United States Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
EasyWeb, Inc.
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(Name of Small Business Issuer in its charter)
Colorado 84-1475642
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6025 South Quebec Street, Suite #150
Denver, Colorado 80111
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (720) 489-8873
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
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Securities to be registered under Section 12(g) of the Act:
Common Stock, no par value
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(Title of class)
Item 1. Description of Business.
(a) Business Development.
EasyWeb, Inc. ("EasyWeb"), a development-stage company, was organized under
the laws of the State of Colorado under the name of "NetEscapes, Inc.," on
September 24, 1998. We changed our name to "EasyWeb, Inc." on February 2, 1999.
We design, market, sell and maintain customized and template, turnkey sites on
the worldwide web, or the Internet, hosted by third parties. Our business plan
has been prepared based upon the popularity of the Internet and the growing
number of businesses interested in advertising and marketing online. The
customer pays us a fee for the design and maintenance of its custom or template
web site; which fee may include a portion of the fee paid monthly by the
customer for the hosting of the site. To date, we have sold less than ten web
sites and, accordingly, we have realized only minimal revenue from the design,
sale and maintenance of Internet sites and incurred a loss from operations
through February 8, 2001. Our executive offices are located at 6025 South Quebec
Street, Suite #150, Englewood, Colorado 80111, and our telephone and facsimile
numbers are (720) 489-8873 and (720) 489-8874, respectively.
On March 11, 1999, we issued and sold an aggregate of 3,200,000 shares of
our common stock to our President/Treasurer/director, a director of EasyWeb and
another individual in consideration for an aggregate of $5,500 in cash
(approximately $.002 per share). These three individuals collectively own
3,200,000 shares of common stock, representing approximately 88.7% of our
3,606,200 shares of common stock outstanding as of February 8, 2000. The sales
of common stock to these three individuals were made in reliance upon the
exemptions from registration with the U.S. Securities and Exchange Commission
provided by Section 4(2) of the Securities Act of 1933 and with the Colorado
Division of Securities under Section 11-51-308(1)(p) of the Colorado Uniform
Securities Act.
We received gross proceeds in the amount of $101,050 from the sale of a
total of 404,200 shares of common stock, representing approximately 11.2% of the
outstanding shares of our common stock as of February 8, 2000, to fifty-four
persons in an offering conducted during the period from December 10, 1999,
through April 10, 2000, pursuant to the exemption from registration with the
Commission under Rule 504 of Regulation D under Section 3(b) of the Securities
Act of 1933; via registration by qualification with the Colorado Division of
Securities under Section 11-51-304 of the Colorado Uniform Securities Act; and
pursuant to certain exemptions from registration under the Florida Securities
and Investor Protection Act, the Illinois Securities Law of 1953, the Nevada
Uniform Securities Act and the Utah Uniform Securities Act. We failed to comply
with Section R14-4-102 of the Regulations of the Arizona Corporation Commission,
Title 14, Chapter 4 (the "Regulations"), in connection with the offers and sales
of a total of 16,000 shares of common stock to three residents of the State of
Arizona. We have initiated, but not yet completed, an offer of rescission to
these three investors under Section R14-4-101 of the Regulations. In the event
that all three investors elect to rescind their purchases of our common stock,
we would be liable to pay them a total of $4,000, representing the aggregate
purchase price of their shares, together with interest at the Arizona statutory
rate of interest of 10% per annum.
See (b) "Business of the Issuer" immediately below for a description of our
current operations and future proposed activities.
(b) Business of Issuer.
General
Commencing February 1999, we marketed, as an independent contractor,
customized, turnkey sites on the worldwide web created and hosted by Big Online,
Inc. ("Big Online"), an established web site vendor service company located in
San Francisco, California, that maintains an electronic directory of more than
eleven million businesses. Our rights to market and sell Big Online's products
and hosting services and receive compensation for these marketing services was
obtained pursuant to the assignment of the rights in February 1999 under the
Marketing Agreement with Millennium Marketing, Inc. ("Millennium Marketing"), a
company then owned and managed by Mr. David C. Olson, the President, the
Treasurer, a director and an approximately 44.4%-owner of EasyWeb, that was
dissolved on May 1, 2000. In June 1999, Millennium Marketing entered into an
Independent Consultant Application and Agreement with Big Online pursuant to
which Millennium Marketing obtained the marketing rights and rights to
compensation that it subsequently assigned to us. While Millennium Marketing
received compensation monthly from Big Online for the sale of five web sites and
the sponsorship of sales representatives pursuant to a discontinued multi-level
marketing program, we sold no Big Online Internet sites and, accordingly,
received no revenue from Big Online.
We design, market, sell and maintain customized and template, turnkey
"sites" on the Internet to businesses in the United States that are hosted by
third parties. We have a strategic relationship with Sunstar 2000, Inc.,
Highlands Ranch, Colorado ("Sunstar"), from which we obtain the template,
turnkey web site models that we offer. The web sites that we design and maintain
for customers are hosted by Sunstar and others. See "- Products and Services"
below for a description of the template, turnkey web site models and hosting and
other services that Sunstar provides us. For the use of the web site models, we
pay Sunstar a portion of the fee that we receive from the customer for the
design and/or maintenance of each template web site. If we utilize other
services, such as custom design and technical maintenance services, provided by
Sunstar, we negotiate compensation arrangements on a case-by-case basis
depending upon the time required in, and the difficulty of, the performance of
the services. We may receive a portion of the fee paid monthly by the customer
to Sunstar or other host for the hosting of its web site.
We market our design and maintenance services for template, turnkey and
customized web sites, primarily, online via our web site on the Internet located
at www.easywebcorp.com. Since June 2000, we have employed advertising on the
radio. We have run a limited newspaper campaign in the Denver, Colorado,
metropolitan area since July 2000 to advertise our products and services. In
September 2000, we designed and created a website for AJ Indoors, Inc. ("AJ
Indoors"), a Denver, Colorado, indoor sign company, in exchange for featuring
EasyWeb on approximately 2,000 indoor signs throughout the Denver and Colorado
front range areas. We are currently negotiating with one potential customer for
custom web site who learned of us from one of AJ Indoors' advertisements. Our
long-range marketing plans include the development of an intensive advertising
program involving newspapers and local periodicals in the Denver metropolitan
area and other cities along the front range of Colorado. We are currently
negotiating with one potential customer for a custom web site who learned of us
from one of AJ Indoors advertisements.
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As of February 8, 2001, we had sold less than ten web sites and realized
$4,000 in revenue. We bartered, in exchange for the design and ongoing
maintenance services in connection with one of the custom web sites, for the
advertising services described above. As compensation for the design and ongoing
maintenance services relating to another customized site for Euthenics
International, Inc. ("Euthenics"), a company engaged in marketing and
distributing dietary supplements, we have entered into a Letter of Understanding
and Terms dated November 1, 2000, providing for Euthenics to pay us an ongoing
royalty of $.50 per each bottle of product sold for a period five years.
Thereafter, the agreement is renewable annually commencing December 1, 2005,
subject to termination by either party within thirty days prior to December 1 of
each year. Commencing in January 2001, Euthenics is running infomercials on
national television advertising its dietary supplements. We have agreed to
upgrade and integrate Euthenics' "Mail Order Management" system with a secure
e-commerce site in connection with Euthenics' national informercial marketing
campaign. We cannot be certain that we will achieve profitability by designing,
marketing, selling and maintaining customized and template, turnkey sites on the
Internet hosted by third parties. Further, we may not receive adequate
compensation for our products and services as a result of the non-traditional
compensation arrangements we make with companies such as AJ Indoors and
Euthenics.
Products and Services
Template Turnkey Web Sites. Sunstar 2000, Inc., 1177 Mulberry Lane,
Highlands Ranch, Colorado 80126, provides EasyWeb with the template web site
models we offer. Design of the template web sets is usually completed and the
site is customarily available on the Internet within ten business days from the
date of purchase. The customer that selects a template web site can develop its
site based on one of Sunstar's models at a much lower cost than the cost of a
customized site. The web sites are hosted by Sunstar or other hosts on a
month-to-month basis or pursuant to an annual contract at a reduced rate. A
potential customer may select a one-page promotional site or a multi-page web
site created from templates. The one-page web site includes: (i) the company
name, address, telephone number and other contact information; (ii) the company
logo; (iii) one photograph or graphic; and (iv) up to 200 words of text
describing the company or its products.
There is no size limitation on the multi-page site except the current
storage limit of 10MB for the entire site, and additional pages can be added at
any time. The typical pages on a multi-page web site include one or more of the
following pages: (i) home page; (ii) products or services page; (iii) contact
information; (iv) mission statement; (v) frequently asked questions; (vi)
technical support; and (vii) customer testimonials or references. At a minimum,
each multi-page web site includes the following: (i) the company name, address,
telephone number and other contact information; (ii) the company logo; (iii) up
to four photographs or graphics per page; (iv) up to 200 words of text
describing the company or its products per page; (v) three e-mail addresses; and
(vi) search engine registration. Optional features include a map to the
company's location, capability to use the company's own custom domain name;
monthly search engine re-registration; metatag inclusion; and maintenance
contracts.
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The visitor to EasyWeb's Internet site contemplating the purchase of a
template one-page starter or multi-page site can view the templates in their
full size from three basic samples. The potential customer can then navigate
through the sample to view the various page options. Before making his final
selection, the visitor can download and print blank worksheets to be completed
and submitted to EasyWeb.
Custom Web Sites. An increasing number of businesses have retained web site
vendor service companies like us to create and maintain customized web sites to
advertise their business, products and/or services. The reasons for selecting a
customized site vary greatly, but include the enhanced customer impact
anticipated from a custom web site and the extra features that are not available
in a template site. The custom sites we design are usually from one to twelve
pages in length and include all of the basic features, such as identifying
information, business logo, photographs and/or graphics submitted by the
customer and text, included in the design of a template web site. The additional
features available with each customized web site include, among others,
downlinks, off-site links, streaming audio and video, flash movies, custom
graphic design, complete design, control and framed web sites. We also offer
services relating to web site promotion, marketing and e-commerce, including,
among others, promotional and advertising packages, shopping cart technology,
e-commerce merchant accounts and payment gateways and e-commerce solutions.
Visitors to our web site are directed to view one of the custom web sites
authored and created by us at www.creativehostservices.com.
Maintenance Services. We offer a number of options for web site maintenance
for partial and complete changes to the web sites we create for our customers.
Our "bolt-on e-commerce solutions" include monthly changes for products, prices,
etc. For customers with e-commerce web sites consisting of hundreds or thousands
of products, we offer individualized programs enabling self-management of
changes. We depend upon outside consultants, primarily Sunstar, to assist us
with programming work in connection with complex maintenance services.
Hosting Services. Sunstar, primarily, and other third party providers will
provide hosting services for our customers. Sunstar outsources its hosting
services to a 5,000 square foot, state-of-the-art, all fiber optic data center
that provides services 24 hours per day. The features include dual OC-192 fiber
optic connectivity, multiple DS-3 backbones, dual OC-12 Lucent and Alcatel
multiplexers, bay switchs and hubs, Cisco 7000 series routers, ultra-fast,
multi-processor RAID servers, SONET technology for maximum redundancy, fault
tolerance and load balancing and routing of IP traffic using BGP4 protocol. The
facility does not share space or co-locate and is restricted by steel-wire
barriers and armed personnel. For customers that use Sunstar for hosting, we
offer, for one monthly fee, access to a number of services in a "Value Pack,"
including a real-time chat program, auction capability, a banner rotation
system, web-based e-mail, an online calendar accessible from any browser and a
bulletin board feature that may be used to post messages.
Competition
The market for web site design and maintenance services is intensely
competitive. Additional companies are expected to enter the competition in the
future. We anticipate that we will be in competition with companies of all sizes
located in the United States that offer Internet web site design, hosting and
maintenance services to business customers. A number of these companies offer
essentially the same products and services as EasyWeb and compete in the areas
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of price and service. Because we obtain the template web sites that we offer
from Sunstar, we are in direct competition with Sunstar in the marketing and
sale of these products and services. We must make changes on a timely basis in
the nature, price, quality and other aspects of our products and services in
response to changes in the market. With regard to template websites, we are
dependent upon Sunstar to make these changes on a timely basis. We expect to
compete by marketing our products and services online and via radio, newspaper
and indoor sign advertising. We intend, through the use of online marketing and
advertising, to minimize our weaknesses, including, among others, our
undercapitalization, cash shortage, limitations with respect to personnel,
technological, financial and other resources and lack of a customer base and
market recognition, and to eliminate the need for a sizeable retail facility and
marketing staff. Many of the companies and other organizations with which we
will be in competition are established and have far greater financial resources,
substantially greater experience and larger staffs than EasyWeb. Additionally,
many of these organizations have proven operating histories, which we lack. We
expect to face strong competition from both well-established companies and small
independent companies like us. In addition, in the future, A T & T, Qwest
Communications and other "Baby Bell" and other telecommunications companies may
offer customers assistance in establishing web sites at costs lower than those
available from us. Additionally, out business may be subject to decline because
of generally increasing costs and expenses of doing business, thus further
increasing anticipated competition. Further, it is anticipated that there may be
significant technological advances in the future and we may not have adequate
creative management and resources to enable us to take advantage of these
advances. The effects of any of these technological advances on EasyWeb,
therefore, cannot be presently determined.
Marketing
We believe that there are a large and growing number of businesses that
would purchase our web site design and maintenance services if contacted and
informed about the opportunity. We market our products and services online,
primarily, from our web site located at www.easywebcorp.com. Since June 2000, we
have employed advertising on the radio on KTLK's "Business for Breakfast" and
"Hard Core Sports" programs. We have run a limited newspaper campaign in the
Denver, Colorado, metropolitan area since July 2000 to advertise our products
and services. In September 2000, we designed and created a website for AJ
Indoors, Inc., a Denver, Colorado, indoor sign company, in exchange for
featuring EasyWeb on approximately 2,000 indoor signs throughout the Denver and
Colorado front range areas. Our long-range marketing plans include the
development of an intensive advertising program involving newspapers and local
periodicals in the Denver metropolitan area and other cities along the front
range of Colorado. Mr. David C. Olson, the President, the Treasurer, a director
and a principal shareholder of EasyWeb, contacts potential customers from the
leads generated from our advertising via newspapers and indoor signs, leads
generated from his own sales efforts and referrals of potential customers. While
we employed two full-time, door-to-door salespersons for a short time, we
terminated them because of the lack of performance in relation to the expense.
5
We have sold only a limited number of Internet sites and, accordingly, we
have a very small customer base. While management believes, we cannot be
certain, that our plan to market and sell our products and services online and
via advertising will enable us to develop a customer base more quickly and
cost-effectively than the employment of traditional marketing methods involving
a sales staff and facility, among other things. If our marketing plan utilizing
online marketing and advertising fails, we may be required to employ sales
personnel and/or compensate them via salary in addition to commission. Such
change(s) in our marketing plan could adversely affect revenues in the
short-term and necessitate the formulation of additional marketing strategies,
with attendant delays and expenses.
Employees and Consultants
As of the date hereof, we employ two individuals, including Mr. David C.
Olson and Ms. Barbara Pentrinsky, the President/Treasurer and the Secretary,
respectively, of EasyWeb, on a part-time basis. Both Mr. Olson and Ms. Petrinsky
are considered to be key to our business success. No cash compensation has been
awarded to, earned by or paid to either of the foregoing or Mr. Robert J. Zappa,
a director of EasyWeb together with Mr. Olson, for all services rendered in all
capacities through February 8, 2001. For the foreseeable future, Messrs. David
C. Olson and Robert J. Zappa and Ms. Barbara Petrinsky will receive no
compensation in any form for their services performed in the capacities of our
executive officers and/or directors. It is anticipated that at such time, if
ever, as EasyWeb's financial position permits, assuming that we are successful
in raising additional funds through equity and/or debt financing and/or
generating a sufficient level of revenue from operations, Mr. Olson and Ms.
Petrinsky will receive reasonable salaries and other appropriate compensation,
such as bonuses, coverage under medical and/or life insurance benefit plans and
participation in stock option and/or other profit sharing or pension plans, for
services as executive officers of EasyWeb and Messrs. Olson and Zappa may
receive fees for their attendance at meetings of the Board of Directors. Mr.
Olson and Ms. Petrinsky devote up to 25% of their time and effort to the
business and affairs of EasyWeb and Mr. Zappa devotes only such time as is
necessary for him to perform his responsibilities as a director of EasyWeb. See
Part I., Item 3. "Description of Property," for a description of the Agreement
for Administrative Support dated March 11, 1999, between EasyWeb and Summit
Financial Relations, Inc., an affiliated company of which Mr. Olson is the
President, a director and a controlling shareholder, pursuant to which we paid
Summit the sum of approximately $8,161 through January 18, 2001
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for use of office space and administrative and technical support services at
Summit's offices. As the sole shareholder of Summit, Mr. Olson benefited
indirectly from these payments. See Part I, Item 7. "Certain Relationships and
Related Transactions," and Part II, Item 4. "Recent Sales of Unregistered
Securities," for detailed information relating to our issuance on March 11,
1999, to Messrs. Olson and Zappa of 1,600,000 shares, and 800,000 shares, of our
common stock, respectively, in consideration for the payment of $2,500 and
$1,500 in cash (approximately $.002 per share), respectively.
Item 2. Management's Discussion and Analysis or Plan of Operation.
General
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EasyWeb's business plan is to design, market, sell and maintain customized
and template, turnkey sites on the Internet hosted by third parties. Our
business plan has been prepared based upon the popularity of the Internet and
the growing number of businesses interested in advertising and marketing online.
We have generated only $4,000 in revenue and a net loss from operations through
the date hereof. For the nine months ended September 30, 2000, and the year
ended December 31, 1999, we realized total revenue of $4,162 (unaudited) and
$-0-, respectively, and a net loss of $(63,346) ($(.02) per share) (unaudited)
and $(16,548) ($(.01) per share), respectively. The increased net loss realized
by EasyWeb for the nine months ended September 30, 2000, was the result of
increased operating expenses, including, primarily, salaries and payroll taxes,
professional fees, web site consulting and maintenance and advertising.
We anticipate that our arrangement in September 2000 with AJ Indoors, Inc.,
an indoor sign company, to feature EasyWeb on approximately 2,000 indoor signs
throughout the Denver and Colorado front range areas, may assist us in obtaining
an increased customer base in the future. Also, we hope to receive revenue in
the near future from our arrangement with Euthenics International, Inc., to
design and maintain the company's web site in exchange for an ongoing royalty of
$.50 per each bottle of product sold for a period five years. Commencing in
January 2001, Euthenics is running infomercials on national television
advertising its dietary supplements.
Additionally, we intend to generate increased revenue in the future through
the expenditure of additional funds for marketing, advertising and/or promotion.
The implementation of these plans is dependent upon our ability to raise
additional capital from equity and/or debt financing and/or achieve profitable
operations. We believe that the revenue generated from our business may not be
sufficient to finance these and other future activities and that it may be
necessary to raise additional funds through equity and/or debt financing in the
next twelve months. Although we intend to explore all available alternatives for
debt and/or equity financing, including, but not limited to, private and public
securities offerings, there can be no assurance that we will be able to generate
additional capital for marketing, advertising and promotion and/or other
purposes. In the event that only limited additional financing is received, we
expect our opportunities in the design, marketing and sale of Internet web sites
to be limited. Further, even if we succeed in obtaining the level of funding
necessary to increase sales through the expenditure of additional funds for
marketing, advertising and/or promotion, this will not ensure that operations
will be profitable.
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Results of Operations
Nine Months Ended September 30, 2000, Versus Nine Months Ended September 30,
1999
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Total revenue was $4,162 (unaudited) for the nine months ended September
30, 2000, as compared to total revenue of $-0- for the nine months ended
December 31, 1999, as a result of the sale of a limited number of web sites.
We incurred a net loss of $(63,346) (unaudited) during the nine months
ended September 30, 2000, as compared to a net loss of $(9,611) during the nine
months ended September 30, 1999, because of the factors described below.
Operating expenses increased approximately 702%, from $9,611 for the nine months
ended September 30, 1999, to $67,508 (unaudited) for the nine months ended
September 30, 2000. We experienced a sizeable increase in rent and
administrative support, professional fees and other. Additionally, we incurred
salaries and payroll taxes of $17,654 (unaudited) for two full-time,
door-to-door salespersons, web site consulting and maintenance of $14,330
(unaudited) and advertising of $11,310 (unaudited) for the nine months ended
September 30, 2000, as compared to $-0- for these items for the nine months
ended September 30, 1999.
Nine Months Ended September 30, 2000, Versus Year Ended December 31, 1999,
and Period from Inception (September 24, 1998) through December 31, 1998
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Total revenue was $4,162 (unaudited) for the nine months ended September
30, 2000, as compared to total revenue of $-0- for the year ended December 31,
1999, and the period from inception (September 24, 1998) through December 31,
1998. The limited revenue realized during the nine months ended September 30,
2000, is the result of our sale of a limited number of web sites.
We incurred a net loss of $(63,346) (unaudited) during the nine months
ended September 30, 2000, as compared to a net loss of $(16,548) and $(1,500)
during the year ended December 31, 1999, and the period from inception
(September 24, 1998) through December 31, 1998, because of the factors described
below. Operating expenses increased from $1,500 and $16,548 for the period from
inception (September 24, 1998) through December 31, 1998, and the year ended
December 31, 1999, respectively, to $67,508 (unaudited) for the nine months
ended September 30, 2000. We experienced a sizeable increase in all operating
expenses except rent and administrative support for the nine months ended
September 30, 2000, as compared to the year ended December 31, 1999.
Additionally, we incurred salaries and payroll taxes of $17,654 (unaudited) for
two full-time, door-to-door salespersons for the nine months ended September 30,
2000, as compared to $-0- salaries and payroll taxes for the year ended December
31, 1999.
Financial Condition, Liquidity and Capital Resources
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As of September 30, 2000, and December 31, 1999, we had total assets
consisting of cash of $41,898 (unaudited) and $1,091, respectively, and
intangible assets, net of accumulated amortization of $344 (unaudited) and $17,
respectively, of $1,906 (unaudited) and $191, respectively. We had total current
liabilities of $15,148 (unaudited) and $15,330, respectively, as of September
30, 2000 and December 31, 1999. Working capital was $26,750 (unaudited) at
September 30, 2000. Our total shareholders' equity (deficit) was $28,656
(unaudited) and $(14,048), respectively, as of September 30, 2000, and December
31, 1999, respectively.
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As a result of our inability to generate significant revenue to date
together with the sizeable increase in our operating expenses, access to capital
may be unavailable in the future except from affiliated persons. If we are able
to obtain access to outside capital in the future, it is expected to be
necessarily costly because of high rates of interest and fees. To date, we have
been funded through the sale of common stock for gross proceeds in the amount of
$101,050. We expect that we may experience working capital shortages in the
future until such time as we are successful in raising additional capital and/or
achieving profitable operations. While our independent auditor has presented our
financial statements on the basis that we are a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business over a reasonable length of time, it has noted
that our significant operating losses raise a substantial doubt about our
ability to continue as a going concern. Our future success will be dependent
upon our ability to increase sales of our Internet products and services. Should
our efforts to raise additional capital through equity and/or debt financing
fail, management is expected to provide the necessary working capital so as to
permit us to continue as a going concern.
Net cash used in operating activities was $(57,593) (unaudited) for the
nine months ended September 30, 2000, primarily, because of the net loss of
$(63,346) (unaudited) incurred, offset, primarily, by the value of office space
and administrative support contributed by an affiliated company ($5,000)
(unaudited). For the nine months ended September 30, 2000, net cash used in
investing activities and net cash provided by financing activities was $(2,650)
(unaudited) and $101,050 (unaudited), respectively. Cash increased by $40,807
(unaudited), from $1,091 (unaudited) at the beginning of the period to $41,898
(unaudited) at the end of the period, because of the above-described factors.
Inflation
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We believe that inflation has not had a material impact on our business.
Seasonality
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We do not believe that our business is seasonal.
Item 3. Description of Property.
We maintain our offices at the business offices located at 6025 South
Quebec Street, Suite #150, Englewood, Colorado 80111, of Summit Financial
Relations, Inc. ("Summit"), an affiliated corporation of which Mr. David C.
Olson, the President, the Treasurer, a director and a controlling shareholder of
EasyWeb, is the President, a director and the sole shareholder. Summit leases
its offices from an unaffiliated company and shares the offices with that
company and a number of other affiliated companies. We entered into the
Agreement for Administrative Support with Summit dated March 11, 1999, for use
of office space, administrative support (including reception, secretarial and
bookkeeping services) and technical support (including use of office, computer
9
and telecommunications equipment) at Summit's offices. The agreement
provides for us to pay Summit for these services the amount of $1,500 per month
commencing in the month in which we receive the minimum proceeds from our
offering of common stock. During the period following the closing of our common
stock offering through January 18, 2001, we paid Summit the sum of approximately
$8,161. For the year ended December 31, 1999, and the period from January 1,
2000, through April 10, 2000, we recorded $12,000 and $5,000 as rent and
administrative support expense, respectively, with a corresponding credit to
additional paid-in capital. We have made arrangements with Summit to continue to
utilize office space free of charge and administrative and technical support
services on an hourly basis pursuant to the Agreement for Administrative Support
until our financial condition improves. The office space we currently occupy is
expected to be adequate to meet our foreseeable future needs while we are in the
development stage. We own no real property. Our telephone and facsimile numbers
are (720) 489-8873 and (720) 489-8874, respectively.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding the ownership
of our common stock as of February 8, 2001, by each shareholder known by us to
be the beneficial owner of more than five per cent of our outstanding shares of
common stock, each of our directors and all of our executive officers and
directors of as a group. Under the General Rules and Regulations of the
Commission, a person is deemed to be the beneficial owner of a security if the
person has or shares the power to vote or direct the voting, or dispose or
direct the disposition, of the security. Each of the shareholders named in the
table has sole voting and investment power with respect to the shares of common
stock beneficially owned.
Shares Percentage
Beneficially of
Beneficial Owner Owned (1) Class (1)
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David C. Olson (2) (3) 1,600,000 44.37%
6025 South Quebec Street, Suite #150
Englewood, Colorado 80111
Robert J. Zappa (3) 800,000 22.18%
2740 Kendrick Street
Golden, Colorado 80401
Steven E. Muth 800,000 22.18%
6463 South Malaya Street
Aurora, Colorado 80016
Barbara Petrinsky (2)
6025 South Quebec Street, Suite #150 -0- 0.00%
Englewood, Colorado 80111
All executive officers and directors 2,400,000 66.55%
as a group (three persons)
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10
(1) Represents the number of shares of common stock owned of record and
beneficially by each named person or group, expressed as a percentage of
3,606,200 shares of the Company's Common Stock outstanding as of February 8,
2000.
(2) Executive officer of the Company.
(3) Member of the Board of Directors of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Executive Officers and Directors
Set forth below are the names, ages, positions with EasyWeb and business
experience of our executive officers and directors.
Name Age Position
David C. Olson* 39 President, Treasurer and Director
Robert J. Zappa* 57 Director
Barbara Petrinsky 58 Secretary
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*May be deemed to be a "parent" and "promoter" of EasyWeb, as those terms
are defined in the General Rules and Regulations promulgated under the
Securities Act of 1933.
General
Directors hold office until the next annual meeting of EasyWeb's
shareholders and until their respective successors have been elected and
qualify. Officers serve at the pleasure of the Board of Directors. Mr. Olson and
Ms. Petrinsky devote up to 25% of their time and effort to the business and
affairs of EasyWeb and Mr. Zappa devotes only such time as is necessary for him
to perform his responsibilities as a director of EasyWeb. Set forth below under
"Business Experience" is a description of the business experience of Messrs.
Olson and Zappa and Ms. Petrinsky.
Family Relationship
No family relationship exists between or among our executive officers and
directors.
11
Business Experience
David C. Olson has served as the President, the Treasurer and a director of
EasyWeb since March 11, 1999. He has served, since August 1997, as the
President, the Chief Executive Officer, the Treasurer, a director and the sole
shareholder of Summit Financial Relations, Inc., a business finance, consulting
and investor relations firm with offices in the Denver Technological Center,
Englewood, Colorado, founded by him that provides EasyWeb with office space and
administrative and technical support. Also, since August 1997, he has served as
the President, the Chief Executive Officer, the Treasurer, a director and a
controlling shareholder of Associate Capital Consulting, Inc., an Englewood,
Colorado, company also founded by Mr. Olson that is engaged in the business of
investing in private and publicly-held companies and, additionally, performs
financial consulting services. Mr. Olson has, since April 28, 1998, served as
the President/Chief Executive Officer and, since April 15, 1999, served as the
Secretary, the Chief Financial Officer and the sole director of Max Development,
Inc., Englewood, Colorado, a publicly-held company co-founded by him in
September 1998 that is engaged in the business of marine diamond mining off the
west coast of the Republic of South Africa. He has served as a director, since
May 1999, and as the President and the Treasurer, since August 1999, of Mile
High Foliage, Inc., Englewood, Colorado, a privately-held wholesale tree nursery
business that he founded in May 1999. Mr. Olson served, from June 1999 through
January 2001, as a director of ModeVa Profiles Inc., a privately-held, Boulder,
Colorado, manufacturer of building materials. From January 1993 to May 1997, he
held various positions, including Vice President, Branch Office Manager of
Cohig's top producing branch office and National Sales Manager, for Cohig and
Associates, Inc. ("Cohig," now part of EastBrokers International, Inc.),
Englewood, Colorado, a securities broker-dealer having approximately 265
registered representatives and offices in twenty-three states that specializes
in NASDAQ SmallCap and growth stocks and initial and secondary public securities
offerings. During his tenure at Cohig, Mr. Olson served on the firm's Corporate
Finance Commitment Committee and Cohig was involved in public and private
financing involving several hundred million dollars and numerous companies. From
April 1987 to January 1993, he was associated with Kober Financial Corp.
("Kober"), Denver, Colorado, a regional broker-dealer specializing in NASDAQ
SmallCap and growth securities that was acquired by Cohig in January 1993. Mr.
Olson held a number of positions, including Executive Vice President, National
Sales and Syndication, registered broker and account executive during the period
of his association with Kober. During the period from 1982 to 1987, he was a
registered representative associated with a number of NASD-member
broker-dealers.
Robert J. Zappa has served as a director of EasyWeb since February 2, 1999.
Mr. Zappa, since January 1999, has been the sole owner and the President of
Unitech International, L.L.C., a Golden, Colorado, export-import company. From
1992 until his retirement in January 1999, he served as the President of
PolyMedica Healthcare, Inc. ("PolyMedica"), and as the Vice President of
PolyMedica Corporation, Inc., a wholly-owned subsidiary of PolyMedica.
PolyMedica is a leading manufacturer and supplier of consumer home healthcare
products and the largest supplier of private label digital thermometers in the
United States. During his tenure at PolyMedica, the company's sales revenue
increased from $3,000,000 to $15,000,000 and major supply programs were
developed with major U.S. retail customers, including but not limited to
WalMart, Target, Safeway, Eckerd and Rite-Aid. Mr. Zappa, from 1991 to 1992,
served as the President and Chief Operating Officer of Clinical Diagnostics,
Inc., which merged with PolyMedica in the fall of 1992. As the President of
Clinical Diagnostics, he was successful in causing the company to obtain a
sizable equity position in a distressed company and subsequently rebuilding and
spinning that company off. Mr. Zappa was the President and sole owner of R.J.
Zappa Distributors, Inc. ("R.J. Zappa Distributors"), the leading wholesale
12
appliance and electronics distributor in the midwestern United States, from 1982
until the sale of the company in 1990. From 1974 to 1981, Mr. Zappa was a
co-owner and served as the Vice-President of S & A Distributors, Inc., the
largest wholesale appliance and electronics distributor in Colorado until the
company closed its business in 1983 as a result of the success of R.J. Zappa
Distributors. Mr. Zappa was employed from 1965 to 1974, variously, as a salesman
(1965-8), as a District Manager (1968-70) and as a Regional Manager (1965-1974),
for Graybar Electric. During the term of his employment by Graybar Electric, Mr.
Zappa was named Salesman of the Year for two years and District Manager of the
Year for two years. He attended Colorado State University, concentrating his
course of study in business and economics, from 1962 to 1965.
Barbara Petrinsky has served as the Secretary of Easyweb since July 26,
1999. She has been employed by Summit Financial Relations, an affiliated
company, since November 1998. From April 1990 to July 1998, Mrs. Petrinsky was
employed by, and from September 1996 to July 1998 during this period, she served
as the Director of, the Montessori School at the Denver Technological Center.
Item 6. Executive Compensation
Executive Compensation
No cash compensation has been awarded to, earned by or paid to Messrs.
David C. Olson and Robert J. Zappa, President/Treasurer/director and a director
of EasyWeb, respectively, and Ms. Barbara Petrinsky, our Secretary, for all
services rendered in all capacities to EasyWeb since our inception on September
24, 1998. It is anticipated that, for the foreseeable future, Messrs. Olson and
Zappa and Ms. Petrinsky and any other executive officer and/or director of
EasyWeb, will receive no compensation in any form for services to EasyWeb in the
capacities of executive officer and/or director.
See Part I., Item 3. "Description of Property," for a description of the
Agreement for Administrative Support dated March 11, 1999, between EasyWeb and
Summit Financial Relations, Inc., an affiliated company of which Mr. Olson is
the President, a director and a controlling shareholder, pursuant to which we
paid Summit the sum of approximately $8,161 through January 8, 2001, for use of
office space and administrative and technical support services at Summit's
offices. As a principal shareholder of Summit, Mr. Olson benefited indirectly
from these payments.
See Part I, Item 7. "Certain Relationships and Related Transactions," and
Part II, Item 4. "Recent Sales of Unregistered Securities," for detailed
information relating to our issuance on March 11, 1999, to Messrs. Olson and
Zappa of 1,600,000 shares, and 800,000 shares, of our common stock,
respectively, in consideration for the payment of $2,500 and $1,500 in cash
(approximately $.002 per share), respectively. None of our executive officers
and/or directors holds any option to purchase any of our securities.
13
Effective March 11, 1999, our Board of Directors and shareholders approved
the adoption of the Incentive Stock Option Plan (the "Plan") reserving 175,000
shares of our common stock for issuance upon the exercise of stock options
received by optionees under the Plan. Except for this Plan described in this
section captioned "Executive Compensation" and elsewhere in this Registration
Statement on Form 10-SB, we do not provide our officers or employees with
pension, stock appreciation rights, long-term incentive or other plans and have
no intention of implementing any such plans for the foreseeable future. In the
future, we may offer stock options to prospective employees and/or consultants;
however, no options have been granted as of the date hereof. It is possible that
in the future we may establish various executive incentive programs and other
benefits, including reimbursement for expenses incurred in connection with our
operations, company automobiles and life and health insurance, for our executive
officers and directors, but none has yet been granted. The provisions of any of
these plans and benefits will be at the discretion of our Board of Directors.
Under Colorado law and pursuant to our Articles of Incorporation, the
officers and directors of EasyWeb may be indemnified for various expenses and
damages resulting from their acting in such capacity. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to our
officers or directors pursuant to those provisions, EasyWeb has been informed by
our counsel that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
Incentive Stock Option Plan
Effective as of March 11, 1998, Mr. David C. Olson, our then sole director
and shareholder, approved the Incentive Stock Option Plan (the "Plan") reserving
an aggregate of 175,000 shares of common stock for issuance upon the exercise of
stock options granted to our employees, consultants and non-employee members of
the Board of Directors under the Plan. The purpose of the Plan is to promote the
growth and general prosperity of EasyWeb by permitting us to grant options
exercisable to purchase shares of common stock to our employees, consultants and
non-employee members of the Board of Directors.
Pursuant to the Plan, we may grant incentive stock options within the
meaning of Section 422A of the Internal Revenue Code of 1986, as amended, to
employees as well as non-qualified stock options to employees, officers,
directors and consultants. The Plan provides for administration by our Board of
Directors or by a committee that comprises disinterested members of the Board of
Directors. The Board or the committee selects the optionees, authorizes the
grant of options and determines the number of underlying shares of common stock,
the exercise price, the term (not to exceed ten years) and any other terms and
conditions of the options. The Board of Directors expects to administer the plan
initially.
The exercise price of each stock option under the Plan must be at least
100% of the fair market value of the shares of common stock on the date of grant
as determined by the Board of Directors. Each incentive stock option may be
exercisable for a period, as determined by the Board of Directors, but not in
excess of ten years from the date of grant. The exercise price of all incentive
stock options granted under the Plan to shareholders possessing more than 10% of
the total combined voting power of all classes of our stock must be less than
110% of the fair market value of the shares of common stock on the date of grant
and those options may be exercisable for a period not in excess of five years
from the date of grant. All options granted under the Plan are non-transferable
and may be exercised only by the optionee or the optionee's estate.
14
There is no limit on the number of shares with respect to which options may
be granted under the Plan to any participating employee. However, the aggregate
fair market value of shares of common stock (determined on the date the option
is granted) with respect to which incentive stock options become exercisable for
the first time by an individual option holder during any calendar year (under
all such plans maintained by EasyWeb) may not exceed $100,000.
Options granted under the Plan may be exercised within twelve months after
the date of an optionee's termination of employment by reason of his death or
disability, or within three months after the date of termination by reason of
retirement or voluntary termination approved by the Board of Directors, but only
to the extent the option was otherwise exercisable on the date of termination.
In the event an optionee's employment is terminated for any reason other than
death, disability, retirement or voluntary termination approved by the Board of
Directors, the optionee's option terminates thirty days after the date of such
termination.
The Plan will terminate on February 24, 2009. The Plan may be amended by
the Board of Directors without shareholder approval, except that no amendment
that increases the maximum aggregate number of shares that may be issued under
the Plan or changes the class of employees who are eligible to participate in
the Plan, can be made without the approval of our shareholders. As of February
8, 2001, no options have been granted, and there are no arrangements to grant
any options, under the Plan. Options granted under the Plan, and shares of
common stock issued upon the exercise of any those options, will not be
registered with the U.S. Securities and Exchange Commission under the Securities
Act of 1933. These securities will be offered pursuant to the exemption from
registration provided by Rule 504 of Regulation D promulgated under Section 3(b)
of, or other available exemption under, the Securities Act of 1933. Accordingly,
resales of the securities will be subject to the registration requirements of
Section 5 of, and Rule 144 of the General Rules and Regulations promulgated
under, the Securities Act of 1933.
The Plan provides that the number of shares of common stock underlying each
option and the exercise price of the option shall be proportionately adjusted in
the event of a stock split, reverse stock split, stock dividend or similar
capital adjustment that is effected without receipt of additional consideration
by EasyWeb.
Compensation of Directors
Directors of EasyWeb receive no compensation pursuant to any standard
arrangement for their services as directors. However, directors who are not
officers may be paid an annual fee or a fee per meeting of the Board of
Directors in an amount(s) to be determined in the future by the Board of
Directors.
15
Item 7. Certain Relationships and Related Transactions.
On March 11, 1999, we issued and sold 1,600,000 shares of our common stock
to Mr. David C. Olson, the President, the Treasurer and a director of EasyWeb,
in consideration for the sum of $2,500 in cash (approximately $.0016 per share).
Mr. Olson serves as one of our two executive officers and directors and owns of
record and beneficially 44.4% of the issued and outstanding shares of our common
stock. Also on March 11, 1999, we issued and sold 800,000 shares of common stock
to each of Mr. Robert J. Zappa, a company director, and Mr. Steven Muth in
consideration for the payment by each individual of the amount of $1,500 in cash
(approximately $.0019 per share).
On March 11, 1999, we entered into the Agreement for Administrative Support
with Summit Financial Relations, Inc., an affiliated company of which Mr. Olson
is the President, a director and a controlling shareholder, for use of office
space, administrative support (including reception, secretarial and bookkeeping
services) and technical support (including use of office, computer and
telecommunications equipment) at Summit's offices located at 6025 South Quebec
Street, Suite #150, Englewood, Colorado 80111. The agreement provides for us to
pay Summit for these services the amount of $1,500 per month commencing in the
month in which we receive the minimum proceeds from our offering of common
stock. During the period following the closing of our common stock offering in
April 2000 through January 18, 2001, we paid Summit, pursuant to the Agreement
for Administrative Support, the sum of approximately $8,161 for the use of
office space and administrative and technical support services at Summit's
offices. Mr. Olson, as a principal shareholder of Summit, benefited indirectly
from these payments. For the year ended December 31, 1999, and the period from
January 1, 2000, through April 10, 2000, we recorded $12,000 and $5,000 as rent
and administrative support expense, respectively, with a corresponding credit to
additional paid-in capital. We have made arrangements with Summit to continue to
utilize office space free of charge and administrative and technical support
services on an hourly basis pursuant to the Agreement for Administrative Support
for the foreseeable future free of charge until our financial condition
improves.
Because of their management positions, organizational efforts and/or
percentage share ownership in EasyWeb, Messrs. Olson, Zappa and Muth may be
deemed to be "parents" and "promoters" of the Company, as those terms are
defined in the Securities Act of 1933 and the applicable Rules and Regulations
under the Securities Act of 1933. Because of the above-described relationships,
transactions between and among EasyWeb and Messrs. Olson, Zappa and Muth, such
as the sale of our common stock to each of them as described above, should not
be considered to have occurred at arm's-length.
Item 8. Description of Securities.
Description of Capital Stock
Our authorized capital stock consists of 30,000,000 shares of common stock,
no par value per share.
Description of Common Stock
All shares of common stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share on all matters to be
voted upon by shareholders. The shares of common stock have no preemptive,
16
subscription, conversion or redemption rights and may be issued only as
fully-paid and nonassessable shares. Cumulative voting in the election of
directors is permitted. In the event of liquidation of EasyWeb, each shareholder
is entitled to receive a proportionate share of our assets available for
distribution to shareholders after the payment of liabilities. All shares of our
common stock issued and outstanding are fully-paid and nonassessable.
Dividend Policy. Holders of shares of the common stock are entitled to
share pro rata in dividends and distributions with respect to the common stock
when, as and if declared by the Board of Directors out of funds legally
available therefor. We have not paid any dividends on our common stock and
intend to retain earnings, if any, to finance the development and expansion of
our business. Future dividend policy is subject to the discretion of the Board
of Directors and will depend upon a number of factors, including future
earnings, capital requirements and our financial condition.
Transfer Agent and Registrar. The Transfer Agent and Registrar for our
common stock is Corporate Stock Transfer, Inc., 3200 Cherry Creek Drive South,
Suite #430, Denver, Colorado 80209.
Part II
Item 1. Market Price of and Dividends on Registrant's Common Equity and Related
Shareholder Matters.
(a) Market Information.
There has been no established public trading market for the common
stock since our inception on September 24, 1998.
(b) Holders.
As of February 8, 2000, we had fifty-eight shareholders of record of
our 3,606,200 issued and outstanding shares of common stock.
(c) Dividends.
We have never paid or declared any dividends on our common stock and
do not anticipate paying cash dividends in the foreseeable future.
Item 2. Legal Proceedings.
We know of no legal proceedings to which EasyWeb is a party or to which any
of our property is the subject that are pending, threatened or contemplated or
any unsatisfied judgments against EasyWeb.
17
Item 3. Changes in and Disagreements with Accountants.
We had no independent accountant prior to the retention of Cordovano and
Harvey, P.C., 201 Steele Street, Suite #300, Denver, Colorado 80206, in May
1999. There has been no change in our independent accountant during the period
commencing with the retention of Cordovano and Harvey, P.C., through February 8,
2001.
Item 4. Recent Sales of Unregistered Securities.
On March 11, 1999, we issued and sold 1,600,000 shares of our common stock
to Mr. David C. Olson, the President, the Treasurer and a director of EasyWeb,
in consideration for the sum of $2,500 in cash (approximately $.0016 per share).
Mr. Olson serves as one of the two executive officers and directors of EasyWeb
and owns of record and beneficially approximately 44.4% of the issued and
outstanding shares of our common stock. Also, on March 11, 1999, we issued and
sold 800,000 shares of common stock to each of Mr. Robert J. Zappa, a director
of EasyWeb, and Mr. Steven Muth in consideration for the payment by each
individual of the amount of $1,500 in cash (approximately $.0019 per share). We
relied, in connection with the sales of the shares, upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933 and Section
11-51-308(1)(p) of the Colorado Uniform Securities Act (the "Colorado Act"). We
relied upon the fact that our issuance and sale of the shares did not constitute
a public securities offering together with the fact that Messrs. Olson, Zappa
and Muth were executive officers, directors, controlling shareholders and/or
founders of EasyWeb at the time of the sales, to make the exemptions available.
On November 9, 1999, we issued and sold 2,000 shares of our common stock to
Associate Capital Consulting, Inc., an affiliated company of which Mr. Olson is
the President, the Chief Executive Officer, the Treasurer, a director and a
controlling shareholder, in consideration for the sum of $500 in cash
(approximately $.25 per share). In connection with the sales of the shares, we
relied upon the exemption from registration provided by Section 4(2) of the
Securities Act of 1933 and Section 11-51-308(1)(p) of the Colorado Act. To make
the exemptions available, we relied upon the fact that our issuance and sale of
the shares did not constitute a public securities offering together with the
fact that Mr. Olson was an executive officer, director, controlling shareholder
and founder of EasyWeb at the time of the sale.
During the period from December 10, 1999, through April 10, 2000, we issued
and sold an aggregate of 404,200 shares of our common stock to a total of
fifty-four persons, all of whom are either residents of the states of Arizona,
Colorado, Florida, Illinois, Nevada or Utah, for cash consideration totaling
$101,050. We made the sales in reliance upon the exemption from registration
with the U.S. Securities and Exchange Commission provided under Rule 504 of
Regulation D under Section 3(b) of the Securities Act of 1933 and via
registration by qualification with the Colorado Division of Securities under
Section 11-51-304 of the Colorado Act. Our Application for Registration by
Qualification became effective with the Colorado Division of Securities on
December 10, 1999. No underwriter was employed in connection with the offering
and sale of the shares. We relied upon the following, among other, facts to make
the Federal exemption available:
18
(i) The aggregate offering price for the offering of the shares of common
stock did not exceed $1,000,000, less the aggregate offering price for
all securities sold within the twelve months before the start of and
during the offering in reliance on any exemption under Section 3(b)
of, or in violation of Section 5(a) of, the Securities Act of 1933;
(ii) The required number of manually executed originals and true copies of
Form D were duly and timely filed with the U.S. Securities and
Exchange Commission;
(iii)We conducted no general solicitation or advertising in connection
with the offering of any of the shares; and
(iv) The fact that we have not been since our inception:
(a) Subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934;
(b) An "investment company" within the meaning the Investment Company
Act of 1940; or
(c) A development stage company that either has no specific business
plan or purpose or has indicated that our business plan is to
engage in a merger or acquisition with an unidentified company or
companies, or other entity or person.
We sold shares of common stock in the States of Florida, Illinois, Nevada
and Utah in reliance upon the exemptions from registration provided under
Section 517.061 of the Florida Securities and Investor Protection Act, Section
4.G of the Illinois Securities Law of 1953, Section 90.530 of the Nevada Uniform
Securities Act and Section 61-1-14 of the Utah Uniform Securities Act,
respectively. We failed to comply with Section R14-4-102 of the Regulations of
the Arizona Corporation Commission, Title 14, Chapter 4 (the "Regulations"), in
connection with the offers and sales of a total of 16,000 shares of common stock
to three residents of the State of Arizona. We have initiated, but not yet
completed, an offer of rescission to these three investors under Section
R14-4-101 of the Regulations. In the event that all three investors elect to
rescind their purchases of our common stock, we would be liable to pay them a
total of $4,000, representing the aggregate purchase price of their shares,
together with interest at the Arizona statutory rate of interest of 10% per
annum.
Item 5. Indemnification of Directors and Officers.
The last paragraph of Article Twelfth of our Articles of Incorporation
contains provisions providing for the indemnification of our directors and
officers as follows:
19
"In addition, the corporation shall have full authority to indemnify
its current or former directors, officers, employees, fiduciaries and
agents as now or hereinafter is permitted by Section 7-109-101 of the
Colorado Business Corporation Act, to the full extent permitted by that
section, or its successor provisions."
We have no agreements with any of our directors or executive officers
providing for indemnification of any of those persons with respect to liability
arising out of his or her capacity or status as an officer and/or director.
At present, there is no pending litigation or proceeding involving a
director or executive officer of EasyWeb as to which indemnification is being
sought.
PART F/S
The Financial Statements of EasyWeb, Inc., required by Regulation SB
commence on page F-1 hereof in response to Part F/S of this Registration
Statement on Form 10-SB and are incorporated herein by this reference.
PART III
Item 1. Index to Exhibits.
Item
Number Description
3.1* Articles of Incorporation of NetEscapes, Inc., filed September 24, 1998.
3.2* Articles of Amendment to the Articles of Incorporation for
NetEscapes, Inc., filed February 2, 1999.
3.4* Original Bylaws of NetEscapes, Inc.
- ------------------
*To be filed herewith.
Item 2. Description of Exhibits.
The documents required to be filed as Exhibit Number 2 in Part III of Form
1-A filed as part of this Registration Statement on Form 10-SB are listed in
Item 1 of this Part III above. No documents are required to be filed as Exhibit
Numbers 3, 5, 6 or 7 in Part III of Form 1-A, and the reference to such Exhibit
Numbers is therefore omitted. No additional exhibits are filed hereto.
20
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
EASYWEB, INC.
(Registrant)
Date: February 12, 2001 By: /s/ David C. Olson
--------------------------
David C. Olson, President
21
EASYWEB, INC.
(A Development Stage Company)
Index to Financial Statements
Page
--------
Independent auditors' report F-2
Balance sheets, December 31, 1999 and September 30, 2000 (unaudited).... F-3
Statements of operations, for the year ended December 31, 1999,
September 24, 1998 (inception) through December 31, 1998, for
the nine months ended September 30, 2000 (unaudited), and September
24, 1998 (inception) through September 30, 2000 (unaudited).......... F-4
Statement of shareholder's deficit, September 24, 1998 (inception)
through September 30, 2000 (unaudited)............................. F-5
Statements of cash flows, for the year ended December 31, 1999,
September 24, 1998 (inception) through December 31, 1998, for
the nine months ended September 30, 2000 (unaudited), and September
24, 1998 (inception) through September 30, 2000 (unaudited........... F-6
Notes to financial statements........................................... F-7
Independent Auditors' Report
To the Board of Directors and Shareholders
EasyWeb, Inc.
We have audited the accompanying balance sheet of EasyWeb, Inc. (a development
stage company) as of December 31, 1999, and the related statements of
operations, shareholders' deficit and cash flows for the year ended December 31,
1999 and from September 24, 1998 (inception) through December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide 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 EasyWeb, Inc. as of December
31, 1999, and the related statements of operations and cash flows for the year
ended December 31, 1999 and from September 24, 1998 (inception) through December
31, 1998 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note A to the financial
statements, the Company has a working capital deficit at December 31, 1999 and
has suffered significant operating losses for the periods from September 24,
1998 (inception) through December 31, 1999. These factors raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans regarding those matters are also described in Note A. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Cordovano and Harvey, P.C
- -----------------------------
Cordovano and Harvey, P.C
Denver, Colorado
August 8, 2000
F-2
EASYWEB, INC.
(A Development Stage Company)
Balance Sheets
December 31, September 30,
1999 2000
-------------- -------------
(Unaudited)
Assets
Current assets:
Cash .................................................... $ 1,091 $ 41,898
-------- --------
Total current assets 1,091 41,898
Intangible assets, net of accumulated amortization of
$17 and $344 (unaudited), respectively (Note A) ......... 191 1,906
-------- --------
$ 1,282 $ 43,804
======== ========
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued liabilities ................ $ 8,785 $ 750
Due to affiliate (Note B) ............................... 545 393
Accrued salaries and payroll taxes ...................... - 8,005
Advances payable to related parties (Note B) ............ 6,000 6,000
-------- --------
Total current liabilities 15,330 15,148
-------- --------
Shareholders' equity (deficit) (Note B & D):
Common stock, no par value; 30,000,000 shares authorized;
3,202,000 and 3,606,200 (unaudited) shares issued and
outstanding, respectively ............................ 6,000 93,050
Additional paid-in capital .............................. 12,000 17,000
Deferred offering costs ................................. (14,000) -
Deficit accumulated during development stage ............ (18,048) (81,394)
--------- ---------
Total shareholders' equity (deficit) (14,048) 28,656
--------- ---------
$ 1,282 $ 43,804
======== ========
See accompanying notes to the financial statements.
F-3
EASYWEB, INC.
(A Development Stage Company)
Statements of Operations
September 24, September 24,
1998 1998
For the (Inception) For the Nine For the Nine (Inception)
Year Ended through Months Ended Months Ended through
December 31, December 31, September 30, September 30, September 30,
1999 1998 2000 1999 2000
------------ -------------- -------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited)
Revenue:
Commissions, related party (Note B) .... $ - $ - $ 4,000 $ - $ 4,000
Commissions, other ..................... - - 162 - 162
------------ -------------- -------------- -------------- --------------
Total Revenue - - 4,162 - 4,162
------------ -------------- -------------- -------------- --------------
Operating Expenses:
Rent and administrative support (Note B) 12,000 - 12,218 7,500 24,218
Salaries and payroll taxes ............. - - 17,654 - 17,654
Professional fees ...................... 2,892 1,500 8,582 2,000 12,974
Web site consulting and maintenance .... 1,000 - 14,330 - 15,330
Advertising ............................ 252 - 11,310 - 11,562
Other .................................. 404 - 3,414 111 3,818
------------ -------------- -------------- -------------- --------------
Total Operating Expenses (16,548) (1,500) (67,508) (9,611) (85,556)
------------ -------------- -------------- -------------- --------------
Operating Loss (16,548) (1,500) (63,346) (9,611) (81,394)
Income taxes (Note C) ....................... - - - - -
------------ -------------- -------------- -------------- --------------
Net Loss $ (16,548) $ (1,500) $ (63,346) $ (9,611) $ (81,394)
============ ============= ============= ============= =============
Basic and diluted loss per common share ..... $ (0.01) N/A $ (0.02) $ *
============ ============= ============= =============
Basic and diluted weighted average
common shares outstanding .............. 2,586,783 $ - 3,471,467 2,382,222
============ ============= ============= =============
See accompanying notes to the financial statements.
F-4
EASYWEB, INC.
(A Development Stage Company)
Statement of Shareholders' Equity (Deficit)
September 24, 1998 (Inception) through September 30, 2000 (Unaudited)
Deficit
Accumulated
Common Stock Additional During
--------------------- Paid-in Offering Development
Shares Amount Capital Costs Stage Total
--------- --------- --------- --------- ----------- ---------
Balance, September 24, 1998 (inception) ...... - $ - $ - $ - $ - $ -
Net loss, September 24, 1998 (inception)
through December 31, 1998 ................. - - - - (1,500) (1,500)
--------- --------- --------- --------- ---------- ----------
Balance, December 31, 1998 - - - - (1,500) (1,500)
March 11, 1999, shares sold to officers
($.0017/share) (Note B) ................... 2,400,000 4,000 - - - 4,000
March 11, 1999, shares issued to director in
exchange for expenses paid on behalf of
the Company ($.0017/share) (Note B) ....... 800,000 1,500 - - - 1,500
Offering costs deferred ...................... - - - (14,000) - (14,000)
December 10, 1999, shares sold in a private
offering at $0.25 per share (Note D) ...... 2,000 500 - - - 500
Office space and administrative support
contributed by an affiliate (Note B) ...... - - 12,000 - - 12,000
Net loss, year ended December 31, 1999 ....... - - - - (16,548) (16,548)
--------- --------- --------- --------- ---------- ----------
Balance, December 31, 1999 3,202,000 6,000 12,000 (14,000) (18,048) (14,048)
March 31, 2000, shares sold in a private
offering at $0.25 per share, net of $14,000
of offering costs (Note D) (unaudited) .... 404,200 87,050 - 14,000 - 101,050
Office space and administrative support
contributed by an affiliate (Note B)
(unaudited) ............................... - - 5,000 - - 5,000
Net loss, nine months ended September
30, 2000 (unaudited) ...................... - - - - (63,346) (63,346)
--------- --------- --------- --------- ---------- ----------
Balance, September 30, 2000 (Unaudited) 3,606,200 $ 93,050 $ 17,000 $ - $ (81,394) $ 28,656
========= ========= ========= ========= ========== ==========
See accompanying notes to the financial statements.
F-5
EASYWEB, INC.
(A Development Stage Company)
Statements of Cash Flows
September 24, September
1998 24, 1998
For the (Inception) For the Nine For the Nine (Inception)
Year Ended through Months Ended Months Ended through
December 31, December 31, September 30, September 30, September
1999 1998 2000 1999 30,2000
------------ ------------- -------------- ------------- ------------
(Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss ............................................... $ (16,548) $ (1,500) $ (63,346) $ (9,611) $ (81,394)
Transactions not requiring cash:
Depreciation and amortization ....................... 17 - 485 - 502
Equipment and intangible assets given in
exchange for services ............................ - - 450 - 450
Office space and administrative support
contributed by an affiliate (Note B) ............. 12,000 - 5,000 7,500 17,000
Changes in operating liabilities:
Increase in accounts payable and accrued liabilities,
net of a $1,500 liability satisfied with stock ... 9,330 1,500 (182) 6,064 10,648
------------ ------------- -------------- ------------- ------------
Net cash provided by (used in) operating activities ........ 4,799 - (57,593) 3,953 (52,794)
------------ ------------- -------------- ------------- ------------
Cash flows from investing activities:
Equipment purchase ..................................... - - (400) - (400)
Payments for intangible assets ......................... (208) - (2,250) - (2,458)
------------ ------------- -------------- ------------- ------------
Net cash (used in) investing activities .................... (208) - (2,650) - (2,858)
------------ ------------- -------------- ------------- ------------
Cash flows from financing activities:
Proceeds on advances from related parties (Note B) ..... 6,000 - - - 6,000
Proceeds from the sale of common stock (Note D) ........ 4,500 - 101,050 4,000 105,550
Payments for offering costs (Note D) ................... (14,000) - - (6,000) (14,000)
------------ ------------- -------------- ------------- ------------
Net cash provided by (used in) financing activities ........ (3,500) - 101,050 (2,000) 97,550
------------ ------------- -------------- ------------- ------------
Net change in cash 1,091 - 40,807 1,953 41,898
Cash, beginning of period .................................. - - 1,091 - -
------------ ------------- -------------- ------------- ------------
Cash, end of period $ 1,091 $ - $ 41,898 $ 1,953 $ 41,898
============ ============= ============== ============= ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ............................................... $ - $ - $ - $ - $ -
============ ============= ============== ============= ============
Income taxes ........................................... $ - $ - $ - $ - $ -
============ ============= ============== ============= ============
Non-cash financing activity:
Stock issued for satisfaction of debt................... $ 1,500 $ - $ - $ 1,500 $ 1,500
============ ============= ============== ============= ============
See accompanying notes to the financial statements.
F-6
EASYWEB, INC.
(A Development Stage Company)
Notes to the Financial Statements
Note A: Organization and summary of significant accounting policies with basis
of presentation
================================================================================
Organization
EasyWeb, Inc. (the "Company") was incorporated in Colorado on September 24, 1998
under the name NetEscapes, Inc. The name of the Company was changed to EasyWeb,
Inc. on February 2, 1999. The Company is a development stage enterprise in
accordance with Statement of Financial Accounting Standard (SFAS) No. 7. The
Company markets web sites on the Internet, which are built by a third party,
Sunstar 2000. During 2000, the Company entered a verbal agreement with Sunstar
2000, whereby the Company receives a sales commission for all templated web
sites and web site products sold by the Company. The Company also pays Sunstar
2000 an hourly rate or negotiated fee for work on custom web sites sold by the
Company.
As of December 31, 1999, the Company has a working capital deficit and has
suffered significant operating losses for the periods from September 24, 1998
(inception) through December 31, 1999, which raises substantial doubt about its
ability to continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern. The Company's ability to
continue as a going concern is dependent upon its ability to generate sufficient
cash flow to meet obligations on a timely basis and ultimately to attain
profitability. The Company's management intends to obtain working capital
through operations and to seek additional funding through equity offerings to
help fund the Company's operations as it expands. There is no assurance that the
Company will be successful in its efforts to raise additional working capital or
achieve profitable operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Summary of significant accounting policies
- ------------------------------------------
Cash equivalents and fair value of financial instruments
For the purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
The carrying amounts of cash, accounts payable and other accrued liabilities
approximate fair value due to the short-term maturity of the instruments.
Use of estimates
The preparation of the financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect certain reported amounts of assets and liabilities;
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. Accordingly, actual results could differ from those estimates.
Fiscal year
The Company operates on a calendar year.
F-7
EASYWEB, INC.
(A Development Stage Company)
Notes to the Financial Statements
Equipment and depreciation
Equipment is stated at cost. Equipment is depreciated over its estimated useful
life using the straight-line method. Depreciation expense totaled $-0-, $-0-,
$89 (unaudited) and $89 (unaudited), respectively, for the year ended December
31, 1999, September 24, 1998 (inception) through December 31, 1998, for the nine
months ended September 30, 2000 and September 24, 1998 (inception) through
September 30, 2000. As of September 30, 2000, the Company had disposed of its
equipment.
Upon retirement or disposition of the furniture and equipment, the cost and
accumulated depreciation are removed from the accounts and any resulting gain or
loss is reflected in operations. Repairs and maintenance are charged to expense
as incurred and expenditures for additions and improvements are capitalized.
Intangible assets, computer software costs and amortization
The Company capitalizes internal and external costs incurred to develop
internal-use computer software during the application development stage in
accordance with Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use". Capitalized web-site
development costs are amortized over an estimated life of three years commencing
on the date the software is ready for its intended use. The Company commenced
amortizing its web-site development costs on April 11, 2000 (unaudited).
Amortization expense totaled $17, $-0-, $396 (unaudited) and $413 (unaudited),
respectively, for the year ended December 31, 1999, September 24, 1998
(inception) through December 31, 1998, for the nine months ended September 30,
2000 and September 24, 1998 (inception) through September 30, 2000.
Start up and deferred offering costs
Costs related to the organization of the Company have been expensed as incurred.
Costs related to common stock offerings are deferred and recorded in
shareholders' deficit until offering proceeds are received, at which time they
will be recorded as a reduction of gross proceeds. If the offering is not
successful, the costs will be charged to operations at that time.
Revenue recognition
All of the Company's income is reported as commission revenue, the total sale
price of each web site is not recorded. Commission revenue is recognized when
earned and the service has been performed. Revenues through related party
transactions are recognized when the service has been performed and the cash has
been received.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the recorded book basis and the tax
basis of assets and liabilities for financial and income tax reporting. The
deferred tax assets and liabilities represent the future tax return consequences
of those differences, which will either be taxable or deductible when the assets
and liabilities are recovered or settled. Deferred taxes are also recognized for
operating losses that are available to offset future taxable income and tax
credits that are available to offset future federal income taxes.
F-8
EASYWEB, INC.
(A Development Stage Company)
Notes to the Financial Statements
Loss per common share
The Company reports earnings (loss) per share using a dual presentation of basic
and diluted earnings per share. Basic earnings (loss) per share exclude the
impact of common stock equivalents. Diluted earnings (loss) per share utilize
the average market price per share when applying the treasury stock method in
determining common stock equivalents. However, the Company has a simple capital
structure for the period presented and, therefore, there is no variance between
the basic and diluted earnings (loss) per share.
Unaudited interim financial information
The financial information presented herein as of September 30, 2000, for the
nine months ended September 30, 2000 and 1999, and from September 24, 1998
(inception) through September 30, 2000, is unaudited. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
which are necessary to provide a fair presentation of operating results for the
interim period presented have been made. The results of operations for the nine
months ended September 30, 2000 are not necessarily indicative of the results to
be expected for the year.
Note B: Related party transactions
==================================
Liabilities
At December 31, 1999 and September 30, 2000, the Company owed an affiliate $545
and $393 (unaudited), respectively, for postage, printing and advertising
expenses paid on behalf of the Company.
During the year ended December 31, 1999, an officer and two directors advanced
the Company a total of $6,000 ($2,000 each) for working capital. The advances
are unsecured, bear no interest and are due on demand.
Marketing agreement
On February 24, 1999, an affiliate assigned all of its rights and privileges in
a marketing agreement to the Company. The Agreement assigns the affiliate's
rights to market Big Online, Inc.'s products and services to the Company. The
products and services consist of the development and maintenance of "web sites"
on the Internet for business and professional customers. On May 1, 2000, the
Company's affiliate was dissolved and the marketing agreement was terminated.
The Company conducted no transactions under the agreement.
Common stock
On March 11, 1999, the Company sold 2,400,000 shares of its no par value
restricted common stock to two officers for a total of $4,000.
On March 11, 1999, the Company issued 800,000 shares of its no par value
restricted common stock to a director in exchange for legal expenses paid on
behalf of the Company totaling $1,500.
F-9
EASYWEB, INC.
(A Development Stage Company)
Notes to the Financial Statements
Rent and administrative support
On March 11, 1999, the Company entered an Administrative Support Agreement with
an affiliate, which provides for the use of the affiliate's office space,
administrative and technical support by the Company. The Company agreed to pay
the affiliate $1,500 per month for these services beginning in the month when
the minimum proceeds from the stock offering are received by the Company. The
Company received the minimum proceeds from the stock offering during April 2000.
Prior to the Company's receipt of minimum proceeds from its stock offering, the
affiliate contributed office space, administrative and technical support to the
Company. Contributed rent and administrative support was calculated from May
1999 (the first month the Company conducted operating transactions) through
April 10, 2000. The Company recorded $12,000 and $5,000 (unaudited) as rent and
administrative support expense with a corresponding credit to additional paid-in
capital for the year ended December 31, 1999 and the period from January 1, 2000
through April 10, 2000.
Following the Company's receipt of minimum proceeds from its stock offering, the
Company paid the affiliate $1,000 (unaudited) in April 2000 and $1,500
(unaudited) each month from May through August of 2000.
In September of 2000, the Company and affiliate amended the Administrative
Support Agreement. Commencing in September 2000, the affiliate began charging
the Company an hourly rate for services and support rather than the $1,500 flat
fee. The fee charged to the Company for September of 2000 was $218.
Revenue
During the nine months ended September 30, 2000, the Company earned commission
revenues totaling $4,000 (unaudited) for the sale of a web site to an affiliate.
The $4,000 (unaudited) commission totaled 96 percent of the revenue generated by
the Company since its inception.
Note C: Income taxes
====================
A reconciliation of U.S. statutory federal income tax rate to the effective rate
is as follows:
September 24,
1998
(inception) Nine Months Nine Months
Year Ended Through Ended Ended
December 31, December 31, September 30, September 30,
1999 1998 2000 1999
---------------- ---------------- ----------------- ---------------
(Unaudited) (Unaudited)
U.S. statutory federal rate 15.00% 15.00% 16.71% 15.00%
State income tax rate, net of federal benefit 4.04% 4.04% 3.96% 4.04%
Permanent differences -0.07% 0.00% 0.00% 0.00%
Net operating loss for which no tax
benefit is currently available -18.97% -19.04% -20.67% -19.04%
---------------- ---------------- ----------------- ---------------
0.00% 0.00% 0.00% 0.00%
================ ================ ================= ===============
F-10
EASYWEB, INC.
(A Development Stage Company)
Notes to the Financial Statements
At December 31, 1999, deferred taxes consisted of a net tax asset of $3,424, due
to operating loss carryforwards of $18,048, which was fully allowed for, in the
valuation allowance of $3,424. The valuation allowance offsets the net deferred
tax asset for which there is no assurance of recovery. The changes in the
valuation allowance from September 24, 1998 (inception) through December 31,
1998 and for the year ended December 31, 1999 were $285 and $3,139,
respectively. Net operating loss carryforwards will expire through 2019.
At September 30, 2000, deferred taxes consisted of a net tax asset of $16,517
(unaudited), due to operating loss carryforwards of $81,394 (unaudited), which
was fully allowed for, in the valuation allowance of $16,517 (unaudited). The
valuation allowance offsets the net deferred tax asset for which there is no
assurance of recovery. The changes in the valuation allowance for the nine
months ended September 30, 2000 and 1999 were $13,093 (unaudited) and $1,830
(unaudited), respectively. Net operating loss carryforwards will expire through
2020.
The valuation allowance will be evaluated at the end of each year, considering
positive and negative evidence about whether the asset will be realized. At that
time, the allowance will either be increased or reduced; reduction could result
in the complete elimination of the allowance if positive evidence indicates that
the value of the deferred tax asset is no longer impaired and the allowance is
no longer required.
Should the Company undergo an ownership change, as defined in Section 382 of the
Internal Revenue Code, the Company's tax net operating loss carryforwards
generated prior to the ownership change will be subject to an annual limitation
which could reduce or defer the utilization of those losses.
Note D: Shareholders' deficit
=============================
Confidential offering of common stock
During the months from December 1999 through March 2000, the Company conducted a
private placement offering whereby it sold 406,200 shares of its no par value
common stock for $.25 per share pursuant to an exemption from registration
claimed under Rule 504 of Regulation D of the Securities Act of 1933, as
amended. The shares were sold through the Company's officers and directors. The
Company received $87,550 after deducting offering costs totaling $14,000. The
Company relied upon exemptions from registration believed by it to be available
under federal and state securities laws in connection with the offering.
Rescission offer
On July 5, 2000, the Company notified the State of Arizona that it had collected
proceeds from the common stock offering prior to meeting all Blue Sky laws
required by that State. The Company may be contingently liable to certain
shareholders who purchased common stock in the above private offering if they
elect to have the transactions rescinded pursuant to the offer of rescission to
be made by the Company. To remedy this situation, the Company intends to file a
registration statement with the State of Arizona, which would include a
rescission offer to those shareholders who purchased the securities under an
offering that was deemed to be in violation of the Blue Sky laws of Arizona. The
Company sold 16,000 shares of its no par value common stock to three Arizona
residents for $4,000 through the private stock offering. Management believes
that the amount of the ultimate liability as a result of the offer to rescind
will be minimal. The amount or probability of any financial liability could not
be reasonably estimated at September 30, 2000.
F-11
EASYWEB, INC.
(A Development Stage Company)
Notes to the Financial Statements
Common stock outstanding
Because of the above offers of rescission, the Company had not issued any stock
certificates as of September 30, 2000. However, all common stock for which
consideration was received by the Company has been reported as issued and
outstanding for the purposes of financial statement presentation.
Stock option plan
The Company has adopted an incentive stock option plan for the benefit of key
personnel and others providing significant services. An aggregate of 175,000
shares of common stock has been reserved under the plan. Options granted
pursuant to the plan will be exercisable at a price no less than 100% of fair
market value of a common share on the date of grant. There were no options
granted under this plan as of September 30, 2000.
F-12
((STAMP)) CUSTOMER COPY
VICTORIA BUCKLEY
COLORADO SECRETARY OF STATE
19981172959 C
$ 50.00
SECRETARY OF STATE
09-24-1998 16:25:10
Articles of Incorporation
for
NetEscapes, Inc.
The undersigned natural person, older than eighteen years, establishes
hereby a corporation pursuant to the Colorado Business Corporation Act, as
amended (the "Act") and adopts these Articles of Incorporation:
FIRST: The name of the corporation is NetEscapes, Inc.
SECOND: The period of its duration is perpetual. The corporation shall
commence to exist as of the filing date of these Articles.
THIRD: The corporation shall have and may exercise all of the rights,
powers and privileges now or hereafter conferred upon corporations organized
under the laws of Colorado. In addition, the corporation may do everything
necessary, suitable or proper for the accomplishment of any of its corporate
purposes. The corporation may conduct part or all of its business in any part of
Colorado, the United States or the world and may hold, purchase, mortgage, lease
and convey real and personal property in any of such places.
FOURTH: (a) The total number of shares that the corporation shall have
authority to issue is 30,000,000 shares of Common Stock. The shares of Common
Stock shall have unlimited voting rights and shall constitute the sole voting
group of the corporation, except to the extent any additional voting group or
groups may hereafter be established in accordance with the Act. The shares of
this class also shall be entitled to receive the net assets of the corporation
upon dissolution.
(b) Each shareholder of record shall have one vote for each share of stock
standing in his name on the books of the corporation and entitled to vote,
except that in the election of directors each shareholder shall have as many
votes for each share held by him as there are directors to be elected and for
whose election the shareholder has a right to vote. Cumulative voting of the
Common Stock is mandatory in the election of directors.
(c) Unless otherwise ordered by a court of competent jurisdiction, at all
meetings of shareholders one-third of the shares of a voting group entitled to
vote at such meeting, represented in person or by proxy, shall constitute a
quorum of that voting group.
FIFTH: Shareholders shall not have preemptive rights to acquire additional
shares.
SIXTH: The board of directors may cause any shares issued by the
corporation to be issued subject to such lawful restrictions, qualifications,
limitations or special rights as it determines, or special rights must be stated
on the certificates for the shares.
SEVENTH: The address of the initial registered office of the corporation is
3090 South Jamaica Court, Suite 306, Aurora, Colorado 80014; the name of the
initial registered agent of the corporation is David C. Olson, with an office at
such address.
/s/ David C. Olson
- --------------------------------------
Signature of Initial Registered Agent
Confirming Consent to Appointment
The address of the initial principal office of the corporation is 3090
South Jamaica Court, Suite 306, Aurora, Colorado 80014.
EIGHTH: (a) The number of directors constituting the initial board of
directors of the corporation is one. All directors shall serve until the next
annual meeting of shareholders or until their successors are duly elected and
qualified. The number of directors may be increased in accordance with the
procedures set for the in the bylaws upon resolutions adopted by the board of
directors, provided that the number of directors shall no be more than five nor
less than two.
(b) The name and address of the initial director is David C. Olson, 3090
South Jamaica Court, Suite 306, Aurora, Colorado 80014
NINTH: The name and address of the incorporator is Stephen E. Rounds, 4635
East 18th Avenue, Denver, CO 80220.
TENTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and the same are
in furtherance of and not in limitation or exclusion of the powers conferred by
laws:
(a) Conflicting Interest Transactions. As used in this paragraph,
"conflicting interest transactions" means any of the following: (i) a loan or
other assistance by the corporation to a director of the corporation or to an
entity in which a director of the corporation is a director or officer or has a
financial interest; (ii) a guaranty by the corporation of an obligation of a
director of the corporation or of an obligation of an entity in which a director
of the corporation is a director or officer or has a financial interest; or
(iii) a contract or transaction between the corporation and a director of the
corporation or between the corporation and an entity in which a director of the
corporation is a director or officer or has a financial interest.
No conflicting interest transaction shall be void or voidable, be enjoined,
be set aside, or give rise to an award of damages or other sanctions in a
proceeding by a shareholder or by or in the right of the corporation, solely
because the conflicting interest transaction involves a director of the
corporation or an entity in which a director of the corporation is a director or
officer or has
2
a financial interest, or solely because the director is present at or
participates in the meeting of the corporation's board of directors or of the
committee of the board of directors which authorizes, approves or ratifies a
conflicting interest transaction, or solely because the director's vote is
counted for such purpose if: (A) the material facts as to the director's
relationship or interest and as to the conflicting interest transaction are
disclosed or are known to the board of directors or the committee, and the board
of directors or committee in good faith authorizes, approves or ratifies the
conflicting interest transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors are less than a
quorum; or (B) the material facts as to the director's relationship or interest
and as to the conflicting interest transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the conflicting interest transaction
is specifically authorized, approved or ratified in good faith by a vote of the
shareholders; or (C) a conflicting interest transaction is fair as to the
corporation as of the time it is authorized, approved or ratified by the board
of directors, a committee thereof, or the shareholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the board of directors or of a committee which authorizes, approves or ratifies
the conflicting interest transaction.
(b) Loans and Guaranties for the Benefit of Directors. Neither the board of
directors nor any committee thereof shall authorize a loan by the corporation to
a director of the corporation or to an entity in which a director of the
corporation is a director or officer or has a financial interest, or a guaranty
by the corporation of an obligation of a director of the corporation or of an
obligation of an entity in which a director of the corporation is a director or
officer or has a financial interest, until at least ten days after written
notice of the proposed authorization of the loan or guaranty has been given to
the shareholders who would be entitled to vote thereon if the issue of the loan
or guaranty were submitted to a vote of the shareholders. The requirements of
this paragraph (b) are in addition to, and not in substitution for, the
provisions of paragraph (a) of this Article TENTH.
(c) Negation of Equitable Interests in Shares or Rights. Unless a person is
recognized as a shareholder through procedures established by the corporation
pursuant to Section 7-1-7-204 or similar law, the corporation shall be entitled
to treat the registered holder of any shares of the corporation as the owner
thereof for all purposes permitted by the Act, including without limitation all
rights deriving from such shares, and the corporation shall not be bound to
recognize any equitable or other claim to, or interest in, such shares or rights
deriving from such shares on the part of any other person, including without
limitation, a purchaser, assignee or transferee of such shares, unless and until
such other person becomes the registered holder of such shares or is recognized
as such, whether or not the
3
corporation shall have either actual or constructive notice of the claimed
interest of such other person. For example, until such other person has become
the registered holder of such shares or is recognized pursuant to Section
7-107-204 or similar law, he shall not be entitled to receive notice of
shareholder meetings, to vote, to examine a list of shareholders, to be paid
dividends or other distributions payable to shareholder, or to own, enjoy or
exercise any other rights deriving from such shares against the corporation.
Nothing contained herein shall be construed to deprive any beneficial
shareholder, as defined in Section 7-113-101(1) of any right he may have under
Article 113 of the Act or subsequent law.
ELEVENTH: Subject to repeal by the shareholders, the board of directors is
authorized to adopt, amend, and repeal bylaws, so long as the bylaws do not
conflict with these Articles of Incorporation.
TWELFTH: No director of the corporation shall be personally liable to the
corporation or to the shareholders of the corporation for monetary damages for
breach of fiduciary duty to the corporation as a director, except that the
foregoing shall not eliminate or limit the liability of a director to the
corporation or to its shareholders for monetary damages for:
(i) any breach of a director's duty of loyalty to the corporation or its
shareholders;
(ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
(iii)voting for or assenting to a distribution in violation of Section
7-106-401 of the Act or the articles of incorporation of the
corporation, if it is established that the director did not perform
his duties in compliance with Section 7-108-401 of the Act, provided
that the personal liability of a director in this circumstance shall
be limited to the amount of the distribution which exceeds what could
have been distributed without violation of Section 7-106-401 or the
articles of incorporation; or
(iv) any transaction from which the director directly or indirectly derives
an improper personal benefit.
Nothing contained herein shall be construed to deprive any director of his
right to all defenses ordinarily available to a director nor shall anything
herein be construed to deprive any director of any right he may have for
contribution from any other director or other person.
4
In addition, the corporation shall have full authority to indemnify its
current or former directors, officer, employees, fiduciaries and agents as now
or hereinafter is permitted by Section 7-109- 101 of the Colorado Business
Corporation Act, to the full extent permitted by that section, or its successor
provisions.
Dated: September 24, 1998
/s/ Stephen E. Rounds
------------------------------------------
Stephen E. Rounds, incorporator
5
For office use only
((STAMP)) RECEIVED
1999 FEB - 2 PM 12:20
SECRETARY OF STATE
STATE OF COLORADO
Mail to: Secretary of State
Corporations Section
1560 Broadway, Suite 200
Denver, CO 80202
(303) 894-2251
Fax (303) 894-2242
MUST BE TYPED
FILING FEE: $25.00
MUST SUBMIT TWO COPIES
---
Please include a typed
self-addressed envelope
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION FOR
NETESCAPES, INC.
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation.
FIRST: The current name of the corporation is NetEscapes, Inc.
SECOND: The following amendment to the Articles of Incorporation was adopted on
February 2, 1999, as prescribed by the Colorado Business Corporation Act, in the
manner marked with an X below:
X No shares have been issued or Directors Elected - Action by Incorporators
- -----
No shares have been issued but Directors Elected - Action by Directors
- -----
Such amendment was adopted by the board of directors where shares have
been issued.
- -----
Such amendment was adopted by the shareholders. The number of shares
voted for the amendment was sufficient for approval.
- -----
Articles I. The new name of the corporation shall be EasyWeb, Inc.
THIRD: The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the amendment
shall be effected, is as follows: Not applicable.
---------------
If these amendments are to have a delayed effective date, please list that date:
Not applicable.
- ---------------
(Not to exceed ninety (90) days from the date of filing)
NetEscapes, Inc.
-----------------
/s/ Stephen E. Rounds
----------------------------------
By Stephen E. Rounds, Incorporator
Original Bylaws
of
NetEscapes, Inc.
Office
----------
Section 1. The principal office of the corporation shall be located in
Aurora, Colorado, or such other location either within or outside of Colorado,
as the board of directors may designate from time to time. Additional offices
shall be located as determined by the board of directors.
Shareholders
------------
Section 2. Annual Meetings.
---------------
Annual meetings of shareholders shall be held on such day during the first
quarter of the year at such time as the board of directors shall determine. At
the annual meetings, directors shall be elected for the following 12 month
period, and for the transaction of such other business as properly may come
before the meeting.
Section 3. Special Meetings.
----------------
Special meetings of shareholders, for any purpose, may be called by the
board of directors, or by the corporation if demand or demands has or have been
made by the holders of shares representing at least ten percent of all the votes
entitled to be cast on any issue proposed to be considered at the meeting.
Section 4. Place of Meeting.
----------------
The board of directors shall designate any place, within or without the
state of Colorado, as the location for any annual or special meeting. If no
designation is made, or if a special meeting be otherwise called, the place
shall be in the principal office of the corporation in Colorado.
Section 5. Notice of Meeting.
------------------
Written notice stating the place, date and hour of the meeting, and in the
case of a special meeting, the purpose for which called, shall be delivered not
less than 10 nor more than 50 days (or within such other time as may be required
by statute) before date of the meeting, either personally or by mail, by or at
direction of the President or the Secretary, to each shareholder of record
entitled to vote. If mailed, notice shall be deemed given when deposited in the
United States mail, addressed to the shareholder at his address as it appears on
the stock transfer books (or other books evidencing stock ownership) of the
corporation, with postage thereon prepaid.
Section 6. Closing of Transfer Books or Fixing of Record Date.
--------------------------------------------------
For the purpose of determining the shareholders entitled to notice of or to
vote at any meeting or any adjournment thereof, or the shareholders entitled to
receive payment of dividends, or for any other proper purpose, the board of
directors may provide that the stock transfer books be closed for a stated
period by not to
1
exceed 50 days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting, such
books shall be closed for at least 10 days immediately preceding such meeting.
In lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date, such date in any case to be not more than 50
and not less than 10 days prior to the date on which the particular action is to
be taken. If the transfer books are not closed and no record date is fixed, the
date of resolution of the board of directors calling for a meeting or declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination. 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.
Section 7. Quorum and Manner of Acting; Voting of Shares.
----------------------------------------------
One-third of the votes entitled to be cast on a matter by a voting group
represented in person or by proxy, shall constitute a quorum of that voting
group for action on the matter. If less than one-third of such votes are
represented at a meeting, a majority of the votes which are so represented may
adjourn the meeting from time to time, without further notice, for a period not
to exceed 120 days for any one adjournment. If a quorum is present at such
adjourned meeting, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum, unless the meeting is adjourned and a new record date is set for the
adjourned meeting.
If a quorum exists, action on a matter other than the election of directors
by a voting group is approved is the votes cast withing the voting group
favoring the action exceed the votes cast within the voting group opposing the
action, unless the vote of a greater number or voting by classes is required by
law or the articles of incorporation.
Each outstanding share, regardless of class, shall be entitled to one vote,
except in the election of directors, except to the extent that the voting rights
of any class or classes are limited or denied by the articles of incorporation
as permitted by the Colorado Business Corporation Act.
Cumulative voting shall be mandatory in the election of directors. At such
elections, the shareholder is entitled to cumulate votes by multiplying the
number of votes the shareholder is entitled to cast by the number of directors
for whom the shareholder is entitled to vote, and casting the product for a
single candidate or distributing the product among two or more candidates. That
number of candidates equaling the number of directors to be elected, having the
highest number of votes cast in favor of their election, shall be elected to the
board of directors.
2
Section 8. Proxies.
-------
At all meetings, a shareholder may vote by proxy executed in writing by the
shareholder or his duly authorized attorney-in-fact. Such proxy shall be filed
with the Secretary of the corporation before or at the time of the meeting. A
shareholder also may use an electronic transmission which provides a written
statement (to the corporation or other person) of an appointment of a proxy,
which proxy shall be valid if (I) the transmitted appointment sets forth or is
transmitted with written evidence from which it can be determined that the
shareholder transmitted or authorized the transmission of the appointment, and
(ii) the proxy appointment form or similar writing is filed with the secretary
of the corporation before or at the time of the meeting. The appointment of a
proxy if effective when received by the corporation and is valid for eleven
months unless a different period is expressly provided in the appointment form
or similar writing.
Any complete copy, including an electronically transmitted facsimile, or an
appointment of a proxy may be substituted for or used in lieu of the original
appointment for any purpose for which the original appointment could be used.
Board of Directors
Section 9. General Powers.
---------------
The business and affairs of the corporation shall be managed by its board
of directors.
Section 10. Number, Etc.
------------
The number of directors on the initial board of directors of the
corporation is one. The initial director shall hold office until the first
annual meeting of shareholders of the corporation. Thereafter, there shall be
not less than two or more than five directors who shall be elected at each
annual meeting of the corporation. The board of directors has the authority to
expand the number of directorships, and to fill the vacancies created thereby on
majority vote of the then directors. Such newly installed directors shall serve
until the next annual meeting of shareholders, when they may be elected to serve
again by the shareholders.
Each director shall hold office until the next annual or special meeting of
shareholders at which a new Board is elected and until his successor shall have
been elected and qualified.
Section 11. Regular Meeting.
----------------
A regular meeting of the board of directors shall be held without notice
immediately after, and at the same place as, the annual meeting of shareholders,
or any special meeting if one or more directors then were elected. The board of
directors may establish a by resolution the time and place
3
for the holding of additional regular meetings without notice other than such
resolution.
Section 12. Special Meetings.
-----------------
Special meetings of the board of directors may be called by or at the
request of the President or any director. A majority of the board of directors
shall fix any place for holding any special meeting of the board of directors
which has been called.
Section 13. Notice.
-------
Written notice of any special meeting shall be given at least three
business days prior thereto by notice delivered personally, by telephone, or by
mail to each director at his business address. If mailed, such shall be deemed
delivered when deposited in the United States mail (first class) at least seven
days before the meeting. Telephone notice shall be given at least 48 hours prior
thereto. Any director may waive notice of any meeting. The attendance of a
director at a meeting constitutes a waiver of notice of such meeting, except in
cases in which a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened. The business to be transacted at any special meeting of the board of
directors shall be specified in the notice.
Section 14. Quorum.
-------
A majority of the required number of directors shall constitute a quorum
for any meeting of the board of directors.
Section 15. Manner of Acting.
-----------------
The act of the majority of the directors constitute at a meeting at which a
quorum is present shall be the act of the board of directors.
Section 16. Vacancies.
----------
Any vacancy in the board of directors may be filled by the affirmative vote
of a majority of the remaining directors, even if less than a quorum. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office.
Section 17. Compensation.
-------------
By resolution of the board of directors, directors may be paid their
expenses, if any, of attendance at each meeting, and may be paid a fixed sum for
attendance at each meeting, or a salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity.
Section 18. Presumption of Assent.
----------------------
A director who is present at a meeting of the Board shall be presumed to
have assented to actions taken unless his dissent shall be entered in the
minutes of the meeting, or unless he or she files written dissent to such action
with the board of directors, or forwards such dissent by certified mail (return
receipt requested) to the Secretary of the corporation immediately after the
meeting. Such right to dissent shall not apply to a director who voted in favor
of such action.
4
Section 19. Action Without a Meeting.
---------------------------
Any action required or permitted to be taken at a meeting of the board of
directors (or any committee thereof) 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 committee members), and delivered to the Secretary of the
corporation for inclusion in the Minute Book or for filing with the corporate
records. An action taken under this Section is effective when all directors (or
committee members) have signed the consent, unless the consent specifies a
different effective date.
Directors (or committee members) may participate in a meeting of the board
of directors (or committee) by means of conference telephone or similar
communications equipment by which all persons participating in the meeting can
hear each other at the same time.
Section 20. Committees.
-----------
By resolution of the board of directors, an Executive Committee may be
designated, comprised entirely of directors, which (to the extent provided in
the resolution) shall have all the authority of the board of directors, except
the authority to (i) declare dividends or distributions, (ii) recommend to
shareholders actions or proposals required to be approved by shareholders
pursuant to law, (iii) fill vacancies on the board of directors or any committee
thereof, (iv) amend these Bylaws, (v) approve a plan of merger not requiring
shareholder approval, (vi) reduce earned or capital surplus, (vii) authorize the
reacquisition of shares unless pursuant to a general formula or method specified
by the board of directors, or (viii) authorize the issuance or sale of, or any
contract to issue or sell shares of stock.
The board of directors, having acted regarding general authorization for
the issuance or sale of shares or any contract therefor and, in the case of a
series, the designation thereof, may, pursuant to a general formula or method
specified by the board of directors or by adoption of a stock option or other
plan, authorize the Executive Committee to fix the terms of any contract for the
sale of the shares.
The board of directors may designate in the same manner such other
committees comprised of directors and other persons, with such authority as the
board of directors may determine, subject to applicable law.
Officers
Section 21. Number.
-------
The executive officers of the corporation shall be a President, a
Secretary, and a Treasurer, each of whom shall be elected by the Board. One or
more Vice Presidents and other officers may be elected by the Board, as
necessary. The same person may hold more than one office.
5
Section 22. Election and Term.
-----------------
Officers shall be elected by the board of directors at the first meeting
held after each annual meeting of shareholders, and at other such times as
necessary. Each officer shall hold office until his successor is elected, or
until he shall resign or shall have been removed.
Section 23. Removal.
--------
Any officer may be removed by the board of directors whenever in its
judgment the best interests of the corporation would be served thereby.
Section 24. President.
----------
The president shall be the principal executive officer of the corporation
and, subject to control of the board of directors, shall supervise all corporate
business, preside at all meetings of shareholders and of the board of directors,
and sign with the Secretary, or other proper officer of the corporation
thereunto authorized by the board of directors, certificates (if any) for shares
of the corporation, deeds, contracts or other instruments, except in cases in
which execution shall be expressly delegated by the board of directors to some
other officer or agent of the corporation, or shall be required by law to be
otherwise signed or executed.
Section 25. Vice President.
--------------
The Vice President(s) shall perform such duties as from time to time may be
assigned by the President or by the board of directors. Further, in the event of
inability or refusal to act, the Vice President (or in the event there be more
than one, the Executive Vice President or the Vice Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election), if there be a Vice President, shall
perform the duties of the President. Unless provided by resolution of the board
of directors, no Vice President except the Executive Vice President shall have
general executive corporate authority with respect to the corporation's affairs.
Section 26. Secretary.
----------
The Secretary shall: (i) keep the minutes of shareholders and board of
directors meetings in one or more books provided for that purpose; (ii) see that
all notices are duly given in accordance with these Bylaws; (iii) be custodian
of the corporate records; (iv) sign with the President certificates for shares
of the corporation; and (v) perform such other duties as form time to time may
be assigned by the President or by the board of directors.
Section 27. Treasurer.
---------
The Treasurer shall perform such duties as from time to time may be
assigned by the President or by the board of directors.
Section 28. Salaries.
---------
Compensation of officers shall be fixed from time to time by the board of
directors.
6
Section 29. Loans.
------
No loans shall be contracted on behalf of the corporation and no evidence
of debt shall be issued in its name, unless authorized by the board of
directors. Such authority may be general or confined to specific instances.
Section 30. Banking.
--------
All checks, drafts or other orders for payment of money, notes or other
evidence of debt shall be signed by such officers, under such restrictions, and
in such manner as shall from time to time be determined by the board of
directors.
Section 31. Certificates.
-------------
Subject to provision in the Articles of Incorporation with respect to when
certificates must be issued, certificates representing shares of the corporation
shall be in form determined by the board of directors. All certificates shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books. All
certificates surrendered to the corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate shall have been
surrendered and canceled, except that in case of a lost, destroyed or mutilated
certificate a new one may be issued therefor upon such terms of indemnity to the
corporation as the board of directors may prescribe.
Section 32. Transfer, Conversion and Redemption.
------------------------------------
Transfer (or redemption or conversion) of shares shall be effective on the
stock transfer books only by the holder of record or authorized agent, who shall
furnish proper evidence of authority to transfer (or redeem or convert), or by
attorney thereunto authorized by power duly executed and filed with the
Secretary, and in all cases then on surrender for cancellation of the
certificate. The person in whose name shares stand on the books shall be deemed
by the corporation to be the owner thereof for all purposes.
Section 33. Seal.
-----
At such time as determined by the board of directors, the corporation shall
obtain and use on its share certificates a corporate seal.
Section 34. Amendments.
-----------
Subject to repeal or change by action of the shareholders pursuant to law,
these Bylaws may be amended, or repealed and new Bylaws adopted, by the board of
directors. All amendments shall be dated and identified as such within the text
of these Original Bylaws.
Section 35. Interpretation and Severability.
--------------------------------
These Bylaws shall be interpreted to conform to the Articles of
Incorporation, the law of the corporation's domicile, and (if necessary for the
corporation to be qualified to transact business in jurisdictions other than its
domicile) shall be deemed modified to the extent such conformity with other law
may require. Any changes to these Bylaws required by the preceding sentence
shall not affect the remaining portions of the Bylaws, all of which are
severable.
7
The foregoing Original Bylaws have been duly adopted by the board of directors
on September __, 1998.
/s/ David C. Olson
- -------------------------
David C. Olson, Director