Washington, D.C. 20549
FORM 10-SB
Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS Under Section 12 (b)or(g)
of the Securities Exchange Act of 1934
Plan A Promotions, Inc.
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(Name of Small Business Issuer as specified in its charter)
UTAH 16-1689008
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(State or other jurisdiction of (Employer I.D. No.)
organization)
3010 Lost Wood Drive
Sandy, Utah 84092
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (801) 231-1121
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which
to be registered each class is registered
NONE NONE
Securities registered pursuant to Section 12 (g) of the Exchange Act:
$0.01 Par Value Common Voting Stock
------------------------------------
Title of Class
1
TABLE OF CONTENTS
FORM 10-SB
PART I
Item 1. Description of Business 3
Item 2. Management's Discussion and Analysis of Plan of Operation 16
Item 3. Description of Property 17
Item 4. Security Ownership of Certain Beneficial Owners and 18
Management
Item 5. Directors, Executive Officers, Promoters and Control Persons 20
Item 6. Executive Compensation 22
Item 7. Certain Relationships and Related Transactions 23
Item 8. Description of Securities 23
PART II
Item 1. Market Price of and Dividends on the Registrant's Common 24
Equity and Other related Stockholder Matters
Item 2. Legal Proceedings 25
Item 3. Changes in and Disagreements with Accountants 25
Item 4. Recent Sales of Unregistered Securities 25
Item 5. Indemnification of Directors and Officers 27
PART F/S
PART III
Item 1. Index to Exhibits 40
Item 2. Description of Exhibits 40
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This Registration Statement on Form 10-SB includes forward-looking
statements within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are based on
management's beliefs and assumptions, and on information currently available to
management. Forward-looking statements include the information concerning
possible or assumed future results of operations of the Company set forth under
the heading "Management Discussion and Analysis of Plan of Operation."
Forward-looking statements also include statements in which words such as
"expect," "anticipate," "intend," "plan," "believe," "estimate," "consider" or
similar expressions are used.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions. The Company's future results and
shareholder values may differ materially from those expressed in these
forward-looking statements. Readers are cautioned not to put undue reliance on
any forward-looking statements
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2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
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ORGANIZATION, CHARTER AMENDMENTS AND GENERAL HISTORY
Plan A Promotions, Inc. (the "Company" or "Plan A Promotions") was
incorporated under the laws of the State of Utah on December 12, 2003, as
"Lostwood Professional Services, Inc." On July 21, 2004, the Company changed its
name to "Plan A Promotions, Inc.," Copies of the Company's Articles of
Incorporation, Amendments to the Articles of Incorporation and Bylaws are
attached hereto and are incorporated herein by reference. See the Index to
Exhibits, Part III, Item 1.
The Company's operations during the year ended September 30, 2005, resulted
in $7,432 in revenue. The Company's cost of goods for the year ended September
30, 2005, was $6,303 and general and administrative expenses were $12,075,
resulting in an operating loss of $10,946, and a net loss of $11,324 after
accounting for interest expenses and franchise taxes.
The independent auditor's report issued in connection with the audited
financial statements of the Company for the period ended September 30, 2005,
expresses "substantial doubt about its ability to continue as a going concern,"
due to the Company's status as a development stage company and its lack of
significant operations.
This Registration Statement is being filed on a voluntary basis to allow
the Company to obtain quotations for its common stock on the OTC Bulletin Board
of the National Association of Securities Dealers, Inc. (the "NASD"). See the
heading "Effects of Existing or Probable Governmental Regulations."
3
BUSINESS OF ISSUER
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BUSINESS OPERATIONS
Plan A Promotions is a value-added reseller, specializing in promotional
merchandise and apparel, employee recognition and incentive programs, business
gifts and marketing expertise. The Company provides its targeted customers-which
include corporations, non-profit organizations, schools, and education
associations with over 500,000 promotional and marketing products.
Plan A provides customers access to a variety of promotional products
through its relationships with wholesale distributors. The Company's
distributors offer a wide array of products, manufactured throughout the world.
A promotional product is any item imprinted with a logo or slogan and given out
to promote a company, organization, product, service, special achievement, or
event. T-shirts, mugs, pens, and key tags are popular examples. Plan A believes
promotional products are more effective than other marketing channels, in that
they often have a practical use and value for the recipient, thus increasing
their effectiveness as advertising and branding tools. Plan A's clients leverage
these products to strengthen their brand, image, customer and employee
relations, incentive programs and advertising campaigns.
The Company also provides customers with art design and consultation
services through its relationships with several art and graphic design houses,
in which the Company outsources its design work. These firms operate as
independent consultants for Plan A Promotions and charge the Company directly
for their services. The Company then marks up the design charges, and
incorporates them into the client's overall merchandising package. The Company
does not have any standing contractual relationships with any design firms;
however, existing relationships between the Company and many different graphic
design houses will allow the provision of these outsourced services to any of
the Company's customers.
Currently the Company's primary market is within the greater Salt Lake
City, Utah area. However, through the Company's website, the Company has begun
marketing its products and services nationwide. The Company has targeted its
marketing efforts particularly on small businesses, non-profit organizations and
school associations. The Company believes that by focusing on smaller clients it
can establish a sizable market share within this targeted customer base, because
it feels that smaller customers are often times neglected by the Company's
competition, who focus on larger clients. The Company seeks to develop these
smaller organizations into a loyal customer base. The Company also believes that
it provides a high level of professional customer service and maintains that
superior service will allow the Company to retain and attract customers not
solely through price.
4
MARKETING AND ADVERTISING
The Company markets its products and services through the use of a direct
mail campaign, word of mouth, and through the Company's website. The Company
markets to new customers through a direct mail campaign. The Company acquired a
list of the major employers in Utah with less than 1,000 full-time employees,
from the Salt Lake City Chamber of Commerce. The list includes approximately 600
profit companies with division or corporate headquarters based in Utah. The
Company also acquired a list, from the Salt Lake City Chamber of Commerce, of
approximately 100 non-profit organizations based in Utah, with less than 1,000
employees. The Company has also compiled a mailing list of all public high
schools in Salt Lake City, targeting them with a direct mail campaign. The
Company also makes an effort to attract and develop business by networking with
its existing clients, and promoting its services through word of mouth
advertising.
The Company's website is an additional marketing tool used to attract
customers. Current and future clients can access products, services and
information regarding the Company via www.planapromotions.com.
DELIVERY AND TRANSPORTATION
The Company's suppliers can ship either directly to the client or to the
Company itself. Typically if the product is a finished product, the suppliers
ship the product directly to the client, and the Company sends a separate
invoice for the order. If the product needs screen printing, embroidery or other
finishing services, the Company delivers the product to the client upon
completion of the order. The Company has access to a variety of ground and air
shipping companies and can typically deliver the product to the client within a
few days.
PROMOTIONAL MERCHANDISE INDUSTRY
According to the Promotional Products Association International (a
non-profit association dedicated to professionals of the promotional products
industry), worldwide sales of promotional products in 2004 were approximately
$17.3 billion. Roughly 30% of overall industry sales were related to wearable
merchandise, including T-shirts, golf-shirts, aprons, uniforms, blazers, caps,
hats, headbands, jackets, neckwear, and footwear. Advertising Specialty
Institute estimates that more than 3,000 manufacturers sell their products to
nearly 20,000 value-added resellers similar to Plan A Promotions
COMPETITION
The promotional merchandise industry is highly competitive, ranging from
small start-up merchandise companies, like Plan A Promotions, to large,
well-established companies which specialize in catering to large national or
multi-national corporations. Plan A Promotions business plan positions the
Company as a supplier of products and services to the industry's smaller
customers. The Company's plan is to target small businesses and
organizations(1,000 employees or less), rather than attempt to compete for the
business of large corporations.
The Company has numerous competitors with similar marketing plans, access
to similar distributors, and similar products. The Company believes that its
success relies on its ability to establish a returning customer base by
providing quality products and a unparalleled customer service. Success is also
dependent upon expanding the Company's customer base through it marketing
efforts.
5
EMPLOYEES
The Company's officers and Directors are the only employees. Alycia
Anthony, President and Director, is responsible for the daily operations of the
Company and Nicholl Heieren, Vice President and Director and Sharlene Doolin,
Secretary and Director, oversee strategy and development of the Company's
business plan. Ms. Anthony has been responsible for establishing the Company's
operations. She has been responsible for obtaining the appropriate licenses,
developing the marketing plan, developing relationships with distributors,
service companies and the Company's customers. For the foreseeable future the
Company plans on paying Ms. Anthony $500 per month for compensation of services
performed. Ms. Heieren and Ms. Doolin will receive compensation based on
services performed. The Company's compensation plan may change depending on the
success and profitability of its operations.
COMPANY HEADQUARTERS
The Company's office is located at 3010 Lost Wood Drive, Sandy, Utah 84092.
The Company's office is provided by the Company's President at no cost. If
necessary, the Company will lease an office to accommodate future growth. The
Company's computers and phones are also provided by the Company's President at
no cost to the Company.
At some point in the future, depending on the Company's growth and demanded
space requirements, the Company will look to lease an office. Anticipated rent
including utilities will range between $500 and $750 per month.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS
OR LABOR CONTRACTS
Other than possibly applying for a trademark on the Company's name, Plan A
Promotions, Inc., the Company does not foresee filing any applications for
patents or licenses. The Company also does not plan to execute any franchises,
concession or royalty agreements or labor contracts.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS
The Company is not currently subject to many direct government regulation,
other than the securities laws and the regulations thereunder applicable to all
publicly owned companies, the laws and regulations applicable to general
businesses. It is possible that certain laws and regulations may be adopted at
the local, state, national and international level that could effect the
Company's dealership operations. Changes to such laws could create uncertainty
in the marketplace which could reduce demand for the Company's products or
increase the cost of doing business as a result of costs of litigation or a
variety of other such costs, or could in some other manner have a material
adverse effect on the Company's business, financial condition, results of
operations and prospects. If any such law or regulation is adopted it could
limit the Company's ability to operate and could force the business operations
to cease, which would have a significantly negative effect on the shareholder's
investment.
6
COMPLIANCE WITH ENVIRONMENTAL LAWS (FEDERAL, STATE AND LOCAL)
Due to the nature of the Company's operations, the Company does not believe
that compliance with environmental laws will have a material impact on the
Company or its operations.
REPORTING REQUIREMENTS
As an issuer whose securities will be registered under Section 12(g) of the
Exchange Act, the Company will be required to file periodic reports with the
Securities and Exchange Commission (the "Commission"). In addition, the National
Association of Securities Dealers, Inc. (the "NASD"), requires that all issuers
maintaining quotations of their securities on the OTC Bulletin Board file
periodic reports under the Exchange Act.
The public may read and copy any materials that the Company files with the
Commission at the Commission's Public Reference Room at 450 Fifth Street N.W.,
Washington, DC 20549. The public may obtain information on the operation of the
Public Reference Room by calling the Commission at 1-800-SEC-0330 or 1-
202-942-8090. The Commission maintains an internet site that contains reports,
proxy and information statements and other information regarding issuers that
file electronically with the Commission. The address of that site is
http://www.sec.gov.
SMALL BUSINESS ISSUER
The Commission's integrated disclosure system for small business issuers,
which was adopted in Release No. 34-30968 and became effective as of August 13,
1992, substantially modified the information and financial requirements of a
"Small Business Issuer," defined to be an issuer that has revenues of less than
$25,000,000; is a U.S. or Canadian issuer; is not an investment company; and if
a majority-owned subsidiary, the parent is also a small business issuer;
provided, however, an entity is not a small business issuer if it has a public
float (the aggregate market value of the issuer's outstanding securities held by
non-affiliates) of $25,000,000 or more. The Company is deemed to be a "small
business issuer."
7
SARBANES-OXLEY ACT
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of
2002. The Sarbanes-Oxley Act imposes a wide variety of new regulatory
requirements on publicly-held companies and their insiders. Many of these
requirements will affect us. For example:
* Our chief executive officer and chief financial officer must now certify
the accuracy of all of our periodic reports that contain financial
statements;
* Our periodic reports must disclose our conclusions about the
effectiveness of our disclosure controls and procedures; and
* We may not make any loan to any director or executive officer and we may
not materially modify any existing loans.
The Sarbanes-Oxley Act has required us to review our current procedures and
policies to determine whether they comply with the Sarbanes-Oxley Act and the
new regulations promulgated thereunder. We will continue to monitor our
compliance with all future regulations that are adopted under the Sarbanes-
Oxley Act and will take whatever actions are necessary to ensure that we are in
compliance.
RISK FACTORS
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The Company's present and intended business operations are highly
speculative and involve substantial risks. Only investors who can bear the risk
of losing their entire investment should consider buying our shares. All risk
factors that you should consider are the following:
THE COMPANY IS IN AN EARLY STAGE OF DEVELOPMENT
Plan A Promotions is a development stage company. The Company has limited
assets and has had limited material operations since inception. The Company can
provide no assurance that its current and proposed business will produce any
material revenues or that will ever operate on a profitable basis.
THE COMPANY MAY EXPERIENCE LOSSES ASSOCIATED WITH START-UP
The Company has limited operating history. The Company will also experience
expenses related to the initial start-up of the business, including marketing,
selling, general and administrative expenses. The Company expects that its
initial and ongoing business expenses will result in losses early in its
development.
8
THE COMPANY MAY EXPERIENCE FLUCTUATIONS IN OPERATING RESULTS
The Company's operating results are likely to fluctuate in the future as a
result of a variety of factors. Some of these factors may include economic
conditions; the amount and timing of the receipt of new business; the success of
the Company's marketing strategy; capital expenditures and other costs relating
to the expansion of operations; the ability of the Company to develop contacts
and establish a network and customer base within the promotional merchandise
industry; the cost of advertising and related media. Due to all of the foregoing
factors, the Company's operating results in any given quarter may fall below
expectations. In such an event, any future trading price of the Company's common
stock would likely be materially and adversely affected.
THE COMPANY'S BUSINESS MODEL MAY CHANGE OR EVOLVE
The Company and its prospects must be considered in light of the risks, as
identified in the Risk Factors section of this filing, expenses and difficulties
frequently encountered by companies in an early stage of development. Such risks
for the Company include, but are not limited to, an evolving business model. To
address these risks the Company must, among other things, develop strong
business development and management activities, develop the strength and quality
of its operations, maximize the value delivered to clients, develop and enhance
the Company's brand through marketing and networking initiatives. There can be
no assurance that the Company will be successful in meeting these challenges and
addressing such risks and the failure to do so could have a material adverse
effect on the Company's business, financial condition, result of operations and
prospects.
THE INDUSTRY THAT THE COMPANY PARTICIPATES HAS RELATIVELY LOW BARRIERS TO
ENTRY AND THE COMPANY MAY FACE SIGNIFICANT COMPETITION
There are relatively low barriers to entry into the Company's industry.
Because firms such as the Company rely on the skill, knowledge and relationships
of their personnel and their ability to market and create brand awareness, they
have no patented technology that would preclude or inhibit competitors from
entering their markets. The Company started with limited capital and anyone
interested in entering the Company's business could also start with limited
capital. In addition, any large or small promotional merchandise company that
seeks to enter the industry could initiate a marketing strategy and seek to
obtain clients in the same or similar manner used by the Company, or could
obtain clients through numerous other channels.
The Company is likely to face additional competition from new entrants into
the market in the future because there are relatively low barriers to entry. The
Company will face competition from existing, established promotional
merchandising companies, in addition to the competition faced by new entrants
into the market. There can be no assurance that existing or future competitors
will not develop or offer services that provide significant performance, price,
creative or other advantages over those offered by the Company, which could have
a material adverse effect on its business, financial condition, results of
operations and prospects.
9
AUDITOR'S OPINION EXPRESSES DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE
AS A "GOING CONCERN"
The independent auditor's report issued in connection with the audited
financial statements of the Company for the period ended September 30, 2005,
expresses "substantial doubt about its ability to continue as a going concern,"
due to the Company's status as a development stage company and its lack of
significant operations. If the Company is unable to develop its operations, the
Company may have to cease to exist, which would be detrimental to the value of
the Company's common stock. The Company can make no assurances that its business
operations will develop and provide the Company with significant cash to
continue operations.
THE COMPANY MAY NEED FUTURE CAPITAL AND MAY NOT BE ABLE TO OBTAIN
ADDITIONAL FINANCING
The Company may need future capital and may not be able to obtain
additional financing. If additional funds are needed, funds may be raised as
either debt or equity, but management does not have any plans or relationships
currently in place to raise such funds. There can be no assurance that such
additional funding, if needed, will be available on terms acceptable to the
Company, or at all. The Company may be required to raise additional funds
through public or private financing, strategic relationships or other
arrangements. There can be no assurance that such additional funding, if needed,
will be available on terms acceptable to the Company, or at all. If adequate
funds are not available on acceptable terms, the Company may be unable to
develop or enhance its services and products, take advantage of future
opportunities or respond to competitive pressures, any of which could have a
material adverse effect on its business, financial condition, results of
operations and prospects.
FUTURE CAPITAL RAISED THROUGH EQUITY FINANCING MAY BE DILUTIVE TO
STOCKHOLDERS
Any additional equity financing may be dilutive to stockholders. If
additional funds are raised through the issuance of equity securities, the
percentage ownership of the stockholders of the Company will be reduced,
stockholders may experience additional dilution in net book value per share and
such equity securities may have rights, preferences or privileges senior to
those of the holder of the Company's common stock.
FUTURE DEBT FINANCING MAY INVOLVE RESTRICTIVE COVENANTS THAT MAY LIMIT THE
COMPANY'S OPERATING FLEXIBILITY
Furthermore, a debt financing transaction, if available, may involve
restrictive covenants, which may limit the Company's operating flexibility with
respect to certain business matters. If additional funds are raised through debt
financing, the debt holders may require the Company to make certain agreements,
covenants, which could limit or prohibit the Company from taking specific
actions, such as establishing a limit on further debt, a limit on dividends,
limit on sale of assets, or specific collateral requirements. Furthermore, if
the Company raises funds through debt financing, the Company would also become
subject to interest and principal payment obligations. In either case, if the
Company was unable to fulfill either the covenants or the financial obligations,
the Company may risk defaulting on the loan, whereby ownership of the firm's
assets could be transferred from the shareholders to the debt holders.
10
EXECUTIVE OFFICERS HAVE LIMITED LONG-TERM EXPERIENCE WITHIN THE PROMOTIONAL
MERCHANDISE INDUSTRY
Other than Ms. Doolin's experience in the promotional merchandise industry,
the Company's officers have no specific experience in the development and
marketing of promotional materials. This lack of experience may make it more
difficult to establish the contacts and relationships necessary to successfully
market products and services. The Company is dependent to a great extent upon
the experience and abilities of Sharlene Doolin, the Company's Secretary and
Director. Ms. Doolin has over fifteen years of merchandising experience, working
with non-profit organizations and school associations. The loss of services of
Ms. Doolin could have a material adverse effect on the Company's business,
financial condition or results of operation.
THE COMPANY'S SUCCESS IS DEPENDENT ON MANAGEMENT
The Company's success is dependent, in large part, on the active
participation of the Executive Officers. The loss of their services would
materially adversely effect the Company's business and future success. The
Company does not have employment agreements with its Executive Officers. The
Company does not have key-man life insurance in effect at the present time.
THE COMPANY MAY FACE POTENTIAL LIABILITY TO CLIENTS
The Company intends to market and distribute products and services. Its
failure or inability to properly acquire and deliver its products and services
to clients could impact the Company's business reputation or result in a claim
for substantial damages, regardless of its responsibility for such failure. The
Company does not have an insurance policy covering claims of this kind, and such
claims could adversely affect the Company's business, results of operations and
financial conditions.
EXECUTIVE OFFICERS AND MAJORITY SHAREHOLDERS MAINTAIN SIGNIFICANT CONTROL
OVER THE COMPANY AND ITS ASSETS
Plan A Promotions' Executive Officers maintain control over the Company's
board of directors and also control the Company's business operations and
policies. In addition, eight shareholders, excluding the Company's Executive
Officers, control 75.3% of the Company's issued and outstanding common stock. As
a result, these majority shareholders will be able to exercise significant
influence over all matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions. Such
concentration of ownership may also have the effect of delaying or preventing a
change in control of the Company. See Part I, Item 4.
11
THE COMPANY IS UNLIKELY TO PAY DIVIDENDS
It is unlikely that the Company will pay dividends on its common stock,
resulting in an investor's only return on an investment in the Company's common
stock being the appreciation of the per share price. The Company can make no
assurances that the Company's common stock will ever appreciate.
THERE IS NO PUBLIC MARKET FOR THE COMPANY'S SECURITIES
There has never been any "established trading market" for shares of common
stock of the Company. The Company intends to submit for listing on the OTC
Bulletin Board of the National Association of Securities Dealers, Inc. ("NASD").
If a market for the Company's common stock does develop, the stock price may be
volatile. The stock price may be volatile because the Company has limited public
float and high concentration of ownership in a few stockholders, both of which
can have an adverse effect on the any market of the Company's stock price.
The Company does not expect the securities of the Company to trade at a
price much higher than their initial offering price, which would make the
Company's common stock "penny stock." Because of this the Company's stock
differs from many stocks, in that it is a "penny stock." The Securities and
Exchange Commission has adopted a number of rules to regulate "penny stocks."
Because the Company's securities probably constitute "penny stock" within the
meaning of the rules, the rules would apply to the Company and its securities.
The rules may further affect the ability of owners of our stock to sell their
securities in any market that may develop for them. There may be a limited
market for penny stocks, due to the regulatory burdens on broker-dealers. The
market among dealers may not be active. Investors in penny stock often are
unable to sell stock back to the dealer that sold them the stock. The mark-ups
or commissions charged by the broker-dealers may be greater than any profit a
seller may make. Because of large dealer spreads, investors may be unable to
sell the stock immediately back to the dealer at the same price the dealer sold
the stock to the investor. In some cases, the stock may fall quickly in value.
Investors may be unable to reap any profit from any sale of the stock, if they
can sell it at all.
No assurance can be given that any market for the Company's common stock
will develop or be maintained. If a public market ever develops in the future,
the sale of "unregistered" and "restricted" shares of common stock pursuant to
Rule 144 of the Securities and Exchange Commission by members of management or
others may have a substantial adverse impact on any such market; and all of
these persons have satisfied the "holding period" under Rule 144.
There is currently no market for the Company's common stock and there is no
assurance that a market will develop. If a market develops, we anticipate that
the market price of the Company's common stock will be subject to wide
fluctuations in response to several factors including;
- The Company's ability to execute its business plan and significantly
grow the business.
- Increased competition from competitors who offer competing products
and services.
- The Company's financial condition and results of operations.
12
THE COMPANY'S SECURITIES MAY HAVE A LIMITED MARKET DUE TO RULES ASSOCIATED
WITH PENNY STOCKS
The Company's stock differs from many stocks, in that it is a "penny
stock." The Securities and Exchange Commission has adopted a number of rules to
regulate "penny stocks." These rules include, but are not limited to, Rules
3a5l-l, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities
and Exchange Act of 1934, as amended.
Because our securities probably constitute "penny stock" within the meaning
of the rules, the rules would apply to us and our securities. The rules may
further affect the ability of owners of our stock to sell their securities in
any market that may develop for them. There may be a limited market for penny
stocks, due to the regulatory burdens on broker-dealers. The market among
dealers may not be active. Investors in penny stock often are unable to sell
stock back to the dealer that sold them the stock. The mark-ups or commissions
charged by the broker-dealers may be greater than any profit a seller may make.
Because of large dealer spreads, investors may be unable to sell the stock
immediately back to the dealer at the same price the dealer sold the stock to
the investor. In some cases, the stock may fall quickly in value. Investors may
be unable to reap any profit from any sale of the stock, if they can sell it at
all.
Stockholders should be aware that, according to the Securities and Exchange
Commission Release No. 34- 29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. These patterns include:
- Control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer;
- Manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases;
- "Boiler room" practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
- Excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
- The wholesale dumping of the same securities by promoters and broker-
dealers after prices have been manipulated to a desired level, along
with the inevitable collapse of those prices with consequent investor
losses.
Furthermore, the "penny stock" designation may adversely affect the
development of any public market for the Company's shares of common stock or, if
such a market develops, its continuation. Broker-dealers are required to
personally determine whether an investment in "penny stock" is suitable for
customers.
13
Penny stocks are securities (i) with a price of less than five dollars per
share; (ii) that are not traded on a "recognized" national exchange; (iii) whose
prices are not quoted on the NASDAQ automated quotation system (NASDAQ-listed
stocks must still meet requirement (i) above); or (iv) of an issuer with net
tangible assets less than $2,000,000 (if the issuer has been in continuous
operation for at least three years) or $5,000,000 (if in continuous operation
for less than three years), or with average annual revenues of less than
$6,000,000 for the last three years.
Section 15(g) of the Exchange Act, and Rule 15g-2 of the Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in a
penny stock for the investor's account. Potential investors in the Company's
common stock are urged to obtain and read such disclosure carefully before
purchasing any shares that are deemed to be "penny stock."
Rule 15g-9 of the Commission requires broker-dealers in penny stocks to
approve the account of any investor for transactions in such stocks before
selling any penny stock to that investor. This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for the Company's stockholders to
resell their shares to third parties or to otherwise dispose of them.
NO ASSURANCE CAN BE GIVEN THAT ANY MARKET FOR THE COMPANY'S COMMON STOCK
WILL DEVELOP OR BE MAINTAINED AND IF A MARKET DEVELOPS THE SALE OF
"UNREGISTERED" AND "RESTRICTED" SHARES BY MEMBERS OR MANAGEMENT MAY HAVE AN
ADVERSE EFFECT ON THE MARKET FOR THESE SHARES
Prior to the Company's organization, the Company authorized and
subsequently issued 126,000 shares of common stock to three individuals pursuant
to a Pre-organization Subscription Agreement. The shares were issued for cash at
$0.02 per share for a total of $2,520.
Following the Company's organization, it conducted an offering of 1,074,000
shares of common stock at a price of $0.03 per share. This offering was
conducted under Rule 504 of Regulation D of the Securities and Exchange
Commission, and the applicable provisions of Rule 144-14-25s of the Utah
Division of Securities, which provides for sales of securities by public
solicitation to "accredited" investors. The offering was subsequently closed
January 28, 2004, with the Company having received gross proceeds of $32,220.
14
No assurance can be given that any market for the Company's common stock
will develop or be maintained. If a public market ever develops in the future,
the sale of "unregistered" and "restricted" shares of common stock pursuant to
Rule 144 of the Securities and Exchange Commission by members of management or
others may have a substantial adverse impact on any such market. The following
table discloses the date that the Company's issued shares of common stock are
available for resale:
Date Number of Aggregate
Name Acquired Shares Consideration
---- -------- --------- -------------
ALYCIA D. ANTHONY* 12/03 60,000 $ 1,200
JAMES P. DOOLIN* 12/03 60,000 $ 1,200
NICHOLL R. HEIEREN* 12/03 6,000 $ 120
PURCHASERS UNDER** 01/04 1,074,000 $ 32,220
RULE 504 OFFERING
* The 126,000 shares that the Company issued in December, 2003, are
eligible for resale pursuant to Rule 144 of the Securities and Exchange
Commission. These persons have satisfied the "holding period" under Rule
144.
** The 1,074,000 shares that the Company issued in January 28, 2004, in
connection with the Offering are eligible for resale pursuant to Rule 144
of the Securities and Exchange Commission.
15
Item 2. Management's Discussion and Analysis or Plan of Operation.
- -------------------------------------------------------------------
PLAN OF OPERATION
The Company's plan of operation for the next 12 months is to continue with
its current business operations. However, the company has accumulated losses
since inception and has not been able to generate profits from operations.
Operating capital has been raised through the Company's shareholders.
Furthermore, the Company has not been able to generate positive cash flow from
operations since inception. These factors raise substantial doubt the Company's
ability to continue as a going concern.
RESULTS OF OPERATIONS
The Company has not generated a profit since inception. The Company
generated a net loss of ($3,400) on revenue of $608 for the fiscal year ended
September 30, 2004 and a net loss of ($11,324) on revenue of $7,432 for the
fiscal year ended September 30, 2005. The increase in the loss during the fiscal
year ended September 30, 2005, was primarily attributable to the increase in
general and administrative expenses, including professional and marketing
expenses, from $3,350 for the fiscal year ended September 30, 2004, to $12,075
for the year ended September 30, 2005.
Net losses increased from ($3,400) for the fiscal year ended September 30,
2004 to ($11,324) for the fiscal year ended September 30, 2005. The increase in
loss was primarily attributed to an increase in professional and marketing
expenses. The Company also began incurring expenses for the Company's President,
Alycia Anthony, of $500 per month, starting January 1, 2005. This expense was
recorded as a general and administrative expense on the Company's income
statement and as an accrued liability on the Company's balance sheet.
Revenues increased from $608 for the fiscal year ended September 30, 2004,
to $7,432 for the fiscal year ended September 30, 2005. The increase in the
Company's revenue was a result of the Company's efforts to continue to grow its
customer base through marketing and promotion. The Company's website and direct
mail campaign commenced during the fiscal year ended September 30, 2005.
The Company's plans for future growth are to continue to focus on the
Company's primary market, within the greater Salt Lake City, Utah area. In
addition the Company will add to its primary market by utilizing the Company's
website to market nationwide. The Company will pursue opportunities to market
its website with the use of banner ads and search engine placement.
16
LIQUIDITY
During the fiscal years ended September 30, 2004, and September 30, 2005,
the Company generated revenues of $608 and $7,432 respectively; there were no
accounts receivable at September 30, 2004, or September 30, 2005. Furthermore
the Company had no inventory at the end of fiscal year September 30, 2004, or
September 30, 2005.
Future cash flow from operations is anticipated to cover the Company's
general expenses of operation. Currently, the Company does not anticipate any
additional short term or long term capital requirements for operational
expenses. If Company deems additional funds are needed for purchase orders, the
Company's management will advance the Company monies not to exceed $20,000, as
loans to the Company, to help the Company acquire inventory. The loan will be on
terms no less favorable to the Company than would be available from a commercial
lender in an arm's length transaction. If the Company needs funds in excess of
$20,000, it will be up to the Company's management to raise such monies. These
funds may be raised as either debt or equity, but management does not have any
plans or relationships currently in place to raise such funds.
The Company has completed the following two transactions to finance its
operation:
1) On December 12, 2003, the Company issued 126,000 shares of common stock
at $0.02 per share for total proceeds to the Company of $2,520. The shares
were issued pursuant to a Pre-organization Subscription Agreement
2) On January 28, 2004, the Company completed an offering of 1,074,000
shares of common stock at a price of $0.03 per share. This offering was
conducted under Rule 504 of Regulation D of the Securities and Exchange
Commission, and the applicable provisions of Rule 144-14-25s of the Utah
Division of Securities, which provides for sales of securities by public
solicitation to "accredited" investors. The offering was subsequently
closed and the Company received gross proceeds of $32,220.
Item 3. Description of Property.
- ---------------------------------
The Company's office is located at 3010 Lost Wood Drive, Sandy, Utah 84092.
The Company's office is provided by the Company's President at no cost. If
necessary, the Company will lease an office to accommodate future growth. The
Company's computers and phones are also provided by the Company's President at
no cost to the Company.
At some point in the future, depending on the Company's growth and demanded
space requirements, the Company will look to lease an office. Anticipated rent
including utilities will range between $500 and $750 per month.
17
Item 4. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the share holdings of those persons who own
more than five percent of the Company's common stock as of the date hereof:
Number of Shares Percentage
Name Beneficially Owned of Class
- ---------------- ------------------ --------
Alycia D. Anthony* 60,000 5.0%
3010 Lostwood Drive
Sandy, UT 84092
Luke H. Bradley 100,000 8.3%
1672 Roycroft Place #C
Salt Lake City, UT 84124
Leonard W. Burningham 80,000 6.7%
455 East Fifth South #205
Salt Lake City, UT 84111
James P. Doolin* 60,000 5.0%
4904 Royal Lake Ave.
Las Vegas, NV 89131
Michael J. Doolin* 298,500 24.9%
5 Pepperwood Drive
Sandy, UT 84092
Duane S. Jenson 100,000 8.3%
4685 South Highland Drive #202
Salt Lake City, UT 84117
Cory Powers 100,000 8.3%
864 Northcrest Ave.
Salt Lake City, UT 84103
Quad D LTD Partnership* 100,000 8.3%
5 Pepperwood Drive
Sandy, UT 84092
SCS, Inc. 75,000 6.3%
455 East Fifth South #201
Salt Lake City, UT 84111
TOTAL 973,500 81.1%
* Sharlene Doolin is deemed a beneficial owner, as she is the general partner of
Quad D LTD Partnership. Michael and Sharlene Doolin are husband and wife. James
Doolin is the son of Michael and Sharlene Doolin. Alycia Anthony is the daughter
of Michael and Sharelene Doolin.
18
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the share holdings of the Company's
directors and executive officers as of the date hereof:
Name Beneficially Owned of Class
- ---------------- ------------------ --------
Alycia D. Anthony* 60,000 5.0%
3010 Lostwood Drive
Sandy, UT 84092
Nicholl R. Heieren* 6,000 0.5%
4904 Royal Lake Ave.
Las Vegas, NV 89131
Sharlene Doolin* 100,000** 8.3%
5 Pepperwood Drive
Sandy, UT 84092
TOTAL OFFICERS & DIRECTORS 166,000 13.8%
* Nicholl Heieren is Alycia Anthony's sister-in-law. James Doolin, a shareholder
of the Company, is married to Nicholl Heieren. Sharlene Doolin is the mother of
Alycia Anthony, and mother-in-law to Nicholl Heieren
*** Sharlene Doolin is an indirect owner of 100,000 shares of the Company's
common stock, because she is the general partner of Quad D LTD Partnership.
CHANGES IN CONTROL
There are no present arrangements or pledges of the Company's securities
which may result in a change in control of the Company.
19
Item 5. Directors, Executive Officers, Promoters and Control Persons.
- ---------------------------------------------------------------------
IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name of the Company's current directors
and executive officers. These persons will serve until the next annual meeting
of the stockholders or until their successors are elected or appointed and
qualified, or prior resignation or termination. Their Date of Date of Positions
Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
Alycia D. Anthony DIRECTOR & 12/03 *
PRESIDENT
Nicholl R. Heieren DIRECTOR & 12/03 *
VICE PRESIDENT
Sharlene Doolin DIRECTOR & 07/04 *
SECRETARY
* These persons presently serves in the capacities indicated.
BUSINESS EXPERIENCE
Alycia D. Anthony, President and a director, is 31 years of age. . Ms.
Anthony graduated from the University of Utah, in Salt Lake City. She graduated
with a bachelor of science, and masters in Economics. Ms. Anthony has been
working in the public finance arena since 1996. She has worked for the
consulting firm of KPMG, Peat Marwick, Consulting, Inc. She also worked with the
Salt Lake Organizing Committee. through 2002. Over the past three years Ms.
Anthony has worked within the advertising and construction management industry.
Nicholl Heieren, Vice President and a director, is 28 years of age. Ms.
Heieren graduated from the University of Utah, in Salt Lake City, Utah. She
graduated with a bachelor of fine arts. Ms. Heieren has worked within the film,
fashion, and entertainment business for the past eight years.
Sharlene Doolin, Secretary and a director, is 56 years of age. Ms. Doolin
has been involved in the promotional merchandising industry for over the past
fifteen years. Her experience within the promotional merchandise industry
primarily involves working with non-profit associations and school
organizations.
20
SIGNIFICANT EMPLOYEES
The Company's Executive Officers are the only employees.
INVOLVMENT IN CERTAIN LEGAL PROCEEDINGS
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of the
Company:
(1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended or vacated.
21
Item 6. Executive Compensation.
- --------------------------------
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated:
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual ricted lying Pay- Comp-
Position Ended ($) ($) Compen -Stock Options outs ensat'n
- ---------------------------------------------------------------------
Alycia D. 09-30-04 0 0 0 0 0 0 0
Anthony, 09-30-05 $4,500 0 0 0 0 0 0
Director,
President
Nicholl R. 09-30-04 0 0 0 0 0 0 0
Heieren, 09-30-05 0 0 0 0 0 0 0
Director,
Vice
President
Sharlene 09-30-04 0 0 0 0 0 0 0
Doolin, 09-30-05 0 0 0 0 0 0 0
Director,
Secretary
No deferred compensation or long-term incentive plan awards were issued or
granted to the Company's management during the year ended September 30, 2004 or
2005. However, the Company has accrued $500 per month for compensation of the
Company's President. Ms. Anthony's began receiving salary as of January 1, 2005.
No employee, director, or executive officer have been granted any option or
stock appreciation rights; accordingly, no tables relating to such items have
been included within this Item.
22
COMPENSATION OF DIRECTORS
There are no standard arrangements pursuant to which the Company's
directors are compensated for any services provided as a director. No additional
amounts are payable to the Company's directors for committee participation or
special assignments.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
There are no employment contracts, compensatory plans or arrangements,
including payments to be received from the Company, with respect to any director
or executive officer of the Company which would in any way result in payments to
any such person because of his resignation, retirement or other termination of
employment with the Company, any change in control of the Company, or a change
in the person's responsibilities following a change in control of the Company.
Item 7. Certain Relationships and Related Transactions.
- --------------------------------------------------------
None, not applicable;
Item 8. Description of Securities.
- -----------------------------------
COMMON AND PREFERRED STOCK
The aggregate number of shares which this corporation shall have authority
to issue is 55,000,000 shares, divided into two classes, 50,000,000 shares of
common stock of a par value of one cent ($0.01) per share and 5,000,000 shares
of preferred stock of a par value of one cent ($0.01) per share, with the
preferred stock having such rights and preferences as the Board of Directors
shall determine. Fully paid stock of this corporation shall not be liable to any
further call or assessment. The holders of the Company's common stock are
entitled to one vote per share on each matter submitted to a vote at a meeting
of stockholders. The shares of common stock do not carry cumulative voting
rights in the election of directors.
NO OUTSTANDING OPTIONS, WARRANTS OR CALLS
There are no outstanding options, warrants or calls to purchase any of the
authorized securities of the Company.
23
NO PROVISIONS LIMITING CHANGE OF CONTROL
There is no provision in the Company's Articles of Incorporation or Bylaws
that would delay, defer, or prevent a change in control of the Company.
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and
Other Stockholder Matters.
- --------------------------
MARKET INFORMATION
There has never been any established "public market" for shares of common
stock of the Company. The Company intends to submit for listing on the OTC
Bulletin Board of the NASD. No assurance can be given that any market for the
Company's common stock will develop or be maintained. For any market that
develops for the Company's common stock, the sale of "restricted securities"
(common stock) pursuant to Rule 144 of the Securities and Exchange Commission by
the directors, executive officers or any other person to whom any such
securities may be issued in the future may have a substantial adverse impact on
any such public market. Information about the date when directors, executive
officers or any other person who may be deemed a beneficial holder, holding
period of "restricted securities" commenced can be found under the caption
"Recent Sales of Unregistered Securities," Part II, Item 4.
A minimum holding period of one year is required for resales under Rule
144, along with other pertinent provisions, including publicly available
information concerning the Company (this requirement will be satisfied by the
filing and effectiveness of this Registration Statement, the passage of 90 days
and the continued timely filing by the Company of all reports required to be
filed by it with the Securities and Exchange Commission); limitations on the
volume of "restricted securities" which can be sold in any 90 day period; the
requirement of unsolicited broker's transactions; and the filing of a Notice of
Sale of Form 144. Shares sold under Rule 504 may be possibly sold earlier under
Section 4 (i) of the Securities Act of 1933, as amended (the "Securities Act").
Alycia D. Anthony, the Company's President Director, Nicholl R. Heieren,
the Company's Secretary and Director and Michael Doolin, a shareholder, are the
only shareholders that hold restricted shares of the Company's common stock and
would have to comply with Rule 144 of the Securities Act. They could each sale
up to 1% of the total issued and outstanding of the Company's common stock. This
constitutes 12,000 shares each or a total of 30,000* shares, could be sold under
Rule 144 of the Securities act once the 90 day period required by Rule 144(c)(1)
has elapsed.
* Nicholl R. Heieren holds 6,000 shares, less than the minimum of 12,000 shares.
24
HOLDERS
The number of record holders of the Company's securities as of the date of
this Registration Statement is approximately 100.
DIVIDENDS
The Company has not declared any cash dividends with respect to its common
stock, and does not intend to declare dividends in the foreseeable future. The
future dividend policy of the Company cannot be ascertained with any certainty,
and if and until the Company completes any sales of its products, no such policy
will be formulated. There are no material restrictions limiting, or that are
likely to limit, the Company's ability to pay dividends on its securities.
Item 2. Legal Proceedings.
- ---------------------------
The Company is not a party to any pending legal proceeding. No federal,
state or local governmental agency is presently contemplating any proceeding
against the Company. No director, executive officer or persons who may be deemed
to be an "affiliate" of the Company or owner of record or beneficially of more
than five percent of the Company's common stock is a party adverse to the
Company or has a material interest adverse to the Company in any proceeding.
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
None; not applicable.
Item 4. Recent Sales of Unregistered Securities.
- -------------------------------------------------
Prior to the Company's organization on December 12, 2003, the Company
authorized and subsequently issued 126,000 shares of common stock to three
individuals pursuant to a Pre-organization Subscription Agreement. The shares
were issued for cash at $0.02 per share for a total of $2,520.
Following the Company's organization, it conducted an offering of 1,074,000
shares of common stock at a price of $0.03 per share. This offering was
conducted under Rule 504 of Regulation D of the Securities and Exchange
Commission, and the applicable provisions of Rule 144-14-25s of the Utah
Division of Securities, which provides for sales of securities by public
solicitation to "accredited" investors. The offering was subsequently closed
January 28, 2004, with the Company having received gross proceeds of $32,220.
25
For Further information see the following table: "Common Stock"
COMMON STOCK
Date Number of Aggregate
Name Acquired Shares Consideration
---- -------- --------- -------------
Alycia D. Anthony* 12/03 60,000 $ 1,200
James P. Doolin* 12/03 60,000 $ 1,200
Nicholl R. Heieren* 12/03 6,000 $ 120
PURCHASERS UNDER** 01/04 1,074,000 $ 32,220
RULE 504 OFFERING
* Alycia D. Anthony, James P. Doolin and Nicholl R. Heieren were all directors
and Executive Officers of the Company at the time of purchase, and as such had
access to all material information regarding the Company prior to the offer or
sale of these securities. The directors and Executive Officers are "accredited
investor." The offers and sales of these securities are believed to have been
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended, pursuant to Sections 3(b) and/or 4(2) thereof, and from
similar applicable states securities laws, rules and regulations exempting the
offer and sale of these securities by available state exemptions from
registration.
** Purchasers of the Company's securities under the Rule 504 offering were
"accredited" investors. Purchasers of the Company's securities under the Rule
504 offering were "accredited" investors. All purchasers had access to all
material information regarding the Company.
There have been no other sales of the Company's unregistered securities.
26
Item 5. Indemnification of Directors and Officers.
- ---------------------------------------------------
Section 16-10a-902(1) of the Utah Revised Business Corporation Act
authorizes a Utah corporation to indemnify any director against liability
incurred in any proceeding if he or she acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
Section 16-10a-902(4) prohibits a Utah corporation from indemnifying a
director in a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation or in a proceeding in which the
director was adjudged liable on the basis that he or she improperly received a
personal benefit. Otherwise, Section 16-10a-902(5) allows indemnification for
reasonable expenses incurred in connection with a proceeding by or in the right
of a corporation.
Unless limited by the Articles of Incorporation, Section 16-10a-905
authorizes a director to apply for indemnification to the court conducting the
proceeding or another court of competent jurisdiction. Section 16-10a-907(1)
extends this right to officers of a corporation as well.
Unless limited by the Articles of Incorporation, Section 16-10a-903
requires that a corporation indemnify a director who was successful, on the
merits or otherwise, in defending any proceeding to which he or she was a party
against reasonable expenses incurred in connection therewith. Section
16-10a-907(1) extends this protection to officers of a corporation as well.
Pursuant to Section 16-10a-904(1), the corporation may advance a director's
expenses incurred in defending any proceeding upon receipt of an undertaking and
a written affirmation of his or her good faith belief that he or she has met the
standard of conduct specified in Section 16-10a-902. Unless limited by the
Articles of Incorporation, Section 16- 10a-907(2) extends this protection to
officers, employees, fiduciaries and agents of a corporation as well.
Regardless of whether a director, officer, employee, fiduciary or agent has
the right to indemnity under the Utah Revised Business Corporation Act, Section
16-10a-908 allows the corporation to purchase and maintain insurance on his or
her behalf against liability resulting from his or her corporate role.
27
PART F/S
Plan A Promotions, Inc.
[fka Lostwood Professional Services, Inc.]
[A Development Stage Company]
Financial Statements and Report of
Independent Registered Public Accounting Firm
September 30, 2005
28
Plan A Promotions, Inc.
[fka Lostwood Professional Services, Inc.]
[A Development Stage Company]
TABLE OF CONTENTS
Page
Report of Independent Registered Public Accounting Firm 30
Balance Sheet -- September 30, 2005 31
Statements of Operations for the year ended September 30, 2005 and for the
periods from Inception [December 12, 2003] through September 30, 2004 and 2005 32
Statements of Stockholders' Equity for the period from Inception
[December 12, 2003] through September 30, 2005 33
Statements of Cash Flows for the year ended September 30, 2005 and for the
periods from Inception [December 12, 2003] through September 30, 2004 and 2005 34
Notes to Financial Statements 35 - 38
29
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
Plan A Promotions, Inc. [a development stage company]
We have audited the accompanying balance sheet of Plan A Promotions [ fka
Lostwood Professional Services, Inc.] (a development stage company) as of
September 30, 2005, and the related statements of operations, stockholders'
equity, and cash flows for the year ended September 30, 2005 and for the periods
from Inception [December 12, 2003] through September 30, 2004 and 2005. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company has determined that it
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purposes
of expressing an opinion on the effectiveness of the Company's internal controls
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Plan A Promotions, Inc. [a
development stage company] as of September 30, 2005, and the results of
operations and cash flows for the year ended September 30, 2005 and for the
periods from Inception [December 12, 2003] through September 30, 2004 and 2005,
in conformity with accounting principles generally accepted in the United States
of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has accumulated losses from operations,
minimal assets, and a net working capital deficiency that raise substantial
doubt about its ability to continue as a going concern. Management plans in
regard to these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/S/MANTYLA MCREYNOLDS
Mantyla McReynolds
Salt Lake City, Utah
October 27, 2005
30
Plan A Promotions, Inc.
[fka Lostwood Professional Services, Inc.]
[A Development Stage Company]
Balance Sheet
September 30, 2005
ASSETS
--------------
--------------
Current Assets
Cash 22,914
--------------
--------------
Total Current Assets 22,914
Property and Equipment (net) [Note 5] 2,860
--------------
--------------
Total Assets $ 25,774
==============
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Accrued Liabilities 4,261
--------------
--------------
Total Current Liabilities 4,261
--------------
--------------
Total Liabilities $ 4,261
Stockholders' Equity [Note 4]
Preferred stock; par value ($0.01);
Authorized 5,000,000 shares
none issued or outstanding 0
Common stock; par value ($0.01);
authorized 50,000,000 shares; issued
and outstanding 1,200,000 12,000
Paid in Capital 24,237
Deficit accumulated during development stage (14,724)
--------------
--------------
Total Stockholders' Equity $ 21,513
--------------
--------------
Total Liabilities and Stockholders' Equity $ 25,774
==============
See accompanying notes to financial statements.
31
Plan A Promotions, Inc.
[fka Lostwood Professional Services, Inc.]
[A Development Stage Company]
Statements of Operations
For the year ended September 30, 2005 and for the periods
from Inception [December 12, 2003] through September 30, 2004 and 2005
From Inception From Inception
[12/12/2003] [12/12/2003]
through through
2005 2004 9/30/2005
--------------- --------------- ---------------
Revenues $ 7,432 $ 608 $ 8,040
Cost of Goods Sold (6,303) (558) (6,861)
--------------- --------------- ---------------
Gross Profit 1,129 50 1,179
General and Administrative Expenses (12,075) (3,350) (15,425)
--------------- --------------- ---------------
Net Loss from Operations (10,946) (3,300) (14,246)
--------------- --------------- ---------------
Other Income/(Expense):
Interest Expense (278) 0 (278)
--------------- --------------- ---------------
--------------- --------------- ---------------
Total Other Income/(Expense) (278) 0 (278)
--------------- --------------- ---------------
Net Loss Before Income Taxes (11,224) (3,300) (14,524)
Provision for Income/Franchise Taxes (100) (100) (200)
--------------- --------------- ---------------
--------------- ---------------
Net Loss from Operations $ (11,324) $ (3,400) $ (14,724)
=============== =============== ===============
Loss Per Share $ (0.01) $ (0.01) $ (0.01)
=============== =============== ===============
Weighted Average Shares Outstanding 1,200,000 1,027,720 1,123,286
=============== =============== ===============
See accompanying notes to financial statements.
32
Plan A Promotions, Inc.
[fka Lostwood Professional Services, Inc.]
[A Development Stage Company]
Statements of Stockholders' Equity
For the period from Inception [December 12, 2003] through September 30, 2005
Common Common Additional Accumulated Net
Shares Stock Paid in Deficit Stockholders'
Capital Equity
---------- ------------ -------------- ------------- --------------
---------- ------------ -------------- ------------- --------------
Balance, December 12, 2003 0 0 0 0 0
Common stock issued for cash 1,200,000 12,000 22,737 0 34,737
Property contributed by shareholder 0 0 1,500 0 1,500
Net loss from inception on December 0 0 0 (3,400) (3,400)
12, 2003 through September 30, 2004
---------- ------------ -------------- ------------- --------------
---------- ------------ -------------- ------------- --------------
Balance, September 30, 2004 1,200,000 12,000 24,237 (3,400) 32,837
Net loss for the year ended
September 30, 2005 0 0 0 (11,324) (11,324)
---------- ------------ -------------- ------------- --------------
---------- ------------ -------------- ------------- --------------
Balance, September 30, 2005 1,200,000 12,000 24,237 (14,724) 21,513
========== ============ ============== ============= ==============
See accompanying notes to financial statements.
33
Plan A Promotions, Inc.
[fka Lostwood Professional Services, Inc.]
[A Development Stage Company]
Statements of Cash Flows
For the year ended September 30, 2005 and for the periods
from Inception [December 12, 2003] through September 30, 2004 and 2005
From Inception From Inception
[12/12/2003] [12/12/2003]
through through
2005 2004 9/30/2005
---------------- --------------- ----------------
Cash Flows From Operating Activities
Net Loss $ (11,324)$ (3,400)$ (14,724)
Adjustments to reconcile net (loss) to
net cash provided by operating activities:
Depreciation 965 497 1,462
Increase/(decrease) in current liabilities
Accrued Liabilities 4,118 143 4,261
---------------- --------------- ----------------
Net Cash From Operating Activities (6,241) (2,760) (9,001)
Cash Flows From Investing Activities
Purchase of Equipment (2,822) 0 (2,822)
---------------- --------------- ----------------
Net Cash Used by Investing Activities (2,822) 0 (2,822)
Cash Flows From Financing Activities
Stock issued for cash 0 34,737 34,737
---------------- --------------- ----------------
Net Cash From Financing Activities 0 34,737 34,737
Net Increase in Cash (9,063) 31,977 22,914
Beginning Cash Balance 31,977 0 0
---------------- --------------- ----------------
---------------- --------------- ----------------
Ending Cash Balance $ 22,914 $ 31,977 $ 22,914
================ =============== ================
Supplemental Disclosure Information
Cash paid during year for interest $ 0 $ 0 $ 0
Cash paid during year for income taxes $ 0 $ 0 $ 0
Property contributed by shareholder $ 0 $ 1,500 $ 1,500
See accompanying notes to financial statements.
34
Plan A Promotions, Inc.
[fka Lostwood Professional Services, Inc.]
[A Development Stage Company]
Notes to Financial Statements
September 30, 2005
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
Plan A Promotions, Inc. (Company) was founded December 12, 2003 as Lostwood
Professional Services, Inc. and was organized to engage in the business of
producing and selling promotional merchandise. The Company was incorporated
under the laws of the State of Utah.
The Company is considered to be in the development stage as defined in
Financial Accounting Standards Board Statement No. 7. It has yet to
commence full-scale operations and it continues to develop its planned
principle operations.
The financial statements of the Company have been prepared in accordance
with accounting principles generally accepted in the United States of
America. The following summarizes the more significant of such policies:
(b) Income Taxes
The Company applies the provisions of Statement of Financial Accounting
Standards No. 109 [the Statement], Accounting for Income Taxes. The
Statement requires an asset and liability approach for financial accounting
and reporting for income taxes, and the recognition of deferred tax assets
and liabilities for the temporary differences between the financial
reporting basis and tax basis of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized
or settled.
(c) Net Loss Per Common Share
In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings per Share," basic loss per common share is based on the
weighted-average number of shares outstanding. Diluted income or loss per
share is computed using weighted average number of common shares plus
dilutive common share equivalents outstanding during the period using the
treasury stock method. There are no common stock equivalents outstanding,
thus, basic and diluted income or loss per share calculations are the same.
35
Plan A Promotions, Inc.
[fka Lostwood Professional Services, Inc.]
[A Development Stage Company]
Notes to Financial Statements
September 30, 2005
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Statement of Cash Flows For purposes of the statements of cash flows,
the Company considers cash on deposit in the bank to be cash. The Company
had $22,914 and $31,977 in cash on September 30, 2005 and 2004,
respectively.
(e) Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with U. S. 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.
(f) Revenue Recognition
The Company recognizes revenue in accordance with the Securities and
Exchange Commission Staff Accounting Bulletin (SAB) number 104, which
states that revenue is generally recognized when it is realized and earned.
Specifically, the Company recognizes revenue when products are completed
and accepted by the customer.
(g) Impact of New Accounting Standards
In December 2004, the FASB issued SFAS 123 (R), "Share-Based Payment." SFAS
123 (R) amends SFAS 123, "Accounting for Stock-Based Compensation," and APB
Opinion 25, "Accounting for Stock Issued to Employees." SFAS 123 (R)
requires that the cost of share-based payment transactions (including those
with employees and non-employees) be recognized in the financial
statements. SFAS 123 (R) applies to all share-based payment transactions in
which an entity acquires goods or services by issuing (or offering to
issue) its shares, share options, or other equity instruments (except for
those held by an ESOP) or by incurring liabilities (1) in amounts based
(even in part) on the price of the Company's shares or other equity
instruments, or (2) that require (or may require) settlement by the
issuance of a company's shares or other equity instruments. This statement
is effective for public companies qualifying as SEC small business issuers
or nonpublic entities, as of the first interim period or fiscal year
beginning after December 15, 2005. For all other public companies, the
statement is effective as of the first interim period or fiscal year
beginning after June 15, 2005. Management does not expect adoption of SFAS
123 (R) to have a material impact on the Company's financial statements.
36
In November 2004, FASB issued SFAS 151, "Inventory Costs." SFAS 151 amends
the accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material (spoilage) under the guidance in ARB
43, Chapter 4, "Inventory Pricing." SFAS 151 requires that items be
recognized as current-period charges regardless of whether they meet the
criterion of "so abnormal." In addition, SFAS 151 requires that allocation
of fixed production overhead to the costs of conversion be based on the
normal capacity of the production facilities. This statement is effective
for inventory costs incurred during fiscal years beginning after June 15,
2005. Management does not expect adoption of SFAS 151 to have a material
impact on the Company's financial statements.
In December 2004, the FASB issued SFAS 153, "Exchanges of Nonmonetary
Assets," an amendment to Opinion No. 29, "Accounting for Nonmonetary
Transactions." Statement 153 eliminates certain differences in the guidance
in Opinion No. 29 as compared to the guidance contained in standards issued
by the International Accounting Standards Board. The amendment to Opinion
No. 29 eliminates the fair value exception for nonmonetary exchanges of
similar productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial substance. Such
an exchange has commercial substance if the future cash flows of the entity
are expected to change significantly as a result of the exchange. SFAS 153
is effective for nonmonetary asset exchanges occurring in periods beginning
after June 15, 2005. Earlier application is permitted. Management does not
expect adoption of SFAS 153 to have a material impact on the Company's
financial statements.
In May 2005, the FASB issued SFAS 154, "Accounting Changes and Error
Corrections." This statement replaces APB Opinion No. 20, "Accounting
Changes," and FASB Statement No. 3, "Reporting Accounting Changes in
Interim Financial Statements." Statement 154 changes the requirements for
the accounting for and reporting of a change in accounting principle. This
statement requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless it is impracticable
to determine the period-specific effects or the cumulative effect of the
change. Such an exchange has commercial substance if the future cash flows
of the entity are expected to change significantly as a result of
accounting changes and corrections of error. SFAS 154 is effective for
accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005. Earlier application is permitted. Management does
not expect adoption of SFAS 154 to have a material impact on the Company's
financial statements.
NOTE 2 - LIQUIDITY/GOING CONCERN
The Company has accumulated losses from inception through September 30,
2005 amounting to $14,724 and has minimal assets and operations at
September 30, 2005. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
Management plans include raising capital to commence business operations,
or seeking a well capitalized merger candidate. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
37
Plan A Promotions, Inc.
[fka Lostwood Professional Services, Inc.]
[A Development Stage Company]
Notes to Financial Statements
September 30, 2005
NOTE 3 - INCOME TAXES
The provision for income taxes consists of the following:
Current taxes $ 100
Deferred tax benefit (net of valuation allowance) 0
Deferred tax liability 0
-------
$ 100
=======
Below is a summary of deferred tax asset calculations on net operating loss
carry forward amounts. Loss carry forward amounts expire at various times
through 2025. A valuation allowance is provided when it is more likely than
not that some portion of the deferred tax asset will not be realized.
Description NOL Tax Rate
- ------------------------------ ----------- -------------- ----------
Federal Income Tax $14,524 $2,179 15%
State Income Tax $14,524 $ 726 5%
Valuation allowance (2,205)
--------------
Deferred tax asset 9/30/05 $0
The allowance has increased $2,245 from $660 as of September 30, 2004.
The Company is incorporated in the State of Utah, which levies a $100
minimum tax per year on every company therein incorporated. As a result,
the Company has accrued a provision of $100 per year to account for this
tax.
Reconciliation between taxes at the statutory rates (20%) and the actual income
tax provision for continuing operations follows:
Expected provision (based on statutory rates) $(2,245)
Effect of:
Increase/(decrease) in valuation allowance 2,245
State minimum franchise tax 100
-------
Total actual provision $ 100
=======
NOTE 4 - COMMON STOCK/PAID IN CAPITAL
On December 12, 2003, the Board of Directors authorized a stock issuance
totaling 1,200,000 shares of common stock to officers of the Company and
investors. On December 12, 2003, the Company issued 126,000 shares of
common stock at $0.02 for $2,520 in cash. On January 28, 2004, the Company
issued an additional 1,074,000 shares of common stock at $0.03 for cash
totaling $32,220.
At inception, an owner of the company contributed a computer valued at
$1,500.
38
Plan A Promotions, Inc.
[fka Lostwood Professional Services, Inc.]
[A Development Stage Company]
September 30, 2005
NOTE 5 - PROPERTY
The major classes of assets as of the balance sheet date are as follows:
Accumulated Net
Asset Class Cost Depreciation Book
- --------------------------- ------------ ----------------- ------------
Computers $1,500 ($898) $602
Office Equipment 2,822 (564) 2,258
Total $4,322 (1,462) $2,860
------------ ----------------- ------------
Both assets are depreciated using the double declining balance method over
five years. Depreciation expense was $965 and $497 for the years ended
September 30, 2005 and 2004, respectively.
NOTE 6 - SALARIES PAYABLE
Salaries to the President of the Company are accrued at a rate of $500 per
month starting January 1, 2005. The balance payable accrues interest at a
simple interest rate of 10% annually. Salaries expense was $4,500 and $0
for 2005 and 2004, respectively. Interest on the September 30, 2005 ending
payable amount of $3,707 was accrued with interest expense totaling $278.
39
PART III
Item 1. Index to Exhibits.
- ---------------------------
The following exhibits are filed as a part of this Registration Statement:
Exhibit
Number Description
- ------ ------------
3.1(a) Articles of Incorporation
3.1(b) Articles of Amendment to the Articles of Incorporation dated
July 21, 2004
3.3 Bylaws
40
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Registration Statement of Plan A Promotions, Inc.
(the "Company") on Form 10-SB for the fiscal year ended September 30, 2005 and
for the periods from Inception [December 12, 2003] through September 30, 2004
and 2005, as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Alycia Anthony, Chief Executive Officer and Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as
adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Date: 11/29/05 /S/ALYCIA ANTHONY
Alycia Anthony, Chief Executive Officer,
Chief Financial Officer and Controller
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant has caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Plan A Promotions, Inc.
Date: 11/29/05 /S/ALYCIA ANTHONY
---------- ------------------------
Alycia Anthony, Director
and President
Date: 11/29/05 /S/NICHOLL HEIEREN
---------- ------------------------
Nicholl Heieren, Director
and Vice President
41
EX-3.1(a)
ARTICLES OF INCORPORATION
OF
LOSTWOOD PROFESSIONAL SERVICES, INC.
The undersigned natural person of the age of eighteen years or more, acting
as the incorporator of a corporation under the Utah Revised Business Corporation
Act, hereby adopts the following Articles of Incorporation for such corporation:
ARTICLE I
Name
The name of this corporation is "Lostwood Professional Services, Inc."
ARTICLE II
Duration
The duration of this corporation is perpetual.
ARTICLE III
Purposes
The purpose or purposes for which this corporation is organized are: To
engage in any other lawful act or activity for which corporations may be
organized under the Utah Revised Business Corporation Act.
ARTICLE IV
Stock
The aggregate number of shares which this corporation shall have authority
to issue is 55,000,000 shares, divided into two classes, 50,000,000 shares of
common stock of a par value of one cent ($0.01) per share and 5,000,000 shares
of preferred stock of a par value of one cent ($0.01) per share, with the
preferred stock having such rights and preferences as the Board of Directors
shall determine. Fully paid stock of this corporation shall not be liable to any
further call or assessment.
ARTICLE V
Amendment
These Articles of Incorporation may be amended by the affirmative vote of a
majority of the shares entitled to vote on each such amendment.
ARTICLE VI
Shareholder Rights
The authorized and treasury stock of this corporation may be issued at such
time, upon such terms and conditions and for such consideration, as the Board of
Directors shall determine. Shareholders shall not have pre-emptive rights to
acquire unissued shares of stock of this corporation. Nor shall shareholders be
entitled to vote cumulatively for directors of the corporation.
42
ARTICLE VII
Initial Office and Agent
The name of the corporation's original registered agent and the address of
its initial registered office is:
Alycia Anthony
3010 Lost Wood Drive
Sandy, UT 84092
ARTICLE VIII
Directors
The number of directors constituting the initial Board of Directors of this
corporation is three. The names and addresses of persons who are to serve as
directors until the first annual meeting of shareholders or until their
successors are elected and qualify, are:
Alycia Anthony
3010 Lost Wood Drive
Sandy, UT 84092
James Doolin
1223 Wilshire Blvd. #912
Santa Monica, CA 90403
Nicholl Heieren
3410 Manhattan Ave.
Manhattan Beach, CA 90266
ARTICLE IX
Incorporator
The name and address of the Incorporator is:
James Doolin
1223 Wilshire Blvd. #912
Santa Monica, CA 90403
43
ARTICLE X
Common Directors - Transactions Between Corporation
No contract or other transaction between this corporation and one or more
of its directors or any other corporation, firm, association or entity in which
one or more of its directors are directors or officers or are financially
interested, shall be either void or voidable because of such relationship or
interest, or because such director or directors are present at the meeting of
the Board of Directors, or a committee thereof which authorizes, approves, or
ratifies such contract or transaction, or because his, her or their votes are
counted for such purposes if: (a) the fact of such relationship or interest is
disclosed or known to the Board of Directors or committee which authorizes,
approves, or ratifies the contract or transaction by vote or consent sufficient
for the purpose without counting the votes or consents of such interested
Director; (b) the fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or (c) the contract or
transaction is fair and reasonable to the corporation. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or committee thereof which authorizes, approves, or
ratifies such contract or transaction.
ARTICLE XI
Board of Director Authorization to Change Corporate Name
The Board of Directors shall have the right to change the name of the
corporation without shareholder approval to a name that reflects the industry or
business in which the corporation's business operations are conducted or to a
name that will promote or conform to any principal product, technology or other
asset of the corporation that the Board of Directors, in its sole discretion,
deems appropriate.
/S/ JAMES DOOLIN
James Doolin, Incorporator
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
I, a Notary Public, hereby certify that on the 12th day of December, 2003,
James Doolin personally appeared before me who being by me first duly sworn,
declared that he is the person who signed the foregoing document as incorporator
and that the statements therein contained are true.
/S/ NOTORY PUBLIC
NOTARY PUBLIC
Residing at Salt Lake County, Utah
44
EX-3.1(b)
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to UCA 16-10a part 10, the individual named below causes this
Amendment to the Articles of Incorporation to be delivered to the Utah Division
of Corporations for filing, and states as follows:
1. The name of the corporation is: Lostwood Professional Services, Inc.
2. The date the following amendment(s) was adopted: July 13, 2004.
3. If changing the corporation name, the new name of the corporation is:
Plan A Promotions, Inc.
4. The text of each amendment adopted: N/A
5. If providing for an exchange, reclassification or cancellation of issued
shares, provisions for implementing the amendment if not contained in the
amendment itself: N/A
6. Indicate the manner in which the amendment(s) was adopted: Shares have
been issued but shareholder action was not required - Adopted by the board
of directors.
7. Delayed effective date: N/A
Under penalties of perjury, I declare that this Amendment of Articles of
Incorporation has been examined by me and is, to the best of my knowledge and
belief, true, correct and complete.
By: /S/ ALYCIA ANTHONY
Title: President
Dated this 21st day of July, 2004.
45
EX-3.3
BYLAWS
OF
LOSTWOOD PROFESSIONAL SERVICES, INC.
ARTICLE I
OFFICES
Section 1.01 Location of Office. The corporation may maintain such offices
within or without the State of Utah as the Board of Directors may from time to
time designate or require.
Section 1.02 Principal Office. The address of the principal office of the
corporation shall be at the address of the registered office of the corporation
as so designated in the office of the Lieutenant Governor/Secretary of State of
the state of incorporation, or at such other address as the Board of Directors
shall from time to time determine.
ARTICLE II
SHAREHOLDERS
Section 2.0 Annual Meeting. The annual meeting of the shareholders shall be
held in May of each year or at such other time designated by the Board of
Directors and as is provided for in the notice of the meeting, for the purpose
of electing directors and for the transaction of such other business as may come
before the meeting. If the election of directors shall not be held on the day
designated for the annual meeting of the shareholders, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a special
meeting of the shareholders as soon thereafter as may be convenient.
Section 2.02 Special Meetings. Special meetings of the shareholders may be
called at any time by the chairman of the board, the president, or by the Board
of Directors, or in their absence or disability, by any vice president, and
shall be called by the president or, in his or her absence or disability, by a
vice president or by the secretary on the written request of the holders of not
less than one-tenth of all the shares entitled to vote at the meeting, such
written request to state the purpose or purposes of the meeting and to be
delivered to the president, each vice-president, or secretary. In case of
failure to call such meeting within 60 days after such request, such shareholder
or shareholders may call the same.
Section 2.03 Place of Meetings. The Board of Directors may designate any
place, either within or without the state of incorporation, as the place of
meeting for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place, either within or without the state of
incorporation, as the place for the holding of such meeting. If no designation
is made, or if a special meeting be otherwise called, the place of meeting shall
be at the principal office of the corporation.
46
Section 2.04 Notice of Meetings. The secretary or assistant secretary, if
any, shall cause notice of the time, place, and purpose or purposes of all
meetings of the shareholders (whether annual or special), to be mailed at least
ten (10) days, but not more than fifty (50) days, prior to the meeting, to each
shareholder of record entitled to vote.
Section 2.05 Waiver of Notice. Any shareholder may waive notice of any
meeting of shareholders (however called or noticed, whether or not called or
noticed and whether before, during, or after the meeting), by signing a written
waiver of notice or a consent to the holding of such meeting, or an approval of
the minutes thereof. Attendance at a meeting, in person or by proxy, shall
constitute waiver of all defects of call or notice regardless of whether waiver,
consent, or approval is signed or any objections are made. All such waivers,
consents, or approvals shall be made a part of the minutes of the meeting.
Section 2.06 Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any annual meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the corporation may provide
that the share transfer books shall be closed, for the purpose of determining
shareholders entitled to notice of or to vote at such meeting, but not for a
period exceeding fifty (50) days. If the share transfer books are closed for the
purpose of determining shareholders entitled to notice of or to vote at such
meeting, such books shall be closed for at least ten (10) days immediately
preceding such meeting.
In lieu of closing the share transfer books, the Board of Directors may fix
in advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than fifty (50) and, in case of a meeting
of shareholders, not less than ten (10) days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the share transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting or
to receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this Section,
such determination shall apply to any adjournment thereof. Failure to comply
with this Section shall not affect the validity of any action taken at a meeting
of shareholders.
Section 2.07 Voting Lists. The officer or agent of the corporation having
charge of the share transfer books for shares of the corporation shall make, at
least ten (10) days before each meeting of the shareholders, a complete list of
the shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of, and the number of shares
held by each, which list, for a period of ten (10) days prior to such meeting,
shall be kept on file at the registered office of the corporation and shall be
subject to inspection by any shareholder during the whole time of the meeting.
The original share transfer book shall be prima facia evidence as to the
shareholders who are entitled to examine such list or transfer books, or to vote
at any meeting of shareholders.
47
Section 2.08 Quorum. One-half of the total voting power of the outstanding
shares of the corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of the shareholders. If a quorum is
present, the affirmative vote of the majority of the voting power represented by
shares at the meeting and entitled to vote on the subject shall constitute
action by the shareholders, unless the vote of a greater number or voting by
classes is required by the laws of the state of incorporation of the corporation
or the Articles of Incorporation. If less than one-half of the outstanding
voting power is represented at a meeting, a majority of the voting power
represented by shares so present may adjourn the meeting from time to time
without further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
Section 2.09 Voting of Shares. Each outstanding share of the corporation
entitled to vote shall be entitled to one vote on each matter submitted to vote
at a meeting of shareholders, except to the extent that the voting rights of the
shares of any class or series of stock are determined and specified as greater
or lesser than one vote per share in the manner provided by the Articles of
Incorporation.
Section 2.10 Proxies. At each meeting of the shareholders, each shareholder
entitled to vote shall be entitled to vote in person or by proxy; provided,
however, that the right to vote by proxy shall exist only in case the instrument
authorizing such proxy to act shall have been executed in writing by the
registered holder or holders of such shares, as the case may be, as shown on the
share transfer of the corporation or by his or her or her attorney thereunto
duly authorized in writing. Such instrument authorizing a proxy to act shall be
delivered at the beginning of such meeting to the secretary of the corporation
or to such other officer or person who may, in the absence of the secretary, be
acting as secretary of the meeting. In the event that any such instrument shall
designate two or more persons to act as proxies, a majority of such persons
present at the meeting, or if only one be present, that one shall (unless the
instrument shall otherwise provide) have all of the powers conferred by the
instrument on all persons so designated. Persons holding stock in a fiduciary
capacity shall be entitled to vote the shares so held and the persons whose
shares are pledged shall be entitled to vote, unless in the transfer by the
pledge or on the books of the corporation he or she shall have expressly
empowered the pledgee to vote thereon, in which case the pledgee, or his or her
proxy, may represent such shares and vote thereon.
Section 2.11 Written Consent to Action by Shareholders. Any action which
may be taken at any annual or special meeting of stockholders may be taken
without a meeting and without prior notice, if one or more consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take the action at a meeting at which all shares entitled to
vote thereon were entitled to be present and to vote.
48
ARTICLE III
DIRECTORS
Section 3.01 General Powers. The property, affairs, and business of the
corporation shall be managed by its Board of Directors. The Board of Directors
may exercise all the powers of the corporation whether derived from law or the
Articles of Incorporation, except such powers as are by statute, by the Articles
of Incorporation or by these Bylaws, vested solely in the shareholders of the
corporation.
Section 3.02 Number, Term, and Qualifications. The Board of Directors shall
consist of two to nine persons. Increases or decreases to said number may be
made, within the numbers authorized by the Articles of Incorporation, as the
Board of Directors shall from time to time determine by amendment to these
Bylaws. An increase or a decrease in the number of the members of the Board of
Directors may also be made upon amendment to these Bylaws by a majority vote of
all of the shareholders, and the number of directors to be so increased or
decreased shall be fixed upon a majority vote of all of the shareholders of the
corporation. Each director shall hold office until the next annual meeting of
shareholders of the corporation and until his or her successor shall have been
elected and shall have qualified. Directors need not be residents of the state
of incorporation or shareholders of the corporation.
Section 3.03 Classification of Directors. In lieu of electing the entire
number of directors annually, the Board of Directors may provide that the
directors be divided into either two or three classes, each class to be as
nearly equal in number as possible, the term of office of the directors of the
first class to expire at the first annual meeting of shareholders after their
election, that of the second class to expire at the second annual meeting after
their election, and that of the third class, if any, to expire at the third
annual meeting after their election. At each annual meeting after such
classification, the number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office until
the second succeeding annual meeting, if there be two classes, or until the
third succeeding annual meeting, if there be three classes.
Section 3.04 Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately following, and at
the same place as, the annual meeting of shareholders. The Board of Directors
may provide by resolution the time and place, either within or without the state
of incorporation, for the holding of additional regular meetings without other
notice than such resolution.
Section 3.05 Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the president, vice president, or any two
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the state of
incorporation, as the place for holding any special meeting of the Board of
Directors called by them.
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Section 3.06 Meetings by Telephone Conference Call. Members of the Board of
Directors may participate in a meeting of the Board of Directors or a committee
of the Board of Directors by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting.
Section 3.07 Notice. Notice of any special meeting shall be given at least
ten (10) days prior thereto by written notice delivered personally or mailed to
each director at his or her regular business address or residence, or by
telegram. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon prepaid. If notice
be given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Any director may waive notice of
any meeting. Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting solely for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
Section 3.08 Quorum. A majority of the number of directors shall constitute
a quorum for the transaction of business or any meeting of the Board of
Directors, but if less than a majority is present at a meeting, a majority of
the directors present may adjourn the meeting from time to time without further
notice.
Section 3.09 Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, and the individual directors shall have no power as such.
Section 3.10 Vacancies and Newly Created Directorship. If any vacancies
shall occur in the Board of Directors by reason of death, resignation or
otherwise, or if the number of directors shall be increased, the directors then
in office shall continue to act and such vacancies or newly created
directorships shall be filled by a vote of the directors then in office, though
less than a quorum, in any way approved by the meeting. Any directorship to be
filled by reason of removal of one or more directors by the shareholders may be
filled by election by the shareholders at the meeting at which the director or
directors are removed.
Section 3.11 Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
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Section 3.12 Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the minutes of the meeting, unless he or
she shall file his or her written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof, or shall forward
such dissent by registered or certified mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
Section 3.13 Resignations. A director may resign at any time by delivering
a written resignation to either the president, a vice president, the secretary,
or assistant secretary, if any. The resignation shall become effective on its
acceptance by the Board of Directors; provided, that if the board has not acted
thereon within ten days (10) from the date presented, the resignation shall be
deemed accepted.
Section 3.14 Written Consent to Action by Directors. Any action required to
be taken at a meeting of the directors of the corporation or any other action
which may be taken at a meeting of the directors or of a committee, may be taken
without a meeting, if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors, or all of the members of the committee,
as the case may be. Such consent shall have the same legal effect as a unanimous
vote of all the directors or members of the committee.
Section 3.15 Removal. At a meeting expressly called for that purpose, one
or more directors may be removed by a vote of a majority of the shares of
outstanding stock of the corporation entitled to vote at an election of
directors.
ARTICLE IV
OFFICERS
Section 4.01 Number. The officers of the corporation shall be a president,
one or more vice- presidents, as shall be determined by resolution of the Board
of Directors, and such other officers, such as a secretary or treasurer, may be
appointed by the Board of Directors. The Board of Directors may elect, but shall
not be required to elect, a chairman of the board and the Board of Directors may
appoint a general manager.
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Section 4.02 Election, Term of Office, and Qualifications. The officers
shall be chosen by the Board of Directors annually at its annual meeting. In the
event of failure to choose officers at an annual meeting of the Board of
Directors, officers may be chosen at any regular or special meeting of the Board
of Directors. Each such officer (whether chosen at an annual meeting of the
Board of Directors to fill a vacancy or otherwise) shall hold his or her office
until the next ensuing annual meeting of the Board of Directors and until his or
her successor shall have been chosen and qualified, or until his or her death,
or until his or her resignation or removal in the manner provided in these
Bylaws. Any one person may hold any two or more of such offices, except that the
president shall not also be the secretary. No person holding two or more offices
shall act in or execute any instrument in the capacity of more than one office.
The chairman of the board, if any, shall be and remain a director of the
corporation during the term of his or her office. No other officer need be a
director. Section 4.03 Subordinate Officers, Etc. The Board of Directors from
time to time may appoint such other officers or agents as it may deem advisable,
each of whom shall have such title, hold office for such period, have such
authority, and perform such duties as the Board of Directors from time to time
may determine. The Board of Directors from time to time may delegate to any
officer or agent the power to appoint any such subordinate officer or agents and
to prescribe their respective titles, terms of office, authorities, and duties.
Subordinate officers need not be shareholders or directors.
Section 4.04 Resignations. Any officer may resign at any time by delivering
a written resignation to the Board of Directors, the president, or the
secretary. Unless otherwise specified therein, such resignation shall take
effect on delivery.
Section 4.05 Removal. Any officer may be removed from office at any special
meeting of the Board of Directors called for that purpose or at a regular
meeting, by vote of a majority of the directors, with or without cause. Any
officer or agent appointed in accordance with the provisions of Section 4.03
hereof may also be removed, either with or without cause, by any officer on whom
such power of removal shall have been conferred by the Board of Directors.
Section 4.06 Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal, disqualification,
or any other cause, or if a new office shall be created, then such vacancies or
newly created offices may be filled by the Board of Directors at a regular or
special meeting.
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Section 4.07 The Chairman of the Board. The Chairman of the Board, if there
be such an officer, shall have the following powers and duties:
(a) He or she shall preside at all shareholders' meetings;
(b) He or she shall preside at all meetings of the Board of Directors; and
(c) He or she shall be a member of the executive committee, if any.
Section 4.08 The President. The president shall have the following powers
and duties:
(a) If no general manager has been appointed, he or she shall be the chief
executive officer of the corporation, and, subject to the direction of the
Board of Directors, shall have general charge of the business, affairs, and
property of the corporation and general supervision over its officers,
employees, and agents;
(b) If no chairman of the board has been chosen, or if such officer is
absent or disabled, he or she shall preside at meetings of the shareholders
and Board of Directors;
(c) He or she shall be a member of the executive committee, if any;
(d) He or she shall be empowered to sign certificates representing shares
of the corporation, the issuance of which shall have been authorized by the
Board of Directors; and
(e) He or she shall have all power and shall perform all duties normally
incident to the office of a president of a corporation, and shall exercise
such other powers and perform such other duties as from time to time may be
assigned to him or her by the Board of Directors.
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Section 4.10 The Secretary. The secretary shall have the following powers
and duties:
(a) He or she shall keep or cause to be kept a record of all of the
proceedings of the meetings of the shareholders and of the Board of
Directors in books provided for that purpose;
(b) He or she shall cause all notices to be duly given in accordance with
the provisions of these Bylaws and as required by statute;
(c) He or she shall be the custodian of the records and of the seal of the
corporation, and shall cause such seal (or a facsimile thereof) 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 in
accordance with these Bylaws, and when so affixed, he or she may attest the
same;
(d) He or she shall assume responsibility that the books, reports,
statements, certificates, and other documents and records required by
statute are properly kept and filed;
(e) He or she shall have charge of the share books of the corporation and
cause the share transfer books to be kept in such manner as to show at any
time the amount of the shares of the corporation of each class issued and
outstanding, the manner in which and the time when such stock was paid for,
the names alphabetically arranged and the addresses of the holders of
record thereof, the number of shares held by each holder and time when each
became such holder or record; and he or she shall exhibit at all reasonable
times to any director, upon application, the original or duplicate share
register. He or she shall cause the share book referred to in Section 6.04
hereof to be kept and exhibited at the principal office of the corporation,
or at such other place as the Board of Directors shall determine, in the
manner and for the purposes provided in such Section;
(f) He or she shall be empowered to sign certificates representing shares
of the corporation, the issuance of which shall have been authorized by the
Board of Directors; and
(g) He or she shall perform in general 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.
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Section 4.11 The Treasurer. The treasurer shall have the following powers
and duties:
(a) He or she shall have charge and supervision over and be responsible for
the monies, securities, receipts, and disbursements of the corporation;
(b) He or she shall cause the monies 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 banks or other
depositories as shall be selected in accordance with Section 5.03 hereof;
(c) He or she shall cause the monies of the corporation to be disbursed by
checks or drafts (signed as provided in Section 5.04 hereof) drawn on the
authorized depositories of the corporation, and cause to be taken and
preserved property vouchers for all monies disbursed;
(d) He or she shall render to the Board of Directors or the president,
whenever requested, a statement of the financial condition of the
corporation and of all of this transactions as treasurer, and render a full
financial report at the annual meeting of the shareholders, if called upon
to do so;
(e) He or she shall cause to be kept correct books of account of all the
business and transactions of the corporation and exhibit such books to any
director on request during business hours;
(f) He or she shall be empowered from time to time to require from all
officers or agents of the corporation reports or statements given such
information as he or she may desire with respect to any and all financial
transactions of the corporation; and
(g) He or she shall perform in general 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.
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Section 4.12 General Manager. The Board of Directors may employ and appoint
a general manager who may, or may not, be one of the officers or directors of
the corporation. The general manager, if any, shall have the following powers
and duties;
(a) He or she shall be the chief executive officer of the corporation and,
subject to the directions of the Board of Directors, shall have general
charge of the business affairs and property of the corporation and general
supervision over its officers, employees, and agents;
(b) He or she shall be charged with the exclusive management of the
business of the corporation and of all of its dealings, but at all times be
subject to the control of the Board of Directors;
(c) Subject to the approval of the Board of Directors or the executive
committee, if any, he or she shall employ all employees of the corporation,
or delegate such employment to subordinate officers, and shall have
authority to discharge any person so employed; and
(d) He or she shall make a report to the president and directors as often
as required, setting forth the results of the operations under his or her
charge, together with suggestions looking toward improvement and betterment
of the condition of the corporation, and shall perform such other duties as
the Board of Directors may require.
Section 4.13 Salaries. The salaries and other compensation of the officers
of the corporation shall be fixed from time to time by the Board of Directors,
except that the Board of Directors may delegate to any person or group of
persons the power to fix the salaries or other compensation of any subordinate
officers or agents appointed in accordance with the provisions of Section 4.03
hereof. No officer shall be prevented from receiving any such salary or
compensation by reason of the fact that he or she is also a director of the
corporation.
Section 4.14 Surety Bonds. In case the Board of Directors shall so require,
any officer or agent of the corporation shall execute to the corporation a bond
in such sums and with such surety or sureties as the Board of Directors may
direct, conditioned upon the faithful performance of his or her duties to the
corporation, including responsibility for negligence and for the accounting of
all property, monies, or securities of the corporation which may come into his
or her hands.
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ARTICLE V
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS
Section 5.01 Execution of Instruments. Subject to any limitation contained
in the Articles of Incorporation or these Bylaws, the president or any vice
president or the general manager, if any, may, in the name and on behalf of the
corporation, execute and deliver any contract or other instrument authorized in
writing by the Board of Directors. The Board of Directors may, subject to any
limitation contained in the Articles of Incorporation or in these Bylaws,
authorize in writing any officer or agent to execute and deliver any contract or
other instrument in the name and on behalf of the corporation; any such
authorization may be general or confined to specific instances.
Section 5.02 Loans. No loans or advances shall be contracted on behalf of
the corporation, no negotiable paper or other evidence of its obligation under
any loan or advance shall be issued in its name, and no property of the
corporation shall be mortgaged, pledged, hypothecated, transferred, or conveyed
as security for the payment of any loan, advance, indebtedness, or liability of
the corporation, unless and except as authorized by the Board of Directors. Any
such authorization may be general or confined to specific instances.
Section 5.03 Deposits. All monies of the corporation not otherwise employed
shall be deposited from time to time to its credit in such banks and or trust
companies or with such bankers or other depositories as the Board of Directors
may select, or as from time to time may be selected by any officer or agent
authorized to do so by the Board of Directors.
Section 5.04 Checks, Drafts, Etc. All notes, drafts, acceptances, checks,
endorsements, and, evidences of indebtedness of the corporation, subject to the
provisions of these Bylaws, shall be signed by such officer or officers or such
agent or agents of the corporation and in such manner as the Board of Directors
from time to time may determine. Endorsements for deposit to the credit of the
corporation in any of its duly authorized depositories shall be in such manner
as the Board of Directors from time to time may determine.
Section 5.05 Bonds and Debentures. Every bond or debenture issued by the
corporation shall be evidenced by an appropriate instrument which shall be
signed by the president or vice president and by the secretary and sealed with
the seal of the corporation. The seal may be a facsimile, engraved or printed.
where such bond or debenture is authenticated with the manual signature of an
authorized officer of the corporation or other trustee designated by the
indenture of trust or other agreement under which such security is issued, the
signature of any of the corporation's officers named thereon may be a facsimile.
In case any officer who signed, or whose facsimile signature has been used on
any such bond or debenture, should cease to be an officer of the corporation for
any reason before the same has been delivered by the corporation, such bond or
debenture may nevertheless be adopted by the corporation and issued and
delivered as through the person who signed it or whose facsimile signature has
been used thereon had not ceased to be such officer.
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Section 5.06 Sale, Transfer, Etc. of Securities. Sales, transfers,
endorsements, and assignments of stocks, bonds, and other securities owned by or
standing in the name of the corporation, and the execution and delivery on
behalf of the corporation of any and all instruments in writing incident to any
such sale, transfer, endorsement, or assignment, shall be effected by the
president, or by any vice president, together with the secretary, or by an
officer or agent thereunto authorized by the Board of Directors.
Section 5.07 Proxies. Proxies to vote with respect to shares of other
corporations owned by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the president or any vice
president and the secretary or assistant secretary of the corporation, or by any
officer or agent thereunder authorized by the Board of Directors.
ARTICLE VI
CAPITAL SHARES
Section 6.01 Share Certificates. Every holder of shares in the corporation
shall be entitled to have a certificate, signed by the president or any vice
president, and the secretary or assistant secretary, and sealed with the seal
(which may be a facsimile, engraved or printed) of the corporation, certifying
the number and kind, class or series of shares owned by him or her in the
corporation; provided, however, that where such a certificate is countersigned
by (a) a transfer agent or an assistant transfer agent, or (b) registered by a
registrar, the signature of any such president, vice president, secretary, or
assistant secretary may be a facsimile. In case any officer who shall have
signed, or whose facsimile signature or signatures shall have been used on any
such certificate, shall cease to be officer of the corporation, for any reason,
before the delivery of such certificate by the corporation, such certificate may
nevertheless be adopted by the corporation and be issued and delivered as though
the person who signed it, or whose facsimile signature or signatures shall have
been used thereon, has not ceased to be such officer. Certificates representing
shares of the corporation shall be in such form as provided by the statutes of
the state of incorporation. There shall be entered on the share 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 and kind, class or series of such shares, and the date of
issuance thereof. Every certificate exchanged or returned to the corporation
shall be marked "Canceled" with the date of cancellation.
Section 6.02 Transfer of Shares. Transfers of shares of the corporation
shall be made on the books of the corporation by the holder of 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 of the corporation or any of
its transfer agents, and on surrender of the certificate or certificates,
properly endorsed or accompanied by proper instruments or transfer, representing
such shares. Except as provided by law, the corporation and transfer agents and
registrars, if any, shall be entitled to treat the holder of record of any stock
as the absolute owner thereof for all purposes, and accordingly, shall not be
bound to recognize any legal, equitable, or other claim to or interest in such
shares on the part of any other person whether or not it or they shall have
express or other notice thereof.
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Section 6.03 Regulations. Subject to the provisions of this Article VI and
of the Articles of Incorporation, the Board of Directors may make such rules and
regulations as they may deem expedient concerning the issuance, transfer,
redemption, and registration of certificates for shares of the corporation.
Section 6.04 Maintenance of Stock Ledger at Principal Place of Business. A
share book (or books where more than one kind, class, or series or stock is
outstanding) shall be kept at the principal place of business of the
corporation, or at such other place as the Board of Directors shall determine,
containing the names, alphabetically arranged, of original shareholders of the
corporation, their addresses, their interest, the amount paid on their shares,
and all transfers thereof and the number and class of shares held by each. Such
share books shall at all reasonable hours be subject to inspection by persons
entitled by law to inspect the same.
Section 6.05 Transfer Agents and Registrars. The Board of Directors may
appoint one or more transfer agents and one or more registrars with respect to
the certificates representing shares of the corporation, and may require all
such certificates to bear the signature of either or both. The Board of
Directors may from time to time define the respective duties of such transfer
agents and registrars. No certificate for shares shall be valid until
countersigned by a transfer agent, if at the date appearing thereon the
corporation had a transfer agent for such shares, and until registered by a
registrar, if at such date the corporation had a registrar for such shares.
Section 6.06 Closing of Transfer Books and Fixing of Record Date.
(a) The Board of Directors shall have power to close the share books of the
corporation for a period of not to exceed fifty (50) days preceding the
date of any meeting of shareholders, or the date for payment of any
dividend, or the date for the allotment of rights, or capital shares shall
go into effect, or a date in connection with obtaining the consent of
shareholder for any purpose.
(b) In lieu of closing the share transfer books as aforesaid, the Board of
Directors may fix in advance a date, not exceeding fifty (50) days
preceding the date of any meeting of shareholders, or the date for the
payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital shares shall go
into effect, or a date in connection with obtaining any such consent, as a
record date for the determination of the shareholders entitled to a notice
of, and to vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment
of rights, or exercise the rights in respect of any such change, conversion
or exchange of capital stock, or to give such consent.
(c) If the share transfer books shall be closed or a record date set for
the purpose of determining shareholders entitled to notice of or to vote at
a meeting of shareholders, such books shall be closed for, or such record
date shall be, at least ten (10) days immediately preceding such meeting.
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Section 6.07 Lost or Destroyed Certificates. The corporation may issue a
new certificate for shares of the corporation in place of any certificate
theretofore issued by it, alleged to have been lost or destroyed, and the Board
of Directors may, in its discretion, require the owner of the lost or destroyed
certificate or his or her legal representatives, to give the corporation a bond
in such form and amount as the Board of Directors may direct, and with such
surety or sureties as may be satisfactory to the board, to indemnify the
corporation and its transfer agents and registrars, if any, against any claims
that may be made against it or any such transfer agent or registrar on account
of the issuance of such new certificate. A new certificate may be issued without
requiring any bond when, in the judgment of the Board of Directors, it is proper
to do so.
Section 6.08 No Limitation on Voting Rights; Limitation on Dissenter's
Rights. To the extent permissible under the applicable law of any jurisdiction
to which the corporation may become subject by reason of the conduct of
business, the ownership of assets, the residence of shareholders, the location
of offices or facilities, or any other item, the corporation elects not to be
governed by the provisions of any statute that (i) limits, restricts, modifies,
suspends, terminates, or otherwise affects the rights of any shareholder to cast
one vote for each share of common stock registered in the name of such
shareholder on the books of the corporation, without regard to whether such
shares were acquired directly from the corporation or from any other person and
without regard to whether such shareholder has the power to exercise or direct
the exercise of voting power over any specific fraction of the shares of the
corporation or from any other person and without regard to whether such
shareholder has the power to exercise or direct the exercise of voting power
over any specific fraction of the shares of common stock of the corporation
issued and outstanding or (ii) grants to any shareholder the right to have his
or her stock redeemed or purchased by the corporation or any other shareholder
on the acquisition by any person or group of persons of shares of the
corporation. In particular, to the extent permitted under the laws of the state
of incorporation, the corporation elects not to be governed by any such
provision, including the provisions of the Utah Control Shares Acquisition Act,
Section 61-6-1 et seq., of the Utah Code Annotated, as amended, or any statute
of similar effect or tenor.
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ARTICLE VII
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 7.01 How Constituted. The Board of Directors may designate an
executive committee and such other committees as the Board of Directors may deem
appropriate, each of which committees shall consist of two or more directors.
Members of the executive committee and of any such other committees shall be
designated annually at the annual meeting of the Board of Directors; provided,
however, that at any time the Board of Directors may abolish or reconstitute the
executive committee or any other committee. Each member of the executive
committee and of any other committee shall hold office until his or her
successor shall have been designated or until his or her resignation or removal
in the manner provided in these Bylaws.
Section 7.02 Powers. During the intervals between meetings of the Board of
Directors, the executive committee shall have and may exercise all powers of the
Board of Directors in the management of the business and affairs of the
corporation, except for the power to fill vacancies in the Board of Directors or
to amend these Bylaws, and except for such powers as by law may not be delegated
by the Board of Directors to an executive committee.
Section 7.03 Proceedings. The executive committee, and such other
committees as may be designated hereunder by the Board of Directors, may fix its
own presiding and recording officer or officers, and may meet at such place or
places, at such time or times and on such notice (or without notice) as it shall
determine from time to time. It will keep a record of its proceedings and shall
report such proceedings to the Board of Directors at the meeting of the Board of
Directors next following.
Section 7.04 Quorum and Manner of Acting. At all meetings of the executive
committee, and of such other committees as may be designated hereunder by the
Board of Directors, the presence of members constituting a majority of the total
authorized membership of the committee shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a majority
of the members present at any meeting at which a quorum is present shall be the
act of such committee. The members of the executive committee, and of such other
committees as may be designated hereunder by the Board of Directors, shall act
only as a committee and the individual members thereof shall have not powers as
such.
Section 7.05 Resignations. Any member of the executive committee, and of
such other committees as may be designated hereunder by the Board of Directors,
may resign at any time by delivering a written resignation to either the
president, the secretary, or assistant secretary, or to the presiding officer of
the committee of which he or she is a member, if any shall have been appointed
and shall be in office. Unless otherwise specified herein, such resignation
shall take effect on delivery.
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Section 7.06 Removal. The Board of Directors may at any time remove any
member of the executive committee or of any other committee designated by it
hereunder either for or without cause.
Section 7.07 Vacancies. If any vacancies shall occur in the executive
committee or any other committee designated by the Board of Directors hereunder,
by reason of disqualification, death, resignation, removal, or otherwise, the
remaining members shall, until the filling of such vacancy, constitute the then
total authorized membership of the committee and, provided that two or more
members are remaining, continue to act. Such vacancy may be filled at any
meeting of the Board of Directors.
Section 7.07 Compensation. The Board of Directors may allow a fixed sum and
expenses of attendance to any member of the executive committee, or of any other
committee designated by it hereunder, who is not an active salaried employee of
the corporation for attendance at each meeting of said committee.
ARTICLE VIII
INDEMNIFICATION, INSURANCE, AND
OFFICER AND DIRECTOR CONTRACTS
Section 8.01 Indemnification: Third Party Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action, or suit by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he or she is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys' fees)
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with any such action, suit or proceeding,
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interest of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, he or she had reasonable
cause to believe that his or her conduct was unlawful.
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Section 8.02 Indemnification: Corporate Actions. The corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he or she is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit, if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue, or matter as to which such a person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his or her duty to the corporation, unless and only to the extent that the court
in which the action or suit was brought shall determine on application that,
despite the adjudication of liability but in view of all circumstances of the
case, the person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
Section 8.03 Determination. To the extent that a director, officer,
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in Sections
8.01 and 8.02 hereof, or in defense of any claim, issue, or matter therein, he
or she shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection therewith. Any
other indemnification under Sections 8.01 and 8.02 hereof, shall be made to the
corporation upon a determination that indemnification of the officer, director,
employee, or agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Sections 8.01 and 8.02 hereof. Such
determination shall be made either (i) by the Board of Directors by a majority
of a quorum consisting of directors who were not parties to such action, suit,
or proceeding; or (ii) by independent legal counsel on a written opinion; or
(iii) by the shareholders by a majority vote of a quorum of shareholders at any
meeting duly called for such purpose.
Section 8.04 General Indemnification. The indemnification provided by this
Section shall not be deemed exclusive of any other indemnification granted under
any provision of any statute, in the corporation's Articles of Incorporation,
these Bylaws, agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent, and shall inure to
the benefit of the heirs and legal representatives of such a person.
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Section 8.05 Advances. Expenses incurred in defending a civil or criminal
action, suit or proceeding as contemplated in this Section may be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding upon a majority vote of a quorum of the Board of Directors and upon
receipt of an undertaking by or on behalf of the director, officers, employee,
or agent to repay such amount or amounts unless if it is ultimately determined
that he or she is to be indemnified by the corporation as authorized by this
Section.
Section 8.06 Scope of Indemnification. The indemnification authorized by
this Section shall apply to all present and future directors, officers,
employees, and agents of the corporation and shall continue as to such persons
who cease to be directors, officers, employees, or agents of the corporation,
and shall inure to the benefit of the heirs, executors, and administrators of
all such persons and shall be in addition to all other indemnification permitted
by law.
8.07 Insurance. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
or her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against any such liability and under the laws of the state
of incorporation, as the same may hereafter be amended or modified.
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.
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ARTICLE X
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and on the terms and
conditions provided by the Articles of Incorporation and these Bylaws.
ARTICLE XI
AMENDMENTS
All Bylaws of the corporation, whether adopted by the Board of Directors or
the shareholders, shall be subject to amendment, alteration, or repeal, and new
Bylaws may be made, except that;
(a) No Bylaws adopted or amended by the shareholders shall be altered or
repealed by the Board of Directors;
(b) No Bylaws shall be adopted by the Board of Directors which shall
require more than a majority of the voting shares for a quorum at a meeting
of shareholders, or more than a majority of the votes cast to constitute
action by the shareholders, except where higher percentages are required by
law; provided, however that (I) if any Bylaw regulating an impending
election of directors is adopted or amended or repealed by the Board of
Directors, there shall be set forth in the notice of the next meeting of
shareholders for the election of directors, the Bylaws so adopted or
amended or repealed, together with a concise statement of the changes made;
and (ii) no amendment, alteration or repeal of this Article XI shall be
made except by the shareholders.
CERTIFICATE OF SECRETARY
The undersigned does hereby certify that he or she is the secretary of
Lostwood Professional Services, Inc., a corporation duly organized and existing
under and by virtue of the laws of the State of Utah; that the above and
foregoing bylaws of said corporation were duly and regularly adopted as such by
the Board of Directors of the corporation at a meeting of the board of
Directors, which was duly and regularly held on the 12th day of December, 2003
and that the above and foregoing Bylaws are now in full force and effect.
Date: 12/12/03 /S/ JAMES DOOLIN
James Doolin, Secretary
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