0001091818-01-500263.txt : 20011019
0001091818-01-500263.hdr.sgml : 20011019
ACCESSION NUMBER: 0001091818-01-500263
CONFORMED SUBMISSION TYPE: 10KSB
PUBLIC DOCUMENT COUNT: 8
CONFORMED PERIOD OF REPORT: 20010630
FILED AS OF DATE: 20011012
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: COMPOSITE INDUSTRIES OF AMERICA INC
CENTRAL INDEX KEY: 0000894501
STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531]
IRS NUMBER: 870434297
STATE OF INCORPORATION: NV
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10KSB
SEC ACT: 1934 Act
SEC FILE NUMBER: 033-55254-18
FILM NUMBER: 1757369
BUSINESS ADDRESS:
STREET 1: 4505 W HACIENDA AVE
STREET 2: UNIT I 1
CITY: LAS VEGAS
STATE: NV
ZIP: 89118
BUSINESS PHONE: 7025794888
MAIL ADDRESS:
STREET 1: 3098 S HIGHLAND DR STE 460
CITY: SALT LAKE CITY
STATE: UT
ZIP: 84106
FORMER COMPANY:
FORMER CONFORMED NAME: AFFORDABLE HOMES OF AMERICA INC
DATE OF NAME CHANGE: 19990518
FORMER COMPANY:
FORMER CONFORMED NAME: WORLD HOMES INC
DATE OF NAME CHANGE: 20001109
10KSB
1
ciai_10ksb-101101.txt
ANNUAL REPORT
===============================================================================
U.S. Securities And Exchange Commission
Washington, d. C. 205549
FORM 10KSB
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended June 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from________to_________
Commission File No. 33-55254-18
COMPOSITE INDUSTRIES OF AMERICA, INC.
(Formerly known as WORLD HOMES, INC.)
(Exact name of Registrant as specified in its charter)
NEVADA 87-0434297
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
4505 W. Hacienda Ave. Unit I-1
Las Vegas, Nevada 89118
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 579-4888
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
===============================================================================
Indicate by check mark whether the registrant (1) has filed all reports
required to filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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. [x] yes []no
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of the Form
10-KSB or any amendment to this Form 10-KSB. [x]
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Class Outstanding as of June 30, 2001
-------------------------------------------------------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK 22,761,396
VALUE Class A Convertible Preferred Stock 428,572
VALUE Class B Convertible Preferred Stock 0
DOCUMENTS INCORPORATED BY REFERENCE
None
ITEM 1. BUSINESS
On March 17, 1999, Kowtow, Inc. received 100% of the common stock of
Affordable Homes of America, Inc. in a merger. Additionally, Kowtow, Inc.
issued 4,000,000 shares of common stock to SCS Enterprises, Inc. Trust, the
sole shareholder of Affordable Homes of America, Inc. On the same date the
company accepted the resignation of Krista Nielson and Sasha Belliston as
Officers and Directors of the Company and elected Merle Ferguson as President,
CEO and Chairman of the Board of Directors. The Company also elected Susan
Donohue as Secretary and as a member of the Board of Directors.
The Company changed its name to Affordable Homes of America, Inc. on March 19,
1999 and obtained a new trading symbol -AHOA. The Company restructured its
common stock with a two for one forward split effective March 31, 1999. The
Company changed its name to World Homes, Inc.(WHME) on October 10, 2000 and to
Composite Industries of America, Inc. (CIAI) on August 23, 2001. Affordable
Homes of America, Inc. and World Homes, Inc. are fully owned subsidiaries of
the Company. Composite Industries of America maintains its principle offices
at 4505 W. Hacienda Ave., Unit I-1, Las Vegas, Nevada 89118.
Composite Industries of America is in the business of building homes for low
income and first time home buyers. Founded in 1997, the focus of the Company
is to develop and build homes for sale in the United States and international
locations with little or no timber products. The Company's methods are
patented. There are three methods for new home construction. These include:
* Z MIX - A cementitious product that combines diatomaceous earth and used
tires to create a lightweight building material that reduces the time and the
cost for constructing a house. The Company currently holds the patent on Z
MIX.
* IN-LINE FRAMING - A new method of construction that reduces the amount of
wood used by one third. This reduces the cost of lumber used in
construction, and thereby reduces the overall cost of the home.
* FOAM-PANELIZED CONSTRUCTION - This method of construction uses foam slabs
covered with panels and strengthened with internal trusses. This allows for
increased insulation and quick construction.
All three methods (i) reduce the time and cost needed to construct the average
home, and (ii) reduce the amount of wood used in building the average home.
Company research has shown that more Americans ages 25 to 45 would prefer to
purchase homes rather than rent. To make this option viable, the Company's
homes are financed 100% by lending institutions and the monthly payments are
comparable to the expense of renting. Additionally, older Americans are more
inclined to move into homes that are less expensive, due to their retirement
status and reduced monthly income.
The Company is finishing the certification procedures necessary to sell its
Z MIX products in the US. Once complete, the Company will begin sales and
distribution of its products in US. The Company has been approached by
several international entities to establish factories to supply Z MIX for
construction.
TO DATE THE COMPANY HAS MADE TWO (2) ACQUISITIONS:
(a) On April 28, 1999, the Company acquired Composite Industries of America
Inc. the owner of a patent covering a construction material known as "Z Mix".
Z MIX is a cementitious building material and can be used in a two step
construction method instead of cement, dry wall or lumber. The Company
believes Z MIX will enable it to build better quality homes at a lower price
than if other products were used.
(b) On June 28, 1999 the Company also acquired Big Mountain Construction
Company which holds the exclusive right to build all the houses for the
Heartland Homes development. The development is planned for the construction
of 136 homes, each on an individual site. The inability to maintain the
operations of Big Mountain caused the Company to abandon its entire investment
in Big Mountain in March, 2001.
COMPOSITE INDUSTRIES OF AMERICA, INC.
The acquisition of Composite Industries was accomplished by exchanging one
share of Affordable's/World Homes' common stock for two shares of the original
Composite's common stock. All stock issued by Affordable/World Homes pursuant
to this acquisition was restricted. Affordable Homes/World Homes was the
surviving entity and acquired the patents owned by Composite. The patents
cover a construction material called "Z MIX". Z MIX is a building material
lighter than cement that can be used in home construction instead of cement,
lumber or dry wall. The patented construction material is a lightweight
cementitious insulating mixture with a high compression strength and thermal
resistance values up to 30 to 40 times that of standard concrete. It is fire
proof, insect proof, has excellent acoustical properties and is easy to clean
up. Z MIX can be used for wall and roof panels and can easily be pumped for
walls and floors. Z MIX makes a well insulated cost effective floor that has
a slight give to it. Z MIX is excellent for gymnasium floors. This material
is used for residential, light commercial and agricultural building. The
composition has the unique property of being able to absorb contaminated or
hazardous materials, especially petroleum based contaminants and is especially
useful in cleaning up and controlling contaminants in underground storage
tanks, especially in abandoned or closed service stations.
The Company also acquired the plans for a "World Home" and a "US Home" made
from this material. These plans have been certified by Larson Engineering,
Inc. as earthquake resistant in all four seismic regions in the world.
Larson Engineering, Inc. also certified that houses built from these materials
are able to withstand hurricane winds up to 150 mph. Composite Industries of
America believes that use of Z MIX will permit it to construct lower cost
housing at substantial less that the present cost for such housing. Z MIX can
also be used in the manufacturing of utility poles, railroad ties and pallets
with substantial savings in the manufacturing cost of these items. The
Company believes that the use of Z MIX will broaden its market and increase
its profitability.
BIG MOUNTAIN CONSTRUCTION COMPANY, INC.
The Company acquired Big Mountain Construction Company, Inc. for $500,000
paid in restrictive common stock in the amount of 215,983 shares. Big
Mountain maintains a general contractor license and has the exclusive right to
build out 136 homes for Heartland Homes Estates, an affordable housing project
near Tacoma, Washington. Big Mountain's master appraisals are generally
$10,000 - $12,000 higher than the selling price. This allows Big Mountain to
feature 100% financing for their buyers, including VA and FHA programs. This
feature will give the Company the ability to qualify more homebuyers and close
more loans than their competition. Big Mountain Construction has had a
presence in the entry-level and one step-up housing market for over 20 years
in the State of Washington.
The Company abandoned its interest in Big Mountain in March of 2001 due to the
inability to maintain Big Mountain's operations.
The Company's business is not seasonal although during some snow storms on
site construction generally does not take place unless indoors. The Company
uses no special raw materials and the materials it does use are available from
numerous suppliers throughout the United States.
Composite Industries of America (Affordable Homes/World Homes) has signed
Joint Venture Agreements or strategic alliance agreements with the following
companies:
(a) Tristar USA of LA, Inc. and the Company signed a five-year Joint Venture
Agreement on June 22, 2000. Tristar will act as the construction company and
Composite Industries of America will supply its proprietary Z MIX material for
building affordable housing in Developing Nations, particularly in Nigeria.
(b) AL NASR Trading & Industrial Corporation L.L.C. and the Company signed a
three-year Joint Venture Agreement with a 25-year optional extension, on
August 17, 2000. AL NASR is to provide a proposal for the establishment of a
manufacturing plant for Z MIX in a Middle Eastern country and a working plan
for at least four other countries in the Middle Eastern / Northern Africa
area. Composite Industries of America will provide its patented Z MIX
material and its technical expertise in building affordable housing.
ITEM 2 PROPERTIES
The Company owns no properties. The Company leases its offices located at
4505 W. Hacienda Ave. Unit I-1, Las Vegas, Nevada 89118 at an annual rent
of $7,680.00. The property is leased on a month-to-month agreement.
ITEM 3 LEGAL PROCEEDINGS
There is no pending or threatened litigation or other legal proceedings,
material or otherwise, nor any claims or assessments with respect to World
Homes, Inc. at the present time.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to the Company security holders for a vote during the
fiscal year ending June 30, 2001.
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is trading on the NASD Over-the-Counter Bulletin
Board under the symbol "WHME" as of June 30, 2001, (and under the symbol
"CIAI" since September 4, 2001). The stock has traded between $3.125 per
share and $0.14 per share. There are approximately 850 record holders of the
Company's common stock. The Company has not previously declared or paid any
dividends on its common stock and does not anticipate declaring any dividends
in the foreseeable future.
ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The following discussion and analysis of financial condition and results of
operations of the Company should be read in conjunction with the Consolidated
Financial Statements, including the corresponding footnotes, which is included
within this report. The following discussion contains certain forward-looking
statements within the meaning of Securities Act of 1933 as amended, and
Section 21E of the Securities and Exchange Act of 1934, as amended, which are
not historical facts and involve risks and uncertainties that could cause
actual results to differ materially from the results anticipated in those
forward-looking statements. These risks and uncertainties include, but are
not limited to those set forth below and the risk factors described in the
Company's other filings with the Securities and Exchange Commission.
Composite Industries of America (Affordable Homes/World Homes) is a
homebuilding and development company in the development stage focusing on
building for low-income and first-time homebuyers. The Company has and will
continue to develop new building techniques and patented products that
significantly reduce the overall cost and time, while maintaining or
increasing the quality and integrity of new home construction. The Company's
plan is to develop and build its "World Home" for sale outside the United
States in developing nations where there is an immediate need for permanent
affordable shelter. The patented Z MIX material used in the "World Home"
provides protection from the elements; hurricanes, earthquakes, as well as
being fireproof.
Composite Industries of America's immediate focus is to enter into licensing
and/or joint venture affiliations in which it will supply its proprietary,
patent-protected Z MIX material to established companies for use outside the
United States in home construction and other applications such as railroad
ties, utility poles and environmental remediation. The Company believes this
approach to be the fastest route for the penetration into the global
marketplace.
The Company projects that the revenues received from licensing Z MIX
technology will be recognized by the Company without incurring the usual
development and labor expenses associated construction projects.
RESULTS OF OPERATIONS
Year ended June 30, 2001 vs. June 30, 2000
REVENUES. Composite Industries of America is presently a development stage
company. Accordingly, the Company has no revenues for the year ended June 30,
2001.
OPERATING EXPENSES. Operating expenses are comprised of General and
Administrative Expenses which consists primarily of amortization of patent
expense, professional fees, product development expense and office expense.
Amortization expense amounted to $1,092,591 and $1,096,145 during the years
ended June 30, 2001 and June 30, 2000 respectively. The patent is being
amortized on a straight-line basis over the remaining life of the patent (195
months as of the acquisition date, April 28, 1999).
Operating expenses decreased from $3,447,186 for the twelve months ended June
30, 2000 to $2,8037,266 for the twelve months ended June 30, 2001. The
decrease in operating expenses was primarily due to professional fees which
decreased from $1,798,321 for the twelve months ended June 30, 2000 to
$1,238,660 for the twelve months ended June 30, 2001.
NET LOSS. As a result, our net loss decreased from $3,105,360 for the twelve
months ended June 30, 2000 to $2,740,898 for the twelve months ended June 30,
2001.
LIQUIDITY AND CAPITAL RESOURCES
Composite Industries of America is currently a development stage company,
however management projects that during the next twelve months revenue derived
from one or more of the signed joint ventures, or the proceeds from a private
placement which is under negotiations should be sufficient to finance the
Company's working capital and capital expenditures.
Although Composite Industries of America believes that the revenues projected
over the next twelve months will be significant, we are presently in
negotiations for a private placement for immediate funds. The Company is
confident that with its product and technology, signed joint ventures and
stronger balance sheet, that it will successfully complete a private
placement. In the event that the Company does not secure additional
financing, the Company has made provisions for working capital, for the next
twelve months.
ITEM 6a QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has no market risk sensitive instruments or market risk exposures.
ITEM 7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 and 2000
PAGE
Report of Independent Auditors 1
Consolidated Balance Sheets as of June 30, 2001 and 2000 2-3
Consolidated Statements of Operations During the Development
Stage for the Years Ended June 30, 2001 and 2000 and
Cumulative from February 10, 1997 (Inception) 4
Consolidated Statements of Changes in Stockholders' Equity
for the Years Ended June 30, 2001 and 2000 and Cumulative
from February 10, 1997 (Inception) to June 30, 1999 5-8
Consolidated Statements of Cash Flows During the Development
Stage for the Years Ended June 30, 2001 and 2000 and
Cumulative from February 10, 1997 (Inception) 9-11
Notes to the Consolidated Financial Statements 12-28
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
CONSOLIDATED FINANCIAL STATEMENTS
and
REPORT OF INDEPENDENT AUDITORS
FROM FEBRUARY 10, 1997 (DATE OF INCEPTION)
TO JUNE 30, 2001 and 2000
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of Composite Industries of America,
Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Composite
Industries of America, Inc. and Subsidiaries (F/K/A World Homes,
Inc./Affordable Homes of America, Inc.) (a development stage company) as of
June 30, 2001 and 2000 and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for the years ended June 30,
2001 and 2000 and for the period from February 10, 1997 (inception) to June
30, 2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We conducted our audits in
accordance with auditing standards generally accepted in the United States of
America. 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 consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Composite Industries of America, Inc. and Subsidiaries as of June
30, 2001 and 2000 and the results of their operations and their cash flows for
the years then ended, and from February 10, 1997 to June 30, 2001, in
conformity with accounting principles generally accepted in the United States
of America.
North Bellmore, New York
September 14, 2001
(except as to Note 20 which
is as of October 3, 2001)
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2001 and 2000
ASSETS 2001 2000
--------------------------------------------------------------------------------------
Cash $ 667,142 $ 18,516
Employee advances - 67,423
Land and land development costs 65,991 449,206
Capitalized interest - 44,059
Deferred tax asset 2,390,000 2,262,655
Machinery & equipment - net of
accumulated depreciation of $40,232
and $73,226 as of June 30, 2001 and
2000, respectively 164,805 176,028
Patent - net of accumulated amortization
of $2,258,750 and $1,216,250 as of June 30,
2001 and 2000, respectively 14,939,349 15,981,849
Goodwill - net of accumulated amortization of
$20,410 as of June 30, 2000 - 387,787
---------- ----------
TOTAL ASSETS $ 18,227,287 $ 19,387,523
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2001 and 2000
LIABILITIES AND STOCKHOLDERS' EQUITY 2001 2000
-----------------------------------------------------------------------------------------------------
LIABILITIES
Accounts payable $ 3,530 $ 55,024
Accrued expenses 20,000 195,360
Accrued interest 22,313 -
Loans and notes payable 133,429 323,494
Loans and advances from related parties 325,301 281,434
Convertible debenture (net of unamortized
discount of $68,250 at June 30, 2001) 931,750 -
Deferred tax liability 4,963,183 5,309,385
--------- ---------
TOTAL LIABILITIES 6,399,506 6,164,697
--------- ---------
COMMITMENTS AND CONTINGENCIES (Notes 15 and 20)
STOCKHOLDERS' EQUITY
Convertible preferred stock class A, (5,000,000 shares
authorized; 428,572 shares issued and outstanding
at June 30, 2001 and 2000) 1,511,086 1,511,086
Convertible preferred stock class B (5,000,000 shares
authorized: 0 shares issued and outstanding at
June 30, 2001 and 2000) - -
Common stock ($.001 par value, 100,000,000
shares authorized, 22,761,396 shares issued
and outstanding as of June 30, 2001; 20,417,379
shares issued and outstanding as of June 30, 2000) 22,761 20,417
Additional paid-in capital 17,347,521 16,195,761
Officer loans - ( 191,749)
Deficit accumulated during the development stage ( 7,053,587) ( 4,312,689)
---------- ----------
Total Stockholders' Equity 11,827,781 13,222,826
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $18,227,287 $19,387,523
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
DURING THE DEVELOPMENT STAGE
FOR THE YEARS ENDED JUNE 30, 2001 and 2000
AND CUMULATIVE FROM FEBRUARY 10, 1997 (INCEPTION)
Cumulative from
Inception to
2001 2000 June 30, 2001
Operating expenses: ---------- ---------- ------------
General and administrative
expenses $ 472,015 $ 552,720 $ 2,638,666
Depreciation and amortization 1,092,591 1,096,145 2,338,372
Officer and consultants'
compensation 1,238,660 1,798,321 3,036,981
Total operating expenses 2,803,266 3,447,186 ( 8,014,019)
(Loss) from operations (2,803,266} (3,447,186} ( 8,014,019)
Other income and (expense):
Interest and other income 4,865 4,453 14,068
Bad debt expense - ( 136,814) ( 136,814)
Gain on sale of automobile 2,093 - 2,093
Interest expense ( 31,429) ( 33,866) ( 65,295)
Net (loss) on disposition of
subsidiaries ( 386,708) (1,604,166) ( 1,993,724)
Total other (expense) - net ( 411,179) (1,770,393} ( 2,179,672)
Net (loss) before income taxes (3,214,445) (5,217,579) (10,193,691)
Benefit for income taxes 473,547 2,112,219 3,140,104
Net (loss) $( 2,740,898) $( 3,105,360) $( 7,053,587)
Net (loss) per common share $( .13} $( .16} $( .49}
Weighted average number of
common shares outstanding 21,482,312 18,825,400 14,365,533
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
Deficit
Convertible Common Accumulated
Preferred Stock Additional During the Total
Stock A .001 Par Value Paid-in Officer Development Stockholders'
Shares Amount Shares Amount Capital Loans Stage Equity
-------- --------- ---------- --------- ----------- -------- ------------- ------------
Opening balance -
July 1, 2000 428,572 $1,511,086 20,417,379 $ 20,417 $16,195,761 $(191,749) $( 4,312,689) $ 13,222,826
Issuance of common
stock for officer's
compensation 1,975,000 1,975 787,350 789,325
Issuance of common
stock for legal and
for consulting services
rendered 90,000 90 44,910 45,000
Issuance of Common
Stock through exercise
of stock options 500,000 500 199,500 200,000
Issuance of stock
option to consultant 120,000 120,000
Cancellation of
restricted stock issued
in the acquisition of
Big Mountain Construction
Company, Inc. ( 215,983) ( 216) ( 216)
Adjustment ( 5,000) ( 5) ( 5)
Officer loans converted
to compensation 191,749 191,749
Net (loss) for the year
ended June 30, 2001 ( 2,740,898) ( 2,740,898)
-------- --------- ---------- --------- ----------- -------- ------------- ------------
Closing balance -
June 30, 2001 428,572 $1,511,086 22,761,396 $ 22,761 $ 17,347,521 $ - $ ( 7,053,587) $ 11,827,781
======== ========= ========== ========= =========== ======== ============= ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED JUNE 30, 2000
Convertible Common Convertible
Preferred Stock Preferred
Stock A .001 Par Value Stock B
Shares Amount Shares Amount Shares Amount
-------- ---------- ---------- --------- -------- ---------
Opening balance -
July 1, 1999 657,144 $ 2,311,086 17,549,402 $ 17,549 100,000 $550,000
Rescission of Preferred A
convertible stock to
reverse the acquisition
of 100% of the common
stock of Realty Center,
Inc. and a 25% interest
in the Heartland Homes
Joint Venture ( 228,572) ( 800,000)
Rescission of Preferred B
convertible stock to
reverse the acquisition
of 100% of the common
stock of M.P. Hall
Enterprises, Inc. (100,000) (550,000)
Issuance of common stock
for legal and
consulting services
rendered 2,105,458 2,106 1,959,199
Common stock issued for
equipment on May 25,
2000 135,008 135 79,925
Common stock issued in
connection with
investment banking
services 300,000 300 317,700
Officer loans 327,511 327 191,422
Net (loss) for the year
ended June 30, 2000
-------- ---------- ---------- --------- -------- ---------
Closing balance -
June 30, 2000 428,572 $1,511,086 20,417,379 $ 20,417 $ - $ -
======== ========== ========== ========= ======== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED JUNE 30, 2000 (continued)
Deficit
Accumulated
Additional During the Total
Paid-in Officer Development Stockholders'
Capital Loans Stage Equity
----------- -------- ------------- ------------
Opening balance -
July 1, 1999 $13,647,515 $ - $( 1,207,329) $ 15,318,821
Rescission of Preferred A
convertible stock to
reverse the acquisition
of 100% of the common
stock of Realty Center,
Inc. and a 25% interest
in the Heartland Homes
Joint Venture (800,000)
Rescission of Preferred B
convertible stock to
reverse the acquisition
of 100% of the common
stock of M.P. Hall
Enterprises, Inc. (550,000)
Issuance of common stock
for legal and
consulting services
rendered 1,961,305
Common stock issued for
equipment on May 25,
2000 80,060
Common stock issued in
connection with
investment banking
services 318,000
Officer loans (191,749) -
Net (loss) for the year
ended June 30, 2000 ( 3,105,360) ( 3,105,360)
----------- -------- ------------- ------------
Closing balance -
June 30, 2000 $ 16,195,761 $(191,749) $( 4,312,689) $ 13,222,826
=========== ======== ============= ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1999 AND
CUMULATIVE FROM FEBRUARY 10, 1997 (INCEPTION)
Convertible Convertible Common
Preferred Preferred Stock
Stock A Stock B .001 Par Value
Shares Amount Shares Amount Shares Amount
-------- ---------- -------- --------- ---------- ---------
Initial issuance of
common stock
as restated to
account for the 2
for 1 stock split
dated March 19, 1999 $ $ 2,000,000 $ 2,000
Net (loss) during the
development stage
through June 30, 1998
Issuance of common
stock in exchange for
100% of the common
stock of Affordable-
Nevada on March 17,
1999 4,000,000 4,000
Issuance of common
stock to founders
on March 18, 1999 250,000 250
Common stock split
on a 2 for 1 basis
on March 19, 1999 4,000,000 4,000
Issuance of convertible
preferred A stock for
the acquisition of 100%
of the common stock of
Kampen and Associates,
Inc. on April 14, 1999 428,572 1,511,086
Issuance of common stock
for the acquisition of
Composite Industries,
Inc. on April 28, 1999 6,514,270 6,514
-------- ---------- -------- --------- ---------- ---------
Subtotal 428,572 $1,511,086 - $ - 16,764,270 $16,764
======== ========== ======== ========= ========== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1999 AND
CUMULATIVE FROM FEBRUARY 10, 1997 (INCEPTION)
Deficit
Accumulated
Additional During the Total
Paid-in Development Stockholders'
Capital Stage Equity
----------- ------------- ------------
Initial issuance of
common stock
as restated to
account for the 2
for 1 stock split
dated March 19, 1999 $ $ $ 2,000
Net (loss) during the
development stage
through June 30, 1998 ( 17,000) ( 17,000)
Issuance of common
stock in exchange for
100% of the common
stock of Affordable-
Nevada on March 17,
1999 ( 4,000) -
Issuance of common
stock to founders
on March 18, 1999 ( 250) -
Common stock split
on a 2 for 1 basis
on March 19, 1999 ( 4,000) -
Issuance of convertible
preferred A stock for
the acquisition of 100%
of the common stock of
Kampen and Associates,
Inc. on April 14, 1999 1,511,086
Issuance of common stock
for the acquisition of
Composite Industries,
Inc. on April 28, 1999 11,792,399 11,798,913
----------- ------------- ------------
Subtotal 11,784,149 $ ( 17,000) $ 13,294,999
=========== ============= ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1999 AND
CUMULATIVE FROM FEBRUARY 10, 1997 (INCEPTION)(continued)
Convertible Convertible Common
Preferred Preferred Stock
Stock A Stock B .001 Par Value
Shares Amount Shares Amount Shares Amount
-------- ---------- -------- --------- ---------- ---------
Balance carried forward 428,572 1,511,086 - - 16,764,270 16,764
Issuance of Preferred B
convertible stock in the
acquisition of M.P. Hall
Enterprises, Inc. on
April 27, 1999 100,000 550,000
Issuance of restricted
common stock in the
acquisition of Big
Mountain Construction
Company, Inc. on
June 28, 1999 215,983 216
Issuance of preferred A
stock in the acquisition
of 100% of the common
stock of Realty Center,
Inc. and a 25% interest
in the Heartland Homes
Joint Venture on June 28,
1999 228,572 800,000
Issuance of common stock
for services rendered
and other consulting
services 569,149 569
Net (loss) for the year
ended June 30, 1999
-------- ---------- -------- --------- ---------- ---------
Closing balance -
June 30, 1999 657,144 $2,311,086 100,000 $550,000 17,549,402 $17,549
======== ========== ======== ========= ========== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1999 AND
CUMULATIVE FROM FEBRUARY 10, 1997 (INCEPTION)(continued)
Deficit
Accumulated
Additional During the Total
Paid-in Development Stockholders'
Capital Stage Equity
----------- ------------- ------------
Balance carried forward 11,784,149 ( 17,000) 13,294,999
Issuance of Preferred B
convertible stock in the
acquisition of M.P. Hall
Enterprises, Inc. on
April 27, 1999 550,000
Issuance of restricted
common stock in the
acquisition of Big
Mountain Construction
Company, Inc. on
June 28, 1999 524,904 525,120
Issuance of preferred A
stock in the acquisition
of 100% of the common
stock of Realty Center,
Inc. and a 25% interest
in the Heartland Homes
Joint Venture on June 28,
1999 800,000
Issuance of common stock
for services rendered
and other consulting
services 1,338,462 1,339,031
Net (loss) for the year
ended June 30, 1999 ( 1,190,329) (1,190,329)
----------- ------------- ------------
Closing balance -
June 30, 1999 $ 13,647,515 $ ( 1,207,329) $ 15,318,821
=========== ============= ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2001 AND 2000 AND
CUMULATIVE FROM FEBRUARY 10, 1997 (Inception)
Cumulative from
inception to
2001 2000 June 30, 2001
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $( 2,740,898) $( 3,105,360) $( 7,053,587)
ADJUSTMENTS TO RECONCILE NET (LOSS)
TO CASH (USED) IN OPERATING ACTIVITIES
Depreciation and amortization 1,092,591 1,096,145 2,338,372
Deferred tax benefit ( 473,547) ( 2,112,219) ( 3,140,104}
Stock issued for services and equipment 954,104 2,041,365 4,334,500
Officer loans converted to compensation 191,749 - 191,749
Net loss on disposition of subsidiaries 386,708 1,604,166 1,954,680
(Gain) on sale of automobile ( 2,092) - ( 2,092)
(Increase) decrease in assets:
Employee advances - ( 21,823) ( 67,423)
Other receivables - 9,000 -
Capitalized interest - 442,982 311,899
Land and development costs ( 65,991} - ( 65,991}
Increase (decrease) in liabilities:
Accounts payable ( 51,494} 12,348 3,530
Accrued expenses ( 175,360} 35,757 20,000
Accrued interest 22,313 ( 206,667} 22,313
----------- ----------- -----------
Total Adjustments 1,878,981 2,901,054 5,901,433
----------- ----------- -----------
Net cash (used) by operating activities ( 861,917} ( 204,306} ( 1,152,154)
CASH FLOWS FROM INVESTING ACTIVITIES:
Machinery and equipment acquisitions ( 62,337) ( 723} ( 84,925}
Disposition of automobile 16,870 - 16,870
----------- ----------- -----------
Net cash (used) by investing activities ( 45,467) ( 723} ( 68,055}
----------- ----------- -----------
Subtotal ( 907,384} ( 205,029} ( 1,220,209)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock - - 2,000
Notes payable 125,000 - 125,000
Advances from (to) related parties 325,301 46,147 679,642
Issuance of convertible debenture 910,000 - 910,000
Issuance of Common Stock through
exercise of stock options 200,000 - 200,000
Payments towards loans and notes payable ( 4,291) - ( 4,291)
Payments towards land purchase option - ( 15,000} ( 25,000}
----------- ----------- -----------
Net cash provided by financing activities 1,556,010 31,147 1,887,351
----------- ----------- -----------
Net increase (decrease) in cash 648,626 ( 173,882} 667,142
----------- ----------- -----------
Cash - beginning of period 18,516 192,398 -
----------- ----------- -----------
Cash - end of period $ 667,142 $ 18,516 $ 667,142
=========== =========== ===========
Supplemental Disclosure of cash flow information:
Cash Paid During the Year for:
Interest expense $ 31,429 $ 33,886 $ 65,315
=========== =========== ===========
Income taxes $ - $ - $ -
=========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2001 AND 2000 AND
CUMULATIVE FROM FEBRUARY 10, 1997 (Inception)
NON-CASH INVESTING AND FINANCING TRANSACTIONS
On May 25, 2000, Composite issued 135,008 shares of common stock valued at
$80,060 to purchase certain construction equipment.
During the year ended June 30, 2000, Composite issued 2,105,458 shares of
common stock valued at $1,961,305 to various individuals for legal and
consulting services performed.
Composite issued 327,511 shares of common stock issued to an officer valued at
$191,749 for which payment was not received by June 30, 2000. Accordingly the
officer loan was reflected as an offset to stockholders' equity in the
accompanying financial statements as of June 30, 2000. During the year ended
June 30, 2001, $163,000 was repaid. The balance of $28,749 was converted to
compensation. In addition, $96,100 was advanced and charged to compensation
during the year ended June 30, 2001.
During the year ended June 30, 2001, Composite issued 90,000 shares of common
stock valued at $45,000 to various individuals for legal and consulting
services performed.
During the year ended June 30, 2001, Composite issued 1,975,000 shares of
common stock valued at $789,325.
On January 30, 2001, a consultant was granted an option to purchase 375,000
shares of common stock of Composite at $0.00125 per cent per share for a total
price of $469. The value of the common stock on the date of issue was $120,469
or $0.32125 per share resulting in compensation of $120,000. The stock option
agreement is for a term of five years.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
COMPOSITE INDUSTRIES OF AMERICA, INC. and SUBSIDIARIES
(F/K/A World Homes, Inc./Affordable Homes of America, Inc.)
(a development stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 and 2000
NOTE 1 - General and Summary of Significant Accounting Policies
(A) - Nature of Business
Composite Industries of America, Inc. ("Composite"- formerly known as World
Homes, Inc./ Affordable Homes of America, Inc.), is a development stage
company primarily in the business of land development and the construction of
residential houses. Composite owns the patent rights to a compound to be used
in the construction process referred to as Z-MIX. The process is more fully
described in Note 2.
Composite's operations include its wholly owned subsidiary Big Mountain
Construction Company, Inc., which is a general building contractor. During
the fiscal quarter ended March 31, 2001, operations of Big Mountain
terminated. Composite Industries' corporate headquarters are located in Las
Vegas, Nevada.
During the 2001 fiscal year, the Company underwent a name change to World
Homes, Inc. The Company changed its name again to Composite Industries of
America, Inc. in August 2001.
(B) - Consolidated Net (Loss) per Common Share
Consolidated net (loss) per common share is computed on the basis of the
weighted average number of common shares outstanding during the period. Only
the weighted average number of shares of common stock outstanding was used to
compute basic loss per share for the period from inception, to June 30, 2001
and 2000 as the inclusion of stock options are anti-dilutive. There were no
stock warrants, or other common stock equivalents outstanding during this
period.
(C) - Income Taxes
Income taxes are provided or a benefit is accrued on all revenue and expense
items included in the consolidated statements of operations, regardless of the
period in which such items are recognized for income tax purposes, except for
items representing a permanent difference between pretax accounting income and
taxable income.
(D) - Depreciation
Composite depreciates equipment, vehicles, furniture and fixtures, and
machinery on a straight-line basis over five to seven years for financial
reporting purposes.
(E) - Patents
Composite amortizes its patent rights from the date of acquisition on a
straight-line basis over its remaining life of 16 years and 3 months.
(F) - Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the 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.
(G) - Basis of Presentation
The accompanying consolidated balance sheets and related consolidated
statements of operations, stockholders' equity and cash flows during the
development stage, includes the accounts of Composite Industries of America,
Inc. and Big Mountain Construction Company, Inc. as of June 30, 2001. For the
year ended June 30, 2000, the operations included Composite Industries of
America, Inc., Kampen and Associates, Inc., and Big Mountain Construction
Company, Inc. Significant inter-company transactions or balances as of and for
the periods ended June 30, 2001 and 2000 have been eliminated.
(H) - Reclassification
Certain reclassifications have been made to the year 2000 balances to conform
them to the current year's presentation. These had no effect on the year 2000
results of operations.
Note 2 - Patent
Acquisition
On April 28, 1999, Composite Industries of America, Inc. acquired 100% of the
common stock of Composite Industries, Inc. for 6,514,270 shares of Common
Stock of Composite valued at $2.73 per share or $17,769,200. Composite
Industries, Inc.'s most significant asset was a patent covering the
construction material "Z-MIX". Z-MIX is a cementitious building material that
can be used in a two-step construction method instead of cement, drywall or
lumber. Composite believes Z-MIX will enable it to build a better quality
home at a lower price than if other building products were used. Management
assigned a net value of $17,198,099 to the patent based upon the fair market
value (the average of the closing stock prices of Composite's common stock two
days prior to and two days after the acquisition date) of Composite common
stock issued to acquire Composite Industries, Inc.
The gross value resulting from the application of the average fair market
value less the value of all other assets acquired was discounted by 25% in
recognition of the restricted nature of the stock issued as well as the fact
that the common stock was thinly traded during the period encompassing the
acquisition date.
On June 12, 2000, Composite signed a joint venture agreement with a major
construction contractor to build homes in third world countries utilizing Z-
MIX. Management believes that it is appropriate to continue to carry the cost
of the patent at June 30, 2001 because the signing of the long-term contract
demonstrates the patent's immediate commercial viability. Furthermore,
management believes that the expected future profits and cash flows will
support the carrying value of the patent. The patent is being amortized on a
straight-line basis over the remaining life of the patent (195 months as of
the acquisition date). Patent amortization expense amounted to $1,042,500 in
each of the years ended June 30, 2001 and 2000.
Note 3 - Acquisition of Subsidiaries
Kampen and Associates, Inc. - Effective April 14, 1999, Composite purchased
100% of the common stock of Kampen and Associates, Inc. for 428,572
convertible Class A preferred shares of Composite valued at $3.53 per share
for a total purchase price of $1,511,086. The cost basis of the net assets
acquired was increased by $1,511,086 to reflect the purchase price of the
company. The acquisition was treated as a purchase for financial reporting
purposes. No goodwill was recognized in the transaction. The inability of
Composite to maintain current payments for the land purchase options caused
Composite to abandon its entire investment in Kampen during the fiscal year
ended June 30, 2000.
Abandonment of Land Purchase and Options
The assets acquired thru the purchase of Kampen, were primarily comprised of
an agreement to purchase land and improvements that was financed through an
option payment agreement. On May 21, 1999, Kampen was served with a notice
of foreclosure as a consequence of its default on the related obligation. As
a result of this action by the creditors, Kampen filed for protection under
the provisions of Chapter 11 of U.S. Bankruptcy Code on June 24, 1999. On
January 14, 2000, The U.S. Bankruptcy Court required a foreclosure on the
property and caused Composite to abandon its investment and the related debts.
The total cost of the land, land improvements and capitalized interest
amounted to $6,793,107.
Total debt, including the loan from Cascade Land Depository, accrued interest
and the options, amounted to $5,188,941. As a result, a net loss was incurred
amounting to $1,604,166 and is included as other expense for the year ended
June 30, 2000.
Composite Industries, Inc. - Composite Industries, Inc. was acquired by
Composite under an agreement dated on April 28, 1999 and immediately merged
into Composite. The agreement called for the conversion of 100% of the issued
and outstanding shares of Composite Industries, Inc. in exchange for
Composite's common stock at the rate of two shares of Composite Industries,
Inc. for each share of Composite. As of the effective date, there were
13,028,539 common shares of Composite Industries, Inc. outstanding. The
acquisition was treated as a purchase for financial reporting purposes.
M.P. Hall Enterprises, Inc. - On April 27, 1999, Composite acquired 100% of
M.P. Hall's common stock in exchange for 100,000 shares of preferred B stock
for a total purchase price of $550,000. M.P. Hall's assets consisted of land
and development costs incurred to build a motel in Washington State. The
acquisition was treated as a purchase for financial reporting purposes. No
goodwill was recognized in the transaction. Composite rescinded the
transaction during the year ended June 30, 2000.
Big Mountain Construction Company, Inc. - Effective June 28, 1999, Composite
purchased 100% of the common and preferred stock of Big Mountain Construction
Company, Inc. for 215,983 restrictive common shares of Composite valued at
$2.43 per share for a total purchase price of $525,120. The acquisition was
treated as a purchase for financial reporting purposes. Goodwill in the
amount of $408,197 was recognized in the transaction. Goodwill is amortized
on the straight-line basis over twenty years commencing July 1, 1999. The
inability of Composite to maintain the operations of Big Mountain caused
Composite to abandon its entire investment in Big Mountain in March, 2001.
The abandonment of the entire investment in Big Mountain includes a loss on
the sale of land in the amount of $197,650, a loss on disposal of equipment in
the amount of $34,663, a loss on disposition of goodwill in the amount of
$377, 579, and a gain on forgiveness of debt in the amount of $223,184. As a
result, a net loss was incurred amounting to $386,708, and is included as
other income and expense for the year ended on June 30, 2001.
Realty Center, Inc. - Effective June 28, 1999, Composite purchased 100% of the
common stock of Realty Center, Inc. for 114,286 convertible Class A preferred
shares of Composite valued at $3.50 per share for a total purchase price of
$400,000. Realty Center's assets consisted of a 25% joint venture interest in
a real estate development project known as Heartland Homes. Further,
Composite acquired an additional 25% interest in Heartland Homes directly by
issuing an additional 114,286 shares of convertible Class A preferred stock.
Immediately after Composite's acquisition of Realty Center, Composite
transferred it's 25% interest in Heartland into Realty Center. The acquisition
was treated as a purchase for financial reporting purposes. No goodwill was
recognized in the transaction. When the anticipated financing from Euro
Federal Bank, NV failed to materialize, (see Note 15) Composite decided that
it was in the best interest of all parties to rescind the transaction during
the year ended June 30, 2000.
Allocation of the purchase price for each of the transactions follows:
Kampen and Composite M.P. Hall Big Mountain Realty Total
Associates, Industries Enterprises Construction Center all
Inc. Inc. Inc. Company, Inc. Inc. Companies
----------- ---------- -------- --------- -------- -----------
Assets
Cash $ - $ 296,662 $ - $ 9,858 $ - $ 306,520
Employee and
other advances - 234,133 - 54,600 - 288,733
Land, development
and capitalized
interest costs 6,668,676 885,252 516,703 - 8,070,631
Equipment (net) - 40,306 - 57,720 - 98,026
Patent 17,198,099 - - - 17,198,099
Investment in
Joint Venture - - - 800,000 800,000
Goodwill - - 408,197 - 408,197
----------- ---------- -------- --------- -------- -----------
Total $ 6,668,676 $17,769,200 $ 885,252 $1,047,078 $ 800,000 $ 27,170,206
=========== ========== ======== ========= ======== ===========
Kampen and Composite M.P. Hall Big Mountain Realty Total
Associates, Industries Enterprises Construction Center all
Inc. Inc. Inc. Company, Inc. Inc. Companies
----------- ---------- -------- --------- -------- -----------
Liabilities Assumed
and Equity
Liabilities assumed $ 5,157,590 $ 5,970,287 $ 335,252 $ 521,958 $ - $ 11,985,087
Convertible
Preferred stock 1,511,086 - 550,000 - 800,000 2,861,086
Common stock - 6,514 - 216 - 6,730
Additional paid-
in capital - 11,792,399 - 524,904 - 12,317,303
----------- ---------- -------- --------- -------- -----------
Total $ 6,668,676 $17,769,200 $ 885,252 $1,047,078 $ 800,000 $ 27,170,206
=========== ========== ======== ========= ======== ===========
Note 4 - Advances to Omega International, Inc.
Composite had from time to time advanced funds to Omega International, Inc.,
an unrelated company, in the business of developing products for the
construction industry. Composite advanced funds totaling $224,140 through
June 30, 1999 in an effort to assist Omega in further developing its products.
The notes were unsecured, due upon demand, and bore interest at 8% per annum.
Interest income was recorded by Composite from April 28, 1999 to June 30, 1999
in the amount of $3,436. During the fiscal year ended June 30, 2000, Omega
filed for bankruptcy protection under Chapter 7 of the U.S. Bankruptcy Code
and accordingly, management concluded that the advances were not collectible
and were written off. For financial statement purposes, the expense is
included as a component under the caption bad debt expense.
Note 5 - Machinery and Equipment
Machinery and equipment consists of the following as of June 30:
2001 2000
------- -------
Equipment and tools not
placed in service $ 80,060 $ 80,060
Machinery and equipment 90,244 84,640
Office equipment 5,094 17,982
Furniture and fixtures 3,032 3,032
Vehicles 26,607 63,540
------- -------
205,037 249,254
Less: accumulated
depreciation (40,232) (73,226)
------- -------
Total $ 164,805 $ 176,028
======= =======
Depreciation expense was incurred in the amount of $28,424 and $33,235 for the
years ended June 30, 2001 and 2000, respectively, and is included in operating
expenses.
NOTE 6 - Income Taxes
Composite accounts for income taxes on the liability method, as provided by
Statement of Financial Accounting Standards 109, Accounting for Income Taxes
(SFAS 109). For the years ended June 30, 2001 and 2000 the income tax
(benefit) was comprised of the following components:
2001 2000 Cumulative
-------- --------- ----------
Current - Federal $ - - -
State - - -
-------- --------- ----------
Total current - - -
Deferred-Federal (473,547) (2,112,219) (3,140,104)
State - - -
-------- --------- ----------
Total deferred (473,547) (2,112,219) (3,140,104)
Total $ (473,547) $(2,112,219) $(3,140,104)
======== ========= ==========
The only differing method of reporting income for tax purposes as compared to
financial reporting purposes was in nnection with the deferred tax liability
resulting from the acquisition of patent rights described in Note 2. In
addition, there is a deferred tax asset relating to the benefit provided by
the net operating loss carry forward. As there are no state income taxes to
be considered, the income tax provision is computed at the federal statutory
rate of 34%.
Deferred tax assets and liabilities consist of the following:
2001 2000
Deferred tax assets- ------------- -------------
Tax benefit of net operating
loss carryovers $ 2,390,000 $ 2,262,655
Valuation allowance - -
------------- -------------
$ 2,390,000 $ 2,262,655
============= =============
Deferred tax liabilities-
Patent rights acquired $ 4,963,183 $ 5,309,385
============= =============
No valuation allowance was required for the deferred tax asset for each of the
years presented because management determined that there is a strong
likelihood of realization of the deferred tax asset. The deferred tax asset
relates to the net operating loss carry forward. Composite incurred net
operating losses for financial reporting purposes totaling $2,740,898 during
2001 available to offset future income for financial reporting purposes
expiring in 2020.
NOTE 7 - Loans and Notes Payable
The following schedule summarizes loans and notes payable as of
June 30, 2001 and 2000:
2001 2000
-------- --------
Note payable to Joseph Vozka dated January 30, 2001
secured by forms built by Precise Forms, Inc. due on
demand including interest at 15% per annum $ 125,000 $ -
Automobile loan dated April 11, 2000 payable at $412
per month including interest at 5.12% per annum with
the final installment due on April 11, 2005 8,429 12,720
Equipment loan dated May 20, 1999 related to Big
Mountain Construction Company, Inc., secured by
excavating equipment payable at $1,664 per month
including interest at 20.9% per annum with the final
installment due on May 20, 2001 - 15,159
Construction loan dated August 11, 1998 secured by
land and property with monthly payments on an interest
only basis and principal due October 1, 2000
including extension at prime + 2%, currently 11.5%
at June 30, 2000 - 295,615
-------- --------
Total $ 133,429 $ 323,494
Less: current maturities $ 129,627 $ 315,065
-------- --------
Long-term portion $ 3,802 $ 8,429
======== ========
The loans payable for the construction loan and to B ig Mountain Construction
Company were written off during the year ended June 30, 2001 due to the
disposition of Big Mountain Construction Company, Inc. and amounts were
included under the caption net loss on disposition of subsidiaries. Interest
expense for the years ended June 30, 2001 and 2000 amounted to $31,429 and
$33,886, respectively. The carrying value of the Company's borrowings
approximate their fair values.
NOTE 8 - Related Party Transactions
Composite has entered into consulting agreements with certain members of the
Company's Board of Directors and stockholders to provide services on various
strategic and business issues. The agreements are renewable at the discretion
of management. Total fees paid for such services by the Company either in
stock or cash during the years ended June 30, 2001 and 2000 were $1,154,325
(including $200,000 cash) and $1,168,375 respectively and are included in
operating expenses in the consolidated statements of operations.
Management believes the transactions were at arm's length.
The President and Chief Executive Officer has from time to time advanced funds
to Composite or one of its subsidiaries to assist with working capital
requirements. These transactions are short-term in nature. Such funds
advanced to the Company amounted to $325,301 and $281,434 as of June 30, 2001
and 2000, respectively, and are carried in loans and advances from related
parties. Interest related to these advances during the year ended June 30,
2000 at 8% amounted to $20,809. No interest was charged for the year ended
June 30, 2001.
NOTE 9 - Officer loans
On May 25, 2000, Composite issued 327,511 shares of common stock in connection
with its Regulation S-8 filing valued at $191,749 to an officer of the company
as nominee for the purpose of selling the shares on the open market and using
the proceeds to pay specific company expenses. Since the common stock was
issued in the officer's name, the officer has a liability to the company for
the value of the shares at the date of issuance. Accordingly, an officer loan
was recorded for $191,749 and was reflected as a reduction of stockholders'
equity at June 30, 2000. During the fiscal year 2001, the officer's loan in
this amount was converted to compensation and expensed in the accompanying
financial statements. $163,000 was repaid and the balance was expensed as
officer compensation. An additional $96,100 was advanced and charged to
officer compensation
NOTE 10 - Concentration of Credit Risk - Cash
Composite maintains its cash balances at financial institutions located in
Nevada. At times, the balance may exceed federally insured limits of
$100,000. The Company has not experienced any losses in such accounts and
believes it is not exposed to any significant credit risk on cash on deposit.
The fair market value of this financial instrument approximates cost.
NOTE 11 - Industry Segment Information Composite's operations fall under
one segment.
NOTE 12 - Stockholders' Equity
The Company is authorized to issue two classes of convertible preferred stock;
Class A and Class B. Each share of Class A preferred is convertible to common
stock at $3.50 per share. Class B preferred stock is convertible to common
stock at $5.50 per share. Each class of preferred stock is authorized at
5,000,000 shares. At June 30, 2000, 428,572 shares of Class A convertible
preferred stock and no shares of Class B convertible preferred stock were
issued and outstanding. During 2001, 228,572 shares of class A and 100,000
shares of class B were rescinded and the acquisitions they related to were
terminated.
NOTE 13 - Stock Options
Composite established a stock option plan during the 2001 fiscal year. In
prior years, an incentive stock option plan was authorized but was cancelled
on June 8, 2000 by the Board of Directors.
Below is summarized the option activity for the years ended June 30, 2001 and
2000.
2001 Weighted 2000 Weighted
Options Average Options Average
------- -------- --------- -------
Securities outstanding - beginning of year - 7,000,000 $0.38
Securities granted 875,000 $0.23 -
Securities exercised 500,000 $0.40 -
Securities cancelled - 7,000,000 $0.38
------- -------- --------- -------
Securities outstanding - end of year 375,000 NIL -
======= ======== ========= =======
Composite issued stock options to a public relations firm in connection with
an agreement signed on June 8, 2000. The stock options issued as part of the
agreement expire after three years. The agreement calls for vesting of
options as follows:
15,000 shares @ $1.50 per share when the stock price reaches $1.50
15,000 shares @ $2.50 per share when the stock price reaches $2.50
25,000 shares @ $3.50 per share when the stock price reaches $3.50
25,000 shares @ $4.50 per share when the stock price reaches $4.50
These options were cancelled during the fiscal year ended June 30, 2001.
On January 30, 2001, a consultant was granted an option to purchase 375,000
shares of common stock at $0.00125 cent per share for a total price of $469.
The value of the common stock on the date of issue was $120,469 or $0.32125
per share resulting in compensation of $120,000. The stock option agreement is
for a term of five years.
An officer was granted an option to purchase 500,000 shares of restricted
common stock of Composite at an exercise price of $.40 per share and on June
4, 2001, he exercised the stock options and the Company received $200,000.
NOTE 14 - Stock Issued For Services
During the fiscal year ended June 30, 2001, the Company issued stock for
services rendered by outside professionals and officers of the Company. A
total of 2,065,000 shares of stock were issued and valued at $834,325. These
costs are included in operating expenses in the accompanying consolidated
statements of operations.
NOTE 15 - Commitments and contingencies
During the year ended June 30, 2000, Composite issued 45,000,000 shares of
common stock to Euro Federal Bank, NV as collateral for an anticipated loan
and financing agreement. No loans or financings were extended to Composite and
the stock certificates were stopped. Euro Federal Bank has returned the shares
to Composite Industries. Accordingly, these shares were not considered
outstanding in the earnings per share calculation.
Composite rents office space for its Las Vegas, Nevada headquarters on a month
to month basis. Rent expense amounted to $7,680 for each of the fiscal years
ended June 30, 2001 and 2000.
NOTE 16 - Fair Value of Financial Instruments
Estimated fair value of Composite financial instruments are as follows:
2001 2000
--------------------- --------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------------------- --------------------
Cash $ 667,142 $ 667,142 $ 18,516 $ 18,516
Notes payable 125,000 125,000 310,774 310,774
Loans and advances
from related parties 325,301 325,301 281,434 281,434
Automobile loan 8,429 8,429 12,720 12,720
Convertible debenture $ 931,750 $ 931,750 - -
--------------------- --------------------
The fair value of the financial instruments related to debt is based on
current rates at which Composite could borrow funds with similar remaining
maturities.
NOTE 17 - Violations of the Securities Act of 1934
On June 8, 2001, the SEC filed a complaint with the United States District
Court, District of Nevada, alleging that certain press releases issued by
Composite Industries, and corporate officers Merle Ferguson and Susan Donohue
contained misrepresentations of material information in connection with
contracted revenues and projected gross profits, operational facilities and
the securing of financing. Also, the Company was cited in the complaint for
issuing common stock to officers who in turn sold those shares into the market
to finance Composite's current operations prior to having a registration
statement in effect.
The defendants, without admitting or denying the allegations set forth in the
Complaint, have agreed to consent judgments permanently restraining them from
committing the violations alleged in the Complaint in the future. The penalty
in the amount of $120,000 was assessed personally to Ferguson which has agreed
to pay and is not an obligation payable by Composite. The proposed final
judgments have been submitted to the SEC's Washington office for approval and
are pending.
NOTE 18 - Going Concern Considerations
Composite Industries has operated as a development stage enterprise since
February 10, 1997, its inception and therefore has operated for over four
years without generating revenues. Funds have been generated primarily by the
extension of loans and advances from officers and directors and the issuance
of common and preferred stock and debentures. The failure to generate
revenues from operations has caused Composite to experience liquidity
shortfalls from time to time.
The Chairman, Merle Ferguson has pledged to continue to contribute money to
keep Composite solvent during the next twelve months. Further, the Company
has contracts with joint venture partners and expects to commence construction
operations during fiscal year 2002. It is for these reasons that management
believes that substantial doubt about Composite's ability to continue as a
going concern is alleviated.
NOTE 19 - Convertible Debentures
On April 5, 2001, Composite issued $1,000,000 of 6% convertible debentures due
April 5, 2002. The Company received proceeds of $910,000, net of a bond
discount of $90,000. The bond discount is being amortized over the life of
the debentures and $21,750 was amortized during 2001. The debentures are
required or permitted to be repaid at the "Maturity Date" as provided
thereunder and to pay interest to the holder on the aggregate unconverted and
then outstanding principal amount of the debentures at the rate of 6% per
annum, payable on each conversion date (date that a conversion notice is
provided) and on the maturity date in cash or shares of common stock. No
debentures were converted as of June 30, 2001. Interest of $14,500 was
accrued on the debentures during the year ended June 30, 2001. The effective
rate of interest on the debentures was 15.4% through June 30, 2001.
The debenture restricts a holder from converting the debenture or receiving
common stock as payment of interest to the extent such conversion or receipt
of such interest payment would result in the holder beneficially owning in
excess of 9.999% of the then issued and outstanding shares of common stock,
including shares issuable upon conversion of, and payment of interest on, the
debentures held by such holder.
NOTE 20 -Subsequent Events
Acquisitions:
Composite acquired 100% of the common stock of MJB Towers, Inc. a California
corporation in the business of acquiring and leasing telecommunication towers,
in exchange for 1,000,000 shares of preferred stock. In addition, the terms
of the agreement specify a bonus payment first, beginning with the first month
of operations, and there is a provision for an additional bonus based on
future performance.
Stock Transactions:
Financial Consulting Agreement
On July 2, 2001, the Company issued 150,000 shares of common stock to a
financial consulting firm as a "commencement bonus" under an agreement wherein
the financial consultant will perform certain evaluations and analyses for the
Company. Additionally, the financial consultant will be paid $3,000 (or 4,000
shares of common stock) per month for such services. The agreement term is
for six months starting on May 23, 2001. These shares related to the
commencement bonus have been valued at $.44 per share for a total valuation of
$66,000. This will be recognized as consulting expenses over six months
commencing July, 2001.
Restricted Stock Issued For Consulting Services On July 11, 2001, a total of
149,385 shares of the Company's common stock were issued to two individuals
for consulting services. These shares are restricted as to transferability
under SEC Rule 144 for a period of one year. The shares have been valued at
$.53 per share for a total valuation of $79,174. This will be recognized as
consulting expense over twelve months commencing July, 2001.
Corporate Officers The Company issued 17,000,000 shares of common stock to
senior corporate officers on August 23, 2001. The shares were issued for
future services to be rendered to the Company related to capital raising
efforts, building alliances, and overall corporate strategy development. These
shares are restricted as to transferability under SEC Rule 144. The trading
restrictions run for a two-year period. The shares have been valued at $.33
per share for a total valuation of $5,525,000. This value reflects a discount
for the two-year trading restriction as well as a discount related to the
volume of shares in this transaction compared to the number of shares
outstanding. Therefore, the unearned compensation of $5,525,000 related to
this transaction will be amortized to compensation expense ratably over a two
year period.
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not Applicable
ITEM 9 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table shows the positions held by the Company's officers and
directors. The directors were appointed and will serve until the next annual
meeting of the Company's stockholders, and until their successors have been
elected and have qualified. The officers were appointed to their positions,
and continue in such positions at the discretion of the directors.
-------------------------------------------------------------------------------
NAME AGE POSITION
-------------------------------------------------------------------------------
Merle Ferguson 54 President, CEO and Chairman of the Board
William Morris 63 Vice President of Finance,
Chief Financial Officer,
Treasurer
Susan Donohue 48 Vice President of Operations, Secretary
-------------------------------------------------------------------------------
Merle Ferguson, President, CEO and Chairman of the Board, founded Affordable
Homes of America, Inc. in 1997 after a successful career in the construction
industry. Mr. Ferguson's goal was to form a national construction company
able to create affordable, quality homes for first-time and low-income
homebuyers. Prior to starting the Company, Mr. Ferguson spent 24 years in the
construction industry as a builder and real estate developer in California,
Oregon and Washington States.
Mr. Ferguson attended Yakima Valley College from 1964-1966 with a major in
forestry and a minor in Business Management. In April of 1966, he enlisted in
the United States Marine Corps, serving two tours in Vietnam, and was
honorably discharged in 1970. For the past 7 years, Mr. Ferguson has been
researching new construction products used to reduce deforestation. Some of
the construction methods under development by the Company use no timber
products.
William Morris joined Composite Industries of America as Vice President of
Finance, Chief Financial Officer and Treasurer of the Board in May of 2001.
Mr. Morris brings over 30 years of financial and accounting experience to the
Company. The majority of the 30 years were performing the duties of Chief
Financial Officer. He was the CFO for (Sony) / Superscope, Inc. and Maranatz
Company, Inc., and at one time was the youngest CFO of a New York Stock
Exchange company.
Susan Donohue is the Vice President of Operations, and Secretary of the
Board. She was one of the two founders of Zawada Technologies, Inc. At
Zawada Technologies she worked directly with Joseph Zawada on the research of
the Z Mix product. Zawada Technologies merged with Composite Industries, Inc.
Ms. Donohue joined Affordable Homes/World Homes when the original Composite
merged with the Company. Ms. Donohue attended the University of Wisconsin at
Stevens Point with a focus in sociology and psychology. Ms. Donohue also
attended Cardinal Stritch College of Madison, where she majored in Business
Administration.
ITEM 10 EXECUTIVE COMPENSATION
Composite Industries of America has employment agreements with its officers.
Merle Ferguson and Susan Donohue are paid through business management services
agreements with the Company. Merle Ferguson is paid $150,000 per year,
William Morris is paid $120,000 per year and Susan Donohue is paid $60,000 per
year. The compensation is for services as officers and/or directors,
specific senior roles, consulting services with regards to corporate
operations and day-to-day duties and responsibilities of running the corporate
office.
During the fiscal year ended June 30, 2001, the Company issued stock for
services rendered by officers of the Company. A total of 1,195,000 shares of
stock were issued and valued at $479,200.
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 30, 2001, information regarding the
beneficial ownership of shares by each person known by the Company to own
five percent or more of the outstanding shares, by each of the directors and
by the officers and directors as a group.
-------------------------------------------------------------------------------
Title of class Name and address Amount of Percent
of beneficial owner beneficial of class
ownership
-------------------------------------------------------------------------------
Common Stock Merle Ferguson 10,438,000 45.9%
4505 W. Hacienda Ave. #I-1
Las Vegas, Nevada 89118
Common Stock William Morris 0 0.0%
4505 W. Hacienda Ave. #I-1
Las Vegas, Nevada 89118
Common Stock Susan Donohue 775,000 3.4%
4505 W. Hacienda Ave. #I-1
Las Vegas, Nevada 89118
-------------------------------------------------------------------------------
All Officers as a Group and Directors 11,213,000 49.3%
===============================================================================
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into a consulting agreement with certain members of
the Company's Board of Directors and stockholders to provide services on
various strategic and business issues. The agreements are renewable at the
discretion of management. Total fees paid for such services by the Company
either in stock or cash during the years ended June 30, 2001 and 2000 were
$1,154,325 and $1,168,375 respectively.
The President and Chief Executive Officer has from time to time advanced funds
to Composite Industries of America or one of its subsidiaries to assist with
working capital requirements. As of June 30, 2001 and 2000, such funds
advanced to the Company amounted to $325,301 and $281,434 respectively.
No officer, director, nominee for election as a director, or associates of
such officer, director or nominee is or has been in debt to the Company during
the past fiscal year except for the following. On May 25, 2000, the Company
issued 327,511 S-8 shares of common stock valued at $191,749 to an officer of
the Company as nominee for the purpose of selling the shares on the open
market and using the proceeds to pay specific Company expenses. Since the
common stock was issued in the officer's name, the officer had a liability to
the Company for the value of the shares at the date of issuance. During the
quarter ended September 31, 2000, $163,000 was repaid to the company. The loan
was reduced by an additional $31,000 in exchange for services.
ITEM 13 EXHIBITS, LISTS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 Articles of Incorporation
3.2 Certificate Of Incorporation - Composite Industries
3.3 Amendment to Articles of Incorporation (World Homes)
3.31 Amendment to Articles of Incorporation (Composite Industries)
3.4 By-Laws
10.1 Joint Venture Agreement with Al Nasr Trading and Industrial Corp.
23.2 Consent of Pascale, Razzino, Alexanderson & Co. PLLC
(b) Reports on Form 8-K.
There were three reports in Form 8-K filed during the fiscal year 2001 and
one 8-K filed on Aug. 24 2001 after the close of fiscal 2001
which is included as a references in this filing.
1) 8-K filed: 10-13-2000 Name Change-Item No. 5. Other Events.
The Company changed its name to World Homes, Inc. on October 12, 2000.
World Homes, Inc. has a new CUSIP number of 98147Q100 and a new
trading symbol of WHME.
2) 8-K filed: 2-5-2001 Change of Officers-Item No. 5. Other Events.
The Company hired Jon Nicolaisen as President and CEO as replacement
to Merle Ferguson, who remains Chairman of the Board.
The Company accepted the resignation of Michael Schulman as Chief
Financial Officer and appointed Susan Donohue as interim CFO.
3) 8-K filed: 5-29-2001 Change of Officers-ITEM NO. 5. OTHER EVENTS.
The Company accepted the resignation of Jon Nicolaisen as President and CEO.
Merle Ferguson, Chairman of the Board, assumed the duties of President and
CEO. The Company accepted the resignation of Jason Thompson as Chief Financial
Officer and hired William Morris as Executive Vice-President of Finance and
CFO.
4) 8-K filed: 8-24-2001 (for Reference only)-Item No. 5. Other Events.
The Company changed its name to Composite Industries of America, Inc. on
August 24, 2001. Composite Industries of America, Inc. has a new CUSIP number
of 20461M101 and a new trading symbol of CIAI
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 Industries of America, Inc.
Date: October 9, 2001 By: /s/ Merle Ferguson
------------------------------
Merle Ferguson
Chairman, President, and CEO
Date: October 9, 2001 By: /s/ William Morris
------------------------------
William Morris
Vice President of Finance
CFO and Treasurer of the Board
EX-3.1
3
ex3-1.txt
ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION OF KOWTOW, INC.
Know all men by these presents;
That I, the undersigned, acting as incorporator for the purpose of for forming
corporation under and pursuant to the provisions of Nevada Revised Statutes
78.010 to Nevada Revised Statutes 78.090 inclusive, as amended, and certify
that;
ARTICLE I
The name of this corporation is KOWTOW, INC.The name and post office address
of the incorporator signing the Articles of Incorporation is: Krista
Castleton, 3760 So, Highland Drive, Suite 300. Salt Lake City, Utah, 84106.
The name and address of the first member of the First Board of Directors is:
Krista Castleton, 3760 So. Highland Drive, Suite 300, SaltLake City, Utah,
84106.
ARTICLE II
The. Resident Agent of this corporation in Nevada shall be Nevada Corporate
Services located at 1800E. Sahara, Suite 107, Las Vegas, Clark County, Nevada,
89104. Offices for the transaction of any business of the Corporation, and
where meetings of the Board of Directors and of Stockholders may be held, may
be established and maintained in any other part of the State of Nevada, or in
any other state, territory or possession of the United States of America, or
in any foreign country as the Board of Directors may, from time to time
determine.
ARTICLE III
The nature of the business and the objects and purpose proposed to be
tranacted, promoted or carriedon by the Corporation is to conduct any lawful
activity in accordance with the Laws of the State of Nevada and the United
States of America, including but not limited to inventing, developing,
marketing, and otherwise exploiting high technology electronic communication
systems, both hardware and software components, parti- cularly systems
utilizing security coding and protective transmitting and receiving.To do each
and everything necessary, suitable or proper for the accomplishment of any of
the foregoing purposes or the attainment of any one or more of the subjects
herein above enumerated, or which may at anytime appear conducive to or
expedient for the protection or benefit of this Corporation, and to do such
acts as fully and to the same extent as natural persons might, or could do, in
any part of the world as principals,agents, partners, trustees, or otherwise,
either alone or in conjunction with any other person, association or
corporation. The period of duration of this Corporation is perpetual.The
foregoing clauses shall be construed as powers as well as objects and purposes
and the matters expressed in each clause shall, unless herein otherwise
expressly provided, be in no wise limited by reference to or inference from
the terms of any other clause shall he regarded as independent objects,
purposes and powers and the enumeration of specific objects, purposes and
powers shall not be construed to limit or restricting any manner the meaning
of the general terms or the general powers of the Corporation nor shall the
expression of one thing be deemed to exclude another not expressed although it
be of like nature.
ARTICLE IV
The aggregate number of shares which the Corporation shall have author- ity to
issue is 100.000,000shares, having a par value of $0.001 (one mill) per share.
The stock shall be designated as Class "A" voting com- mon stock and shall
have the same rights and preferences. The stock of the Corporation shall be
non-assessible. Fully paid stock of this Cor- poration shall not be liable for
any further call or assessment. The total capitalization of the Corporation
shall be $100,000. The shares of Class "A" common stock shall not be divided
into classes and may not be issued in series.
ARTICLE V
No stockholder of the Corporation shall, because of his ownership of s tock,
have a pre-emptive or other right to purchase, subscribe for or take part of
any of the notes, debentures, bonds or other securities convertible into or
carrying options for warrants to purchase stock of the Corporation issued,
optioned or sold by it after its incorporation, except as may be otherwise
stated in these Article of Incorporation. Any part ofthe capital stock and any
part of the notes, debentures, bonds, or other securities convertible into or
carrying options or warranties to purchase stock of the Corporation authorized
by these Articles of Incorporation or byan amended certificate duly filed may
at any time be issued, optioned for sale and sold r disposed of by the
Corporation pursuant to the resolution of its Board of Directors to such
persons and upon such terms as mayto such Board of Directors seem proper,
without first offering such stock or securities or any part thereof to
existing stockholders, except as required in Article IV of these Articles of
Incorporation.
ARTICLE VI
Each outsanding share of the class "A" common stock of the Corporation shall
be entitled to one vote on each matter submitted to a vote at a meeting of the
stockholders. Each shareholder shall be entitled to vote his or its shares in
person or by proxy, executed in writing by such shareholder or by its duly
authorized attorney in fact. At each election for directors, every shareh
older entitled to vote at such election shall havethe right to vote in person
or by proxy, the number of shares owned by him or it for as many pesons as
thereare directors to be elected and for whose election he or it has the right
to vote, but the shareholder shall haveno right, whatsoever, to accumulate his
or its votes with regard to such election.
ARTICLE VII
The members of the governing board of this corporation shall be called
directors. The Board ofDirectors shall consist of at least on (1) person. The
number of directors of this corporation may, from time to time, be increased
or decreased by an amendment to the By-Laws in that regard and without the
necessityof amending the Articles of Incorpora tion. A majority of the
Directors in office, present at any meeting of theBoard of Directors, duly
called, whether regular or special, shall always constitute aquorum for the
Hansactionof business, unless the By-Laws otherwise provide. Directors need
not be residents of the State of Nevada or stockholders of the Corporation.
ARTICLE VIII
This Corporation shall have a president, a secretary, a treasurer, and a
resident agent, to be chosen by the Board of Directors, any person may hold
two or more offices.
ARTICLE IX
The capital stock of the Corporation, after the fixed consideration thereof
has been paid or performed,shall not be subject to assessment, and the
individual stockholders of this Corporation shall not be indi vidually liable
for the debts and liabilities of the Corporation, and the Articles of
Incorporation shall never be amended as to the aforesaid provisions.
ARTICLE X
The Board of Directors is expressly authorized: (subject to the By-Laws, if
any, adopted by the Stockholders)
1) To make, alter or amend the By-Laws of the Corporation.
2) To fix the amount in cash or otherwise, to be reserved as working capital.
3) To authorize and cause to be executed mortgages and liens up on the
property and franchises of the Corporation.
4) To by resolution or resolutions passed by a majority of the whole board,
designate one or more committees, each committee to consist of one or more of
the Directors of the Corporation, which, to the extent provided in the
resolution or resolutions or in the By-Laws of the Corporation, shall have and
ma exercise the powers of the Board of Directors in the management of the
business and affairs of the Corpora tion, and may have power to authorize the
seal of the Corporation to be affixed to all papers on which the Corporation
desires to place a seal. Such committee or committees shall have such name or
names as may be stated in the By Laws of the Corporation or as may be
determined from time to time by resolution adopted by the Board of Directors.
5) To sell, lease or exchange all of its property and assets, including its
goodwill and its corporate franchises, upon such terms and condi- tions as the
board deems expedient and for the best interests of the Corporation, when and
as authorized by the affirmative vote of the stock- holders holding stock in
theCorporation entitling them to exercise a t least a majority of the voting
power given at a stockholders meeting called tor that purpose.
ARTICLES XI
In the absence of fraud, no contract or other transaction of the Corporation
shall be affected by the fact that any of the Directors are in any way
interested in, or connected with, any other party to such con- tract or
transaction, or are themselves, parties to such contract or transaction,
provided that this interest in any such contract or trans- action of any such
director shall at any time be fully disclosed or other- wise known to the
Board of Directors, and each and every person who may become a director of the
Corporation is hereby relieved of any lia- bility that might otherwise exist
from contracting with the Corporation for the benefit of himself or any firm,
association or corporation in which he may be in any way interested.
ARTICLE XII
No director or officer of the Corporation shall be personally liable to the
Corporation or any of its stockholders for damages for breach of fiduciary
duty as a director or officer involving any act or omission of any such
director or officer provided, however, that the foregoing provision shall not
eliminate or limit the liability of a director or officer for acts or
omissions which involve intentional misconduct, fraud or a knowing violation
of law, or the payment of dividends in violation of Section 78.300 of the
Nevada Revised Statutes.Any repeal or modification of this Article by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on thepersonal liability of a director or
office of the Corporation for a cts or omissions prior to such repeal or
modification.
I, the undersigned, being the incorporator hereinbefore named for the purpse
of forming a corporationpursuant to the general corporation law of (the State
of Nevada, do make and file these Articles of Incorporation, hereby declaring
and certifying that the facts herein stated are true, and accordingly have
hereunto set my hand,
By /s/ Krista Castleman
----------------
Krista Castleman
State of Utah )
ss)
County of Salt Lake)
On December 29, 1993 personally appeared before me, the undersigned, a Notary
Public, Krista Castleton, known to me the person whose name is subscribed to
the foregoing document and acknowledged to me that she executed the same.
By /s/ DAVID R. YEAMAN
---------------
DAVID R. YEAMAN
Notary Public
8818 South Renegade Road
Sandy, Utah 84093
CORPORATE CHARTER
I, CHERYL A. LAU, Secretary of State of the State of Nevada, do here by
certify that KOWTOW, INC did on the THIRTIETH day of DECEMBER, 1993 file in
this office the original Articles of Incorporation; that said Articles are now
on file and of record in the office of the Secretary of State of the State of
Nevada, and further, that said Articles contain all the provisions required by
the law of said State of Nevada.
IN WITNESS WHEREOF, I have here hereunto set my hand affixed the Great Seal of
State, at my office, in Carson City, Nevada, this THIRTIETH day of DECEMBER.
1993.
By /s/ Cheryl A. Lau
------------------
Cheryl A. Lau
Secretary of State
By /s/ Kari Rhodes
-----------
Kari Rhodes
Deputy
EX-3.2
4
ex3-2.txt
CERTIFICATE OF CORPORATION
SECRETARY OF STATE
State of Nevada
CERTIFICATE OF EXISTANCE WITH STATUS IN GOOD STANDING
I, DEAN HELLER, the duty elected and qualified Nevada Secretary of State, do
hereby certify that I am, by laws of said State, the custodian of the records
relating to filings by corporations, limited-liability companies, limited
partnerships, and limited-liability partnerships pursuant to title 7 of the
Nevada Revised Statutes which are either presently in a status of good
standing or were in good standing for a time period subsequent of 1976 and am
the proper officer to execute this certificate.
I further certify that the records of the Nevada Secretary of State, at the
date of this certificate, evidence, COMPOSITE INDUSTRIES OF AMERICA, INC. as a
Corporation duly organized under the laws of Nevada and existing under and by
virtue of the laws of the State of Nevada since December 30, 1993, and is good
standing in this state. IN WITNESS WHEREOF, I have hereunto set my hand and
affixed the Great Seal of State, at my office, in Las Vegas, Nevada, on August
23, 2001.
By: /s/ Dean Heller
-------------
Dean Heller
Secretary of State
By: /s/ Angela Worwer
-------------
Angela Worwer
Certification Clerk
EX-3.3
5
ex3-3.txt
AMENDMENT TO THE ARTICLES OF INCORPORATION
AMENDMENT TO THE ARTICLES OF INCORPORATION OF KOWTOW, INC.
(NAME CHANGED HEREIN TO AFFORDABLE HOMES OF AMERICA, INC.)
WHEREAS, there as issued by the Secretary of State a Charter constitu-
ting and creating KOWTOW, INC., a corporation organized under the laws
of this state with irs principal place ofbusiness in Las Vegas, Nevada,
and a capital stock of One Hundred Thousand Dollars($1.00,000.00),
divided into One Hundred Million (100,000.000) shares of a par value of
one mill (1/10 cent) each, empowering it to engage in any activity or
business not in conflict with the lawsof the State of Nevada or of the
United States ofAmerica.The undersigned. President and Secretary of
KOWTOW, INC. hereby certify that byresolutions duly adopted unanimously
by the Board of Directors of the Company pursuant towritten action
effective as of March 19. 1999; and by resolutions duly adopted by a
majority of the shareholders of all classes of stock outstanding and
entitled to vote thereon of the Company pursuant to written action
effective as of March 19, 1999 amending the Articles of Incorporation
as follows:
That Article 1. be amended and changed to read as follows;
Name; The name of the Corporation is AFFORDABLE HOMES OF AMERICA, INC.
EX-3.31
6
ex3-31.txt
AMENDMENT TO THE ARTICLES OF INCORPORATION
DEAN HELLER CERTIFICATE OF Filed #C17611-93
SECRETARY OF STATE AMENDMENT August 23,2001
202 North Carson Street (PURSUANT TO NRS 78.385 and in the office of
Carson City, Nevada 89701-4201 78.390) /s/ DEAN HELLER
(775) 684-5708 Secretary of State
Certificate of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390- After Issuance Stock)
-Remit in Duplicate-
1. Name of corporation: ________World Homes, Inc.__________________________
2. The articles have been amended as follows (provide article numbers, if
available):
Article I:
Name: The name of the corporation is COMPOSITE INDUSTRIES OF AMERICA,
INC.
3. The vote by which the stockholders holding shares in the
corporation entitling them to exercise at least a majority of the voting
power, or such greater proportion of the voting power as may be required in
the case of a vote by classes or series, or as may be required by the
provisions of the articles of incorporation have in favor of the amendment is:
_____52%____. *
4. Officer Signature (required):
/s/ Susan Donahue
*If any proposed amendment would alter or change any preference or any
relative or other right given to any class or series of outstanding shares,
then the amendment must be approved by the vote, in addition to the
affirmative vote otherwise required, of the holders of shares representing a
majority of the voting power of each class or series affected by the amendment
regardless of limitations or restrictions on the voting power thereof.
WRITTEN ACTION OF THE SHAREHOLDERS OF WORLD HOMES, INC.
The undersigned shareholders, holding a majority interest of the
issued and outstanding shares of Common Stock of World Homes, Inc. a Nevada
corporation (the "Company"), do hereby take the following action pursuant to
Section 78.320 of Nevada Statutes, on the 23rd day of August 2001.
AMENDED ARTICLE OF INCORPORATION
WHEREAS, the Company wishes to amend its Articles of Incorporation to change
the name of the Company, THEREFORE IT IS
RESOLVED, that the Articles of Incorporation of the Company be, and
the same hereby, are amended pursuant to NRS 78.390 as follows:
ARTICLE I
NAME
The name of the Company is COMPOSITE INDUSTRIES OF AMERICA, INC.
RESOLVED FURTHER, that the appropriate officers of the Company are
hereby authorized and directed to file the Amended Articles of Incorporation
with the Secretary of State of the State of Nevada.
FURTHER ACTIONS
RESOLVED, that the appropriate officers of the Company are hereby
authorized and directed to take and all further actions deemed or appropriate
to effectuate the foregoing resolution.
IN WITNESS WHEREOF, the undersigned have hereunto affixed their
signature.
/s/ Merle Ferguson /s/ Susan Donohue
Majority Shareholder Shareholder
Aug. 23, 2001 STATE OF NEVADA Secretary of State
I hereby certify that this is a true and complete copy of the document filed
in this office.
By: /s/ DEAN HELLER
-------------
DEAN HELLER
Secretary of State
By: /s/ Angela Warwer
-------------
Angela Warwer
EX-3.4
7
ex3-4.txt
BYLAWS
BYLAWS OF AFFORDABLE HOMES OF AMERICA, INC.,
a Nevada corporation
ARTICLE I
Section I. PRINCIPAL OFFICE The principal office shall be in the City of
Las Vegas, County of Dark. State of Nevada.
Section 2. OTHER OFFICES. The board of directors may at any time eslablish
branch or subordinate offices at any place or places where the corporation is
qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section I. PLACE OF MEETINGS. Meetings of stockholders shall be held atany
place within or without the State of Nevada designated by the board of
directors. In the absentof any such designation, stock- holders' meetings
shall be held at the principal executive office of the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of stockholders shall be
held at a date and time designated by the board of directors. (At such
meetings, directors shabe elected and any other proper business m ay be
transacted by a plurality vote of stockholders.)
Section 3. SPECIAL MEETINGS. A special meeting of the stockholders, any
purpose or purposes whatsoever, unless prescribed by statute or by the
articles of incorporation may be called at any rime by the prpsident and shall
be called by the president or secretary at therequest in writing of a majority
of the board of directors, or at the request in writing of stockholders
holding shares in the aggregate entitled to cast not less than a majority of
the votes at any such meeting.
The request shall be in writing, specifying the time of such meeting, the
place which it is to be held and the general nature of the business proposed
to be transacted, and shall be delivered personally or sent by registered mail
or by telegraphic or other facsimile transmission to the chairman of the
board, the president, any vice president or the secretary of the corporation.
The officer receiving such request forthwith shall cause notice to be given
tothe stocfcholdcrs entitlediu vote, in accordance with the provisions of
Sections 4 and 5 of this Article II, that a meeting will be held at the time
requested by the person or persons calling the meeting, not less than thirty-
five(35) nor more than sixty (60) days after the receipt of the request. If
the notice is not given within twenty (20) days after receipt of the request,
the person or persons requesting the meeting may givethe notice. Nothing
contained in this paragraph of this Section 3 shall be construed as
limiting,fixing or affecting the tme when a meeting of stockholders called by
action of the board of directors may be held.
Section 4. NOTICE QF STOCKHOLDERS' MEETINGS. All notices of meet- ings of
stockholders shall be sent or otherwise given in accordance with Section 5 of
this Article(I not less than ten (10) nor more than sixty (60) days before the
date of the meeting being noiced.The notice shall specify the place, date and
hour of the meeting and (i) in the case of a specialmeeting the general nature
of the business to be transacted, or (ii) in the case of the annual meeting
those matters which the board of directors, at the time of giving the notice,
intends to present foraction by the stockholders. The notice of any meeting at
which directors are to be elected shallinclude the name of any nominee or
nominees which, at the time of the notice, management intendsto present for
election.If action is proposed to be taken at any meeting for approval of (i)
contracts ortransactions in which a di rector has a direct or indirect
financial interest, (ii) an amendment to tearticles of incorporation, (iii) a
reorganization of the corporat ion, (iv) dissolution of the corporation,or (v)
a distribution to pref erred stockholders, the notice shall also state the
general nature of suchproposal.
Section 5. MANNER OF GTVTNG NOTICE: AFFIDAVIT OF NOTICE. Notice of any
meeting of stockholders shall be given either personally or by first-class
mail or telegraphicor other written communication, charges prepaid, addressed
to the stockholder at the address of such stockholder appearing on the books
of the corporation or given by the stockholder to the corporationfor the
purpose of notice. If no such address appears on the corporation's books or is
given, notice shall be deemed to have been given if sent by mail or telegram
to the corporation's principal executive office, or if published at least once
in a new spaper of general circulation in the county where this office is
located. Prsonal delivery of any such notice to any officer of a corporation
or association or to any member of a partnership shall consti tute delivery of
such notice to suchcorporation, association or partnership. Notice shall be
deemed to have been given at the time when delivered personally or deposited
in the mail or sent by telegram or other means of written communication. In
the event of the transfer of stock after delivery or mailing of the notice of
and prior to the holding of the meeting, it shall not be necessary to deliver
or mail notice of the meeting to the transferee.
If any notice addressed to a stockholder ai the address of such stockh olde
appearingon the books of the corporation is return ed t the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the stockholder at such address,
all fixture notices or reports shall be deemed to have been duly given without
further mailing if the same shall be available to the stockholder upon whiten
demand of the stockholder at the principal executive office of the corporation
for a period of one year from the date of the giving of such notice.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting shall be executed by the secretary, assistant secretary
or any transfer agent of the corporation giving such notice, a ndshall be
filed and maintained in the minute book of the corporation.
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice.
Section 6. The presence in person or by proxy of the holders of a majority
of the shares entitled to vote at any meeting of stockholders shall constitute
a quorum for the transaction of business, except as otherwise provided by
statute or the articles of incorporation. The stockholders present at a duly
called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majorityof the shares required to
consitute a quorum.
Section 7. ADJOURNED MEETING AND NOTICE THEREOF. Any stockholders'
meeting, annual or special, whether or not a quorum is present, may be
adjourned from time to time by the vote of the majority of the shares
represented at such meeting, either in person or by proxy, but in the absence
of aquorum, no other business may he transacted at such meeting.
When any meetng of stockholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if
the time and place thereof are announced at a meeting at which the adjournment
is taken. At any adjourned meeting the corporation may transact any business
which might have been transacted at the original meeting.
Section 8. VOTING. Unless a record date set for voting purposes be fixed as
provided in Section I of Article VII of these bylaws, only persons in whose
name shares entitled to vote stand on the stock records of the corporation at
the close of business on the business day next preceding the day on which
notice is given (or, if notice is waived, at the close of business on the
business day next preceding the day on wh ich he meeting is held) shall be
entitled to vote at such meeting. Any stock-holder entitled to vote on any
matter other than elections of directors or officers, may vote part of the
shares in favor of the proposal and refrain from voting the remaining shares
or vote them against the proposal,but, if the stockholder fails to specify the
number of sh ares such stock-holder is voting affirmatively, it will be
conclusivel y presumed that the stockholders's approving vote is with respect
to all shares such stockholderis entitled to vote. Such vote may be by voice
vote or by ballot; provided, however, that all elections for directors must be
by ballot upon demand by a stockholder at any election and before the voting
begins.
When a quorum is present or represented at any meeting, the vote of the
holders of a majority of the stock having oting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or
of the articles of in corporation a different vote is required in which case
such express provision shall govern and control the decision of such question.
Every stockholder of record of the corporation shall be entitled at each
meeting of stockholders to one vote for each share of stock standing in his
name on the books of the corporation.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT STOCKHOLDERS. The
transactions at any meeting of stockholders, either annual or special, however
called and noticed, and wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, not present In person or by proxy, signs written waiver of
notice or a consent to a holding of the meeting, or an approval of the minutes
thereof. The waiver of notice or consent need not specify either the business
to be transacted or the purpose of any regular or special meeting of
stockholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of Section
4 of this Article II, the waiver of notice or consent shall state the general
nature of such proposal. All such waivers, consents or approvals shall be fled
with the corporate records or made a part of the minutes of the meeting.
Attendance of a person at a meeting shall also constitute a waiver of notice
of such meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened, and except that attendance at a meeting is not a
waiver of any right to object to the consider action of matters not included
in the notice if such objection is expressly made at the meeting.
Section 10. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Any action which may be taken at any annual or special meeting on stockholders
may be taken without a meeting and without prior notice, if a consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. All such consents shall be
filed with the secretary of the corporation and shall be maintained in the
corporate records. Any stockholder, giving a written consent, or the stock
holder's proxy holders, or a transferee of the shares of a personal
representative of the stockholder of their respective proxy holders, may
revoke the consent by a writing received by the secretary of the corpo ration
prior to the time that written consents of the number of shares requred to
authorize the proposed action have been filed with the secretary.
Section 11. PROXIES. Every person entitled to vote for directors or on
any other matter shall have he right to do so either in person or by one or
more agents authorized by a written proxy signed by the person and filed with
the secretary of the corporation. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting,telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney in fact.
A validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless revoked by the person executing it,
prior to the vote pursuant thereto, by a writing delivered.to the corporation
staling that the proxy is revoked or by a subsquent proxy executed by,or
attendance at the meeting and voting i n person by the person executing the
proxy; provided. however, that no such proxy shall be valid after the
expiration of six (6) months from the date o(such proxy, unless coupled with
an interest, or unless the person executing it specifies therein thelength of
time for which it is to continue in force, which in no case shall exceed seven
(7) years from the date of its execution. Subject to the above and the
provisions of Section 78.355 of the NevadaGeneral Corporation Law, ay proxy
duly executed is not revoked and continues in full force and effect until an
instrument revoking it or a duly executed proxy bearing a later date is filed
with the secretary of the corporation.
Section 12. INSPECTORS OF ELECTION. Before any meeting of stockholders, the
board of directors may appoint any persons other than nominees for offie to
act as inspectorsof election at the meeting or its adjournmen t If no
inspectors of election are appointed, the chairman of the meeti ng may, and on
the request ofany stockholder or his proxy shall, appoi nt inspectors election
at the meeting. The number of inspectors shall be either one (1) or three (3).
If inspectors are appointed at a meeting on the request ofone or more
stockholders or proxies, the holders of a majority of shares or their proxies
present at the meeting shall determine whether one (1) or three (3) inspectors
are to be appointed. If any person appointed as inspector fails to appear or
fails or refuses to act, lhe vacancy may be filled by appointment by the board
of directors before the meeting, or by the chairman at the meeting.
The duties of these inspectors shall be as follows:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum, and
the authenticity, validity and effect of proxies;
(b) Receive votes, ballots, or consents:
(c) Hear and determine all challenges and questions in any way arising in
connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine the election result; and
(f) Do any other acts that may be proper to conduct the election or vote
with fairness to all stockholders.
ARTICLE III
Section 1. POWERS. Subject to the provisions of the Nevada General
Corporation Law and any limitations the articles of incorporation and these
bylaws relating to action required to be approved by the stockholders or by
the outstanding shares, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction
of the board of directors.
Without prejudice to such general powers, but subject to the same limitations,
it ishereby expressly declared that the directors shall have the power and
authority to:
(a) Select and remove all officers, agents, and employees of the
corporation, prescribe such powers and duties tor them as may not be
inconsistent with law, with thearticles of incorporation or these bylaws, fix
their compensation, and require from them security for faithfull service.
(b) Change the principal executive office or the principal business office
from one location to another; cause the corporation to be qualified to do
business in any other state,territory, dependency, or foreign country and
conduct business within or without the State; designateany place within or
without the State for the holding of any stockholders' meeting, or
meetings,including annual meetings; adopt, make and use a corporate seal, and
prescribe the forms of certificates of stock, and alter the form of such seal
and of such certificates from time to time as in their judgment they may deem
best, provided that such forms shall at all times comply with the provisions
of law.
(c) Authorize the issuance of shares of stock of the corporation from time
to time, upon such terms as may be lawful, in consideration of money paid,
labor done or services actually rendered, debts or securities cancelled
tangible or intangible property actually received.
(d) Borrow money and incur indebtedness for the purpose of the
corporation, and cause to be executed and delivered therefor, in the corporate
name, pronussoiynoies, bonds, debentures, deeds of trust, mortgages, pledges,
hypothecations. or other evidences of debt and securities therefore.
Section 2. NUMBER OF DIRECTORS. The authorized number of directors shall
be no fewer than three (3) nor more than ten (10). The exact number of
authorized directors shall be set by resolution ofthe board of directors,
within the limits specified above. The maximum or minimum number of directors
cannot be changed, nor can a fixed number be substituted for the maximum and
minimum numbers, except by duly adopted amendment to this bylaw duly
approvedby a majority of the outstanding shares entitled to vote.
Sections 3. QUALIFICATION. ELECTION AND TERM OF OFFICE OF
DIRECTORS.Diretors shall be elected at each annual meeting of the stockholders
to hold office until the next annual meeting, but if any such annual meeting
is not held or the directors are not elected at any annual meeting, the
directors may be elected at any special meeting of stockholders held for that
purpose, or at the next annual peering of stockholders held thereafter.
Each director,including a director elected to fill a vacancy, shall hold
office until the expiration of the term for which elected and until a
successor has been elected and qualified or until his earlier resignation or
removal or his office has been declared vacant in the manner provided in these
bylaws. Directors need not be stockholders.
Section 4. RESIGNATION AND REMOVAL QF DIRECTORS. Any director may resign
effective upon giving written notice to the chairman of the board, the
president, the secretary or the board of directors of the corporation, unless
the notice specifies a later time for the effective- ness of such resignation,
in which case such resignation shall be effective at the time specified.
Unless such resignation specifies other- wise, its acceptance by the
corporation shall not be necessary to make it effective. The board of
directors may declare vacant the office of a director who has been declared of
unsound mind by an order of a court or convicted of a felony. Any or all of
the directors may be removed without cause of such removal is approved by the
affirmative vote of a majority of the outstanding shares entitled to vote. No
reduction of the authorized number of directors shall have the effect of
removing any director before his term of office expires.
Section 5. VACANCIES. Vacancies in the board of directors, may be filled
by majority of the remaining directors, though less than a quorum, or by a
sole remaining director.Each director so elected shall hold office until the
next annual meeting of the stockholders and until a successor has been elected
and qualified.
A vacancy in the board of directors exists as to any authorized position of
directors which is not then filled by a duly elected director, whether caused
by death, resignation, removal,increase in the authorized number of directors
or otherwise.
The stockholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote. If the resignation of a director is effective at a
future time, the board of directors may elect a successor to take office when
the resignation becomes effective.
If after the filling of any vacancy by the directors, the directors then in
office who have been elected by the stockholders shall constitute less than a
majority of the directors then in office, any holder or holders of an
aggregate of five percent or more of the total number of shares at the time
outstanding having the right to vote for such directors may call a special
meeting of the stockholders to elect the entire board. The term of office of
any director_not elected by the stockholders shall terminate upon the election
of a successor.
Section . PLACE OF MERTINGS. Regular meetings of the board of direct or
shall be held at any place within or without the State of Nevada that has been
designated from time to time by resolution of the board. In the absence of
such designation, regular meetings shall be held at the principal executive
office of the corporation. Special meetings of the board shall be held at any
place within or without the State of Nevada that has been designated in the
notice of the meeting or, if not stated in the notice or there is not notice,
at the principal executive office of the corporation.Any meeting, regular or
special, may be held by conference telephone or similar communication
equipment, so long as all directors participating in such meeting can hear one
another, and all such directors shall be deemed to be present in person at
such meeting.
Section 7. ANNUAL MEETINGS. Immediately following each annual meeting of
stockholders, the board of directors shall hold a regular meeting for the
purpose of transaction o other business. Notice of this meeting shall not be
required.
Section 8. OTHER REGULAR MEETINGS. Other regular meetings of the board of
directors shall be held without call at such time as shall from time to time
be fixed by the board of directors. Such regular meetings may be held without
notice, provided the notice of any change in the time of any such meetings
shall be given to all of the directors. Notice e of a change in the
determination of the time shall be given to each d director in the same manner
as notice for special meetings of the board of directors.
Section 9. SPECIAL MEETINGS. Special meetings of the board of direcors for
my purpose or purposes may be called at any time by the chairman of the hoard
or the preside;or any vice president or the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered personally
or telephone to each director or sent by first-class mail or telegram, charges
prepaid, addressed to each director at his or her address as it is shown upon
the records of the corporation. In case such notice is mailed, it shall be
deposited in the United States mail at least four (4) days prior to the time
of the holding of the meeting. In case such notice is delivered personally, or
by telephone or telegram, it shall be delivered personally or by telephone or
to the telegraph company at least forty-eight (48)hours prior to th e tie of
the holding of the meeting. Any oral notice given personally or bytelephone
may be communicated to either the director or to a pers on at the office of
the director whLhe person giving the notice has re ason to believe will
promptly communicate it to the director. The notice need not specie the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive office of the corporation.
Section 10. QUORUM. A majority of the authorized number of directors
shallconstilute a quorum tor the transaction of business, except to adjourn as
hereinafter provided. Everyact or decision done or made by a majority of the
directors present at a meeting duly held at whicha quorum is present shall be
regarded oa the act of the board of directors, subject to the provisionsof
Section 78.140 of the Nevada General Colpo ration Law (approval of contracts
or transactions inwhich a director h as adirect or indirect material financial
interest). Section 78.125 (a ppointment ofcommittees), and Section 78.751
(indemnification of direc tors). A meeting at which a quorum is initially
present may continue to transact business notwithstanding the withdrawal of
directors, if any action taken is approved by at least a majority of the
required quorum for such meeting.
Section 11 - WAIVER OF NOTICE, the transactions of any meeting of the oardof
directors, however called and noticed or wherever held. sh all be as valid as
though had at a meeting duly held after regular call and notice if a quorum be
present and if, either before or afterthe meeting, each of the directors not
present signs a written waiver of notice, a consent to holding the meeting or
an approval of the minutes thereof. The waiver of notice of consent need not
specifythe purpose of the meeting. All such waivers, consents and approvals
shall be filed with thecorporate records or made a part of the minutes of the
meeting. Notice of a meeting shall also be deemed given to any director who
attends The meeting without protesting, prior thereto or at its commencement,
the lack of notice to such director.
Section 12. ADJOURNMENT. A majority of the directors present, whether or not
constituting a quorum, may adjourn any meeting to another time and place.
Section 13. NOTICE OF ADJOURNMENT. Notice of the time and place of holding
an adjourned meeting need not be given, unless the meeting is adjourned for
more thantwenty-four (24) hours, in which case notice of such time and place
shall be given prior to the time of the adjourned meeting, in the manner
specified in Section 8 of this Article III, to the directors whowere not
present at the time of the adjournment.
Section 14. ACTION WITHOUT MEETING. Any action required orpermt to be taken
by the board of directors may be taken without a meeting, if all members of
the boashall individually or collectively consent in writing to such action.
Such action by written consentshall have the same force and effect as a
unanimous vote of the board of directors. Such written consent or consents
shall be filed with the minutes of the proceedings of the board.
Section 15. FEES AND COMPENSATION OF DIRECTORS. Directors a members of
committees may receive such compensation, if any, for their services, and
suchreimbursement of expenses, as may be fixed or determined by resolution of
the board of directorsNothing herein contained shall be construed to preclude
any director from serving the corporationin any other capacity as an officer,
agent, employee, or otherwise, and receiving compensationsuch services.
Members of special or sanding committees may be allowed like
compensationattending committee meetings.
ARTICLE IV
COMMITTEES
Section I. COMMITTEES OF DIRECTORS. The board of directors may resoluton
adopted by a majority of the authorized number of directors, designate one or
more committees, each consisting of one or more directors, to serve at the
pleasure of the board.
The board may designate one or more directors as alternate members of any
committees, who may replace any absent member at any meeting of the committee.
Any such committee, to the extent provided in the resolution of the board,
shall have all the authority of the board, except with regard to:
(a) the approval of any action which, under the Nevada General
Corporation Law, also requires stockholders' approval or approval of the
outstanding shares;
(b) the filing of vacancies on the board of directors or in
any committees;
(c) the fixing of compensation of die directors for serving on
the board or on any committee;
(d) the amendment or repeal of bylaws or the adoption of new
bylaws;
(e) the amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or repealable; (f)
a distribution to the stockholders of the corporation, except at a rate or in
a periodic amount or within a price range determined by the board of
directors; or
(g) the appointment of any other committees of the board of
directors or the members thereof.
Section 2. MEETINGS AND ACTION BY COMMITTEES. Meetings and action of
committees shall be governed by, and held and taken in accordance with the
provisions of Article III, Sections 6 (place of meetings), 8 (regular
meetings), 9 (special meetings and notice),10 (quorum), II (waiver of
notice),12 (adjournment), 13 (notice of adjournment) and 14 (action without
meeting), with such changes in the context of those bylaws as are necessary to
substitute the committee and its members for the board of directors and its
members, except that the time or regular meetings of committees shall by
resolutions of the board of directors and notice of special meetings of
committees shall also be given to all alternate members, who shall have the
right to attend all meetings of the committee. The board of directors may
adopt rules for the government of any committee not inconsistent.
The committees shall keep regular minutes of their proceedings and report the
same to the board when board when required.
ARTICLE V
OFFICERS
Section I. OFFICERS. The officers of the corporation shall be a president,
a secretary and a treasurer. The corporation may also have, at the discretion
of the board of directors,a chairman of the board, one or more vice
presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 3 of this Article V. Any two or more offices may be held
by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the corporation, except
such officers as may be appointed in accordance with the provisions of Section
3 or Section 5 of this same person.
Article V, shall be chosen by the board of directors, and each shall serve at
the pleasure of the board subject to the rights, if any, of an officer under
any contract of employment. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a president, a vice
president, a secretary and a treasurer, none of whom need be a member of the
board. The salaries of all officers and agents of the corporation shall be
fixed by the board of directors.
Section 3. SUBORDINATE OFFICERS. ETC. The board of directors may appoint,
and may empower the president to appoint, such other officers as the business
of the corporation may require, each of whom shall hold office for such
period, have such authority and perform such duties as a re provided in the
bylaws or as the board of directors may from time t o time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. the corporation shall hold
office until their successors are chosen and qualify. Subject to the rights,
if any, of an officer under any contract of employment, any officer may be
removed, either with or without cause, by the board of directors, at any
regular or special meeting thereof, or, except in case of an officer chosen by
the board of directors, by any officer upon whom such power or removal maybe
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective. Any such resignation is without prejudice to the rights,
if any, of the corporation under any contract to which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office because death,
resignation, removal, disqualification or any other cause shall be filled in
the manner prescribed in these bylaws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if such an
officer be elected, shall, if present, preside at meetings of the board of
directors and exercise and perform such other powers and duties as may be from
time to time assigned to him by the board of directors or prescribed by the
bylaws. If there is no president, the chairman of the board shall in addition
be the chief executive officer of the corporation and shall have the powers
and duties prescribed in Section 7 of this Article V.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may
be given by the board of directors to the chairman of the board, if there be
such an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and the officers of
the corporation. He shall preside at all meetings of the stockholder and, in
the absence of the chairman of the board, of if there be none, at all meetings
of the board of directors. He shall have the general powers and duties of
management usually vested in the office of president of a corporation, and
shall have such other powers and duties as may be prescribed by the board of
directors or the bylaws. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
Section 8. VICE PRESIDENTS. In the absence or disability of the president,
the vice presidents, if any, in order of their rank as fixed by the board of
directors or, if not ranked, advice president designated by the board of
directors, shall perform all the duties of the president, and when so acting
shall have all the powers of, and be subject to a the restrictions upon, the
president.The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by
the board of directors or the bylaws, the president or the chairman of the
board.
Section 9. SECRETARY. The secretary shall attend all meetings of the board
of directors and all meetings of the stockholders and shall record, keep or
cause to be kept, at the principal executive office or such other place as the
board of directors may order, a book of minutes of all meetings of directors,
committees of directors and stockholders, with the time and place of holding,
whether regular or special, and, if special, how authorized, the notice
thereof given, the names of those present at directors' and committee
meetings, the number of shares present or represented at stockholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office or at the office of the corporation's transfer agent or registrar, as
determined by resolution of the board of directors, a share register, or a
duplicate share register, showing the names of all stock holders and their
addresses, the number and classes of shares held by each, the number and date
of certificates issued for the same, and the number and date of cancellation
of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
stockholders and of the board of directors required by the bylaws or by law to
be given, and he shall keep the seal of the corporation in safe custody, as
may be prescribed by the board of directors or by the bylaws.
Section 10. TREASURER. The treasurer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The Books of account shall at all reasonable
times be open to inspection by any director.
The treasurer shall deposit all moneys and other valuables in the name and to
the credit of the corporation with such depositaries as may be designated by
the board of directors. He shall disburse the funds of the corporation as may
be ordered by the board of directors, shall render to the president and
directors, whenever they request it, an account of all of his transactions as
treasurer and of the financial condition of the corporation, and shall have
other powers and perform such other duties as may be prescribed by the board
of directors or the bylaws.
If required by the board of directors, the treasurer shall give the
corporation a bonding such sum and with such surely or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of
his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his possession
or under his control belonging to the corporation.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS. OFFICERS, EMPLOYEES, AND OTHER AGENTS
Section 1. ACTIONS OTHER THAN BY THE CORPORATION. The corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal,administrative or investigative, except an action by or in the
right of the corporation, by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees,judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, has no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding, he
had reasonable cause to believe that his conduct was unlawful.
Section 2. ACTIONS BY THE CORPRATION. The corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses, including amounts paid in settlement and
attorneys' fees, actually and reasonably incurred by him in connection with
the defense or settlement of the action or suit if he acted in good faith and
in a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, indemnification may not be made for any claim,
issue or matter as to which such a person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals there from, to be
liable to the corporation or for amounts to be paid in settlement to the
corporation, unless and only to the extent that the court in which the action
or suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court
deems proper.
Section 3. SUCCESSFUL DEFENSE. To the extent that a director, office,
employee or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Sections
I and 2, or in defense of any claim, issue or matter therein, he must be
indemnified by the corporation against expenses, including attorneys' fees
actually and reasonably incurred by him in connection with the defense.
Section 4. REQUIRED APPROVAL Any indemnification under Sections I and 2,
unless ordered by a court or advanced pursuant to Section 5, must be made by
the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote e of a quorum consisting of
directors who were not parties to the act, suitor proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the act. suit or proceeding so orders, by independent legal counsel
in a written opinion;
(d) If a quorum consisting of directors who were not parties to the act,
suit or proceeding cannot be obtained, by independent legal counsel in a
written opinion.
Section 5. ADVANCE OF EXPENSES The articles of incorporation, bylaws or
an agreement made by the corporation may provide that the expenses of officers
and directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by corporation as they are incurred and in advance of
the final disposition of the action, suit proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if
it is ultimately determined by a court of compitent jurisdicton that he is not
entitled be indemnified by the corporation. The provisions of this section do
not affect any rights to advancement of expenses to which corporate personnel
other than directors or officers may be entitled under any contract or
otherwise bylaw.
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the articles
of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except
that indemnification, unless ordered by a court pursuant to Section 2 or for
the advancement of expenses
Section 6. OTHER RIGHTS. The indemnification and advancement of expenses
authorized in or ordered by a court pursuant to the Article VI: made pursuant
to Section 5, may not be made to or on behalf of any director or officer if a
final adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such person.
Section 7. INSURANCE. The corporation may purchase and maintain insurance
on behalf of ay person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise for any liability asserted against
him and incurred by him in any such capacity, or arising out f his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of his Article VI.
Section 8. RELIANCE ON PROVISIONS. Each person who shall act as authorized
representative of the corporation shall be deemed to be doing so in reliance
upon the rights of indemnification provided by this Article.
Section 9. SEVERABILTY. If any of the provisions of this Article are held
be invalid or unenforceable, this Article shall be construed a s if it did not
contain such invalid unenforceable provision and the remaining provisions of
this Article shall remain in full force and effect
Section 10. RETROACTIVE EFFECT. To the extent permitted by applicable
law,the rights and powers granted pursuant to this Article VI shall apply to
acts and actions occurring in progress prior to its adoption by the board of
directors.
ARTICLE VII
RECORDS AND BOOKS
Section 1. MAINTENANCE OF SHARE REGISTER. The corporation shall keep at
its principal executive office, or at die office of its transfer agent or
registrar, if either appointed and as determined by resolution of the board of
directors, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of shares held by each stockholder.
Section 2. MAINTENANCE OF BYLAWS. The cuiporaHon shall keep at its
principal executive office, or if its principal executive office is not in
this State at its principal business office in this State, the ori- ginal or a
copy of the bylaws as amended to date, which shall be open to inspection by
the stockholders at all reasonable times during office hours. If the principal
executive office of the corporation is outside this state and the corporation
has no principal business office in this state, the secretary shall, upon the
written request of any stockholder, furnish to such stockholder a copy of the
bylaws as amended to date.
Section3. MAINTENANCE OF OTHER CORPORATE RECORDS. The accounting books
and records and minutes of proceedings of the stockholders and the board of
directors and any committee or committees of the board of directors shall be
kept at such place or places designated by the board of directors, or, in the
absence of such designation, at the principal executive office of the
corporation. The minutes shall be kept in written form and the accounting
books and records shall be kept either in written form or in any other form
capable of being converted into written form.
Every director shall have the absolute right at any reasonable time to inspect
and copy all books, records and documents of every kind and to inspect the
physical properties of this corporation and any subsidiary of this
corporation. Such inspection by a director may b made in person or by agent or
attorney and the right of inspection includes the right to copy and make
extracts. The foregoing rights of inspection shall extend to the records of
each subsidiary of the corporation.
Section 4. ANNUAL REPORT TO STOCKHOLDERS. Nothing herein shall be
interpreted as prohibiting the board of directors from issuing any annual or
other periodic reports the stockholders of the corporation as they deem
appropriate.
Section 5. FINANCIAL STATEMENTS. A copy of any annual financial statement
and any income statement of the corporation for each quarterly period of each
fiscal year and any accompanying balance sheet of the corporation as of the
end of each such period, that has been prepared by the corporation shall be
kept on file in the principal executive office of the corporation for twelve
(12) months.
Section 6. ANNUAL LIST OF DIRECTORS. OFFICERS AND RESIDE AGENT. The
corporation shall, on or before June 30 of each year, file with the Secretary
of State of Nevada, on the prescribed form, a list of its officers and
directors and a designate of its resident agent in Nevada.
ARTICLE VIII
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE. For purposes of determining the stockholders
entitled to notice of any meeting or to vote or entitled to receive payment of
any dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action, the board of
directors may fix, in advance, a record date, which shall not be more than
sixty (60) days nor less than ten (10) days prior to the date of any such
meeting nor more than sixty (60)days prior to any other action, and in such
case only stockholders of record on the date so fixed are entitled to notice
and to vote or to receive the dividend, distribution or allotment of rights or
to exercise the rights, as the case may be, notwithstanding any transfer of
any shares on the books of the corporation after the record date fixed as
aforesaid, except as otherwise provided in the Nevada General Corporation Law.
If the board of directors docs not so fix record date:
(a) The record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given or, if notice is waived,
at the close of business on the business day next preceding the day on which
the meeting is held.
(b) The record date tor determining stockholders entitled to give consent
to corporate action in writing without a meeting, when no prior action by the
board has been taken,shall be the day on which the first written consent is
given.
(c) The record date for determining stockholders for any other purposes
shall be at the close of business on the day on which the board ad opts the
resolution relating thereto,or the sixtieth (60th) day prior to the date of
such other action, whichever is later.
Section 2. CLOSING OF TRANSFER BOOKS. The directors may prescribed period
not exceeding sixty (60) days prior to any meeting of the stockholders during
which no transfer of stock on the books of the corpora- tion may be made, or
my fix a date not more than sixty (60) days prior to the holding of any such
meeting as the day as of which stockholders entitled to notice of and to vote
at such meeting shall be determined; and only stockholders of record on such
day shall be entitled to notice or to vote at such meeting.
Section 3. REGISTERED STOCKHOLDERS. The corporation shall entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as other wise
provided by the laws of Nevada.
Section 4. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS. All checks, drafts
or other orders for payment of money, notes or other evidences of
indebtedness, issued in the name of or payable to the corporation, shall be
signed or endorsed by such person or persons and in such manner as, from time
to time, shall be determined by resolution of the board of directors.
Section 5. CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXCUTED. The board
of directors, except as in the bylaws otherwise provided, may authorize any
officer or officers, agent or agents, to enter into any contract or execute
any instrument in tin;name of and on behalf of the corporation, and such
authority may be general or confined to specific instances; and, unless so
authorized or ratified by the board of directors or within the agency power or
authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or to any amount.
Section 6. STOCK CERTIFICATES. A certificate or certificates for shares of
the capital stock of the corporation shall be issued to each stockholder when
any such shares are partly paid, and the board of directors may authorize the
issuance of certificates or shares as partly paid provided that such
certificates shall state the amount of the consideration to be paid therefor
and the amount paid thereon. All certificates shall be signed in the name of
the corporation by the president or vice president and by the treasurer or a
assistant treasurer or the secretary or any assistant secretary, certifying
the number of shares and the class or series of shares owned by the
stockholder. When the corporation is authorized to issue shares of more than
one class or more than one series of any class, there shall be set forth upon
the face or back of the certificate, or the certificate shall have a statement
that the corporation will furnish to any stockholders upon request and without
charge, a full or summary statement of the designations, preferences and
relatives, participating optional or other special rights of the various
classes of stock or series there of and the qualifications, limitations or
restrictions of such rights, and,if the corporation shall be authorized to
issue only special stock, such certificate must set forth in full or summarize
the rights of the holders of such stock. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it maybe issued by the corporation with the same effect
as if such person were an officer, transfer agent or registrar at the date of
issue.
No new certificate for shares shall be issued in place of any certificate
theretofore issued unless the latter is surrendered and cancelled at the same
time; provided, however, that a new certificate may be issued without the
surrender and cancellation of the old certificate if the certificate
theretofore issued is alleged to have been lost, stolen or destroyed. In case
of any such allegedly lost, stolen or destroyed certificate, the corporation
may require the owner thereof or the legal representative of such owner to
give the corporation a bond (or other adequate security) sufficient to
indemnify it against any claim that may be made against it (including any
expense or liability) on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.
Section 7. DIVIDENDS. Dividends upon the capital stock of the corporaton,
subject to the provisions of the articles of incorporation, if any, may be
declared by the board of directors at any regular or special meeting pursuant
to law. Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the articles of incorporation.
Before payment of any dividend, there may be act aside out of any funds of the
corporation available for dividends such sum or sums as the directors from
time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the corporation, or for such other purpose as
the directors shall think conducive to the interest of the corporation, and
the directors may modify or abolish any such reserves in the manner in which
it was created.
Section 8. FISCAL YEAR. the fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 9. SEAL. The corporate seal shall have inscribed thereon the name
or the corporation, the year of its incorporation and the words "Corporate
Seal, Nevada."
Section 10. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The chairman of
the board, the president, or any vice president, or any other person
authorized by resolution of the board of directors by any of the foregoing
designated officers, is authorized to vote on behalf of the corporation any
and all shares of any other corporation or corporations, foreign or domestic,
standing in the name of the corporation. The authority herein granted to said
officers to vote or represent on behalf of the corporation any and all shares
held by the corporation in any other corporation or corporations may be
exercised by any such officer in person or by any person authorized to do so
by proxy duly executed by said officer.
Section 11. CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of constructiOn, and definitions in
the Nevada GeneralCorporation Law shall govern the construction of the bylaws.
Without limiting the generality of the foregoing, the singular number includes
the plural, the plural number includes the singular, and the term "person"
includes both a corporation and a natural person.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY STOCKHOLDERS. New bylaws may be adopted or these
bylaws may be amended or repealed by the affirmative vote of a majority of the
outstanding shares entitled to vote, or by the written assent of stockholders
entitled to vote such shares, except as otherwise provided by law or by the
articles of incorporation.
Section 2. AMENDMENT BY DIRECTORS. Subject to the rights of the
stocholders as provided in Section I of this Article, bylaws may be adopted,
amended or repealed by the board of directors.
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
I. That I am the duly elected and acting secretary of
AFFORDABLE HOMES OF AMERICA, INC., a Nevada corporation; and
2. That the foregoing Amended and Restated Bylaws, comprising
twenty (20) pages, constitute the Bylaws of said corporation as duly adopted
and approved by the board of directors of said corporation by a Unanimous
Written Consent dated as of October ___, 1997 and duly adopted and approved by
the stockholders of said corporation at a special meeting held on October ___,
1997.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of
said corporation this ____________ day of October, 1997.
By /s/ Jim Matthews
------------
Jim Matthews
Secretary
EX-10.1
8
ex10-1.txt
JOINT VENTURE AGREEMENT
JOINT VENTURE AGREEMENT WITH AL NASAR TRADING & INDUSTRIAL CORPORATION
August 15, 2000
JOINT VENTURE AGREEMENT
This Joint Venture Agreement (the Agreement or This Agreement) is entered into
this August 14 , 2000 by and between
Affordable Homes of America, Inc, hereinafter referred to as AHOA, a Nevada
Corporation whose principle place of business is 4505 W. Hacienda Ave. Unit
I-1, Las Vegas, Nevada, USA and
AL Nasar Trading & Industrial Corporation, LLC, hereinafter referred to as
ALNASR, a corporation registered in the Kingdom of Saudi Arabia (registration
no. 3) whose principal place of business is Adam Khashoggi Vila, Al Washem
Street, Murabba's District, Riyadh, Kingdom of Saudi Arabia.
WHEREAS
A. AHOA is the holder of two United States of America patents (number
5,782,970 and 5,852,077), the patents being issued for the manufactur ing of
a protected new and unique building material hereinafter refer red to as the
product;
B. AHOA has through extensive research and experience, developed low c ost,
rapidly produced housing models which meet minimum building stan dards for
the construction of homes in the United States and in many, if not all
foreign countries.
C. AHOA is now capable and ready to offer the product and associated home
building expertise to a joint venture partner, specifically ALNASR to
introduce, market and sell the product in the Kingdom of Saudi Arabia and in
other countries mutually selected by ALNASR and AHOA.
D. Furthermore, AHOA is now capable and ready to (a) provide full complete
technical assistance in the establishment of plants to manufacture the
product and (b) provide all the necessary expertise required to build and
market low cost homes in accordance with models created by AHOA
AND WHERAS
A. ALNASR has the experience and contacts necessary to (a) market the product
in the countries selected in the Middle East and Northern Africa and (b)
create the infrastructure necessary for AHOA to build manufacturing plants for
products where feasible.
B. ALNASR possesses the professional network which will work diligently
towards obtaining various permits and licenses as required, both for the
introduction of the product in the countries selected and for the introduction
of the product in the countries selected and for the establishment of
factories to construct manufacturing facilities in line with this agreement;
C. Furthermore, ALNASR now desires to utilize its experience, expertise and
network to ensure the success of low cost housing models by bidding for
housing projects in countries selected at the very earliest opportunity to
this signing of this agreement.
NOW THEREFORE, In consideration of one United States Dollar (US$1.00) receipt
of which is hereby acknowledged and the mutual promises and warranties
contained herein, AHOA and ALNASR hereby agree as follows:
MARKETING AND PRODUCTION, LOW COST HOUSING 1. AHOA and ALNASR agree to the
formation of two corporations called Affordable Homes (Middle East), Inc., the
said corporations, unless otherwise agreed upon to be (a) a Canadian (British
Columbia) and (b) a United States of America (Nevada) corporation
respectively;
2. AHOA and ALNASR will each hold 50% of the Canadian and US corporation ( the
"JV Corporations") respectively
3. AHOA and ALNASR understand that each of the JV corporations will be obliged
to form alliances, partnerships or even JV agreements with third parties
depending upon the individual requirements and project mechanics in each
country:
4. AHOA will hereby grant the JV corporation the exclusive rights to (a)
introduce and market the product in various countries selected and (b)
construct manufacturing and production facilities to produce the product in
the said countries selected and furthermore, unless there are fundamental
reasons to the contrary AHOA agrees to transfer such exclusive rights to any
alliances, partnerships or JV undertaken with third parties in any particular
country.
5. AHOA will also grant the JV corporation the exclusive right, jointly, with
other parties or on their own accords, to bid on low cost housing contracts in
countries selected using AHOA's product and technical support.
6. AHOA warrants and guarantees that the product is feasible and further
warrants that all technical information provided to ALNASR isaccurate and will
be accurate at all times to the best of AHOA management
7. AHOA warrants that the product is viable building product and is one which
can be produced and used at a cost substantially less that the cost of
normally existing wood or concrete based housing materials
8. AHOA warrants that is engineer and technicians will be available for on
site presentations, reviews and studies in the countries selected to assist
ALNASR in any of its efforts envisaged in this Agreement
9. ALNASR agrees to use its best efforts to introduce, market and sell the
product in countries selected and further agrees that the first country will
be selected within 7 business days of the signing of this Agreement
10. ALNASR agrees that it will arrange for the preparation and submission of
competitive bids which will be based on the use of the product (either via
local production or via exports) to produce low cost housing in the country of
countries selected.
11. ALNASR may provide, as its own contribution towards the Joint Ventures
envisaged herein, land or buildings and such land or buildings will be
acceptable to AHOA, if (a) they are deemed suitable for the furtherance of the
objectives of the joint venture and (b) they are valued as per recognized
local or international standards;
12. Each party will have equal representation of the Board of Directors of the
corporation (per 1) unless such representation needs to be altered due to
locally prevailing regulations in which case both parties shall arrive at
mutually acceptance representations;
COSTS, FEES, EXPENSES & ORGANIZATION
13. Further to a Letter of Intent dated August 07, 2000, AHOA and ALNASR have
made their initial contributions of $US 25,000.00 (United States Dollars
Twenty Five Thousand only) each towards preliminary expenses designed to
identify the precise nature of opportunities for the product in all countries
in the Middle East and in certain countries forming the Northern Africa.
14. AHOA and ALNASR hereby, agree form this juncture, to operate the agreement
only through the JV Corporations (per 1);
15. AHOA and ALNASR hereby agree that both parties will contribute a specified
amount towards their share of initial capitalization of the corporations in
such a manner that preliminary travel cost, legal fees and other expenditures
are accounted for prior to formal capitalization pursuant to the actual
implementation of country specific joint ventures for production, marketing
and bidding purposes.
16. AHOA and ALNASR hereby agree to appoint Ms. Allison Eaton, President of
Africa Resources Corporation, Vancouver, as Secretary of the Canadian
corporation and AHOA appointee as Secretary of the US Corporation for the
primary purpose of maintaining and preparing books, records, timetables,
timelines and expense budgets;
17. AHOA and ALNASR hereby agree to appoint Mr. Stephen Nemerqut as General
Counsel for purposes envisaged in this Agreement;
IMMEDIATE OBJECTIVES
18. ALNASR, will, within 7 business days of the signing of this Agreement,
provide written confirmation of a least one country chosen for immediate
implementation of the objectives of the Joint Venture with AHOA, namely to
produce and manufacture the product and, further more, to promote low cost
housing projects;
19. ALNASR will within 7 business days of the signing of this Agreement,
provide a plan of action for a least four other countries where such plan will
be implemented depending upon the level of resources available to AHOA;
20. ALNASR and AHOA will cause the formation of the corporations (per 1) with
immediate effect so that the Secretaries of the Corporations can prepare and
formalize books, records, and budgets in line with the objectives of the
Agreement;
21. In order to fund the JV, and to complete other obligations under the
Agreement, AHOA will immediately conduct a private placement financing in
which cause AHOA will be actively assisted by Africa Resource Corporation and
by ALNASR;
22. ALNASR hereby agrees to make all arrangements, in conjunction with Africa
Resources, to enable AHOA to complete the targeted private placement for a sum
expected to be for a minimum of $7.00 million and for a maximum of $15 million
with the overriding provision that the bulk of the proceed excluding certain
operating and working capital costs agreed upon, will be utilized to fund
AHOA's share in the joint venture and/or joint ventures envisaged therein;
23. ALNASR is aware that shares issued as a consequence of the private
placement by AHOA will be restricted shares (either Rule 144 or Reg,'S') and
such shares may remain restricted for trading in the US either for a period of
12 months from the date of the issuance or pending AHOA effecting the
appropriate registration of the securities issued;
GENERAL
24. It is explicitly understood by ALNSAR that AHOA's near term and longer
term participation, especially in the manufacture of the product in one or
more countries, is reliant upon the success of the private placement (per 22)
and a failure to satisfactorily complete the private placement will make it
impossible for AHOA to meet the forthcoming commitments as outlined in this
Agreement;
25. The term of the Agreement shall be for a period of three (3) years with
and automatic renewal for twenty five (25) years if a minimum of US$
100,000,000.00 (United States Dollars One Hundred Million) of actual
construction value is achieved within three years where such construction
value will be the aggregate of construction expenditures in one or more
countries designated by ALNASR;26. Since the representation on the Board of
Directors (per 1) shall be equally split between AHOA and ALNASR, any
stalemate in voting- despite the best efforts of both parties- will be
submitted to an independent Arbitrator selected from the American Arbitrator
Association in which case the Arbitrator's decision will be final;
27. This agreement may be terminated for any of the following reasons:
a. By mutual consent of both parties
b. By the failure of ALNASR to secure necessary licenses permits and other
related arrangements in at least 1 country over a period of 12 months form the
date of signing this Agreement.
c. By the failure of ALNASR to forward a comprehensive plan of action for the
JV corporations within 12 months from the date of signing this Agreement;
d. By the failure of AHOA to complete the private placement envisaged herein
within 6 months from the date of signing this Agreement;
e. By the failure of AHOA to demonstrate adequately that the product meets
with all necessary minimum requirements and furthermore, to prove that the
low cost housing model is reality;
28. The Agreement may be amended at any time provided that any amended
agreement is in writing, signed by both parties and clearly referenced;
29. All timetables of timelines mentioned herein and appearing as the duties
of any of the parties to the Agreement may be extended with the written
consent of both parties to the agreement and the parties concerned hereby
agree that certain requirements or provisions may be waived provided that such
waiver is mutually agreed in writing
30. Address for notices and other communications:
AHOA Affordable Homes of America, Inc
4505 W. Hacienda Ave. Unit I-1
Las Vegas, NV
#702-579-4888
Fax#-702-579-4833
e-mail:info@affordahome.com
AL NASR Trading & Industrial Corporation LLC
Adnan Khashoggi Villa
Al Washem Street
Murabba's District
Riyadh, Kingdom of Saudi Arabia
Telephone: 1-9661-402-7888
Fax:1-9661-402-8577
31. The Agreement is the final written expression and the complete and
exclusive statement of the parties namely AHOA and ALNASR. It super- sedes any
and all other agreements (and letters of intent as the case may be) written or
oral between the parties and alterations or amendments hereinafter must only
be with the written and mutual content of AHOA and ALNASR:
32. The Agreement, and its terms and conditions, shall be govern by the laws
prevailing in the State of Nevada or laws in other jurisdictions if and when
applicable;
33. In the event that any pan of the Agreement is determined invalid by a
court of competent jurisdiction, such determination shall not effect the
validity of the remaining portion of the Agreement:
34. Both parties agree that, within the framework of the Agreement, certain
commission and/or finder's fees will be payable to Charlesbridge Holdings
(Europe) Corporation/Africa Reiources Corporation and to The Aiegis Group and
that the said commissions and fees will be negotiated separately and will form
part of a separate aereement.
SIGNED AND ACCEPTED
DATED: 08/15/2000
For AFFFORDABLE HOMES OF AMERICA, INC.
By: /s/ Merle Ferguson
--------------
Merle Ferguson
President
FOR AL NASR TRADING AND INDUSTRIAL CORPORATION, LLC
By /s/ ADNAN KHASHOGGI
---------------
ADNAN KHASHOGGI
DIRECTOR
EX-23.2
9
ex23-2.txt
CONSENT OF INDEPENDENT AUDITORS
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this form 10KSB Annual Report pursuant to section 13
or 15 (d) of the Securities Exchange Act of 1934 Composite Industries Of
America, Inc. (F/K/A World Homes, Inc./Affordable Homes Of America, Inc. and
Subsidiaries) of our report dated September 14, 2001 (except as to note 20
which is as of October 3, 2001)
By: /s/ Pascale, Razzino, Alexanderson & Co., PLLC
------------------------------------------
Pascale, Razzino, Alexanderson & Co., PLLC
North Bellmore, New York 11710
October 9, 2001