Rule 144 promulgated pursuant to the Securities Act of 1933. Rule 144 provides, among other things, that persons holding restricted securities for a period of one year may each sell, assuming all of the conditions of Rule 144 are satisfied, in brokerage transactions every three months an amount of restricted securities equal to one percent of our outstanding shares of common stock, or the average weekly reported volume of trading during the four calendar weeks preceding the filing of a notice of proposed sale, which ever is more. Rule 144 also provides that, after holding such securities for a period of two years, a nonaffiliate of the company may sell those securities without restriction, other than the requirement that we are current with respect to our information reporting requirements.
There are no outstanding options or warrants to purchase, or securities convertible into, shares of our common stock. There are no outstanding shares of our common stock that we have agreed to register under the Securities Act of 1933 for sale by security holders. The approximate number of holders of record of shares of our common stock is thirty.
There have been no cash dividends declared on our common stock. Dividends are declared at the sole discretion of our Board of Directors.
Penny Stock Regulation. Shares of our common stock are subject to rules adopted by the Securities and Exchange Commission that regulate broker-dealer practices in connection with transactions in "penny stocks". Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in those securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission, which contains the following:
o a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading;
o a description of the broker's or dealer's duties to the customer
and of the rights and remedies available to the customer with
respect to violation to such duties or other requirements of
securities' laws;
o a brief, clear, narrative description of a dealer market,
including "bid" and "ask" prices for penny stocks and the
significance of the spread between the "bid" and "ask" price;
o a toll-free telephone number for inquiries on disciplinary
actions;
o definitions of significant terms in the disclosure document
or in the conduct of trading in penny stocks; and
o such other information and is in such form, including language,
type, size and format, as the Securities and Exchange
Commission shall require by rule or regulation.
Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in
the transaction;
o the number of shares to which such bid and ask prices apply,
or other comparable information relating to the depth and
liquidity of the market for such stock; and
o monthly account statements showing the market value of each
penny stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock that becomes subject to the penny stock rules. Holders of shares of our common stock may have difficulty selling those shares because our common stock will probably be subject to the penny stock rules.
Any compensation received by our officers, directors, and management personnel will be determined from time to time by our Board of Directors. Our officers, directors, and management personnel will be reimbursed for any out-of-pocket expenses incurred on our behalf.
Summary Compensation Table. The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our chief executive officer and our other executive officers whose total annual salary and bonus are anticipated to exceed $50,000 during the year ending December 31, 2001. Our Board of Directors may adopt an incentive stock option plan for our executive officers which would result in additional compensation.
======================================== ======= ============= ============= ===================== =========================
Name and Principal Position Year Annual Bonus ($) Other Annual All Other Compensation
Salary ($) Compensation ($)
---------------------------------------- ------- ------------- ------------- --------------------- -------------------------
Renee Y. Close - president, secretary 2001 None None None None
---------------------------------------- ------- ------------- ------------- --------------------- -------------------------
Bernard P. Colacchio - treasurer 2001 None None None None
======================================== ======= ============= ============= ===================== =========================
|
Compensation of Directors. Our directors who are also our employees receive no extra compensation for their service on our Board of Directors.
Compensation of Officers. As of August 1, 2001, our officers have received no compensation for their services provided to us.
Employment Contracts. We anticipate that we will enter into employment contracts with Renee Y. Close and Bernard P. Colacchio.
ARTESCOPE, INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
JUNE 30, 2001
ARTESCOPE, INC.
(a development stage company)
CONTENTS
PAGE
Independent Accountant's Review Report 1
Financial Statements (Unaudited)
Balance Sheet 2
Statements of Operations 3
Statement of Changes in Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6
|
Independent Accountant's Review Report
To the Stockholders of
Artescope, Inc.
I have reviewed the accompanying balance sheet of Artescope, Inc. (a development stage company) as of June 30, 2001, and the related statements of operations, changes in stockholders' equity, and cash flows for the six months then ended and for the period March 2, 2000 (inception) through June 30, 2001, in accordance with Statement on Standards for Accounting and Review Services issued by the American Institute of Public Accountants. All information included in these financial statements is the representation of the management of Artescope, Inc.
A review of interim financial information consists principally of inquiries of Company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.
/s/ Quintanilla A Professional Accountancy Corporation Laguna Niguel, California July 20, 2001 |
ARTESCOPE, INC.
(a development stage company)
BALANCE SHEET
JUNE 30, 2001
(UNAUDITED)
Current assets
Cash $ 26,321
Accounts receivable, net of allowance for doubtful accounts of $0 410
----------------
Total current assets 26,731
Other assets ---
----------------
Total assets $ 26,731
================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable and accrued expenses $ 2,500
----------------
Total current liabilities $ 2,500
----------------
Stockholders' Equity
Preferred stock, $.001 par value;
Authorized shares-- 5,000,000
Issued and outstanding shares-- 0
--
Common stock, $.001 par value;
Authorized shares-- 50,000,000
Issued and outstanding shares-- 6,210,000 6,210
Additional paid-in capital 32,565
Deficit accumulated during the development stage (14,544)
-----------------
Total stockholders' equity 24,231
----------------
Total liabilities and stockholders' equity $ 26,731
================
|
See accompanying notes to financial statements.
ARTESCOPE, INC.
(a development stage company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS MARCH 2, 2001
ENDED (INCEPTION) -
JUNE 30, 2001 JUNE 30, 2001
------------- -------------
Revenues
Design and media production $ 1,495 $ 1,495
Less: returns and allowances --- ---
------------------ ------------------
Net revenues 1,495 1,495
------------------ ------------------
Operating expenses
Consulting services 1,000 2,525
Printing & reproduction 359 359
Legal and professional fees 8,985 13,035
Service bureau 120 120
------------------ ------------------
Total operating expenses 10,464 16,039
------------------ ------------------
Loss from operations (8,969) (14,544)
------------------ ------------------
Provision for income tax expense (benefit) --- ---
------------------ ------------------
Net loss/Comprehensive loss $ (8,969) $ (14,544)
=================== ==================
Net loss per common share-- basic and diluted $ (.002) $ (.004)
=================== ==================
Weighted average of common shares-- basic and diluted 4,347,500 3,552,000
=================== ==================
|
See accompanying notes to financial statements.
ARTESCOPE, INC.
(a development stage company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD MARCH 2, 2000 (INCEPTION) THROUGH JUNE 30, 2001
(UNAUDITED)
Common Stock Additional
------------ Paid-In Accumulated
Shares Amount Capital Deficit Total
------------ ----------- ----------- ----------- -----------
Balance, March 2, 2000 --- $ --- $ --- $ --- $ ---
Issuance of common stock,
March 3, 2000 3,075,000 3,075 --- --- 3,075
Net loss/Comprehensive loss --- --- --- (5,575) (5,575)
------------ ----------- ----------- ----------- -----------
Balance, December 31, 2000 3,075,000 3,075 --- (5,575) (2,500)
------------ ----------- ----------- ----------- -----------
Issuance of common stock,
February 28, 2001 1,500,000 1,500 1,500 --- 3,000
Issuance of common stock,
May 25, 2001 1,635,000 1,635 31,065 --- 32,700
Net loss/Comprehensive loss --- --- --- (8,969) (8,969)
------------ ----------- ----------- ----------- -----------
Balance, June 30, 2001 6,210,000 $ 6,210 $ 32,565 $ (14,544) $ 24,231
============= ============ ============ ============= ============
|
See accompanying notes to financial statements.
ARTESCOPE, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS MARCH 2, 2001
ENDED (INCEPTION) -
JUNE 30, 2001 JUNE 30, 2001
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (8,969) $ (14,544)
Adjustments to reconcile net loss to net cash used in operating
activities
Cost of consulting services paid with common stock 1,000 2,525
Cost of legal services paid with common stock --- 1,550
Changes in operating assets and liabilities
(Increase) in accounts receivable (410) (410)
Increase in accounts payable and accrued expenses --- 2,500
----------------- -----------------
Net cash used in operating activities (8,379) (8,379)
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES --- ---
----------------- -----------------
Net cash provided by investing activities --- ---
----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 34,700 34,700
----------------- -----------------
Net cash provided by financing activities 34,700 34,700
----------------- -----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 26,321 26,321
CASH AND CASH EQUIVALENTS, beginning of period --- ---
----------------- ----------------
CASH AND CASH EQUIVALENTS, end of period $ 26,321 $ 26,321
================= =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid --- ---
----------------- -----------------
Interest paid --- ---
----------------- -----------------
|
See accompanying notes to financial statements.
ARTESCOPE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES
Business Description - Artescope, Inc.(the "Company") was incorporated in the state of Delaware on March 2,2000 under the name "411 Place.com". The name became Artescope, Inc. in February 2001. The Company provides digital graphics design and production services for commercial and corporate enterprises. The Company is headquartered in Fountain Valley, California.
Cash and Cash Equivalents - For purposes of the balance sheet and statements of cash flows, the Company considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents.
Fair Value of Financial Instruments - The carrying value of cash, accounts receivable and accounts payable and accrued expenses approximate their fair value due to the short period to maturity of these instruments.
Recognition of Revenues and Costs of Goods Sold - The Company records revenues of its services when they are complete and its products upon shipment to its customers and collectibility is reasonably assured The Company will also provide an allowance for returns when experience is established. Cost of goods sold consists of the payroll and related expenses of personnel used and the purchase price of products sold including inbound and outbound shipping charges.
Income Taxes - The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.
Net Loss per Common Share - The Company has adopted the provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). SFAS 128 requires the reporting of basic and diluted earnings/loss per share. Basic loss per share is calculated by dividing net loss by the weighted average number of outstanding common shares during the period.
Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
ARTESCOPE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
New Accounting Pronouncements - In September 2000, the EITF reached a final consensus on EITF Issue 00-10, "Accounting for Shipping and Handling Fees and Costs." This consensus requires that all amounts billed to a customer in a sale transaction related to shipping and handling, if any, represent revenue and should be classified as revenue.
NOTE 2 - BASIS OF PRESENTATION
The unaudited financial statements included herein have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001.
NOTE 3 - CONTINGENCIES
As shown in the accompanying financial statements, the Company has incurred a net operating loss of $14,544 since inception for the period ended June 30, 2001.
The Company is subject to those risks associated with development stage companies. The Company has sustained losses since inception and additional financing will be required by the Company to fund its development activities and to support operations. However, there is no assurance that the Company will be able to obtain additional financing. Furthermore, there is no assurance that rapid technological changes, changing customer needs and evolving industry standards associated with the Internet marketplace (e-commerce) will enable the Company to introduce new products and services on a continual and timely basis so that profitable operations can be attained.
NOTE 4 - ACCRUED EXPENSES
Accrued Wages and Compensated Absences - The Company currently does not have any employees. The majority of development costs and services have been provided to the Company by outside, third parties and by the founders. As such, there is no accrual for wages or compensated absences as of June 30, 2001.
ARTESCOPE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
NOTE 5 - COMMON STOCK
On March 3, 2000, the Company issued 1,525,000 shares of its common stock to its officers and founders for consulting services and 1,550,000 shares of its common stock to various individuals for legal services rendered in connection with the initial start-up and organization costs incurred. Since there was no readily available market value at the time the services were rendered, par value of $0.001 per share was considered as a reasonable estimate of fair value by all parties.
On February 28, 2001, the Company issued 1,500,000 shares of its common stock to an officer and director for cash of $2,000 and consulting services. Since there was no readily available market value at the time the services were rendered, the value of $0.002 per share was considered as a reasonable estimate of fair value between the Company and the officer.
On May 31, 2001, the Company completed a "best efforts" offering of its common stock pursuant to the provisions of Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated by the Securities and Exchange Commission. In accordance with the Private Placement Memorandum Offering, which was initiated on March 15, 2001, the Company issued 1,635,000 shares of its common stock at $0.02 per share for a total of $32,700.
NOTE 6 - INCOME TAXES
At June 30, 2001, the Company has available for federal income tax purposes a net operating loss carryforwards of approximately $14,544, expiring 2015 and 2016, that may be used to offset future taxable income. Therefore, no provision for income taxes has been provided.
In addition, the Company has deferred tax assets of approximately $3,500 at June 30, 2001. The Company has not recorded a benefit from its net operating loss carryforward because realization of the benefit is uncertain and, therefore, a valuation allowance of ($3,500) has been provided for the deferred tax assets.
ARTESCOPE, INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
DECEMBER 31, 2000
ARTESCOPE, INC.
(a development stage company)
CONTENTS
Independent Auditor's Report 1
Financial Statements:
Balance Sheet 2
Statement of Operations 3
Statement of Changes in Stockholders' Deficit 4
Statement of Cash Flows 5
Notes to Financial Statements 6
|
Independent Auditor's Report
To the Stockholders of
Artescope, Inc.
I have audited the accompanying balance sheet of Artescope, Inc., a development stage company, as of December 31, 2000, and the related statements of operations, changes in stockholders' deficit, and cash flows for the period March 2, 2000 (inception) through December 31, 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 audit.
I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Artescope, Inc., a development stage company as of December 31, 2000, and the results of its operations and its cash flows for the period March 2, 2000 (inception) through December 31, 2000 in conformity with generally accepted accounting principles.
/s/ Quintanilla A Professional Accountancy Corporation Laguna Niguel, California July 20, 2001 |
ARTESCOPE, INC.
(a development stage company)
BALANCE SHEET
DECEMBER 31, 2000
Current assets
Cash $ ---
Other current assets ---
----------------
Total current assets ---
Other assets ---
----------------
Total assets $ ---
================
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities
Accounts payable and accrued expenses $ 2,500
----------------
Total current liabilities 2,500
----------------
Contingencies
Stockholders' Deficit
Preferred stock, $.001 par value;
Authorized shares-- 5,000,000
Issued and outstanding shares-- 0 ---
Common stock, $.001 par value;
Authorized shares-- 50,000,000
Issued and outstanding shares-- 3,075,000 3,075
Additional paid-in capital ---
Deficit accumulated during the development stage (5,575)
---------------
Total stockholders' deficit
(2,500)
Total liabilities and stockholders' deficit $ ---
================
|
See accompanying notes to financial statements.
ARTESCOPE, INC.
(a development stage company)
STATEMENT OF OPERATIONS
PERIOD MARCH 2, 2000 (INCEPTION) THROUGH DECEMBER 31, 2000
Revenues
Design and media production $ ---
Less: returns and allowances ---
-----------------
Net revenues ---
-----------------
Direct costs
Production design and development ---
-----------------
Total direct costs ---
-----------------
Gross margin ---
-----------------
Operating expenses
Consulting services 1,525
Legal and accounting fees 4,050
-----------------
Total operating expenses 5,575
-----------------
Loss from operations (5,575)
-----------------
Provision for income tax expense (benefit) ---
-----------------
Net loss/Comprehensive loss $ (5,575)
==================
Net loss per common share-- basic and diluted $ (.002)
==================
Weighted average of common shares-- basic and diluted 3,075,000
==================
|
See accompanying notes to financial statements.
ARTESCOPE, INC.
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
PERIOD MARCH 2, 2000 (INCEPTION) THROUGH DECEMBER 31, 2000
Common Stock Additional
------------ Paid-In Accumulated
Shares Amount Capital Deficit Total
------------ ----------- ----------- ------------ ------------
Balance, March 2, 2000 --- $ --- $ --- $ --- $ ---
Issuance of common stock,
March 3, 2000 3,075,000 3,075 --- --- 3,075
Net loss/Comprehensive loss --- --- --- (5,575) (5,575)
------------ ----------- ----------- ------------ ------------
Balance, December 31, 2000 3,075,000 $ 3,075 $ --- $ (5,575) $ (2,500)
============ =========== =========== =========== ============
|
See accompanying notes to financial statements.
ARTESCOPE, INC.
(a development stage company)
STATEMENT OF CASH FLOWS
PERIOD MARCH 2, 2000 (INCEPTION) THROUGH DECEMBER 31, 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,575)
Adjustments to reconcile net loss to net cash used in operating activities
Cost of consulting services paid with common stock 1,525
Cost of legal services paid with common stock 1,550
Changes in operating assets and liabilities
Increase in accounts payable and accrued expenses 2,500
-----------------
Net cash provided by operating activities ---
-----------------
CASH FLOWS FROM INVESTING ACTIVITIES ---
------------------
Net cash provided by investing activities ---
-----------------
CASH FLOWS FROM FINANCING ACTIVITIES ---
-----------------
Net cash provided by financing activities ---
-----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS ---
CASH AND CASH EQUIVALENTS, beginning of period ---
-----------------
CASH AND CASH EQUIVALENTS, end of period $ ---
=================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid ---
----------------
Interest paid ---
----------------
|
Non-cash financing activities:
During the period March 2, 2000 (inception) through December 31, 2000,
the Company issued 3,075,000 shares of its common stock to its President,
Secretary and founders for services valued at $3,075.
See accompanying notes to financial statements.
ARTESCOPE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES
Business Description - Artescope, Inc.(the "Company") was incorporated in the state of Delaware on March 2,2000 under the name "411 Place.com". The name became Artescope, Inc. in February 2001. The Company provides digital graphics design and production services for commercial and corporate enterprises. The Company is headquartered in Fountain Valley, California.
Cash and Cash Equivalents - For purposes of the balance sheet and statement of cash flows, the Company considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents. At December 31, 2000, the Company had no cash or cash equivalents.
Fair Value of Financial Instruments - The carrying value of accounts payable and accrued expenses approximate their fair value due to the short period to maturity of these instruments.
Recognition of Revenues and Costs of Goods Sold - Once revenues are generated, the Company will record revenues of its services when they are complete and its products upon shipment to its customers and collectibility is reasonably assured The Company will also provide an allowance for returns when experience is established. Cost of goods sold consists of the payroll and related expenses of personnel used and the purchase price of products sold including inbound and outbound shipping charges.
Income Taxes - The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.
Net Loss per Common Share - The Company has adopted the provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). SFAS 128 requires the reporting of basic and diluted earnings/loss per share. Basic loss per share is calculated by dividing net loss by the weighted average number of outstanding common shares during the year.
Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
ARTESCOPE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
New Accounting Pronouncements - In September 2000, the EITF reached a final consensus on EITF Issue 00-10, "Accounting for Shipping and Handling Fees and Costs." This consensus requires that all amounts billed to a customer in a sale transaction related to shipping and handling, if any, represent revenue and should be classified as revenue.
NOTE 2 - CONTINGENCIES
As shown in the accompanying financial statements, the Company has incurred a net operating loss of $5,575 since inception for the year ended December 31, 2000.
The Company is subject to those risks associated with development stage companies. The Company has sustained losses since inception and additional financing will be required by the Company to fund its development activities and to support operations. However, there is no assurance that the Company will be able to obtain additional financing. Furthermore, there is no assurance that rapid technological changes, changing customer needs and evolving industry standards associated with the Internet marketplace (e-commerce) will enable the Company to introduce new products and services on a continual and timely basis so that profitable operations can be attained.
NOTE 3 - ACCRUED EXPENSES
Accrued Wages and Compensated Absences - The Company currently does not have any employees. The majority of development costs and services have been provided to the Company by outside, third parties and by the founders. As such, there is no accrual for wages or compensated absences as of December 31, 2000.
NOTE 4 - COMMON STOCK
On March 3, 2000, the Company issued 1,525,000 shares of its common stock to its officers and founders for consulting services and 1,550,000 shares of its common stock to various individuals for legal services rendered in connection with the initial start-up and organization costs incurred. Since there was no readily available market value at the time the services were rendered, par value of $0.001 per share was considered as a reasonable estimate of fair value by all parties.
ARTESCOPE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
NOTE 5 - INCOME TAXES
At December 31, 2000, the Company has available for federal income tax purposes a net operating loss carryforward of approximately $5,575, expiring 2015, that may be used to offset future taxable income. Therefore, no provision for income taxes has been provided.
In addition, the Company has deferred tax assets of approximately $1,900 at December 31, 2000. The Company has not recorded a benefit from its net operating loss carryforward because realization of the benefit is uncertain and, therefore, a valuation allowance of ($1,900) has been provided for the deferred tax assets.
Note 6 - SUBSEQUENT EVENT
On May 30, 2001, the Company completed a "best efforts" offering of its common stock pursuant to the provisions of Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated by the Securities and Exchange Commission. In accordance with the Private Placement Memorandum Offering, which was initiated on March 15, 2001, the Company issued 1,635,000 shares of its common stock at $0.02 per share for a total of $32,700.
In May 2001, our Board of Directors appointed Quintanilla Accountancy Corporation, independent accountant, to audit our financials statements from March 2, 2000 (our date of formation) through December 31, 2000.
There have been no disagreements with our accountant since our formation required to be disclosed pursuant to Item 304 of Regulation S-B.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered by the selling security holders has been passed upon by the law firm of Stepp Law Group, located in Newport Beach, California.
EXPERTS
Our financial statements for the period ended December 31, 2000, appearing in this prospectus which is part of a Registration Statement have been audited by Quintanilla Accountancy Corporation and are included in reliance upon such reports given upon the authority of Quintanilla Accountancy Corporation as experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed a registration statement on Form SB-2 with the Securities and Exchange Commission pursuant to the Securities Act of 1933 with respect to the common stock offered by the selling security holders. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. For further information regarding us and our common stock offered hereby, reference is made to the registration statement and the exhibits and schedules filed as a part of the registration statement.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Article Six of our Certificate of Incorporation provides, among other things, that our directors shall not be personally liable to us or our shareholders for monetary damages for breach of fiduciary duty as a director, except for:
o any breach of such director's duty of loyalty to us or our
security holders;
o acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o liability for unlawful payments of dividends or
unlawful stock purchase or redemption by us; or
o any transaction from which such director derived any improper
personal benefit.
Accordingly, our directors may have no liability to our shareholders for any mistakes or errors of judgment or for any act of omission, unless such act or omission involves intentional misconduct, fraud, or a knowing violation of law or results in unlawful distributions to our shareholders.
Our Certificate of Incorporation provides that we will indemnify our directors to the extent permitted by Delaware General Corporation Law, including circumstances in which indemnification is otherwise discretionary under the Delaware General Corporation Law. Our Certificate of Incorporation also provides that to the extent that Delaware General Corporation Law is amended to permit further indemnification, we will so indemnify our directors.
Section 145 of the Delaware General Corporation Law provides that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to or is involved in any pending, threatened, or completed civil, criminal, administrative, or arbitration action, suit, or proceeding, or any appeal therein or any inquiry or investigation which could result in such action, suit, or proceeding, because of his or her being or having been our director, officer, employee, or agent or of any constituent corporation absorbed by us in a consolidation or merger or by reason of his or her being or having been a director, officer, trustee, employee, or agent of any other corporation or of any partnership, joint venture, sole proprietorship, trust, employee benefit plan, or such enterprise, serving as such at our request or of any such constituent corporation, or the legal representative of any such director, officer, trustee, employee, or agent, from and against any and all reasonable costs, disbursements, and attorney's fees, and any and all amounts paid or incurred in satisfaction of settlements, judgments, fines, and penalties, incurred or suffered in connection with any such proceeding.
Article VI of our Bylaws also provides that our officers and directors shall be indemnified and held harmless by us to the fullest extent permitted by the provisions of Section 145 of the Delaware General Corporation Law.
Indemnification Agreements. We anticipate that we will enter into indemnification agreements with each of our executive officers pursuant to which we will agree to indemnify each such officer for all expenses and liabilities, including criminal monetary judgments, penalties and fines, incurred by such person in connection with any criminal or civil action brought or threatened against such person by reason of such person being or having been our officer or director or employee. To be entitled to indemnification by us, such officer must have acted in good faith and in a manner such officer believed to be in our best interests and, with respect to criminal actions, such person must have had no reasonable cause to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
We will pay all expenses in connection with the registration and sale of the common stock by the selling security holders. The estimated expenses of issuance and distribution are set forth below.
======================================== ===================== =============== Registration Fees Approximately $163.95 ---------------------------------------- --------------------- --------------- Transfer Agent Fees Approximately $650.00 ---------------------------------------- --------------------- --------------- Costs of Printing and Engraving Approximately $600.00 ---------------------------------------- --------------------- --------------- Legal Fees Approximately $5,000.00 ---------------------------------------- --------------------- --------------- Accounting Fees Approximately $3,500.00 ======================================== ===================== =============== |
There have been no sales of unregistered securities within the last three years which would be required to be disclosed pursuant to Item 701 of Regulation S-B, except for the following:
In May 2001, we issued 1,635,000 shares of our common stock to eighteen investors for $0.02 per share. The shares were issued in a transaction which we believe satisfies the requirements of that exemption from the registration and prospectus delivery requirements of the Securities Act of 1933, which exemption is specified by the provisions of Section 4(2) of that act and Rule 506 of Regulation D promulgated pursuant to that act by the Securities and Exchange Commission. Specifically, the offer was made to "accredited investors", as that term is defined under applicable federal and state securities laws, and no more than 35 non-accredited investors. The value of the shares was arbitrarily set by us and had no relationship to our assets, book value, revenues or other established criteria of value. There were no commissions paid on the sale of these shares. The net proceeds to us were $32,700.
In February 2001, we issued 1,500,000 shares of our common stock to Bernard P. Colacchio. The shares were issued in a transaction which we believe satisfies the requirements of that certain exemption from the registration and prospectus delivery requirements of the Securities Act of 1933, which exemption is specified by the provisions of Section 4(2) of the Securities Act of 1933, as amended. 500,000 of the shares were issued to Mr. Colacchio in exchange for services provided to us, which were valued at $1,000. 1,000,000 of the shares were issued to Mr. Colacchio in exchange for $2,000.
On March 3, 2000, we issued 3,075,000 shares of our common stock to Renee Y. Close, Thomas E. Stepp, Jr.; Michael Muellerleile; Deron Colby; Richard Reincke; Amy Pontillas; John D. Muellerleile; Cindy Bergendahl; Sharareh Frouzesh; Ryan Neely and Christopher A. Cota, in a transaction which we believe satisfies the requirements of that certain exemption from the registration and prospectus delivery requirements of the Securities Act of 1933, which exemption is specified by the provisions of Section 4(2) of the Securities Act of 1933, as amended. The shares were issued in exchange for services provided to us, which were valued at $3,075.
Copies of the following documents are filed with this Registration Statement as exhibits:
1. Underwriting Agreement (not applicable) 3.1 Certificate of Incorporation 3.2 Certificate of Amendment to Certificate of Incorporation 3.3 Bylaws |
5. Opinion Re: Legality
8. Opinion Re: Tax Matters (not applicable)
11. Statement Re: Computation of Per Share Earnings*
15. Letter on unaudited interim financial information
(not applicable)
23.1 Consent of Auditors
23.2 Consent of Counsel**
24. Power of Attorney is included on the Signature Page of the
Registration Statement
|
* Included in Financial Statements ** Included in Exhibit 5
A. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by our director, officer or controlling person 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, we will, unless in the opinion of our 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 of 1933 and will be governed by the final adjudication of such issue.
B. We hereby undertake:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To specify in the prospectus any facts or events arising after the effective date of the Registration Statement (or most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered, if the total dollar value of securities offered would not exceed that which was registered, and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) (Section 230.424(b) of Regulation S-B) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; and
(iii) To include any additional or changed material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended, we certify that we have reasonable grounds to believe that we meet all of the requirements of filing on Form SB-2 and authorized this Registration Statement to be signed on our behalf by the undersigned, in the city of Newport Beach, California, on August 1, 2001.
Artescope, Inc., a Delaware corporation
By: /s/ Renee Y. Close
--------------------
Renee Y. Close
Its: President, Treasurer and Director
|
In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates stated:
/s/ Renee Y. Close August 1, 2001 ------------------------------- Renee Y. Close president, secretary, director /s/ Bernard P. Colacchio August 1, 2001 ------------------------------- Bernard P. Colacchio treasurer, director |
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and hereby authorizes Renee Y. Close with the full power of substitution, as attorney-in-fact, to sign in such person's behalf, individually and in each capacity stated below, and to file any amendments, including post-effective amendments to this Registration Statement.
In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates stated.
Artescope, Inc.
/s/ Renee Y. Close August 1, 2001 ------------------------------ Renee Y. Close president, secretary, director /s/ Bernard P. Colacchio August 1, 2001 ------------------------------ Bernard P. Colacchio treasurer, director |
CERTIFICATE OF INCORPORATION
OF
411 PLACE.COM, INC.
I, the undersigned, for the purposes of incorporating and organizing a corporation under the General Corporation Law of the State of Delaware, do execute this Certificate of Incorporation and hereby certify the foregoing:
SECOND. The address of this corporation's registered office in the State of Delaware is 1013 Centre Road, in the city of Wilmington, 19805, county of New Castle. The name of the agent at that address is Corporation Service Company.
THIRD. The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized pursuant to the General Corporation Law of the State of Delaware.
FOURTH. The total number of shares of stock which this corporation shall have authority to issue is Fifty Five Million (55,000,000) with a par value of one mil ($.001) per share. Fifty Million (50,000,000) of those shares are Common Stock and Five Million (5,000,000) of those shares are Preferred Stock. Each share of Common Stock shall entitle the holder thereof to one vote, in person or by proxy, on any matter on which action of the stockholders of this corporation is sought. The holders of shares of Preferred Stock shall have no right to vote such shares, except (i) as determined by the Board of Directors of this corporation in accordance with the provisions of Section (3) of ARTICLE FIFTH of this Certificate of Incorporation, or (ii) as otherwise provided by the Delaware General Corporation Law, as amended from time to time. The stockholders shall not possess cumulative voting rights. The holders of shares of capital stock of the corporation shall not be entitled to pre-emptive or preferential rights to subscribe to any unissued stock or any other securities which the corporation may now or hereafter be authorized to issued. 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.
FIFTH. The Board of Directors of this corporation shall be, and hereby is, authorized and empowered, subject to limitations prescribed by law and the provisions of Article FOURTH of this Certificate of Incorporation, to provide for the issuance of the shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designations, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions of each such series. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following:
(1) The number of shares that constitute such series and the distinctive designation of such series;
(2) The dividend rate on the shares of such series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of such series;
(3) Whether such series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;
(4) Whether such series shall have conversion privileges, and, if so, the terms and conditions of such conversion privileges, including provision for adjustment of the conversion rate, in such events as the Board of Directors shall determine;
(5) Whether or not the shares of such series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date upon or after which those shares shall be redeemable, and the amount per share payable in the event of redemption, which amount may vary in different circumstances and at different redemption dates;
(6) Whether that series shall have a sinking fund for the redemption or purchase of shares of such series, and, if so, the terms and amount of such fund;
(7) The rights of the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of this corporation, and the relative rights of priority, if any, of payment of shares of such series;
(8) Any other relative rights, preferences and limitations of such series.
SIXTH. Each director of this corporation shall not be personally liable to this corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of such director's duty of loyalty to this corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which such director derived any improper personal benefit. In the event that the Delaware General Corporation Law is amended to authorize corporate action further eliminating or limiting the personal liability of directors of this corporation, then the liability of each director of this corporation shall be eliminated or limited to the fullest and most complete extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of this article by the stockholders of this corporation shall not adversely affect any right or protection of any director of this corporation existing at the time of such repeal or modification.
SEVENTH. This corporation reserves the right at any time, and from time to time, to amend, alter, change or repeal any provision specified in this Certificate of Incorporation, and other provisions authorized by the laws of the State of Delaware at any such time then in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the rights reserved in this article.
EIGHTH. The incorporator of this corporation is Sharareh Frouzesh whose mailing address is 26641 Calle Alcala, Mission Viejo, California 92691.
NINTH. The powers of the incorporator are to terminate upon the filing of this Certificate of Incorporation. The name and mailing address of the person who is to serve as the initial director of this corporation until the first annual meeting of stockholders of this corporation, or until his successor is elected and qualifies, is:
Ryan A. Neely 513 Calle Amigo San Clemente, CA 92673
TENTH. (a) The number of directors constituting the entire Board of
Directors of this corporation shall be not less than one (1) nor more than eight
(8) as fixed from time to time by vote of a majority of the entire Board of
Directors of this corporation; provided, however, that the number of directors
shall not be reduced so as to shorten the term of any director at that time in
office.
(b) Notwithstanding any other provisions of this Certificate of Incorporation or the bylaws of this corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Certificate of Incorporation or the bylaws of this corporation), any director or the entire Board of Directors of this Corporation may be removed at any time, but only for cause and only by the affirmative vote of the holders of seventy-five percent (75%) or more of the outstanding shares of capital stock of this corporation entitled to vote generally in the election of directors cast at a meeting of the stockholders of this corporation called for that purpose. Notwithstanding the foregoing, and except as otherwise required by law, whenever the holders of any one or more series of Preferred Stock shall have the right, voting separately as a class, to elect one or more directors of this corporation, the provisions of this article shall not apply with respect to the director or directors elected by such holders of Preferred Stock.
ELEVENTH. All of the powers of this corporation, insofar as the same may be lawfully vested by this Certificate of Incorporation in the Board of Directors, are hereby conferred upon the Board of Directors of this corporation. In furtherance and not in limitation of that power, the Board of Directors shall have the power to make, adopt, alter, amend and repeal from time to time the bylaws of this corporation, subject to the right of the shareholders entitled to vote with respect thereto to adopt, alter, amend and repeal bylaws made by the Board of Directors; provided, however, that bylaws shall not be adopted, altered, amended or repealed by the stockholders of this corporation, except by the vote of the holders of not less than two thirds (2/3) of the outstanding shares of stock entitled to vote upon the election of directors.
The undersigned incorporator hereby acknowledges that the foregoing Certificate of Incorporation is her act and deed on this 1st day of March, 2000.
Incorporator:
/s/ Sharareh Frouzesh --------------------------- Sharareh Frouzesh |
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF INCORPORATION OF
411 PLACE.COM INC.
a Delaware corporation
411 Place.com, Inc., a corporation organized under the General Corporation Law of the State of Delaware ("Corporation"), does hereby certify:
FIRST: The Corporation has received payment for its capital stock.
SECOND: The amendment to the Corporation's Certificate of Incorporation set forth in the following resolution was approved by a majority of the Corporation's Board of Directors and was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of Delaware; and, further, was approved by the shareholders of the Corporation pursuant to Section 228 of the General Corporation Law of the State of Delaware.
RESOLVED, that the Certificate of Incorporation of the Corporation
be amended by striking Article FIRST in its entirety and replacing therefor:
`FIRST: The name of this corporation shall be Artescope, Inc.'
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed and attested by its duly authorized officer.
Dated: February 27, 2001
/s/ Renee Close
---------------------------
By: Renee Close
Its: President
|
ATTEST:
/s/ Renee Close
---------------------------
By: Renee Close
Its: Secretary
|
BYLAWS
OF
411 Place.Com, Inc.
ARTICLE I
Offices
Section 1. Registered Office. The registered office of 411 Place.com, Inc. ("Corporation") shall be maintained at such locations within the State of Delaware as the Board of Directors from time to time shall designate. The Corporation shall maintain in charge of such registered office an agent upon whom process against the Corporation may be served.
Section 2. Other Offices. The Corporation may also have an office or offices at such other place or places, either within or without the State of Delaware, as the Board of Directors from time to time may determine or the business of the Corporation may require.
ARTICLE II
Meetings of Shareholders
Section 1. Annual Meetings. Subject to the provisions of these Bylaws, the annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before such meeting shall be held on such date and at such time as shall be designated by the Board of Directors and stated in the notice of such meeting. If the election for directors shall not be held on the day designated therefor or at any adjournment thereof, the directors shall cause such election to be held at a special meeting of the shareholders as soon thereafter as may be convenient. At such special meeting, subject to the provisions of these Bylaws, the shareholders may elect the directors and transact any other business with the same force and effect as at an annual meeting duly called and held.
Section 2. Special Meetings. A special meeting of the shareholders for any purpose or purposes, unless otherwise prescribed by statute, may be called at any time and shall be called by the President or Secretary, upon the direction of the Board of Directors, or upon the written request of a shareholder or shareholders holding of record at least ten percent (10%) of the outstanding shares of the Corporation entitled to vote at such a meeting.
Section 3. Place of Meetings. All meetings of the shareholders shall be held at the principal place of business of the Corporation or at such other place, within or without the State of Delaware, as shall be designated by the Board of Directors and stated in the notice of each such meeting.
Section 4. Notice of Meetings. Except as otherwise provided by law, notice of each meeting of the shareholders, whether annual, special, or adjourned, shall be given, not less than ten (10) days nor more than sixty (60) days before the day on which such meeting is to be held, to each shareholder of record entitled to vote at such meeting by delivering a written or printed notice thereof to such shareholder personally, by facsimile machine, or by mailing such notice in a postage prepaid envelope addressed to such shareholder at the post office address furnished by such shareholder to the Secretary for
such purpose, or, if such shareholder shall not have furnished to the Secretary an address for such purpose, then at the address of such shareholder last known to the Secretary. Except when expressly required by law, no publication of any notice of a meeting of shareholders shall be required. Notice of any meeting of shareholders shall not be required to be given to any shareholder who shall attend such meeting in person or by proxy. If any shareholder shall in person or by proxy waive notice, in writing, of such meeting, whether before or after such meeting, notice thereof need not be given to such shareholder. Notice of any adjourned meeting of the shareholders shall not be required to be given, except when expressly required by law.
Section 5. Quorum. At each meeting of the shareholders, the presence in person or by proxy of shareholders holding of record a majority of the outstanding shares entitled to vote at such meeting shall be necessary and sufficient to constitute a quorum for the transaction of business. In the absence of a quorum, the shareholders entitled to vote who are present in person or by proxy at the time and place of any meeting, or, if no shareholder entitled to vote is so present in person or by proxy, any officer entitled to preside at or act as secretary of such meeting may adjourn such meeting from time to time, without notice other than an announcement at such meeting, until a quorum shall be present. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called.
Section 6. Organization. At every meeting of the shareholders, the President, or, in his or her absence, a Vice President, or, in the absence of the President and all of the Vice Presidents, a chairman chosen by a majority in interest of the shareholders present in person or by proxy and entitled to vote thereat, shall act as chairman. The Secretary, or, in his or her absence, an Assistant Secretary, shall act as secretary at all meetings of the shareholders. In the absence from any such meeting of the Secretary or an Assistant Secretary, the chairman may appoint any person to act as secretary of such meeting.
Section 7. Business and Order of Business. Subject to the provisions of these Bylaws, at each meeting of the shareholders, such business may be transacted as may properly be brought before such meeting.
Section 8. Voting. At each meeting of the shareholders, each
shareholder shall be entitled to one vote in person or by proxy for each share
of the Corporation having voting rights registered in his or her name on the
books of the Corporation at the close of business on the day next preceding the
day on which notice of such meeting was given, or, if no notice was given, on
the day next preceding the day on which such meeting is held, except when,
pursuant to the provisions of Section 7 of Article VII of these Bylaws, a date
shall have been fixed as a record date for the determination of the shareholders
entitled to vote. Any shareholder entitled to vote may vote in person or by
proxy in writing; provided, however, that no proxy shall be valid after eleven
(11) months after the date of its execution, unless otherwise provided therein.
The presence at any meeting of any shareholder who has given a proxy shall not
revoke such proxy, unless such shareholder shall file written notice of such
revocation with the secretary of such meeting prior to the voting of such proxy.
At each meeting of the shareholders, all matters other than those the manner of deciding of which is expressly regulated by statute, the Certificate of Incorporation, or these Bylaws, shall be decided by a majority of the votes cast by the holders of shares entitled to vote thereon.
The Board of Directors, in advance of any meeting of the shareholders, or the chairman of such meeting, at such meeting, may appoint one or more inspectors of election to act at such meeting or any adjournment thereof, but no inspectors need be appointed unless expressly requested at such meeting by a shareholder entitled to vote thereat.
Section 9. Conduct of Meetings of Shareholders. Meetings of the shareholders shall generally follow reasonable and fair procedure. Subject to the foregoing, the conduct of any meeting and the determination of procedure and rules shall be within the absolute discretion of the chairman, and there shall be no appeal from any ruling of the chairman with respect to procedure or rules. Accordingly, in any meeting of the shareholders, or part thereof, the chairman shall have the absolute power to determine appropriate rules or to dispense with theretofore prevailing rules. Without limiting the foregoing, the following rules shall apply:
(a) Within his or her sole discretion, the chairman of a meeting may adjourn such meeting by declaring such meeting adjourned. Upon his or her doing so, such meeting shall be immediately adjourned.
(b) The chairman may ask or require that anyone who is not a bona fide shareholder or proxy leave a meeting.
(c) A resolution or motion shall be considered for vote only if proposed by a shareholder or duly authorized proxy, and seconded by a person, who is a shareholder or a duly authorized proxy, other than the person who proposed the resolution or motion. The chairman may propose any motion for vote.
(d) The chairman of a meeting may impose any reasonable limits with respect to participation by shareholders in a meeting, including, but not limited to, limits on the amount of time at the meeting taken up by the remarks or questions or any shareholder, limits on the numbers of questions per shareholder, and limits as to the subject matter and timing of questions and remarks by shareholders.
Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any meeting of the shareholders except in accordance with the procedures set forth in this Section 9; provided, however, that nothing in this Section 9 shall be deemed to preclude discussion by any shareholder as to any business properly brought before any meeting.
The chairman shall, if the facts warrant, determine, and declare at any meeting of the shareholders that business was not properly brought before such meeting in accordance with the provisions of this Section 9, and if he or she should so determine, he or she shall so declare to such meeting and any such business not properly brought before such meeting shall not be transacted.
Section 10. Advance Notice of Shareholder Proposed Business at any Meeting of the Shareholders. To be properly brought before any annual meeting of the shareholders, business must be either (a) specified in the notice of such meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before such meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before such meeting by a shareholder. In addition to any other applicable requirements, including, but not limited to, requirements imposed by federal and state securities laws pertaining to proxies, for business to be properly brought before any meeting by a shareholder, such shareholder must have given timely notice thereof in writing to the Secretary. To be timely, shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not later than the close of business on the 15th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made, whichever first occurs. A shareholder's notice to the Secretary shall set forth as to each matter such shareholder proposes to bring before any meeting of the shareholders (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name and record address of the shareholder proposing such business, (iii) the class and number of shares of the Corporation which are beneficially owned by such shareholder, and (iv) any material interests of such shareholder in such business.
Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 10. The chairman of such annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before such meeting and in accordance with the provisions of this Section 10, and if he or she should so determine, he or she shall so declare to such meeting and any such business not properly brought before such meeting shall not be transacted.
Section 11. Action by Shareholders Without a Meeting. Any action required or permitted to be taken at a meeting of the shareholders under any provisions of the Delaware General Corporation Law, the Certificate of Incorporation, or these Bylaws may be taken without a meeting if all of the shareholders entitled to vote thereon consent in writing to such action being taken, or, subject to the provisions of Section 228 of the Delaware General Corporation Law, if the shareholders who would have been entitled to cast the
minimum number of votes which would be necessary to authorize such action at a meeting at which all of the shareholders entitled to vote thereon were present and voting shall consent in writing to such action being taken. Whenever action of the Corporation is so taken, the consents of the shareholders consenting thereto shall be filed with the minutes of proceedings of the shareholders.
ARTICLE III
Board of Directors
Section 1. General Powers. The property, affairs, and business of the Corporation shall be managed by the Board of Directors.
Section 2. Number, Qualifications, and Term of Office. The number of directors constituting the entire Board of Directors of this corporation shall be not less than one (1) nor more than eight (8) as fixed from time to time by vote of a majority of the entire Board of Directors of this Corporation; provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at that time in office. The directors shall be elected annually at the annual meeting of the shareholders. Each director shall hold office until his or her successor shall have been elected and qualified, until his or her death, until he or she shall have resigned in the manner set forth in Section 13 of this Article III, or until he or she shall have been removed in the manner set forth in Section 14 of this Article III, whichever shall first occur. Any director elected to fill a vacancy in the Board of Directors shall be deemed elected for the unexpired portion of the term of his or her predecessor on the Board of Directors. Each director, at the time of his or her election, shall be at least eighteen (18) years of age.
Section 3. Nomination of Directors. (a) Only persons who are nominated
in accordance with the procedures set forth in this section shall be eligible
for election as directors. The Board of Directors, or a duly appointed committee
thereof, shall act as a nominating committee for selecting nominees for election
as directors. Except in the case of a nominee substituted as a result of the
death or incapacity of a nominee of the nominating committee, the nominating
committee shall deliver written nominations to the Secretary at least ninety
(90) days prior to the appropriate date of the previous meeting of shareholders
called for election of directors. Provided such nominating committee makes such
nominations, no nominations for directors, except those made by the nominating
committee, shall be voted upon at the annual meeting unless other nominations by
shareholders are made in accordance with the provisions of this section. No
person shall be elected as a director of the Corporation unless nominated in
accordance with the procedures set forth in this section. Ballots specifying the
names of all persons nominated by the nominating committee and by shareholders
shall be provided for use at the annual meeting.
(b) Nominations of persons for election to the Board of Directors of the Corporation at an annual meeting of shareholders may be made by any shareholder entitled to vote for the election of directors at such meeting who
complies with the procedures set forth in this section. Such nominations, other than those made by the Board of Directors or a nominating committee thereof, shall be made pursuant to timely notice in writing to the Secretary as set forth in this section. To be timely, a shareholder's notice shall be delivered to or received at the principal executive offices of the Corporation not less than ninety (90) days prior to the appropriate anniversary date of the previous meeting of shareholders of the Corporation called for the election of directors. Each such shareholder's notice shall set forth (1) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (2) a representation that the shareholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (3) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (4) such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations of proxies with respect to nominees for election as directors, pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, including, but not limited to, information required to be disclosed by Items 4, 5, 6, and 7 of Schedule 14A; (5) the consent of each nominee to serve as director of the Corporation if so elected; and (6) the class and number of shares of stock of the Corporation which are beneficially owned by such shareholder on the date of such shareholder notice and, to the extent known, by any other shareholders known by such shareholder to be supporting such nominees on the date of such shareholder notice. At the request of the Board of Directors, any person nominated by the Board of Directors, or a nominating committee thereof, for election as a director shall furnish to the Secretary that information required to be set forth in a shareholder's notice of nomination which pertains to the nominee together with the required written consents, each as described herein.
(c) The Board of Directors may reject any nomination by a shareholder not timely made in accordance with the requirements of this section. If the Board of Directors , or a designated committee thereof, determines that the information provided in a shareholder's notice does not satisfy the informational requirements of this section in any material aspect, the Secretary shall notify such shareholder of the deficiency in the notice. The shareholder shall have an opportunity to cure the deficiency by providing additional information to the Secretary within such period of time, not to exceed five (5) days from the date such deficiency notice is given to the shareholder, as the Board of Directors or such committee shall reasonably determine. If the deficiency is not cured within such period, or if the Board of Directors or such committee reasonably determines that the additional information provided by the shareholder, together with information previously provided, does not satisfy the requirements of this section in any material respect, then the Board of Directors may reject such shareholder's nomination. The Secretary shall notify a shareholder in writing whether his or her nomination has been made in accordance with the time and informational requirements of this section. Notwithstanding the procedures set forth in this section, if neither the Board of Directors nor such committee makes a determination as to the validity of any nominations by a shareholder, the chairman of such annual meeting shall determine and declare at such annual meeting whether the nomination was made in accordance with the terms of this section. If such chairman determines a nomination was made in accordance with the terms of this section, he or she shall so declare at such annual
meeting and ballots shall be provided for use at the annual meeting with respect to such nominee. If such chairman determines that a nomination was not made in accordance with this section, he or she shall so declare at the annual meeting and defective nomination shall be disregarded.
Section 4. Election of Directors. At each meeting of the shareholders for the election of directors, the directors shall be chosen by a plurality of the votes cast at such election by the holders of shares entitled to vote thereon. The vote for directors need not be by ballot, unless demanded by a shareholder entitled to vote thereon at such election and before the voting begins. The shareholders shall not be entitled to cumulate their votes for directors.
Section 5. Annual Meetings. The annual meeting of the Board of Directors shall be held in each year immediately after the annual meeting of shareholders, at such place as the Board of Directors from time to time may fix and, if so held, no notice of such meeting need be given.
Section 6. Regular Meetings. Regular meetings of the Board of Directors shall be held at such times as the Board of Directors shall determine. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at said place at the same hour on the next succeeding business day that is not a legal holiday. Notice of regular meetings need not be given.
Section 7. Special Meetings. Special meetings of the Board of Directors shall be held whenever called by the President or any one (1) director. Notice of each such meeting shall be mailed to each director, addressed to him or her at his or her residence or usual place of business, at least five (5) days before the day on which such meeting is to be held, or shall be sent to him or her at such place by facsimile machine, telegraph, cable, telex, or the equivalent, or be delivered personally or by telephone, not later than the day preceding the day on which such meeting is to be held, except that in the event of an emergency, the President may direct that shorter notice of a special meeting be given personally or by facsimile machine, telephone, telegraph, cable, telex, or the equivalent. Neither the business to be transacted nor the purpose of any such meeting need be specified in such notice. Notice of any meeting of the Board of Directors need not be given, however, if waived in writing or by facsimile machine, telegraph, telex, cable, or the equivalent, either before or after such meeting, or, at the meeting. Any meeting of the Board of Directors shall be a legal meeting without any notice having been given, if all the directors shall be present thereat.
Section 8. Place of Meeting. Meetings of the Board of Directors may be held at such place or places within or without the State of Delaware as the Board of Directors from time to time may designate.
Section 9. Quorum and Manner of Acting. A majority of the directors shall be required to constitute a quorum for the transaction of business at any meeting. The act of a majority of the directors present at any meeting while a quorum is present shall be an act of the Board of Directors. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum be had. Notice of any adjourned meeting shall be given, in the same manner as notice of special meetings is required to be given, as set forth in these Bylaws. The directors shall act only as a board and the individual directors shall have no power as such.
Section 10. Action by Written Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if, prior or subsequent to such action, all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing and such written consents are filed with the minutes of the proceedings of the Board of Directors or such committee. Such consent shall have the same effect as a unanimous vote of the Board of Directors or such committee for all purposes and may be stated as such in any certificate or other document.
Section 11. Organization. At each meeting of the Board of Directors, the President or, in his or her absence, a chairman chosen by a majority of the directors present, shall act as chairman. The Secretary, or, in his or her absence, an Assistant Secretary, or, in the absence of the Secretary and the Assistant Secretaries, any person appointed by the chairman, shall act as secretary of such meeting.
Section 12. Order of Business. At all meetings of the Board of Directors business may be transacted in such order as the Chairman of the Board of Directors may determine.
Section 13. Resignations. Any director of the Corporation may resign at any time by giving written notice to the President or to the Secretary. The resignation of any director shall take effect at the time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make such resignation effective.
Section 14. Removal of Directors. Any director may be removed at any time, either with or without cause, by the shareholders at any regular or special meeting of the shareholders and the vacancy in the Board of Directors caused thereby may be filled by the shareholders at the same meeting.
Section 15. Vacancies. In addition to a vacancy occurring by removal by the shareholders, as contemplated by Section 14 of these Bylaws, a vacancy in the Board of Directors shall occur upon the happening of any of the following events:
(a) a director dies or resigns:
(b) the shareholders fail to elect the number of directors authorized to be elected at any meeting of shareholders at which any director is to be elected;
(c) the Board of Directors by resolution have elected to increase the number of directors;
(d) the Board of Directors declare vacant the office of any director for such cause as the Board may determine; or
(e) a vacancy occurs for any other reason. Any vacancy occurring in the Board of Directors shall be filled by a majority of the remaining members of the Board of Directors, though less than a quorum, and each person so elected shall hold office until the next annual meeting of shareholders and until his or her successor is duly elected and has qualified.
Section 16. Compensation. The directors shall receive no compensation for their services as directors.
Section 17. Indemnification of Directors, Officers, Employees and Agents. The Corporation shall indemnify each director, officer, employee and agent of the Corporation, as amended by the provisions of Section 145 of the Delaware General Corporation Law, as set forth in Article VI of these Bylaws.
Section 18. Executive and Other Committees.
(a) The Board of Directors, by resolution adopted by a majority of the members of the Board of Directors determined in the manner specified by these Bylaws, may create and establish an Executive Committee consisting of not less than two (2) directors. The Board of Directors may provide the Executive Committee with such powers as the Board of Directors determines to be necessary or appropriate, subject to such conditions as may be prescribed by the Board of Directors, these Bylaws, the Certificate of Incorporation and the Delaware General Corporation Law.
(b) During the intervals between the meetings of the Board of Directors, the Executive Committee may exercise all the authority of the Board of Directors; provided, however, that the Executive Committee shall not have the power to amend or repeal any resolution of the Board of Directors that by its terms shall not be subject to amendment or repeal by the Executive Committee, and the Executive Committee shall not have the authority of the Board of Directors in reference to (1) approving or proposing to shareholders action required to be approved by shareholders; (2) filling vacancies on the Board of Directors or on any of its committees; (3) amending the Certificate of Incorporation; (4) adopting, amending or repealing bylaws; or (5) approving a plan of merger or share exchange not requiring shareholder approval.
(c) The Executive Committee shall meet from time to time on call of the Chairman of the Board of Directors or of any two (2) or more members of the Executive Committee. Meetings of the Executive Committee may be held at such
place or places, within or without the State of Delaware, as the Executive Committee shall determine or as may be specified or fixed in the respective notices or waivers of such meetings. The Executive Committee may fix its own rules of procedures, including provision for notice of its meetings. It shall keep a record of its proceedings and shall report these proceedings to the Board of Directors at the meeting thereof held next after they have been taken, and all such proceedings shall be subject to revision or alternation by the Board of Directors except to the extent that action shall have been taken pursuant to or in reliance upon such proceedings prior to any such revision or alternation.
(d) The Executive Committee shall act by majority vote of its members; provided, however, the provisions of Section 19 of these Bylaws notwithstanding, that contracts or transactions of and by the Corporation in which officers or directors of the Corporation are interested shall require the affirmative vote of majority of the disinterested members of the Executive Committee, at a meeting of the Executive Committee at which the material facts as to the interest and as to the contract or transaction are disclosed or known to the members of the Executive Committee prior to the vote.
(e) Members of the Executive Committee may participate in committee proceedings by means of conference telephone or similar communications equipment by means of which all persons participating in the proceedings can hear each other, and such participation shall constitute presence in person at such proceedings.
(f) The Board of Directors, by resolution adopted in accordance with Paragraph (a) of this section, may designate one or more directors as alternate members of the Executive Committee who may act in the place and stead of any absent member or members at any meeting of said committee.
(g) The Board of Directors, by resolution adopted by a majority of the entire Board of Directors, may designate one or more additional committees, each committee to consist of two (2) or more of the directors, which shall have such name or names and shall have and may exercise such powers of the Board of Directors, except the powers denied to the Executive Committee, as may be determined from time to time by the Board of Directors. Such committees shall provide for their own rules of procedure, subject to the same restrictions thereon as provided above for the Executive Committee.
(h) The Board of Directors shall have the power at any time to remove any member of any committee, with or without cause, and to fill vacancies in and to dissolve any such committee.
Section 19. Provision Concerning Interested Transactions. Any contract or other transaction between the Corporation and (i) any director, or (ii) any corporation, unincorporated association, business trust, estate, partnership, trust, joint venture, individual or other legal entity ("Legal Entity") (A) in
which any director has a material financial interest or is a general partner, or (B) of which any director is a director, officer, or trustee (collectively, a "Conflict Transaction"), shall be valid for all purposes, if the material facts of such Conflict Transaction and such director's interest were disclosed or known to the Board of Directors, a committee with authority to act thereon, or the shareholders entitled to vote thereon, and the Board of Directors, such committee, or such shareholders authorized, approved, or ratified such Conflict Transaction. A Conflict Transaction shall be authorized, approved or ratified:
(a) By the Board or Directors or such committee, if it receives affirmative vote of majority of the directors who have no interest in the Conflict Transaction, notwithstanding the fact that such majority may not constitute a quorum or a majority of the Board of Directors or such committee or a majority of the directors present at such meeting, and notwithstanding the presence or vote of any director who does have such an interest; provided, however, that no Conflict Transaction may be authorized, approved or ratified by a single director; or
(b) By such shareholders, if such Conflict Transaction receives the vote of a majority of the shares entitled vote, in which vote shares owned or voted under the control of any director who, or of any Legal Entity that, has an interest in the Conflict Transaction may be counted. This section shall not be construed to require authorization, ratification or approval by the shareholders of any Conflict Transaction, or to invalidate any Conflict Transaction that would otherwise be valid under the common and statutory law applicable thereto.
Section 20. Telephonic Meeting. Unless restricted by the Certificate of Incorporation, any one or more members of the Board of Directors may participate in a meeting of the Board of Directors by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation by such means shall constitute presence in person at a meeting.
ARTICLE IV
Officers
Section 1. Number. The officers of the Corporation shall be a President, a Treasurer, and a Secretary, and, in the discretion of the Board of Directors, one or more Vice Presidents.
Section 2. Election, Qualifications, and Terms of Office. The officers shall be elected annually by the Board of Directors. Each officer shall hold office until his or her successor shall have been elected and qualified, or until his or her earlier death, resignation, or removal in the manner provided in these Bylaws. Any person may hold more than one office.
Section 3. Resignations. Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the President, or the Secretary. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt of the notice thereof by the Board of Directors or any such officer.
Section 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification, or any other cause shall be filled for the unexpired portion of the term by the Board of Directors.
Section 5. The President. The President shall be the chief executive officer of the Corporation. Subject to the direction of the Board of Directors, the President shall have general charge of the business affairs and property of the Corporation and general supervision over its officers and agents. If present, the President shall preside at all meetings of shareholders and at all meetings of the Board of Directors. The President shall see that all orders and resolutions of the Board of Directors are carried into effect. The President may sign, with any other officer "hereunto authorized, share certificates of the Corporation, the issuance of which shall have been duly authorized, and may sign and execute, in the name of the Corporation, deeds, mortgages, bonds, contracts, agreements, and other instruments duly authorized by the Board of Directors, except in these instances where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent. From time to time, the President shall report to the Board of Directors all matters within his or her knowledge which the interests of the Corporation may require to be brought to their attention. The President shall also perform such other duties as are given to him or her by these Bylaws or as from time to time may be assigned to him or her by the Board of Directors.
Section 6. The Secretary. The Secretary shall (a) record all the
proceedings of the meetings of the shareholders and Board of Directors in a book
or books to be kept for that purpose; (b) cause all notices to be duly given in
accordance with the provisions of these Bylaws and as required by statute; (c)
be custodian of the records and of the seal of the Corporation and cause such
seal to be affixed to all certificates representing shares of the Corporation
prior to the issuance thereof and to all instruments the execution of which on
behalf of the Corporation under its seal shall have been duly authorized; (d)
see that the lists, books, reports, statements, certificates, and other
documents and records required by statute are properly kept and filed; (e) have
charge of the share record books of the Corporation and cause the same to be
kept in such manner as to show at any time the amount of shares of the
Corporation issued and outstanding, the names and addresses of the holders of
record thereof, the number of shares held by each, and the date when each became
such holder of record; (f) perform the duties required of him or her under
Section 9 of Article II of these Bylaws; (g) sign (unless the Treasurer shall
sign) certificates representing shares of the Corporation, the issuance of which
shall have been duly authorized; and (h) in general, perform all duties incident
to the office of Secretary and such other duties as are given to him or her by
these Bylaws or as from time to time may be assigned to him or her by the Board
of Directors or the President.
Section 7. The Chief Financial Officer. The Chief Financial Officer shall (a) have charge of and supervision over and by responsible for the funds, securities, receipts, and disbursements of the Corporation; (b) cause the moneys and other valuable effects of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies, or with such
bankers or other depositories, as shall be selected in accordance with Section 3 of Article V of these Bylaws or to be otherwise dealt with in such manner as the Board of Directors may direct; (c) cause the funds of the Corporation to be disbursed by checks or drafts upon the authorized depositories of the Corporation and cause to be taken and preserved proper vouchers for all moneys disbursed; (d) render to the Board of Directors or the President, whenever requested, a statement of the financial condition of the Corporation and of all his or her transactions as Chief Financial Officer; (e) cause to be kept, at the principal office of the Corporation or at such other office (within or without the State of Delaware) as shall be designated by the Board of Directors, correct books of account of all its business and transactions; (f) sign (unless the Secretary shall sign) certificates representing shares of the Corporation, the issuance of which shall have been duly authorized; and (g) in general, perform all duties incident to the office of Treasurer and such other duties as are given to him or her by these Bylaws or as from time to time may be assigned to him or her by the Board of Directors or the President.
Section 8. The Vice Presidents. At the request of the President, any Vice President shall perform all the duties of the President and, when so acting, shall have all the powers of and be subject to all restrictions upon the President. Any Vice President may also sign, with any other officer thereunto duly authorized, share certificates of the Corporation, the issuance of which shall have been duly authorized, and may sign and execute in the name of the Corporation, deeds, mortgages, bonds, contracts, agreements, and other instruments duly authorized by the Board of Directors, except in those instances where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent. Each Vice President shall perform such other duties as are given to him or her by these Bylaws or as from time to time may be assigned to him or her by the Board of Directors or the President.
Section 9. Salaries. The salaries of the officers of the Corporation shall be fixed from time to time by the Board of Directors. No officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the Corporation.
Section 10. Surety Bonds. In the event the Board of Directors shall so require, any officer or agent of the Corporation shall execute a bond to the Corporation, in such amount and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful discharge of his or her duties.
ARTICLE V
Contracts and Financial Matters
Section 1. Execution of Contracts. The President or any Vice President, subject to the approval of the Board of Directors, may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Such authorization may be general or restricted to specific instances.
Section 2. Checks and Drafts. All checks, drafts, or other orders for the payment of money and all notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers or agent or agents of the Corporation as shall be thereunto so authorized from time to time by resolution of the Board of Directors.
Section 3. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositaries as the Board of Directors may select or as may be selected by any officer or officers or agent or agents authorized so to do by the Board of Directors. Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositaries shall be made in such manner as the Board of Directors from time to time may determine.
Section 4. General and Special Bank Accounts. The Board of Directors may authorize from time to time the opening and keeping of general and special bank accounts with such banks, trust companies, or other depositaries as the Board of Directors may designate and may make such special rules and regulations with respect thereto, not inconsistent with the provisions of these Bylaws, as the Board of Directors may deem expedient.
Section 5. Loans. No loans or advances shall be contracted on behalf of the Corporation and no negotiable paper shall be issued in its name, unless and except as authorized by the Board of Directors. Such authorization may be general or restricted to specific instances. Any officer or agent of the Corporation thereunto so authorized may effect loans and advances for the Corporation and for such loans and advances may make, execute, and deliver promissory notes, bonds, or other evidences of indebtedness of the Corporation. Any officer or agent of the Corporation thereunto so authorized may pledge, hypothecate, or transfer, as security for the payment of any and all loans, advances, indebtedness, and liabilities of the Corporation, any and all stocks, bonds, other securities, and other personal property at any time held by the Corporation and, to that end, may endorse, assign, and deliver the same and do every act and shine necessary or proper in connection therewith.
Section 6. Proxies. Proxies to vote with respect to shares of stock of other corporations owned by or standing in the name of the Corporation may be executed and delivered from time to time on behalf of the Corporation by such person or persons as shall be thereunto authorized from time to time by the Board of Directors.
ARTICLE VI
Indemnification and Insurance
Section 1. Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any pending, threatened, or completed civil, criminal, administrative, or arbitration action,
suit, or proceeding, or any appeal therein or any inquiry or investigation which could lead to such action, suit, or proceeding ("proceeding"), by reason of his or her being or having been a director, officer, employee, or agent of the Corporation or of any constituent corporation absorbed by the Corporation in a consolidation or merger or by reason of his or her being or having been a director, officer, trustee, employee, or agent of any other corporation (domestic or foreign) or of any partnership, joint venture, sole proprietorship, trust, employee benefit plan, or such enterprise (whether or not for profit), serving as such at the request of the Corporation or of any such constituent corporation, or the legal representative of any such director, officer, trustee, employee, or agent, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than the Delaware General Corporation Law permitted prior to such amendment), from and against any and all reasonable costs, disbursements, and attorney's fees, and any and all amounts paid or incurred in satisfaction of settlements, judgments, fines, and penalties, incurred or suffered in connection with any such proceeding, and such indemnification shall continue as to a person who has ceased to be a director, officer, trustee, employee, or agent and shall inure to the benefit of his or her heirs, executors, administrators, and assigns; provided, however, that, except as provided in Section 2 of this Article VI, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was specifically authorized by the Board of Directors of the Corporation. The right to indemnification specified in this Article VI shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in connection with any proceeding in advance of the final disposition of such proceeding as authorized by the Board of Directors; provided, however; that, if the Delaware General Corporation Law so requires, the payment of such expenses in advance of the final disposition of a proceeding shall be made only upon receipt by the Corporation of an undertaking, by or on behalf of such director, officer, employee, or agent, to repay all amounts so advanced unless it shall ultimately be determined that such person is entitled to be indemnified under this article or otherwise.
Section 2. Right of Claimant to Bring Suit. If a claim made under
Section 1 of this Article VI is not paid in full by the Corporation within
thirty (30) days after a written request has been received by the Corporation,
the claimant may, at any time thereafter, apply to a court for an award of
indemnification by the Corporation for the unpaid amount of the claim and, if
successful on the merits or otherwise in connection with any proceeding or in
the defense of any claim, issue, or matter therein, the claimant shall also be
entitled to be paid by the Corporation for any and all expenses incurred or suffered in connection with such proceeding. It shall be a defense to any such action (other than an action brought to enforce a claim for the advancement of expenses incurred in connection with any proceeding where the required undertaking, if any, has been tendered to the Corporation) that the claimant has not satisfied the standard of conduct which makes it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such proceeding that indemnification of the claimant is proper in the circumstances because he or she has satisfied the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, or its shareholders) that the claimant has not satisfied such applicable standard of conduct, nor the termination of any proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall be a defense to the action or create a presumption that the claimant has not satisfied the applicable standard of conduct.
Section 3. Nonexclusivity of Rights. The right to indemnification and advance of expenses provided by or granted pursuant to this Article VI shall not exclude or be exclusive of any other rights to which any person may be entitled under the Certificate of Incorporation of the Corporation, these Bylaws, any agreement, vote of shareholders, or otherwise; provided, however, that no indemnification shall be made to or on behalf of such person if a judgment or other final adjudication adverse to such person establishes that such person has not satisfied the applicable standard of conduct required to be satisfied under the Delaware General Corporation Law.
Section 4. Insurance. The Corporation may purchase and maintain insurance on behalf of any director, officer, employee, or agent of the Corporation, or of another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, against any expenses incurred in any proceeding and against any liabilities asserted against him or her by reason of such person's being or having been such a director, officer, employee, or agent, whether or not the Corporation would have the power to indemnify such person against such expenses and liabilities under the provisions of this Article VI or otherwise.
ARTICLE VII
Shares and Their Transfer
Section 1. Share Certificates. Every holder of shares of the Corporation shall be entitled to have a certificate, signed by the President or a Vice president and either the Treasurer or the Secretary, certifying the number of shares owned by him or her in the Corporation. In case any officer of the Corporation who has signed any such certificate shall cease to be such officer, for whatever cause, before the certificate shall have been delivered by the Corporation, the certificate shall be deemed to have been adopted by the Corporation, unless the Board of Directors shall otherwise determine prior to the issuance and delivery thereof, and may be issued and delivered as though the person who signed it had not ceased to be such officer of the Corporation. Certificates representing shares of the Corporation shall be in such form as shall be approved by the Board of Directors. There shall be entered upon the share record books of the Corporation, at the time of issuance of each share, the number of the certificate issued, the name and address of the person owning the shares represented thereby, the number of shares, and the date of issuance thereof. Every certificate exchanged or returned to the Corporation shall be marked "cancelled" with the date of cancellation.
Section 2. Share Record Books. The share record books and the blank share certificate books shall be kept by the Secretary, or by any officer or agent designated by the Board of Directors.
Section 3. Addresses of Shareholders. Each shareholder shall designate to the Secretary of the Corporation an address at which notices of meetings and all other corporate notices may be served, delivered, or mailed to such shareholder and, if any shareholder shall fail to designate such address, all corporate notices (whether served or delivered by the Secretary, another shareholder, or any other person) may be served upon such shareholder by mail directed to him or her at his or her last known post office address.
Section 4. Transfers of Shares. Transfers of shares of the Corporation shall be made on the books of the Corporation by the holder or record thereof or by his or her attorney thereunto duly authorized by a power of attorney duly executed in writing and filed with the Secretary and on surrender of the certificate or certificates representing such shares. The Corporation shall be entitled to treat the holder of record of any shares as the absolute owner thereof for all purposes and, accordingly, shall not be obligated to recognize any legal, equitable, or other claim to or interest in such shares on the part of any other person, whether or not it or they shall have express of other notice thereof, except as otherwise expressly provided by statute; provided, however, that whenever any transfer of shares shall be made for collateral or security and not absolutely and written notice thereof shall be given to the Secretary, such fact shall be expressed in the entry of the transfer. Notwithstanding anything to the contrary contained in these Bylaws, the Corporation shall not be required or permitted to make any transfer of shares of the Corporation which, if made, would violate the provisions of any agreement restricting the transfer of shares of the Corporation to which the Corporation shall be a party; provided, however, that the restriction upon the transfer of the shares represented by any share certificate shall be set forth or referred to upon the certificate.
Section 5. Regulations. Subject to the provisions of this Article VII, the Board of Directors may make such rules and regulations as it may deem expedient concerning the issuance, transfer, and registration of certificates for shares of the Corporation.
Section 6. Lost, Destroyed, and Mutilated Certificates. The holder of any shares shall immediately notify the Corporation of any loss, destruction, or mutilation of the certificate therefor and the Board of Directors, in its discretion, may cause to be issued to him or her a new certificate or certificates upon surrender of the mutilated certificate or, in case of loss or destruction of the certificate, upon satisfactory proof of such loss or destruction. The Board of Directors, in its discretion, may require the owner of the lost or destroyed certificate or his or her legal representative to give the Corporation a bond, in such amount (not exceeding twice the value of such shares) and with such surety or sureties as it may direct, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss or destruction of any such certificate.
Section 7. Fixing of Record Dates. The Board of Directors shall have
the power to fix in advance a date, not more than sixty (60) nor less than ten
(10) days, preceding the date of any meeting of shareholders, the date for the
payment of any dividend or allotment of any right, the date when any change,
conversion, or exchange of shares shall go into effect, or for the purpose of
any other action, as a record date for the determination of the shareholders
entitled to notice of and to vote at any such meeting, entitled to receive
payment of any such dividend or allotment of any right, entitled to exercise the
rights in respect to any such change, conversion, or exchange of shares, or
entitled to participate in or be entitled to the benefit of any such other
action. Whenever a record date has been so fixed, only shareholders of record on
such date shall be entitled to notice of and to vote at such meeting, to receive
payment of any such dividend or allotment of any right, to exercise such rights
in respect to any such change, conversion, or exchange of shares, or to
participate in or be entitled to the benefit of any such other action.
Section 8. Refusal to Register Transfer. The Corporation shall not register any transfer of securities issued by the Corporation in any transaction that qualifies for the exemption from registration requirements specified by the provisions of Regulation S, unless such transfer is made in accordance with the provisions of Regulation S.
ARTICLE VIII
Dividends and Surplus
Subject to any restrictions imposed by statute, the Board of Directors from time to time, in its discretion, may fix and vary the amount of the working capital of the Corporation and determine what, if any, dividends shall be declared and paid to the shareholders out of the surplus of the Corporation. The Board of Directors, in its discretion, may use and apply any surplus in purchasing or acquiring any of the shares of the Corporation in accordance with law or any of its bonds, debentures, or other obligations, or from time to time may set aside from such surplus such amount or amounts as it, in its absolute discretion, may deem proper as a reserve fund to meet contingencies or for equalizing dividends, for the purpose of maintaining or increasing the property or business of the Corporation, or for any other purposes it may deem consistent with the best interest of the Corporation. All such surplus, until actually declared in dividends or used and applied as aforesaid, shall be deemed to be so set aside by the Board of Directors for one or more of said purposes.
ARTICLE IX
Corporation Seal
The Corporation shall have a corporate seal which shall be in circular form, shall bear the name of the Corporation and the words and figures denoting its organization under the laws of the State of and the year thereof and otherwise shall be in such form as shall be approved from time to time by the Board of Directors.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE XI
Accountants
The Board of Directors of the Corporation from time to time shall designate the independent accountants of the Corporation.
ARTICLE XII
Amendments
All Bylaws of the Corporation shall be subject to amendment, alteration, or repeal, and new Bylaws not inconsistent with any provision of the Certificate of Incorporation of the Corporation or any provision of law may be made, by the shareholders or by the Board of Directors, except as otherwise expressly required by statute. Any Bylaw adopted, amended, or repealed by the shareholders may be amended or repealed by the Board of Directors, unless the resolution of the shareholders adopting such Bylaw expressly reserves the right to amend or repeal it only to the shareholders.
ARTICLE XIII
Force and Effect
These Bylaws are subject to the provisions of the Delaware General Corporation Law and the Certificate of Incorporation, as the same may be amended from time to time. If any provision in these Bylaws is inconsistent with an express provision of either of the Delaware General Corporation Law or the Certificate of Incorporation, the provision of the Delaware General Corporation Law or the Certificate of Incorporation, as the case may be, shall govern, prevail and control the extent of such inconsistency.
STEPP LAW GROUP
A PROFESSIONAL CORPORATION
1301 DOVE STREET, SUITE 460
NEWPORT BEACH, CALIFORNIA 92660-2422
TELEPHONE: 949.660.9700
FACSIMILE: 949.660.9010
Opinion of Counsel and Consent of Counsel
Board of Directors
Artescope, Inc.
Re: Registration Statement on Form SB-2
Gentlemen: As counsel to Artescope, Inc., a Delaware corporation (the "Company"), we have participated in the preparation of the Company's Registration Statement on Form SB-2 filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, relating to the registration of 6,210,000 shares of the Company's $.001 par value common stock owned by the selling security holders (the "Shares"). As counsel to the Company, we have examined such corporate records, certificates and other documents of the Company, and made inquiries of such officers of the Company, as we have deemed necessary or appropriate for purposes of this opinion. Based upon such examinations, we are of the opinion that the Shares have been and are duly authorized, validly issued, fully paid and non-assessable shares of the common stock of the Company. We hereby consent to the inclusion of this opinion as an exhibit to the Registration Statement on Form SB-2 filed by the Company and the reference to our firm contained therein under "Legal Matters."
Sincerely,
/s/ Stepp Law Group Stepp Law Group Newport Beach, California August 1, 2001 |
Consent of Independent Certified Public Accountant
I consent to the use in this Registration Statement on Form SB-2 of my report dated July 20, 2001, relating to the financial statements of Artescope, Inc., and to the reference to my firm under the caption "Experts" in the Prospectus.
/s/ Quintanilla A Professional Accountancy Corporation Laguna Niguel, California August 2, 2001 |