-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QzGEEA0PJCaw8Pe8RcRpFg31Ddp2yV7vIpLHFG/Dq5j3oo78jEnWkw0hKOxAbtjq PjXVmc+3eOAUSK1mk895aQ== 0001010412-98-000126.txt : 19980803 0001010412-98-000126.hdr.sgml : 19980803 ACCESSION NUMBER: 0001010412-98-000126 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980731 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPOSITE DESIGN INC CENTRAL INDEX KEY: 0000789747 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 880224219 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 033-03358-NY FILM NUMBER: 98674614 BUSINESS ADDRESS: STREET 1: 9005 COBBLE CANYON LANE CITY: SANDY STATE: UT ZIP: 84093 BUSINESS PHONE: 8019420555 MAIL ADDRESS: STREET 1: 9005 COBBLE CANYON LANE CITY: SANDY STATE: UT ZIP: 84093 10KSB 1 ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1997 U. S. Securities and Exchange Commission Washington, D. C. 20549 FORM 10-KSB [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 ----------------- [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to __________________ Commission File No. 33-3358-NY ---------- COMPOSITE DESIGN, INC. ---------------------- (Name of Small Business Issuer in its Charter) NEVADA 88-0224219 - ------------------------------- -------------------------- (State or Other Jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) 9005 Cobble Canyon Lane Sandy, Utah 84093 ----------------------- (Address of Principal Executive Offices) Issuer's Telephone Number: (801) 942-0555 SRS Technical, Inc. 2050 Ellis Way Elko, Nevada 89801 ------------------- (Former name and former address, if changed since last Report) Securities Registered under Section 12(b) of the Exchange Act: None. Securities Registered under Section 12(g) of the Exchange Act: None. Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes X No (2) Yes No X Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10- KSB or any amendment to this Form 10-KSB. [ ] State Issuer's revenues for its most recent fiscal year: December 31, 1997 - $0 For the Exhibit Index see Item 13 of this Report. State the aggregate market value of the common voting stock held by non- affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days. July 29, 1998 - $219. There are approximately 219,020 shares of common voting stock of the Registrant held by non-affiliates. During the past five years, there has been no "public market" for shares of common stock of the Registrant, so the Registrant has arbitrarily valued these shares on the basis of par value per share. (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Not Applicable. (APPLICABLE ONLY TO CORPORATE REGISTRANTS) State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date: July 29, 1998 1,069,020 DOCUMENTS INCORPORATED BY REFERENCE ----------------------------------- A description of "Documents Incorporated by Reference" is contained in Item 13 of this Report. Transitional Small Business Issuer Format Yes X No ___ PART I Item 1. Description of Business. ----------------------- Business Development. - -------------------- Corporate Developments. ---------------------- Composite Design, Inc. (the "Company") was organized under the laws of the State of Nevada on January 15, 1986, under the name "SRS Technical, Inc." The Company was formed for the purpose of engaging in the business of investing and all other lawful businesses. The Company's initial authorized capital consisted of 200,000,000 shares of one mill ($0.001) par value common voting stock. On June 5, 1987, the Company's name was changed to "Composite Design, Inc." Effective October 23, 1996, and in accordance with the Nevada Revised Statutes, the Board of Directors of the Company, with the written consent of persons owning a majority of its outstanding voting securities, unanimously resolved to reverse split the outstanding shares of its common stock on a basis of 1000 for one (as corrected on December 13, 1996), while retaining its authorized capital, with appropriate adjustments in the stated capital and capital surplus accounts of the Company. All computations hereinafter take into account this reverse split. Copies of the initial Articles of Incorporation of the Company and the foregoing Certificates of Amendment to the Articles of Incorporation of the Company, as corrected, are attached hereto and incorporated herein by reference. See Item 13 of this Report. 5,000 shares of the Company's common stock were issued at its inception in consideration of the sum of $5,000 to certain persons who may have been deemed to have been promoters or founders of the Company. Public Offering. --------------- The Company subsequently sold 2,000 units, each containing 1/10th of a common share and 3/10th of a common stock purchase warrant to the public at a price of $100 per share, pursuant to an S-18 Registration Statement which was filed with the Securities and Exchange Commission on or about February 14, 1986, and which became effective on April 14, 1986. The offering was completed in the fourth quarter of 1986, with the Company receiving gross proceeds of $200,000 and net proceeds of $175,000, after deduction of legal and accounting fees, prospectus costs and other expenses incidental to the public offering. By this reference, the Company's Registration Statement on Form S- 18 of the Securities and Exchange Commission and its Prospectus dated April 14, 1986, are incorporated herein. See Item 13 below. Changes in Control. ------------------ On May 29, 1987, the stockholders of the Company approved the acquisition of Composite Design Corporation, a Nevada corporation ("Composite Nevada"), in consideration of the Company's issuance of 20,000 "unregistered" and "restricted" shares of its common stock to the former stockholders of Composite Nevada. As a result of this transaction, Composite Nevada became a wholly-owned subsidiary of the Company. The only business operations conducted by the Company from its inception to the end of the period covered by this Report were those of Composite Nevada, which was in the business of manufacturing and marketing of an experimental class of a home built kit plane. These operations proved to be unsuccessful, and the Company ceased its business operations in 1989. Other than maintaining and restoring its good standing status in the State of Nevada, and seeking prospective businesses or assets to acquire, the Company has had no material business operations since that time. Pursuant to the Company's Bylaws, on February 27, 1996, Ila Sellers, the Company's Secretary/Treasurer and director, appointed Corie Merrell to fill a vacancy on the Board of Directors, in contemplation of reviving the Company. Ms. Sellers resigned immediately thereafter. Ron Sellers President and a director, resigned and appointed David C. Merrell as a Director. Corie and David C. Merrell were appointed to serve as directors of the Company until the next annual meeting of stockholders and until their respective successors are elected and qualified or until their prior resignations or terminations. On the same date, the Board of Directors unanimously consented without a meeting and pursuant to applicable provisions of the Nevada Revised Statutes to elect the following persons to serve in the capacities indicated: David C. Merrell, President; and Corie Merrell, Secretary/Treasurer. It was further resolved that Ron Sellers and Ila Sellers each be issued 2,500 "unregistered" and "restricted" shares of the Company's common stock, and that Richard Ririe be issued 1,000 "unregistered" and "restricted" shares of the Company's common stock, all as payment in full for their prior services to the Company; these services were valued at the par value of the shares issued. Sales of Unregistered Securities During the Past Five Years. ----------------------------------------------------------- Date Number of Aggregate Name Acquired Shares Consideration ---- -------- --------- ------------- Ron Sellers 4/26/96 5,000 Services Ila Sellers 4/26/96 5,000 Services Steve Howell 4/26/96 23,000 Services Angie C. Howell 4/26/96 23,000 Services Michael C. Brown 4/26/96 50,000 Services Corie Merrell 4/26/96 50,000 Services Dan and Connie Ross 6/25/96 10,000 Services Lois Fallentine 6/25/96 10,000 Services Chiricahua Company* 6/25/96 800,000 Services Leonard W. Burningham,10/15/96 10,000 Services Esq. * Chiricahua Company is wholly owned by David C. Merrell, President and a director of the Company. Past Material Litigation. ------------------------ The Company was involved in a Civil Action brought by the Securities and Exchange Commission in the United States District Court for the District of Nevada, Civil No. CV-S-89-096 PMP. As a result of this action, 8,102 shares of the Company's common stock were attached by the Securities and Exchange Commission and were returned to the Company's treasury. Business. -------- The Company has not engaged in any material business operations since 1989. Its only activities since that time have consisted of restoring and maintaining its good standing in the State of Nevada. The Company has no material tangible property or assets. The Company intends to continue to seek out the acquisition of assets, property or business that may be beneficial to it and its stockholders. In considering whether to complete any such acquisition, the Board of Directors shall make the final determination, and the approval of stockholders will not be sought unless required by applicable law, the Company's Articles of Incorporation or Bylaws or contract. The Company can give no assurance that any such endeavor will be successful or profitable. The Company is not currently engaging in any substantive business activity and has no plans to engage in any such activity in the foreseeable future. In its present form, the Company may be deemed to be a "shell" and will be a vehicle to acquire or merge with a business or company. The Company does not intend to restrict its search to any particular business or industry, and the areas in which it will seek out acquisitions, reorganizations or mergers may include, but will not be limited to, the fields of high technology, manufacturing, natural resources, service, research and development, communications, transportation, insurance, brokerage, finance and all medically related fields, among others. The Company recognizes that because of its lack of resources, the number of suitable potential business ventures which may be available to it will be extremely limited, and may be restricted to entities who desire to avoid what these entities may deem to be the adverse factors related to an initial public offering ("IPO"). The most prevalent of these factors include substantial time requirements, legal and accounting costs, the inability to obtain an underwriter who is willing to publicly offer and sell shares, the lack of or the inability to obtain the required financial statements for such an undertaking, limitations on the amount of dilution public investors will suffer to the benefit of the stockholders of any such entities, along with other conditions or requirements imposed by various federal and state securities laws, rules and regulations. Any of these types of entities, regardless of their prospects, would require the Company to issue a substantial number of shares of its common stock to complete any such acquisition, reorganization or merger, usually amounting to between 80 and 95 percent of the outstanding shares of the Company following the completion of any such transaction; accordingly, investments in any such private entity, if available, would be much more favorable than any investment in the Company. Management intends to consider a number of factors prior to making any decision as to whether to participate in any specific business endeavor, none of which may be determinative or provide any assurance of success. These may include, but will not be limited to an analysis of the quality of the entity's management personnel; the anticipated acceptability of any new products or marketing concepts; the merit of technological changes; its present financial condition, projected growth potential and available technical, financial and managerial resources; its working capital, history of operations and future prospects; the nature of its present and expected competition; the quality and experience of its management services and the depth of its management; its potential for further research, development or exploration; risk factors specifically related to its business operations; its potential for growth, expansion and profit; the perceived public recognition or acceptance of its products, services, trademarks and name identification; and numerous other factors which are difficult, if not impossible, to properly analyze without referring to any objective criteria. Regardless, the results of operations of any specific entity may not necessarily be indicative of what may occur in the future, by reason of changing market strategies, plant or product expansion, changes in product emphasis, future management personnel and changes in innumerable other factors. Further, in the case of a new business venture or one that is in a research and development mode, the risks will be substantial, and there will be no objective criteria to examine the effectiveness or the abilities of its management or its business objectives. Also, a firm market for its products or services may yet need to be established, and with no past track record, the profitability of any such entity will be unproven and cannot be predicted with any certainty. Management will attempt to meet personally with management and key personnel of the entity sponsoring any business opportunity afforded to the Company, visit and inspect material facilities, obtain independent analysis or verification of information provided and gathered, check references of management and key personnel and conduct other reasonably prudent measures calculated to ensure a reasonably thorough review of any particular business opportunity; however, since the Company has extremely limited current assets and cash reserves, these activities may be limited, and if undertaken, the cost and expense thereof will be advanced by management, and may further dilute the interest of the stockholders of the Company. The Company is unable to predict the time as to when and if it may actually participate in any specific business endeavor. The Company anticipates that proposed business ventures will be made available to it through personal contacts of directors, executive officers and principal stockholders, professional advisors, broker dealers in securities, venture capital personnel, members of the financial community and others who may present unsolicited proposals. In certain cases, the Company may agree to pay a finder's fee or to otherwise compensate the persons who submit a potential business endeavor in which the Company eventually participates. Such persons may include the Company's directors, executive officers, beneficial owners or their affiliates. In this event, such fees may become a factor in negotiations regarding a potential acquisition and, accordingly, may present a conflict of interest for such individuals. Because the Company has extremely limited assets, management anticipates that any finder's fees would be paid in the form of common stock of the Company, rather than cash. This would have the effect of further diluting the shares of current stockholders. In the event that funds become available from a company that is a candidate for a merger or acquisition transaction, such fees may be paid in cash. Whether paid in the form of common stock or cash, and whether paid to members of management, beneficial owners or their affiliates, or unaffiliated third parties, the amount of such finder's fees will not exceed the amount that the Company would pay to an unaffiliated third party in an arm's length transaction. Further, substantial fees are often paid in connection with the completion of these types of acquisitions, reorganizations or mergers, ranging from a small amount to as much as $250,000. These fees are usually divided among promoters or founders, after deduction of legal, accounting and other related expenses, and it is not unusual for a portion of these fees to be paid to members of management or to principal stockholders as consideration for their agreement to retire a portion of the shares of common stock owned by them. Such fees may become a factor in negotiations regarding any potential acquisition by the Company and, accordingly, may present a conflict of interest for such individuals. None of the Company's directors, executive officers or promoters, or their affiliates or associates, has had any negotiations with any representatives of the owners of any business or company regarding the possibility of an acquisition or merger transaction with the Company. Nor are there any present plans, proposals, arrangements or understandings with any such persons regarding the possibility of any acquisition or merger involving the Company. Risk Factors. - ------------ In any business venture, there are substantial risks specific to the particular enterprise and which cannot be ascertained until a potential acquisition, reorganization or merger candidate has been identified; however, at a minimum, the Company's present and proposed business operations will be highly speculative and subject to the same types of risks inherent in any new or unproven venture, and will include those types of risk factors outlined below. Limited Assets; No Source of Revenue. The Company has no assets and has had no revenues since 1989. Nor, will the Company receive any revenues until it completes an acquisition, reorganization or merger, at the earliest. The Company can provide no assurance that any acquired business will produce any material revenues for the Company or its stockholders or that any such business will operate on a profitable basis. Discretionary Use of Proceeds; "Blank Check" Company. Because the Company is not currently engaged in any substantive business activities, as well as management's broad discretion with respect to the acquisition of assets, property or business, the Company may be deemed to be a "blank check" company. Although management intends to apply substantially all of the proceeds that it may receive through the issuance of stock or debt to a suitable acquisition, subject to the criteria identified above, such proceeds will not otherwise be designated for any more specific purpose. The Company can provide no assurance that any allocation of such proceeds will allow it to achieve its business objectives. Absence of Substantive Disclosure Relating to Prospective Acquisitions. Because the Company has not yet identified any assets, property or business that it may potentially acquire, potential investors in the Company will have virtually no substantive information upon which to base a decision whether or not to invest in the Company. Potential investors would have access to significantly more information if the Company had already identified a potential acquisition or if the acquisition target had made an offering of its securities directly to the public. The Company can provide no assurance that any investment in the Company will not ultimately prove to be less favorable than such a direct investment. Unspecified Industry and Acquired Business; Unascertainable Risks. To date, the Company has not identified any particular industry or business in which to concentrate its acquisition efforts. Accordingly, prospective investors currently have no basis to evaluate the comparative risks and merits of investing in the industry or business in which the Company may invest. To the extent that the Company may acquire a business in a highly risky industry, the Company will become subject to those risks. Similarly, if the Company acquires a financially unstable business or a business that is in the early stages of development, the Company will become subject to the numerous risks to which such businesses are subject. Although management intends to consider the risks inherent in any industry and business in which it may become involved, there can be no assurance that it will correctly assess such risks. Uncertain Structure of Acquisition. Management has had no preliminary contact or discussions regarding, and there are no present plans, proposals or arrangements to acquire any specific assets, property or business. Accordingly, it is unclear whether such an acquisition would take the form of an exchange of capital stock, a merger or an asset acquisition. However, because the Company has virtually no resources as of the date of this Report, management expects that any such acquisition would take the form of an exchange of capital stock. State Restrictions on "Blank Check" Companies. A total of 36 states prohibit or substantially restrict the registration and sale of "blank check" companies within their borders. Additionally, 36 states use "merit review powers" to exclude securities offerings from their borders in an effort to screen out offerings of highly dubious quality. See Paragraph 8221, NASAA Reports, CCH Topical Law Reports, 1990. The Company intends to comply fully with all state securities laws, and plans to take the steps necessary to ensure that any future offering of its securities is limited to those states in which such offerings are allowed. However, these legal restrictions may have a material adverse impact on the Company's ability to raise capital because potential purchasers of the Company's securities must be residents of states that permit the purchase of such securities. These restrictions may also limit or prohibit stockholders from reselling shares of the Company's common stock within the borders of regulating states. By regulation or policy statement, eight states (Idaho, Maryland, Missouri, Nevada, New Mexico, Pennsylvania, Utah and Washington) place various restrictions on the sale or resale of equity securities of "blank check" or "blind pool" companies. These restrictions include, but are not limited to, heightened disclosure requirements, exclusion from "manual listing" registration exemptions for secondary trading privileges and outright prohibition of public offerings of such companies. Further, all states (with the exception of Alabama, Delaware, Hawaii, Minnesota, Nebraska and New York) have adopted some form of the Small Corporate Offering Registration Exemption ("SCORE") program, which permits an issuer to notify the Securities and Exchange Commission of certain offerings registered in such states by filing a Form D under Regulation D of the Securities and Exchange Commission. States participating in the SCORE program also allow applications for registration of securities by qualification by filing a Form U-7 with the states' securities commissions. In most jurisdictions, "blank check" and "blind pool" companies are not eligible for participation in the SCORE program. Management to Devote Insignificant Time to Activities of the Company. Members of the Company's management are not required to devote their full time to the affairs of the Company. Because of their time commitments, as well as the fact that the Company has no business operations the members of management anticipate that they will devote an insignificant amount of time to the activities of the Company, at least until such time as the Company has identified a suitable acquisition target. Voting Control. Due to the ownership of a majority of the Company's outstanding common stock, Chiricahua Company, David C. Merrell and Corie Merrell have the ability to elect all of the Company's directors, who in turn elect all executive officers, without regard to the votes of other stockholders. Accordingly, these persons may be deemed to have absolute control of the Company. See the caption "Security Ownership of Certain Beneficial Owners and Management," Part III, Item 11, of this Report. No Market for Common Stock; No Market for Shares. Although the Company intends to submit for listing of its common stock on the OTC Bulletin Board of the National Association of Securities Dealers, Inc. (the "NASD"), there is currently no market for such shares; there can be no assurance that such a market will ever develop or be maintained. Any market price for shares of common stock of the Company is likely to be very volatile, and numerous factors beyond the control of the Company may have a significant effect. In addition, the stock markets generally have experienced, and continue to experience, extreme price and volume fluctuations which have affected the market price of many small capital companies and which have often been unrelated to the operating performance of these companies. These broad market fluctuations, as well as general economic and political conditions, may adversely affect the market price of the Company's common stock in any market that may develop. See Item 5 of this Report. Conflicts of Interest; Related Party Transactions. Although the Company has not identified any potential acquisition target, the possibility exists that the Company may acquire or merge with a business or company in which the Company's directors, executive officers, principal stockholders or their affiliates may have an ownership interest. Such a transaction may occur if management deems it to be in the best interests of the Company and its stockholders, after consideration of the above referenced factors. A transaction of this nature would present a conflict of interest to those parties with a managerial position and/or an ownership interest in both the Company and the acquired entity, and may compromise management's fiduciary duties to the Company's stockholders. If management's fiduciary duties become compromised, any remedy available under state corporate law will most likely be prohibitively expensive and time consuming. An independent appraisal of the acquired company may or may not be obtained in the event a related party transaction is contemplated. Furthermore, because management may be eligible for finder's fees or other compensation related to potential acquisitions by the Company, such compensation may become a factor in negotiations regarding such potential acquisitions. Chiricahua Company, David C. Merrell and Corie Merrell may actively negotiate or otherwise consent to the purchase of all or any portion of their common stock as a condition to or in connection with any proposed merger or acquisition transaction, which may present a further conflict of interest. The Company's other stockholders may not be afforded an opportunity to approve or consent to any particular stock buyout transaction. Risks of "Penny Stock." The Company's common stock may be deemed to be "penny stock" as that term is defined in Reg. Section 240.3a51-1 of the Securities and Exchange Commission. Penny stocks are stocks (i) with a price of less than five dollars per share; (ii) that are not traded on a "recognized" national exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must still meet requirement (i) above); or (iv) is an issuer with net tangible assets less than $2,000,000 (if the issuer has been in continuous operation for at least three years) or $5,000,000 (if in continuous operation for less than three years), or with average revenues of less than $6,000,000 for the last three years. There has never been any "established public market" for the Company's common stock. At such time as the Company completes a merger or acquisition transaction, if at all, it may attempt to qualify for listing on either NASDAQ or a national securities exchange. However, at least initially, any trading in its common stock will most likely be conducted in the over-the- counter market in the "pink sheets" or the "Electronic Bulletin Board" of the National Association of Securities Dealers, Inc. (the "NASD"). There are presently no market makers for the Company's common stock. In the event that it is unsuccessful, after completing a merger or acquisition transaction, in obtaining a listing on NASDAQ or a national securities exchange, it will seek a securities firm to make a market in its securities. If there is only one market maker in the Company's securities, there is a risk that the market maker will dominate the market and set prices that are not based on competitive forces. Section 15(g) of the Securities Exchange Act of 1934, as amended, and Reg. Section 240.15g-2 of the Securities and Exchange Commission require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor's account. Potential investors in the Company's common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be "penny stock." Moreover, Reg. Section 240.15g-9 of the Securities and Exchange Commission requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for investors in the Company's common stock to resell their shares to third parties or to otherwise dispose of them. Item 2. Description of Property. - -------------------------------- The Company has no property or assets; its principal executive office address and telephone number are the business office address and telephone number of David C. Merrell, which are provided at no cost. See Item 1 of this Report. Item 3. Legal Proceedings. - -------------------------- The Company is not the subject of any pending legal proceedings; and to the knowledge of management, no proceedings are presently contemplated against the Company by any federal, state or local governmental agency. Further, to the knowledge of management, no director or executive officer is party to any action in which any has an interest adverse to the Company. Item 4. Submission of Matters to a Vote of Security Holders. - ------------------------------------------------------------ No matter was submitted to a vote of the Company's security holders during the fourth quarter of the period covered by this report or during the previous two calendar years. PART II Item 5. Market for Common Equity and Related Stockholder Matters. - ----------------------------------------------------------------- Market Information - ------------------ There has never been any established "public market" for shares of common stock of the Company. The Company intends to submit for listing on the OTC Bulletin Board of the National Association of Securities Dealers, Inc. ("NASD"); however, management does not expect any public market to develop unless and until its operations are successful or the Company completes an acquisition or merger. In any event, no assurance can be given that any market for the Company's common stock will develop or be maintained. If a public market ever develops in the future, the sale of "unregistered" and "restricted" shares of common stock pursuant to Rule 144 of the Securities and Exchange Commission by members of management or others may have a substantial adverse impact on any such public market; and all of these persons have satisfied the "holding period" under Rule 144. See the heading "Sales of Unregistered Securities During the Past Five Years," of Item 1 of this Report. Holders - ------- The number of record holders of the Company's common stock as of the calendar year ended December 31, 1996 was approximately 398 and as of the calendar year ended December 31, 1997 was 403; these numbers do not include an indeterminate number of stockholders whose shares are held by brokers in street name. As of July 29, 1998, there were approximately 403 stockholders. Dividends - --------- There are no present material restrictions that limit the ability of the Company to pay dividends on common stock or that are likely to do so in the future. The Company has not paid any dividends with respect to its common stock, and does not intend to pay dividends in the foreseeable future. Item 6. Management's Discussion and Analysis or Plan of Operation. - ------------------------------------------------------------------ Plan of Operation - ----------------- The Company has not engaged in any material operations in the period ending December 31, 1997 or since 1989. The Company intends to continue to seek out the acquisition of assets, property or business that may be beneficial to the Company and its stockholders. The Company's only foreseeable cash requirements during the next 12 months will relate to maintaining the Company in good standing in the State of Nevada. Management does not anticipate that the Company will have to raise additional funds during the next 12 months. Results of Operations - --------------------- The Company discontinued its active operations in 1989. It received no revenues and had no profits or losses in any of the calendar years ended December 31, 1993, 1994 and 1995. Losses from the Company's previously- discontinued operations for the year ended December 31, 1996 were ($165,019). At December 31, 1997, the Company had a loss of ($2,179) from discontinued operations for the year. Liquidity - --------- At December 31, 1996 and 1997, the Company had no assets. At December 31, 1997, the Company had a loss of ($2,179), compared to a loss as of December 31, 1996 of ($165,019). There were contributions to capital of $1,584 in 1997 and $2,149 in 1996. Substantially all of the loss in 1996 was the result of an issuance of shares of common stock for services valued at approximately $162,800. Item 7. Financial Statements. - ----------------------------- For the periods ended December 31, 1997 and 1996 Independent Auditors' Report Balance Sheets Statements of Operations Statements of Stockholders' Equity (Deficit) Statements of Cash Flows Notes to the Financial Statements Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. - -------------------- No independent accountant of the Company has resigned, declined to stand for re-election or was dismissed during the Company's two most recent fiscal years or any interim period. Due to the Company's lack of significant business operations since approximately 1989, present management has deemed it to be in the best interests of the Company to appoint a new independent accountant to audit its financial statements. Accordingly, the Board of Directors unanimously resolved to retain the services of Jones, Jensen & Company, Certified Public Accountants, in this regard. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act. - ------------------------------------------------- Identification of Directors and Executive Officers - -------------------------------------------------- The following table sets forth, in alphabetical order, the names and the nature of all positions and offices held by all directors and executive officers of the Company for the calendar years ending December 31, 1996 and 1997, and to the date hereof, and the period or periods during which each such director or executive officer served in his or her respective positions. Date of Date of Positions Election or Termination Name Held Designation or Resignation ---- ----------- ----------- -------------- Corie Merrell Director 2/96 * Secretary/ 2/96 * Treasurer David C. Merrell President 2/96 * Director Ila Sellers Director 1/88 2/96 Secretary/Treasurer 1/88 2/96 Ron Sellers Director 1/88 2/96 President 1/88 2/96 * These persons presently serve in the capacities indicated opposite their respective names. Term of Office - -------------- The term of office of the current directors shall continue until the annual meeting of stockholders, which has been scheduled by the Board of Directors to be held in December of each year. The annual meeting of the Board of Directors immediately follows the annual meeting of stockholders, at which officers for the coming year are elected. Business Experience - ------------------- David C. Merrell, Director and President. Since 1989, he has been the owner of DCM Finance, a Salt Lake City based finance company which makes and brokers real estate loans. Mr. Merrell received his Bachelor of Science degree in Economics from the University of Utah in 1981. Corie Merrell, Director and Secretary/Treasurer. Since 1989, she has been part owner of DCM Finance and is currently a part time student at Westminster College majoring in Psychology. Family Relationships - -------------------- David C. Merrell and Corie Merrell are husband and wife. Involvement in Certain Legal Proceedings - ---------------------------------------- Except as indicated below and to the knowledge of management, during the past five years, no present or former director, person nominated to become a director, executive officer, promoter or control person of the Company: (1) Was a general partner or executive officer of any business by or against which any bankruptcy petition was filed, whether at the time of such filing or two years prior thereto; (2) Was convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting, the following activities: (i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; (ii) Engaging in any type of business practice; or (iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws; (4) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) Was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the Securities and Exchange Commission has not been subsequently reversed, suspended, or vacated; or (6) Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated. Compliance with Section 16(a) of the Exchange Act - ------------------------------------------------- No securities of the Company are registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, and the Company files reports under Section 15(d) of the Securities Exchange Act of 1934; accordingly, directors, executive officers and 10 percent stockholders are not required to make filings under Section 16 of the Securities Exchange Act of 1934. Item 10. Executive Compensation. - ------------------------------- Cash Compensation - ----------------- The following table sets forth the aggregate compensation paid by the Company for services rendered during the periods indicated: SUMMARY COMPENSATION TABLE Long Term Compensation Annual Compensation Awards Payouts (a) (b) (c) (d) (e) (f) (g) (h) (i) Name and Years or other all principal periods Annual restricted option/ LTIP other position Ended $ $ Compen- Stock SAR's Payouts Compen- Salary Bonus sation awards$ # $ sation$ - ------------------------------------------------------------------------------ Corie Merrell 12/31/97 0 0 0 0 0 0 0 Sec/Tres 12/31/96 0 0 0 50,000 0 0 0 Director David C. 12/31/97 0 0 0 0 0 0 0 Merrell 12/31/96 0 0 0 800,000* 0 0 0 President Director Ron Sellers 12/31/97 0 0 0 0 0 0 0 former 12/31/96 0 0 0 7,500 0 0 0 President and Director Ila Sellers 12/31/97 0 0 0 0 0 0 0 former 12/31/96 0 0 0 7,500 0 0 0 Sec/Tres and Director *See the caption "Sales of Unregistered Securities During the Past Five Years," Part I, Item 1. No cash compensation, deferred compensation or long-term incentive plan awards were issued or granted to the Company's management during the calendar years ending December 31, 1996, or 1995, or the period ending on the date of this Report. Further, no member of the Company's management has been granted any option or stock appreciation right; accordingly, no tables relating to such items have been included within this Item. See the Summary Compensation Table of this Item. Compensation of Directors - ------------------------- There are no standard arrangements pursuant to which the Company's directors are compensated for any services provided as director. No additional amounts are payable to the Company's directors for committee participation or special assignments. There are no arrangements pursuant to which any of the Company's directors was compensated during the Company's last completed calendar year or the previous two calendar years for any service provided as director. See the Summary Compensation Table of this Item. Termination of Employment and Change of Control Arrangement - ----------------------------------------------------------- There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person named in the Summary Compensation Table set out above which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of such person's employment with the Company or its subsidiaries, or any change in control of the Company, or a change in the person's responsibilities following a change in control of the Company. Item 11. Security Ownership of Certain Beneficial Owners and Management. - ----------------------------------------------------------------------- Security Ownership of Certain Beneficial Owners. - ----------------------------------------------- The following table sets forth the shareholdings of those persons who own more than five percent of the Company's common stock as of December 31, 1996 and 1997, and to the date hereof: Number and Percentage of Shares Beneficially Owned ---------------------------- Name and Address 12/31/96 12/31/97 and Currently - ---------------- -------- ---------------------- Chiricahua Company* 800,000 74.8% 800,000 74.8% 9005 Cobble Lane Sandy, Utah 84093 TOTALS 800,000 74.8% 800,000 74.8% * David C. Merrell is the sole owner of Chiricahua Company, and is deemed to be the beneficial owner of these shares. Security Ownership of Management. - -------------------------------- The following table sets forth the shareholdings of the Company's directors and executive officers as of December 31, 1996 and 1997, and to the date hereof: Number and Percentage of Shares Beneficially Owned ---------------------------- Name and Address 12/31/96 12/31/97 and currently - ---------------- -------- ---------------------- David C. Merrell* 800,000 74.8% 800,000 74.8% 9005 Cobble Lane Sandy, Utah 84093 Corie Merrell 50,000 4.6% 50,000 4.6% 9005 Cobble Lane Sandy, Utah 84093 TOTALS 850,000 79.5% 850,000 79.5% * David C. Merrell is the sole owner of Chiricahua Company, and is deemed to be the beneficial owner of these shares. Changes in Control - ------------------ To the knowledge of management, there are no present arrangements or pledges of the Company's securities which may result in a change in its control. Item 12. Certain Relationships and Related Transactions. - ------------------------------------------------------- Transactions with Management and Others. - --------------------------------------- Except as indicated below, or under the heading "Sales of Unregistered Securities During the Past Five Years," of Item 1 of this Report, there were no material transactions, or series of similar transactions, during the Company's last three calendar years, or any currently proposed transactions, or series of similar transactions, to which the Company or any of its subsidiaries was or is to be a party, in which the amount involved exceeded $60,000 and in which any director, executive officer or any security holder who is known to the Company to own of record or beneficially more than five percent of any class of the Company's common stock, or any member of the immediate family of any of the foregoing persons, had an interest. Certain Business Relationships. - ------------------------------ Except as indicated under the heading "Transactions with Management and Others" above, there were no material transactions, or series of similar transactions, during the Company's last three calendar years, or any currently proposed transactions, or series of similar transactions, to which it or any of its subsidiaries was or is to be a party, in which the amount involved exceeded $60,000 and in which any director, executive officer or any security holder who is known to the Company to own of record or beneficially more than five percent of any class of its common stock, or any member of the immediate family of any of the foregoing persons, had an interest. Indebtedness of Management. - -------------------------- Except as indicated under the heading "Transactions with Management and Others" above, there were no material transactions, or series of similar transactions, during the Company's last three calendar years, or any currently proposed transactions, or series of similar transactions, to which it or any of its subsidiaries was or is to be a party, in which the amount involved exceeded $60,000 and in which any director, executive officer or any security holder who is known to the Company to own of record or beneficially more than five percent of any class of its common stock, or any member of the immediate family of any of the foregoing persons, had an interest. Transactions with Promoters. - --------------------------- Except as indicated under the heading "Transactions with Management and Others" above, there were no material transactions, or series of similar transactions, during the Company's last three calendar years, or any currently proposed transactions, or series of similar transactions, to which it or any of its subsidiaries was or is to be a party, in which the amount involved exceeded $60,000 and in which any promoter or founder or any member of the immediate family of any of the foregoing persons, had an interest. Item 13. Exhibits and Reports on Form 8-K. - ----------------------------------------- Reports on Form 8-K - ------------------- None. Exhibit Exhibits* Number Number ------- - ------ (i) Articles of Incorporation of SRS Technical, Inc. dated January 15, 1986 3.1 Certificate of Amendment to Articles of Incorporation of SRS Technical, Inc. dated June 5, 1987 3.2 Certificate of Amendment to the Articles of Incorporation of Composite Design, Inc., as corrected, dated December 13, 1996 3.3 Financial Data Schedule 27 (ii) Where Incorporated In This Report Number ------------------ - ------ Registration Statement on Form S-18 Part I Prospectus dated April 14, 1986 Part I * A summary of any Exhibit is modified in its entirety by reference to the actual Exhibit. ** These documents and related exhibits have previously been filed with the Securities and Exchange Commission and are incorporated herein by this reference. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. COMPOSITE DESIGN INC. Date: 7/22/98 By/S/David C. Merrell David C. Merrell, President and Director Date: 7/22/98 By/s/Corie Merrell Corie Merrell, Secretary/Treasurer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: COMPOSITE DESIGN INC. Date: 7/22/98 By/s/David C. Merrell David C. Merrell, President and Director Date: 7/22/98 By/s/Corie Merrell Corie Merrell, Secretary/Treasurer and Director INDEPENDENT AUDITORS' REPORT To the Board of Directors Composite Design, Inc. (A Development Stage Company) Salt Lake City, Utah We have audited the accompanying balance sheet of Composite Design, Inc. (a development stage company) as of December 31, 1997 and the related statements of operations, stockholders' equity (deficit) and cash flows for the years ended December 31, 1997 and 1996 and from inception on January 15, 1986 through December 31, 1997. 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Composite Design, Inc. (a development stage company) as of December 31, 1997 and the results of its operations and its cash flows for the years ended December 31, 1997 and 1996 and from inception on January 15, 1986 through December 31, 1997 in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company is a development stage company with no operating capital which together raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/Jones, Jensen & Company Jones, Jensen & Company March 25, 1998 COMPOSITE DESIGN, INC. (A Development Stage Company) FINANCIAL STATEMENTS December 31, 1997 COMPOSITE DESIGN, INC. (A Development Stage Company) Balance Sheet
ASSETS December 31, 1997 CURRENT ASSETS Cash $ - Total Current Assets - TOTAL ASSETS $ - LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 695 TOTAL LIABILITIES 695 STOCKHOLDERS' EQUITY Common stock, $0.001 par value, authorized 200,000,000 shares; 1,069,020 shares issued and outstanding 1,069 Additional paid-in capital 522,020 Deficit accumulated during the development stage (523,784) Total Stockholders' Equity (Deficit) (695) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ -
COMPOSITE DESIGN, INC. (A Development Stage Company) Statements of Operations
From Inception on For the Years January 15, Ended 1986 Through December 31, December 31, 1997 1996 1997 REVENUE $ - $ - $ - EXPENSES - - - LOSS FROM DISCONTINUED OPERATIONS (Note 4) 2,179 165,019 523,784 NET LOSS $ (2,179) $ (165,019) $ (523,784) LOSS PER SHARE $ (0.00) $ (0.15)
COMPOSITE DESIGN, INC. (A Development Stage Company) Statements of Stockholders' Equity (Deficit) From Inception on January 15, 1986 Through December 31, 1997
Deficit Accumulated Additional During the Common Stock Paid-In Development Shares Amount Capital Stage At inception January 15 1986 - $ - $ - $ - Common stock issued for cash at approximately $8.20 per share 25,000 25 204,975 - Stock order offering costs - - (45,853) - Common stock issued for purchasing subsidiary at approximately $5.77 per share 20,000 20 115,395 - Recission of common stock by the SEC (8,102) (8) 8 - Contributed capital by shareholder - - 82,024 - Net loss from inception January 15, 1986 to December 31, 1994 - - - (356,586) Balance, December 31, 1994 36,898 37 356,549 (356,586) Net loss for the year ended December 31, 1995 - - - - Balance, December 31, 1995 36,898 37 356,549 (356,586) Common stock issued for services at $1.00 per share 162,000 162 161,838 - Contributed capital by shareholder - - 2,149 - Common stock issued for services at $0.001 per share 870,000 870 - - Stock split adjustment 122 - - - Net loss for the year ended December 31, 1996 - - - (165,019) Balance, December 31, 1996 1,069,020 1,069 520,536 (521,605) Contributed capital by shareholder - - 1,484 - Net loss for the year ended December 31, 1997 - - - (2,179) Balance, December 31, 1997 1,069,020 $ 1,069 $ 522,020 $(523,784)
COMPOSITE DESIGN, INC. (A Development Stage Company) Statements of Cash Flows
From Inception on For the Years January 15, Ended 1986 Through December 31, December 31, 1997 1996 1997 CASH FLOWS FROM OPERATING ACTIVITIES Income (Loss) from operation $(2,179) $(165,019) $(523,784) Adjustments to reconcile net income to net cash provided by operating activities: Amortization and depreciation expense - - 102,719 Contributed capital for expenses 1,584 2,149 85,757 Stock issued for services - 162,870 162,870 Increase (decrease) in account payable 595 - 595 Net Cash Provided (Used) by Operating Activities - - (171,843) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from investment - - 12,696 Net Cash Provided (Used) by Investing Activities - - 12,696 CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock for cash - - 205,000 Stock offering costs - - (45,853) Net Cash Provided (Used) by Financing Activities $ - $ - $ 159,147 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ - $ - $ - CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD - - - CASH AND CASH EQUIVALENTS AT END OF PERIOD $ - $ - $ - Cash Paid For: Interest $ - $ - $ - Income taxes $ - $ - $ - NON-CASH FINANCING ACTIVITIES Common stock issued for services $ - $162,870 $162,870 Contributed capital for expenses $1,584 $ 2,149 $ 85,757 Common stock issued for subsidiary $ - $ - $115,415
COMPOSITE DESIGN, INC. (A Development Stage Company) Notes to Financial Statements December 31, 1997 NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS The Company was incorporated as SRS Technical, Inc. under the laws of the State of Nevada on January 15, 1986, to engage in the business activity. On May 29, 1987, the Company acquired a company named Composite Design Corporation (CDC). 20,000,000 shares of the Company's stock was given in exchange for the 100% of CDC's shares. CDC was suspended by both the Secretary of State of California and the Franchise Tax Board in 1988. On June 2, 1987, the Board of Directors resolved to change the corporate name from SRS Technical, Inc. to Composite Design, Inc. (CDI). At the current time, the Company does not have any active business operations. The Company has authorized 200,000,000 shares of $0.001 par value common stock. The Company has elected a calendar year end. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Accounting Method The Company's financial statements are prepared using the accrual method of accounting. b. Provision for Taxes At December 31, 1997, the Company had net operating loss carryforwards of approximately $168,000 that may be offset against future taxable income through 2012. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carryforward will expire unused. Accordingly, the potential tax benefits of the loss carryforward are offset by a valuation account of the same amount. c. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not established revenues sufficient to cover its operating costs and allow it to continue as a going concern. Management is seeking a merger with an existing operating company. In the interim, management is committed to covering all operating and other costs until sufficient revenues are generated. NOTE 4 - DISCONTINUED OPERATIONS The Company discontinued its operations since 1989, therefore, all revenues generated by the Company have been offset against the expenses and are grouped into the discontinued operations line on the statement of operations. NOTE 5 - STOCK TRANSACTIONS On February 27, 1996, the Company issued 162,000 shares of common stock for services rendered which was valued at $162,000. The Company effected a 1,000 for 1 reverse stock split on May 23, 1996 and issued 870,000 shares of post split common stock for services valued at $870. The reverse split has been applied retroactively to the financial statements. NOTE 6 - CONTINGENCIES The Company's former subsidiary CDC was suspended by the State of California. In order to operate in the State of California, the Company may be required to pay back fees of approximately $8,000 plus accrued interest and penalties. EX-3.1 2 ARTICLES OF INCORPORATION SRS TECHNICAL, INC. WE, THE UNDERSIGNED NATURAL PERSONS OF THE AGES OF TWENTY-ONE (21) OR MORE, ACTING AS INCORPORATORS OF A CORPORATION UNDER THE GENERAL CORPORATION LAW OF NEVADA, ADOPT THE FOLLOWING ARTICLES OF INCORPORATION: ARTICLE I NAME: THE NAME OF THE CORPORATION IS SRS TECHNICAL, INC. ARTICLE II REGISTERED OFFICE AND AGENT: THE ADDRESS OF THE CORPORATION'S REGISTERED AGENT IS 2050 ELLIS WAY, IN THE CITY OF ELKO, COUNTY OF ELKO, STATE OF NEVADA. THE INITIAL AGENT FOR SERVICE OF PROCESS AT THAT ADDRESS WILL BE GATEWAY ENTERPRISES, INC. ARTICLE III PURPOSE: THE PURPOSES FOR WHICH THE CORPORATION IS ORGANIZED ARE TO ENGAGE IN ANY ACTIVITY OR BUSINESS NOT IN CONFLICT WITH THE LAWS OF THE STATE OF NEVADA OR OF THE UNITED STATES OF AMERICA, AND WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SPECIFICALLY: 1. TO HAVE AND TO EXERCISE ALL THE POWERS NOW OR HEREAFTER CONFERRED BY THE LAWS OF THE STATE OF NEVADA UPON CORPORATIONS ORGANIZED PURSUANT TO THE LAWS UNDER WHICH THE CORPORATION IS ORGANIZED AND ANY AND ALL ACTS AMENDATORY THEREOF AND SUPPLEMENTAL THERETO. 2. TO DISCOUNT NO NEGOTIATE PROMISSORY NOTES, DRAFTS, BILL OF EXCHANGE AND OTHER EVIDENCE OF DEBTS, AND TO COLLECT FOR OTHERS MONEY DUE THEM ON NOTES, CHECKS, DRAFTS, BILL OF EXCHANGE, COMMERCIAL PAPER AND OTHER EVIDENCE OF INDEBTEDNESS. 3. TO PURCHASE OR OTHERWISE ACQUIRE, OWN, HOLD, LEASE, SELL, EXCHANGE, ASSIGN, TRANSFER, MORTGAGE, PLEDGE, OR OTHERWISE DISPOSE OF, TO GUARANTY, TO INVEST, TRADE, NO DEAL IN AND WITH PERSONAL PROPERTY OF EVERY CLASS AND DESCRIPTION. 4. TO ENTER INTO ANY KIND OF CONTRACT OR AGREEMENT, COOPERATIVE OR PROFIT SHARING PLAN WITH ITS OFFICERS OR EMPLOYEES THAT THE CORPORATION MAY DEEM ADVANTAGEOUS OR EXPEDIENT OR OTHERWISE TO REWARD OR PAY SUCH PERSONS FOR THEIR SERVICES AS THE DIRECTORS MY DEEM FIT. 5. TO PURCHASE, LEASE, OR OTHERWISE ACQUIRE, IN WHOLE OR IN PART, THE BUSINESS, THE GOOD WILL, RIGHTS, FRANCHISES AND PROPERTY OF EVERY KIND, AND TO UNDERTAKE THE WHOLE OR ANY PART OF THE ASSETS OR LIABILITIES, OF ANY PERSON, FIRM, ASSOCIATION, NON-PROFIT OR PROFIT CORPORATION, OR OWN PROPERTY NECESSARY OR SUITABLE FOR ITS PURPOSES, AND TO PAY THE SAME IN CASH, IN THE STOCKS OR BONDS OF THIS COMPANY OR OTHERWISE, TO HOLD OR IN ANY MANNER DISPOSE OF THE WHOLE OR ANY PART OF THE BUSINESS OR PROPERTY S0 ACQUIRED AND TO EXERCISE ALL OF THE POWERS NECESSARY OR INCIDENTAL TO THE CONDUCT OF SUCH BUSINESS. 6. TO LEND OR BORROW MONEY AND TO NEGOTIATE AND MAKE LOANS, EITHER ON ITS OWN ACCOUNT OR AS AGENT, OR BROKER FOR OTHERS. 7. T0 ENTER INTO, MAKE, PERFORM AND CARRY OUT CONTRACTS OF EVERY KIND SO FOR ANY LAWFUL PURPOSE, WITHOUT LIMIT AS TO AMOUNT WITH ANY PERSON, FIRM, ASSOCIATION, COOPERATIVE PROFIT OR NON-PROFIT CORPORATION, MUNICIPALITY, STATE OR GOVERNMENT OR ANY SUBDIVISION, DISTRICT OR DEPARTMENT THEREOF. 8. TO BUY, SELL, EXCHANGE, NEGOTIATE, OR OTHERWISE DEAL IN, OR HYPOTHECATE SECURITIES, STOCKS, BONDS, DEBENTURES, MORTGAGES, NOTES OR OTHER COLLATERALS OR SECURITIES, CREATED OR ISSUED BY ANY CORPORATION WHEREVER ORGANIZED INCLUDING THIS CORPORATION, WITHIN SUCH LIMITS AS MAY BE PROVIDED BY LAW, AND WHILE OWNER OF ANY SUCH STOCKS OR OTHER COLLATERALS TO EXERCISE ALL RIGHTS, POWERS AND PRIVILEGES OF OWNERSHIP, INCLUDING THE RIGHT TO VOTE THE SAME; TO SUBSCRIBE FOR STOCK OF ANY CORPORATION TO BE ORGANIZED, OTHER THAN TO PROMOTE THE ORGANIZATION THEREOF. 9. TO PURCHASE OR OTHERWISE ACQUIRE, OWN, HOLD, LEASE, SELL, EXCHANGE, ASSIGN, TRANSFER, MORTGAGE, PLEDGE, LICENSE, OR OTHERWISE DISPOSE OF ANY LETTERS, PATENTS, COPYRIGHTS, OR TRADEMARKS OF EVERY CLASS AND DESCRIPTION. 10. TO DO ANY AND ALL OTHER SUCH ACTS, THINGS, BUSINESS OR BUSINESSES IN ANY MANNER CONNECTED WITH OR NECESSARY, INCIDENTAL, CONVENIENT OR AUXILIARY TO DO ANY OF THESE OBJECTS HEREINBEFORE ENUMERATED, OR CALCULATED, DIRECTLY OR INDIRECTLY, TO PROMOTE THE INTEREST OF THE CORPORATION; AND IN CARRYING ON ITS PURPOSES, OR FOR THE PURPOSE OF OBTAINING OR FURTHERING ANY OF ITS BUSINESS, TO DO ANY AND ALL ACTS AND THINGS, AND TO EXERCISE ANY AND ALL OTHER POWERS WHICH A CO-PARTNER OR NATURAL PERSON COULD DO OR EXERCISE, AND WHICH NOW OR HEREAFTER MAY BE AUTHORIZED BY LAW, HERE AND IN ANY OTHER PART OF THE WORLD. 11. THE SEVERAL CLAUSES CONTAINED IN THIS STATEMENT OF POWERS SHALL BE CONSTRUED AS BOTH PURPOSES AND POWERS. AND THE STATEMENTS CONTAINED IN EACH OF THESE CLAUSES SHALL BE IN NO WAY LIMITED OR RESTRICTED. BY REFERENCE TO OR INFERENCE FROM, THE TERM OF ANY OTHER CLAUSES, BUT SHALL BE REGARDED AS INDEPENDENT PURPOSES AND POWERS; AND NO RECITATIONS, EXPRESSION OR DECLARATION OF SPECIFIC OR SPECIAL POWERS OR PURPOSES HEREIN ENUMERATED SHALL BE DEEMED TO BE EXCLUSIVE; BUT IS HEREBY EXPRESSLY DECLARED THAT ALL OTHER LAWFUL POWERS NOT INCONSISTENT HEREWITH, ARE HEREBY INCLUDED. ARTICLE IV STOCK: THE AGGREGATE NUMBER OF SHARES WHICH THE CORPORATION SHALL HAVE AUTHORITY TO ISSUE IS 200,000,000 SHARES AT A PAR VALUE OF .001 PER SHARE. ALL STOCK WHEN ISSUED SHALL BE FULLY PAID AND NONASSESSABLE. NO HOLDER OF SHARES OF COMMON STOCK OF THE CORPORATION SHALL BE ENTITLED, AS SUCH, TO ANY PRE-EMPTIVE OR PREFERENTIAL RIGHTS TO SUBSCRIBE TO ANY UNISSUED STOCK OR ANY OTHER SECURITIES WHICH THE CORPORATION MAY NOW OR THEREAFTER BE AUTHORIZED TO ISSUE. THE BOARD OF DIRECTORS OF THE CORPORATION MAY, HOWEVER, AT ITS DISCRETION, BY RESOLUTION DETERMINE THAT ANY UNISSUED SECURITIES OF THE CORPORATION SHALL BE OFFERED FOR SUBSCRIPTION SOLELY TO THE HOLDERS OF COMMON STOCK OF THE CORPORATION OR SOLELY TO THE HOLDERS OF ANY CLASS OR CLASSES OF SUCH STOCK, IN SUCH PROPORTIONS BASED ON STOCK OWNERSHIP AS SAID BOARD AT ITS DISCRETION MAY DETERMINE. EACH SHARE Of COMMON STOCK SHALL BE ENTITLED TO ONE VOTE AT STOCKHOLDERS MEETINGS, EITHER IN PERSON OR BY PROXY. CUMULATIVE VOTING IN ELECTIONS OF DIRECTORS AND ALL OTHER MATTERS BROUGHT BEFORE STOCKHOLDERS MEETINGS, WHETHER THEY BE ANNUAL OR SPECIAL, SHALL NOT BE PERMITTED. ARTICLE V STOCKHOLDERS MEETING: MEETINGS OF THE SHAREHOLDERS SHALL BE HELD AT SUCH PLACE WITHIN OR WITHOUT THE STATE OF NEVADA AS MAY BE PROVIDED BY THE BY-LAWS OF THE CORPORATION. SPECIAL MEETINGS OF THE SHAREHOLDERS MAY BE CALLED BY THE PRESIDENT OR ANY OTHER EXECUTIVE OFFICER OF THE CORPORATION, THE BOARD OF DIRECTORS, OR ANY MEMBER THEREOF, OR BY THE RECORD HOLDER OR HOLDERS OF AT LEASE TEN PERCENT (10%) OF ALL SHARES ENTITLED TO VOTE AT THE MEETING. ANY ACTION OTHERWISE REQUIRED TO BE TAKEN AT A METING OF THE SHAREHOLDERS, EXCEPT ELECTION OF DIRECTORS, MAY BE TAKEN WITHOUT A MEETING IF A CONSENT IN WRITING, SETTING FORTH THE ACTION SO TAKEN, SHALL BE SIGNED BY SHAREHOLDERS HAVING AT LEASE A MAJORITY OF THE VOTING POWER. ARTICLE VI COMMENCING BUSINESS: THE CORPORATION SHALL NOT COMMENCE BUSINESS UNTIL AT LEAST $1,000.00 HAS BEEN RECEIVED BY IT AS CONSIDERATION FOR THE ISSUANCE OF SHARES. ARTICLE VII STOCK RIGHTS: THE BOARD OF DIRECTORS SHALL HAVE THE AUTHORITY TO DETERMINE THE CLASSES AND SERIES OF ANY SUBSEQUENT STOCK ISSUED BY THE CORPORATION AND THE RIGHT AND PREFERENCES PERTAINING THERETO. ARTICLE VIII BOARD OF DIRECTORS: A MAJORITY OF THE BOARD OF DIRECTORS SHALL BE NECESSARY TO CONSTITUTE A QUORUM; AND WHEN SO CONSTITUTED, THE BOARD SHALL BE AUTHORIZED TO TRANSACT SUCH BUSINESS AS MAY BE DELEGATED TO IT BY THE STOCKHOLDERS AND WHENEVER THE BOARD OF DIRECTORS SHALL BE SO ASSEMBLED AND ACT AS A BOARD, EITHER WITHIN OR WITHOUT THE STATE OF NEVADA, ANY ACTION TAKEN SHALL BE THE ACTION OF THE BOARD OF DIRECTORS AND SHALL BE BINDING UPON THE CORPORATION, PROVIDED THAT THREE DAYS PRIOR NOTICE, GIVEN EITHER ORALLY OR IN WRITING, OF THE TIME AND PLACE OF THE MEETING AND OF THE NATURE OF THE BUSINESS PROPOSED TO BE TRANSACTED SHALL HAVE BEEN GIVEN TO THE ENTIRE BOARD OF DIRECTORS UNLESS SUCH NOTICE BE WAIVED AS HEREINAFTER PROVIDED. ANY DIRECTOR MAY WAIVE NOTICE OF ANY MEETING; AND IN THE EVENT OF SUCH WAIVER, NOTICE SHALL BE IN WRITING OR A WRITTEN MEMORANDUM SHALL BE MADE ON AN ORAL WAIVER OF NOTICE. ARTICLE IX OFFICER: THE OFFICERS OF THE CORPORATION SHALL CONSIST OF A BOARD OF DIRECTORS OF NOT LESS THAN THREE NOR MORE THAN TWENTY-FIVE. A CHAIRMAN OF THE BOARD OF DIRECTORS, A PRESIDENT, A VICE-PRESIDENT, A SECRETARY AND A TREASURER, WHO SHALL PERFORM SUCH DUTIES AND HAVE SUCH AUTHORITY AS USUALLY PERTAINS TO SUCH OFFICERS OF A CORPORATION OR AS MAY BE PRESCRIBED BY THE BOARD OF DIRECTORS FROM TIME TO TIME. QUALIFICATION OF OFFICERS: OFFICERS AND DIRECTORS OF THE CORPORATION NEED NOT BE RESIDENTS OF THE STATE OF NEVADA AND NEED NOT OWN SHARES OF THE CORPORATION'S STOCK. THE SECRETARY AND TREASURER MAY, BUT NEED NOT BE, THE SAME PERSON. ELECTION: DIRECTORS SHALL BE ELECTED AT THE ANNUAL MEETING OF THE SHAREHOLDERS, AND THE PERSONS RECEIVING THE HIGHEST NUMBER OF VOTES SHALL BE DECLARED DULY ELECTED, PROVIDING SUCH NUMBERS SHALL REPRESENT A MAJORITY OF ALL VOTES CAST. WITHIN TEN (10) DAYS AFTER THE ELECTION, THE DIRECTORS SHALL MEET AND ELECT A PRESIDENT, VICE-PRESIDENT, SECRETARY AND TREASURER. TERM OF OFFICE: THE TERM OF OFFICE OF ALL DIRECTORS AND OFFICERS SHALL BE ONE YEAR, PROVIDED ALL DIRECTORS AND OFFICERS SHALL HOLD OFFICE UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED. RESIGNATION OF OFFICERS: ANY OFFICER OR DIRECTOR MAY RESIGN BY FILING HIS OWN RESIGNATION WITH THE SECRETARY OF THE CORPORATION, OR IN THE CASE OF THE SECRETARY, WITH THE PRESIDENT OF THE CORPORATION AND UPON ACCEPTANCE THEREOF THE BOARD OF DIRECTORS OR IF SUCH BOARD SHALL NEGLECT TO ACT UPON SUCH RESIGNATION WITHIN FOURTEEN (14) DAYS AFTER RECEIPT, THE RESIGNATION SHALL BECOME EFFECTIVE AND THE OFFICE SHALL BE DEEMED VACANT. REMOVAL OF OFFICERS: ANY OFFICER OR DIRECTOR OF THIS CORPORATION MAY BE REMOVED AT ANY TIME WITHOUT CAUSE IN THE MANNER PROVIDED BY THE LAWS OF THE STATE OF NEVADA FOR THE REMOVAL OF SUCH OFFICER OR DIRECTOR, OR BY A MAJORITY VOTE OF THE OUTSTANDING STOCK OF THE CORPORATION AT ANY SPECIAL MEETING OF THE STOCKHOLDERS CALLED FOR THAT PURPOSE AS HEREIN PROVIDED. VACANCIES: IN THE CASE OF DEATH, DISABILITY, OR RESIGNATION OF ANY OFFICER OR DIRECTOR OF THE COMPANY, THE REMAINING DIRECTORS OR DIRECTOR OF THE COMPANY, EVEN THOUGH LESS THAN A QUORUM, SHALL FILL VACANCIES FOR THE UNEXPIRED TERM OR TERMS. ORIGINAL DIRECTORS: THE NUMBER OF DIRECTORS CONSTITUTING THE INITIAL BOARD OF DIRECTORS OF THE CORPORATION IS THREE (3), AND THE NAMES AND ADDRESSES OF THE PERSONS WHO ARE THE INCORPORATORS AND WHO ARE TO SERVE AS DIRECTORS UNTIL THE FIRST ANNUAL MEETING OF SHAREHOLDERS OR UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED ARE: 1. SHIRRELL W. HUGHES 2929 HILLSDEN DRIVE, SALT LAKE CITY, UTAH 84111 2. SYDNEY L. HOAGLAND 3942 SOUTH RIVER HOLLOW ROAD, SALT LAKE CITY, UTAH 84123 3. SINDIE SPENCER 11131 SOUTH 2820 WEST, SOUTH JORDAN, UTAH 84065 ARTICLE X DURATION: THE PERIOD OF DURATION OF THE CORPORATION SHALL BE PERPETUAL. ARTICLE XI AMENDMENT: THESE ARTICLES OF INCORPORATION, BY VOTE OF NOT LESS THAN FIFTY PER CENT OF THE ISSUED AND OUTSTANDING, CAPITAL STOCK OF THE CORPORATION, MAY BE DEEMED AMENDED IN ANY RESPECT AMENDABLE AT LAW AT ANY MEETING. A COPY OF THE PROPOSED AMENDMENT SHALL BE GIVEN TO THE SHAREHOLDERS AS PROVIDED IN ARTICLE VI HEREOF, FOR CALLING AND HOLDING MEETINGS OF THE STOCKHOLDERS. ARTICLE XII BY-LAWS: THE BOARD OF DIRECTORS OF THE CORPORATION SHALL HAVE AUTHORITY TO ADOPT SUCH BY-LAWS AS IN THEIR JUDGMENT MAY BE DEEMED NECESSARY OR ADVISABLE FOR THE MANAGEMENT AND TRANSACTION OF THE BUSINESS OF THE CORPORATION PROVIDED THAT SUCH BY-LAWS ARE NOT IN CONFLICT WITH THESE ARTICLES OF INCORPORATION OR THE CONSTITUTION OF THE STATE OF NEVADA. IN WITNESS WHEREOF, THE UNDERSIGNED INCORPORATORS HAVE HEREUNTO AFFIXED THEIR SIGNATURES AT SALT LAKE CITY THIS 15TH DAY OF JANUARY 1986. /S/Shirrell H. Hughes /s/Sydney L. Hoagland /s/Sindie Spencer STATE OF UTAH ) COUNTY OF SALT LAKE) I, KELLIE HUMES, A NOTARY PUBLIC, DO HEREBY CERTIFY THAT SHIRRELL W. HUGHES, SYDNEY L. HOAGLAND, AND SINDIE SPENCER DID PERSONALLY APPEAR BEFORE ME TO AFFIX THEIR SIGNATURES TO THIS DOCUMENT. /S/Kellie Humes NOTARY PUBLIC, RESIDING IN SALT LAKE COUNTY. EX-3.2 3 Certificate of Amendment to Articles of Incorporation of SRS TECHNICAL, INC. We, the undersigned as R.W. Wheeler, President and Kent A. Midby, Secretary, do hereby certify: That the Board of Directors of SRS Technical, Inc. at a meeting duly commenced and held on June 2, 1987, adopted a resolution to amend the original Articles as follows: RESOLVED that the name of the corporation be changed to Composite Design, Inc. The number of shares of the corporation outstanding and authorized to vote an amendment to the Articles of Incorporation is 45,000,000; that said change and amendment has been consented to and authorized by the written consent of stockholders holding at least a majority of each class of stock outstanding and entitled to vote thereon. signed/s/ E.W. Wheeler, President Signed/s/Kent A. Midby, Secretary STATE OF NEVADA) )SS COUNTY OF CLARK) /s/MICHELLE BRAZIER On June 1, 1987, personally appeared before me a Notary Public, E.W. Wheeler & Kent A. Midby, who acknowledged that they executed the above instrument. EX-3.3 4 CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF COMPOSITE DESIGN, INC. We, the undersigned, David C. Merrell, President, and Corie Merrell, Secretary/Treasurer, of COMPOSITE DESIGN, INC., a Nevada corporation (the "corporation"), do hereby certify: I The Articles of Incorporation of the corporation shall be amended as follows: The foregoing amendment was adopted by the shareholders of the corporation at a meeting held June 25th, 1996. II Pursuant to a resolution duly adopted by the shareholders of the corporation on June 25th, 1996 the 198,898,000 outstanding shares of the corporation were reversed split on a basis of 1000 for 1, retaining the authorized shares at 200,000,000 and the par value at one mill ($.001) per share, with the appropriate adjustments being made in the additional paid in capital and stated capital accounts of the corporation. III The number of shares entitled to vote on the amendment was 198,898,000. IV The number of shares voted in favor of the amendment was 146,000,000 with none opposing and none abstaining. /s/David C. Merrell, President /s/Corie Merrell, Sec/Treasurer STATE OF UTAH ) )ss COUNTY OF SALT LAKE) On the 2nd day of November 1996, personally appeared before me, a Notary Public, David C. Merrell, who acknowledged that he is the President of Composite Design, Inc., and that he is authorized to and did execute the above instrument. /s/Jens O. Lovell NOTARY PUBLIC JENS 0. LOVELL (Notary Seal) STATE OF UTAH ) )ss COUNTY OF SALT LAKE) On the 2nd day of November 1996, personally appeared before me, a Notary Public, Corie Merrell, who acknowledged that she is the Secretary/Treasurer of Composite Design Inc., and that she is authorized to and did execute the above instrument. /s/Jens O. Lovell NOTARY PUBLIC JENS 0. LOVELL (Notary Seal) EX-27 5
5 12-MOS DEC-31-1997 DEC-31-1997 0 0 0 0 0 0 0 0 0 695 0 0 0 1069 (1764) 0 0 0 0 0 0 0 0 (2179) 0 0 (2179) 0 0 (2179) 0 0
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