<PAGE>
12
UNITED STATES SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
For the transition period from __________ to ________
Commission File Number 000-21729
__________APPLIED INTELLIGENCE GROUP, INC.___________
(Exact name of registrant as specified in its charter)
__________Oklahoma____________ ________73-1247666_______
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
13800 Benson Road
_______ Edmond, Oklahoma_ 73013_____
(Address of principal executive offices)
(405) 936-2300
Registrant's telephone number, including area code
Check whether the Registrant(1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes _X_ No ____
As of April 30, 1997, there were 2,726,944 outstanding
shares of Common Stock, par value $.001 per share.
Transitional Small Business Disclosure Format: Yes _____
No __X___
<PAGE>
APPLIED INTELLIGENCE GROUP, INC.
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1997
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Item 1. FINANCIAL STATEMENTS
Balance Sheets (unaudited) as of March 31,
1997 and December 31, 1996 3
Statements of Operations (unaudited) for
the three months ended March 31, 1997 and 1996 4
Statement of Stockholders' Equity (unaudited)
for the three months ended March 31, 1997 5
Statements of Cash Flows (unaudited) for the
three months ended March 31, 1997 and 1996 6
Notes to Financial Statements (unaudited) -
March 31, 1997 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS 10
Item 2. CHANGES IN SECURITIES 10
Item 3. DEFAULTS UPON SENIOR SECURITIES 10
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 10
Item 5. OTHER INFORMATION 11
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 11
Signatures 12
Exhibits 10.43 1997 Employee Stock Purchase Plan 13
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APPLIED INTELLIGENCE GROUP, INC.
BALANCE SHEETS
(Unaudited)
March 31, 1997 and December 31, 1996
<TABLE>
<CAPTION>
ASSETS March 31, December
1997 31, 1996
----------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $1,430,420 $1,821,014
Accounts receivable - trade, net of
allowance for doubtful accounts of
$4,036 at March 31, 1997 and $5,631
at December 31, 1996 1,126,562 2,009,837
Other receivables 257,433 314,874
Inventory 17,472 28,159
Prepaid expenses 161,344 76,264
---------- ----------
Total current assets 2,993,231 4,250,148
Furniture, equipment and leasehold
improvements, net 1,653,074 1,632,147
Software development costs 1,380,366 1,308,099
Other assets 248,935 117,141
---------- ----------
Total assets $6,275,606 $7,307,535
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Book overdraft $ 105,136 $ 284,760
Accounts payable and accrued
liabilities 668,424 1,078,506
Deferred revenue 314,024 332,449
Current portion of notes payable to
shareholders 162,375 107,375
Current portion of capital lease
obligations 139,459 135,151
---------- ----------
Total current liabilities 1,389,418 1,938,241
Capital lease obligations, net of current
portion 140,095 176,618
Notes payable to shareholders, net of
current portion 314,000 389,000
Deferred income taxes - 62,687
---------- ----------
Total liabilities 1,843,513 2,566,546
Stockholders' equity:
Common stock, $.001 par value;
30,000,000 shares authorized;
2,726,944 and 2,726,500 shares
issued and outstanding at March
31, 1997 and December 31, 1996,
respectively 2,727 2,727
Additional paid-in capital 4,491,505 4,491,226
Retained earnings (deficit) (62,139) 247,036
---------- ----------
Total stockholders' equity 4,432,093 4,740,989
Total liabilities and stockholders'
equity $6,275,606 $7,307,535
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
APPLIED INTELLIGENCE GROUP, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Revenues $1,836,419 $2,358,287
Expenses:
Direct cost of sales 188,495 420,734
Salaries and benefits 1,374,617 1,230,582
Selling, general and administrative 586,890 490,949
Interest expense, net 5,565 45,087
Depreciation and amortization 179,522 139,915
---------- ----------
Total expenses 2,335,089 2,327,267
Income (loss) before income taxes (498,670) 31,020
Provision (benefit) for income taxes (189,495) 11,788
---------- ----------
Net income (loss) $ (309,175) $ 19,232
========== ==========
Net income (loss) per common share $ (.11) $ .011
========== ==========
Weighted average common share equivalents
outstanding 2,726,944 1,755,628
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
APPLIED INTELLIGENCE GROUP, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
For the Three Months Ended March 31, 1997
<TABLE>
<CAPTION>
Additional Retained
Common Stock Paid-in Earnings
Shares Amount Capital (Deficit)
--------- ------- ---------- ---------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 2,726,500 $ 2,727 $4,491,226 $247,036
Exercise of stock options 444 - 279 -
Net loss - - - (309,175)
--------- ------- ---------- --------
Balance, March 31, 1997 2,726,944 $ 2,727 $4,491,505 $(62,139)
========= ======= ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
APPLIED INTELLIGENCE GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(309,175) $ 19,232
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 179,522 139,915
Deferred income tax provision (benefit) (189,495) 11,788
Decrease in accounts receivable 883,275 167,377
Decrease in other receivables 57,441 16,642
Decrease (increase) in inventory 10,687 (26,456)
Decrease (increase) in prepaid expenses (85,080) 21,153
Increase in other assets (4,986) (8,400)
Decrease in accounts payable and accrued
liabilities (410,082) (16,935)
Increase (decrease) in deferred revenue (18,425) 158,108
---------- ----------
Net cash provided by operating activities 113,682 482,424
Cash flows from investing activities:
Capital expenditures (141,652) (118,074)
Capitalized expenditures for software
development (131,064) (173,260)
---------- ----------
Net cash used in investing activities
(272,716) (291,334)
Cash flows from financing activities:
Decrease in book overdraft (179,624) (72,411)
Proceeds from long-term debt - 1,520,000
Proceeds from exercise of stock options 279 -
Payments of capital lease obligations (32,215) (23,018)
Payments of shareholder loans (20,000) -
Payments on long-term debt - (1,625,000)
---------- ----------
Net cash used in financing activities (231,560) (200,429)
---------- ----------
Net decrease in cash and cash equivalents (390,594) (9,339)
Cash and cash equivalents at beginning of
period 1,821,014 18,499
---------- ----------
Cash and cash equivalents at end of period $1,430,420 $ 9,160
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
APPLIED INTELLIGENCE GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 1997
NOTE 1. DESCRIPTION OF BUSINESS
Applied Intelligence Group, Inc. (the "Company") provides a
diversified range of management consulting and computer system
integration services, focused primarily on the retail and
wholesale distribution industries. The Company's clients and
customers range from small, rapidly growing companies to large
corporations and are geographically disbursed throughout the
United States.
NOTE 2. BASIS OF PRESENTATION
Reference is made to the Company's Annual Report on Form 10-KSB
for the year ending December 31, 1996.
The accompanying unaudited financial statements have been
prepared by the Company in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-QSB. Accordingly, they do not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of
normal recurring items) considered necessary for a fair
presentation have been included. These interim financial
statements should be read in conjunction with the audited
financial statements and related notes included in the Company's
Annual Report on Form 10-KSB as filed on March 31, 1997.
Operating results for the three month period ended March 31,
1997 are not necessarily indicative of the results that may be
expected for the full year ended December 31, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Statements of the Company's or management's intentions,
beliefs, anticipations, expectations and similar expressions
concerning future events contained in this Form 10-QSB constitute
"forward looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. As with any future event, there
can be no assurance that the events described in forward looking
statements made in this Form 10-QSB will occur or that the
results of future events will not vary materially from those
described in the forward looking statements. Important factors
that could cause the Company's actual performance and operating
results to differ materially from the forward looking statements
include, but are not limited to, changes in the general level of
economic activity in the markets served by the Company,
introduction of new products or services by competitors, delays
in implementing the Company's viaLinkT services, the availability
of capital sufficient to support the Company's level of activity,
and the ability of the Company to implement its business
strategies.
The Company's expectations with respect to future results of
operations that may be embodied in oral and written forward-
looking statements, including any forward-looking statements that
may be included in this Form 10-QSB, are subject to risks and
uncertainties that must be considered when evaluating the
likelihood of the Company's realization of such expectations.
The Company's actual results could differ materially. Factors
that could cause or contribute to such differences include, but
are not limited to, those discussed in Item 5 of Part II of this
Report.
OVERVIEW
The Company is engaged in the business of providing
information systems services to retail companies and to the
manufacturers, wholesalers, and other suppliers who provide the
products that these retail companies sell (the "Retail Supply
Chain"). These information systems services include (i)
management consulting and computer system integration services,
(ii) proprietary software products and applications, and (iii)
network services and network-based computer applications. The
Company is organized to provide all three information systems
services in several business areas: Retail Consulting, Store
Systems Consulting, Internet Consulting, viaLink Implementation
and Production/Operations. In 1993, the Company began development
of viaLink, a subscription service on the World Wide Web of the
Internet (the "Internet"), which was announced in April 1996, and
live services were first delivered in January 1997. In 1994, the
Company began work on its RETAIL SERVICES APPLICATION ("RSA"),
which was released in August 1995.
During the three months ended March 31, 1997, the Company
expended approximately $131,000, net of revenue, to launch and
implement a new internet tool called ijob. ijob is a network
based human resource recruiting application deployed through
either the internet or accessible by telephone. ijob uses these
communications systems as a medium to bring together people
looking for jobs and companies looking for employees. ijob
utilizes a database to collect, catalog, and match information to
pre-qualify job candidates with the human resources needs of
employers who subscribe to the ijob network services application.
The Company believes this system represents a technological
improvement over current Internet "resume web sites" where career
material is simply posted on unscreened databases or on bulletin
boards. With ijob, the subscribing employer benefits by receiving
a list of pre-qualified registrants who have greater probability
of meeting his or her human resource needs. Computer assisted,
structured interviews and skill testing is used to help determine
if the registrant will meet the required needs. This predictive
system enables employers to conduct focused searches, saving time
and money. People looking for jobs also benefit by using the ijob
system. Free to job seekers, ijob maintains all information in
its active database until the registrant requests its withdrawal.
Implementation of ijob commenced early in the second quarter
of 1997, and the Company expects to receive revenues from this
new source during the second quarter. The initial customer has
executed an agreement to utilize ijob as its recruiting source.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 compared with Three Months
Ended March 31, 1996
REVENUES. Total revenues decreased $521,868 (22 percent),
from $2,358,287 in the three months ended March 31, 1996 compared
to revenues of $1,836,419 in the three months ended March 31,
1997. The decrease was principally due to a license sale
exceeding $800,000 during the first quarter of 1996, with no
similar sale in the first quarter of 1997. The Company's
consulting, maintenance and web site hosting, and commission
revenue all increased in the first quarter of 1997 compared to
the first quarter of 1996. Consulting fees increased $340,766 (a
38 percent increase), due to generally higher level of on-going
retail consulting projects in the three months ended March 31,
1997 compared to the same period in 1996. Revenues from the
Company's network services and network based computer
applications were $187,246 for the three months ended March 31,
1997, while these sources of revenues did not exist in the first
quarter of 1996.
DIRECT COST OF SALES. Direct cost of sales during the first
quarter of 1997 decreased $232,239 (55 percent) from the first
quarter of 1996, due to the decrease in hardware sales of
$250,221 (52 percent). The decreased hardware sales resulted in
decreased gross margin of $17,981 (a decrease of 29 percent),
which was offset by commissions earned. Commissions for the
first quarter of 1997 totaled $73,243, while during the first
quarter of 1996 no commissions were earned.
SALARIES AND BENEFITS. Salaries, wages, taxes and related
benefits, and contract labor expenses in total increased during
the three months ended March 31, 1997 by $144,035 (a 12 percent
increase) over the same period in 1996. During the first quarter
of 1997 the Company utilized contract programmers for client
engagements to a greater extent than in the prior year. Contract
labor expenses totaled $121,776 during the three months ended
March 31, 1997, compared to a total of $9,764 during the three
months ended March 31, 1996. The Company expects to replace
these higher cost contract labor costs with permanent employees
during the remainder of 1997. All other payroll and related
taxes and benefit expenses increased in total by $32,023 (a 3
percent increase).
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling,
general and administrative expenses increased $95,941 (20
percent) from $490,949 in the three months ended March 31, 1996,
to $586,890 in the three months ended March 31, 1997. Occupancy
costs of rent, utilities, repairs and maintenance and insurance
increased $26,277 (24 percent) due to on-going costs associated
with the relocation and occupation of the Company's new
headquarters in the first quarter of 1996. Additional equipment
rentals and increased software maintenance agreements also
contributed to the increase. Telecommunications expense
increased $10,025 (30 percent) during the three months ended
March 31, 1997, compared to the same period in 1996. This
increase was due to expanded communications systems with the
Internet for the Company's viaLinkT and web site hosting
services, greater long distance usage due to the increased
marketing activities for the Company, and Internet and telephone
expense associated with ijob. Advertising and promotion expenses
increased $26,338 (136 percent increase) in the first quarter
compared to the same period in 1996, due to the increased effort
in marketing and sales promotion activities for the Company.
Professional fees increased $34,332 (a 38 percent increase) to
$125,778 in the three months ended March 31, 1997 compared to a
total of $91,446 in the three months ended March 31, 1996. These
increased expenses relate to the Company becoming a publicly held
corporation in November 1996, and the use of professional
consultants for the continued marketing and implementation of the
Company's new viaLinkT Item Catalog service, and ijob (discussed
above). These projects are all part of the recurring revenue
business area, as the Company shifts its focus from single
consulting projects to recurring network service revenues with
expected higher profit margins. All other selling, general and
administrative expenses decreased $1,031 (less than 1 percent)
for the quarter.
INTEREST EXPENSE. Net interest expense for the three months
ended March 31, 1997, decreased $39,522 (88 percent) from the
three months ended March 31, 1996, due to the repayment of all
outstanding bank debt with the proceeds of the Company's initial
public offering in November 1996, and no outstanding bank debt
during the first quarter of 1997 compared to an average balance
of outstanding bank debt during the first quarter 1996 of
$1,452,000. Total average outstanding debt, including the
capital lease obligations, during the first quarter of 1997
totaled $767,000 compared to total average outstanding debt
during the first quarter of 1996 of $2,318,000.
DEPRECIATION AND AMORTIZATION. Depreciation and
amortization expense increased $39,607 (28 percent)during the
three months ended March 31, 1997 compared to the three months
ended March 31, 1996, due to increased capital asset additions
during 1996, totaling $625,893, and total software development
cost expenditures of $655,248. Furthermore, the Company
commenced amortization of software development costs associated
with the viaLinkT Item Catalog Service system in the first
quarter.
LIQUIDITY AND CAPITAL RESOURCES.
As of March 31, 1997, the Company had cash and cash
equivalents of $1,430,420, and working capital of $1,603,813,
with a working capital ratio of 2.15 to 1.
In addition to such capital resources, the Company currently
has an available bank credit facility pursuant to which it may
borrow up to $1,000,000, secured by accounts receivable and all
tangible assets of the Company. The credit facility expires in
October 1997. As of March 31, 1997, there were no outstanding
borrowings under the credit facility. Prior to the Company's
initial public offering in November 1996, the Company financed
its operations and growth through internally generated cash flows
and borrowings.
During the three months ended March 31, 1997, the Company
had cash flows from operating activities of $113,682, compared to
net cash flows in the first quarter of 1996 of $482,424. Accounts
receivable decreased a net $883,275 during the three months ended
March 31, 1997, from $2,009,837 at December 31, 1996 to
$1,126,562 at March 31, 1997. The cash flow in the first
quarter of 1997 were due primarily to aggressive collection of
accounts receivable, which was offset by the net loss for the
period and using such funds to reduce accounts payable and
accrued liabilities by $410,082. All other operating activities
used net cash flows of $50,336 during the quarter.
During the three months ended March 31, 1997, the Company
invested cash flows of $272,716 in various fixed assets, hardware
and software of $141,652 and software development costs of
$131,064, compared to total investments $291,334 for the same
items in the three months ended March 31, 1996.
During the three months ended March 31, 1997, the Company
used a total of $231,560 in financing activities to reduce long-
term debt by $20,000, capital lease payments of $32,215, and a
decrease in the book overdraft of $179,624, offset by receipts of
$279 from the exercise of stock options during the quarter. Net
cash decreased during the quarter ended March 31, 1997 by
$390,594, compared to a net decrease in cash during the quarter
ended March 31, 1996 of $9,339.
The Company anticipates that its operations and growth
strategy will be financed through proceeds from its initial
public offering, operating cash flow, capital lease sources and
the existing bank line of credit facility. The Company believes
that these sources of funds will be sufficient to satisfy the
Company's capital requirements for at least 18 months. There may
be circumstances, however, that would accelerate the Company's
use of such financing sources. If this occurs, the Company may,
from time to time, incur indebtedness or issue, in public or
private transactions, equity or debt securities. The Company
currently has no arrangements, however, for additional financing
and there can be no assurance that the Company will be able to
obtain requisite financing when needed on acceptable terms.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company does not provide forecasts of its future
financial performance. However, from time to time, information
provided by the Company or statements made by its employees may
contain "forward-looking" information that involve risks and
uncertainties. In particular, statements contained in this Form
10-QSB that are not historical facts constitute forward-looking
statements and are made under the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The Company's
actual results of operations and financial condition have varied
and may in the future vary significantly from those stated in any
forward-looking statements. The Company's future operating
results are subject to risks and uncertainties and are dependent
upon many factors, including, without limitation, (i) changes in
the general level of economic activity in the markets served by
the Company (ii) introduction of new products or services by
competitors, (iii) the availability of capital sufficient to
support the Company's level of activity, (iv) the ability of the
Company to implement its business strategies, (v) delays in
implementing the Company's viaLinkT services, (vi) the ability of
the Company to understand, anticipate and respond to rapidly
changing technologies, market trends and customer needs, and
(vii) the ability of the Company to recruit and retain highly
talented professionals in a competitive job market. The Company's
ability to market and sell its products could also be adversely
affected by the emergence of new competitors in the market place
and by changes resulting in increased government regulation. In
addition, a significant portion of the Company's revenues are
attributable to a limited number of individual customers, the
immediate loss of any of which may adversely affect the Company's
business and results of operations. Each of these factors, and
others, are discussed from time to time in the filings made by
the Company with the Securities and Exchange Commission,
including, but not limited to, the Company's Form SB-2
Registration Statement (no. 333-5058-D) which became effective on
November 20, 1996 and the Company's Annual Report on Form 10-KSB
filed on March 31, 1997.
PONTENTIAL FLUCTATIONS IN OPERATING RESULTS
The Company's quarterly operating results have in the past
varied and may in the future vary significantly depending on
factors such as the size, timing and recognition of revenue from
significant customer consulting and systems integration activity,
hardware and software sales, the timing of new product releases
and market acceptance of these new releases, increases in
operating expenses, and to some extent, the seasonal nature of
its business. Thus, the Company's revenues and results of
operations have and may continue to vary significantly from
quarter to quarter, period to period, and year to year based upon
frequency and volume of sales and licensing of the Company's
software applications and providing of consulting services during
such period, as well as software applications developed by the
Company. Due to the relatively fixed nature of certain of the
Company's costs throughout each quarterly period, including
personnel and facilities costs, the decline of revenues in any
quarter typically results in lower profitability in that quarter.
There can be no assurance that the Company will be successful in
achieving profitability or avoiding losses in any future period.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.43 1997 Employee Stock Purchase Plan
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the 3 months
ended March 31, 1997.
SIGNATURES
Pursuant to the requirements 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.
APPLIED INTELLIGENCE GROUP, INC.
By: /s/___ ROBERT L. BARCUM_____
Robert L. Barcum
Chairman of the Board
President and Chief Executive
Officer
May 12, 1997
By: /s/___ JOHN M.DUCK__________
John M. Duck
Vice President and Chief
Financial Officer
May 12, 1997
APPLIED INTELLIGENCE GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
Effective Date: April 1, 1997
APPLIED INTELLIGENCE GROUP, INC. EMPLOYEE STOCK PURCHASE PLAN
Table of Contents
ARTICLE I NAME AND PURPOSE OF PLAN A-1
1.1 Name of Plan A-1
1.2 Purpose A-1
ARTICLE II DEFINITIONS A-1
2.1 Definitions A-1
2.2 Construction A-4
ARTICLE III FUNDING AND EARLY WITHDRAWAL OF ACCOUNTS A-5
3.1 Stock Purchase Accounts A-5
3.2 Participant's Contributions A-5
3.3 Continued Participation; Voluntary
Withdrawal from Plan A-5
3.4 Withdrawal by Terminating Participant A-5
3.5 Reparticipation A-5
3.6 Interest Accrual A-6
ARTICLE IV EXERCISE OF STOCK OPTION A-6
4.1 Exercise A-6
4.2 Amount of Shares of Stock A-6
4.3 Distribution A-7
4.4 Fractional Shares A-7
4.5 Issuance of Shares A-7
ARTICLE V MAXIMUM SHARES OF STOCK AVAILABLE A-7
5.1 Maximum Number of Shares Available
to Participants A-7
5.2 Maximum Authorized Shares A-7
5.3 Termination of Offering for the
Second and Subsequent Purchase Periods A-7
ARTICLE VI ADMINISTRATION A-7
6.1 Appointment of Committee A-7
6.2 Committee Powers and Duties A-8
6.3 Committee to Make Rules and Interpret
Plan A-8
ARTICLE VII AMENDMENT OF THE PLAN A-8
ARTICLE VIII RECAPITALIZATION AND EFFECT OF CERTAIN
TRANSACTIONS A-8
8.1 Stock Adjustments A-8
8.2 Effect of Certain Transactions A-9
8.3 Stockholder Approval A-9
ARTICLE IX MISCELLANEOUS A-9
9.1 Notices A-9
9.2 Application of the Funds A-9
9.3 Repurchase of Stock A-9
9.4 Alternate Contribution Methods A-9
9.5 Nonassignability A-10
9.6 Government Regulation A-10
9.7 Effective Date of Plan A-10
9.8 Termination of Plan A-10
9.9 Obligations to Exercise Stock Option A-10
9.10 Right to Continued Employment A-10
9.11 Reliance on Reports A-10
9.12 Applicable Law A-10
9.13 Construction A-10
APPLIED INTELLIGENCE GROUP, INC. EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
NAME AND PURPOSE OF PLAN
I.1 Name of Plan. This Plan shall be known as:
Applied Intelligence Group, Inc. Employee Stock Purchase Plan.
I.2 Purpose. The Applied Intelligence Group, Inc.
Employee Stock Purchase Plan, by offering Employees the
opportunity to purchase the Company's Stock through payroll
deductions, is intended to encourage participation in the
ownership and economic progress of the Company. Employees may
only be granted Stock Options to purchase Stock. Except as
otherwise provided in the Plan, by reason of their employment
relationship with the Company and/or the Employer, all Employees
of all Employers will be eligible to participate in the Plan.
ARTICLE II
DEFINITIONS
II.1 Definitions. Where the following capitalized
words and phrases appear in either a singular or plural form in
this instrument, they shall have the respective meanings set
forth below unless a different context is clearly expressed
herein.
(a) Account and Account Balance:
(i) The word "Account" shall mean the
record established and maintained to record the
interest in the Plan of each Participant in
accordance with Article III.
(ii) The words "Account Balance" shall
mean the credited balance standing in a
Participant's Account from time to time.
(b) Board: The word "Board" shall mean the Board
of Directors of the Company.
(c) Code: The word "Code" shall mean the
Internal Revenue Code of 1986, as amended from time to
time.
(d) Committee: The word "Committee" shall mean
the Compensation Committee of the Board referred to in
Article VI.
(e) Company: The word "Company" shall mean
Applied Intelligence Group, Inc., an Oklahoma
corporation.
(f) Employee: The word "Employee" shall mean any
person employed by the Employer on the basis of an
employer-employee relationship who receives
remuneration for personal services rendered to the
Employer.
(g) Employer: The word "Employer" shall mean the
Company and any Subsidiary of the Company.
(h) Exercise Date: The words "Exercise Date"
shall mean the last day of each calendar quarter during
which the Plan is in existence, being June 30, 1997,
September 30, 1997, December 31, 1997, March 31, 1998,
June 30, 1998, September 30, 1998, December 31, 1998,
March 31, 1999, June 30, 1999, September 30, 1999,
December 31, 1999, March 31, 2000, June 30, 2000,
September 30, 2000, December 31, 2000, March 31, 2001,
June 30, 2001, September 30, 2001, December 31, 2001,
and March 31, 2002.
(i) Fair Market Value: The words "Fair Market
Value" shall mean (A) during such time as the Stock is
listed upon the New York Stock Exchange or other
exchanges or the NASDAQ/National Market System, the
closing price of the Stock on such stock exchange or
exchanges or the NASDAQ/ National Market System on the
day for which such value is to be determined, or if no
sale of the Stock shall have been made on any such
stock exchange or the NASDAQ/National Market System
that day, on the next preceding day on which there was
a sale of such Stock or (B) during any such time as the
Stock is not listed upon an established stock exchange
or the NASDAQ/National Market System, the mean between
dealer "bid" and "ask" prices of the Stock in the
over-the-counter market on the day for which such value
is to be determined, as reported by the National
Association of Securities Dealers, Inc.
(j) Granting Date: The words "Granting Date"
shall mean the beginning of each applicable Purchase
Period, being April 1, 1997, July 1, 1997, October 1,
1997, January 1, 1998, April 1, 1998, July 1, 1998,
October 1, 1998, January 1, 1999, April 1, 1999, July
1, 1999, October 1, 1999, January 1, 2000, April 1,
2000, July 1, 2000, October 1, 2000, January 1, 2001,
April 1, 2001, July 1, 2001, October 1, 2001, and
January 1, 2002.
(k) Option Agreement: The words "Option
Agreement" shall mean an agreement to be executed by
the Participant and the Company, which shall comply
with the terms of the Plan and shall be in such form as
the Committee agrees upon from time to time.
(l) Option Price: The words "Option Price" shall
mean the price which shall be paid by the Participant
from his Account for any Stock purchased on an
applicable Exercise Date pursuant to any Stock Option
granted to such Participant; provided, such option
price shall be the lesser of:
(i) 85% of the per share Fair Market
Value on the Granting Date of the Purchase Period
applicable to such Participant: or
(ii) 85% of the per share Fair Market
Value on the Exercise Date of the Purchase Period
applicable to such Participant.
Provided, in no event shall the Option Price per share
be less than the par value of the Stock.
(m) Participant: The word "Participant" shall
mean an Employee (i) who executes with the Company an
Option Agreement on or prior to a Granting Date, (ii)
who on such Granting Date has been continuously
employed by the Employer for at least six months, and
(iii) whose customary employment is more than 20 hours
per week and more than five months in any calendar
year. Provided, for purposes of calculating the
foregoing six month service requirement for an
Employee, all employment service with the Company and
its Subsidiaries will be recognized. The word
"Participant" shall also include the legal
representative of a deceased Participant, and a
Participant who, within one month prior to the end of
the applicable Purchase Period for which he is a
Participant, terminates his employment with the
Employer on account of (i) retirement on or after age
55, (ii) retirement because of disability, (iii) lay
off by the Employer, or (iv) an authorized leave of
absence granted by the Employer. "Disability" for
purposes of this Subsection (m) shall mean a physical
or mental condition which, in the judgment of the
Committee, totally and permanently prevents a
Participant from engaging in any substantial gainful
employment with the Employer. A determination that
disability exists shall be based upon independent
medical evidence satisfactory to the Committee. In the
event that any Employer ceases to be a Subsidiary of
the Company, the Employees of such Employer will be
deemed to have terminated employment as of such date.
(n) Plan: The word "Plan" shall mean this
Applied Intelligence Group, Inc. Employee Stock
Purchase Plan, and any amendments thereto.
(o) Purchase Period: The words "Purchase Period"
shall mean any calendar quarter of each year during
which the Plan is in existence, as follows:
(i) "First Purchase Period"--April 1,
1997 through June 30, 1997.
(ii) "Second Purchase Period"--July 1,
1997 through September 30, 1997.
(iii) "Third Purchase Period"--October
1, 1997 through December 31, 1997.
(iv) "Fourth Purchase Period"--January
1, 1998 through March 31, 1998.
(v) "Fifth Purchase Period"--April 1,
1998 through June 30, 1998.
(vi) "Sixth Purchase Period"--July 1,
1998 through September 30, 1998.
(vii) "Seventh Purchase Period"--October
1, 1998 through December 31, 1998.
(viii) "Eighth Purchase Period"--January
1, 1999 through March 31, 1999.
(ix) "Ninth Purchase Period"--April 1,
1999 through June 30, 1999.
(x) "Tenth Purchase Period"--July 1,
1999 through September 30, 1999.
(xi) "Eleventh Purchase Period"--October
1, 1999 through December 31, 1999.
(xii) "Twelfth Purchase Period"--January
1, 2000 through March 31, 2000.
(xiii) "Thirteenth Purchase Period"--
April 1, 2000 through June 30, 2000.
(xiv) "Fourteenth Purchase Period"--July
1, 2000 through September 30, 2000.
(xv) "Fifteenth Purchase Period"--
October 1, 2000 through December 31, 2000.
(xvi) "Sixteenth Purchase Period"--
January 1, 2001 through March 31, 2001.
(xvii) "Seventeenth Purchase Period"--
April 1, 2001 through June 30, 2001.
(xviii) "Eighteenth Purchase Period"--
July 1, 2001 through September 30, 2001.
(xix) "Nineteenth Purchase Period"--
October 1, 2001 through December 31, 2001.
(xx) "Twentieth Purchase Period"--
January 1, 2002 through March 31, 2002.
(p) Stock: The word "Stock" shall mean the
common stock of the Company, par value $.001 per share,
authorized for issuance pursuant to the terms of the
Plan, subject to Article VIII of the Plan.
(q) Stock Option: The words "Stock Option" shall
mean the right of a Participant on an applicable
Exercise Date to purchase the number of whole shares of
Stock as provided in Article IV.
(r) Subsidiary: The word "Subsidiary" shall mean
any present or future subsidiary corporation of the
Company as defined in Section 424 of the Code.
(s) Terminating Participant: The words
"Terminating Participant" shall mean a Participant who
terminates his employment for reasons other than those
set forth in Subsection 2.1(m).
II.2 Construction. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine
gender, unless the context clearly indicates to the contrary.
Any word appearing herein in the plural shall include the
singular, where appropriate, and likewise the singular shall
include the plural, unless the context clearly indicates to the
contrary.
ARTICLE III
FUNDING AND EARLY WITHDRAWAL OF ACCOUNTS
III.1 Stock Purchase Accounts. As of the
applicable Granting Date, there shall be established and
maintained under the Plan in the name of each Participant (who is
a Participant with respect to the Purchase Period pertaining to
such Granting Date) an Account which shall be debited and
credited in accordance with the following Sections of this
Article III.
III.2 Participant's Contributions. By becoming a
Participant, authorization shall be deemed to be automatically
given by the Participant for his periodic contributions which
shall be credited to his Account. Prior to the applicable
Granting Date, the Participant shall elect in his Option
Agreement filed with the Committee the dollar amount of equal
periodic contributions which shall be withheld by the Employer by
payroll deduction from the Participant's compensation on each
payroll payment date. Such dollar amount shall not exceed $20
per payroll payment date ("Contribution Rate"); provided, an
election, once made with respect to any Purchase Period cannot be
changed after commencement of the Purchase Period; and provided
further, a Participant may elect to change his Contribution Rate
for succeeding Purchase Periods by notifying the Committee within
10 days of any succeeding Granting Date. If a Participant
receives a "hardship withdrawal" from a cash or deferred
arrangement established by the Employer under Section 401(k) of
the Code, he shall be prohibited from making contributions to his
Account under this Plan for a period of 12 months after receipt
of such hardship distribution. If a Participant's number of
payroll payment dates thereafter shall be changed, appropriate
adjustment shall be made so that equal periodic contributions
shall be made.
III.3 Continued Participation; Voluntary Withdrawal
from Plan. Once a Participant elects to participate in the Plan,
he shall thereafter remain as a Participant until expiration or
termination of the Plan, unless he otherwise withdraws from, or
otherwise becomes ineligible to participate in the Plan. A legal
representative of a deceased Participant and a Participant who
terminates employment for any reasons specified in Subsection
2.1(m) within one month prior to the end of the applicable
Purchase Period will continue to be a Participant in the Plan
until the next succeeding Exercise Date unless such Participant
or his representative (in the event of the Participant's death)
elects to withdraw from the Plan pursuant to this Section 3.3. A
Participant may withdraw from the Plan at any time by filing a
written notice with the Committee of withdrawal prior to the next
applicable Exercise Date. Upon a Participant's withdrawal, his
entire Account Balance, if any, on the date of withdrawal shall
be refunded to him.
III.4 Withdrawal by Terminating Participant. A
Terminating Participant shall be deemed to have made an election
to withdraw from the Plan on the date his employment terminates.
Upon such withdrawal, his entire Account Balance, if any, on the
date of withdrawal, shall be refunded to him.
III.5 Reparticipation. A Participant who withdraws
under Section 3.3 within any Purchase Period shall not be
eligible to reenter the Plan with respect to the same Purchase
Period; provided, a Participant who withdraws from the Plan under
Section 3.3 prior to the end of any Purchase Period shall not be
precluded from becoming a Participant with respect to any
succeeding Purchase Period if he has satisfied the eligibility
requirements of the Plan.
III.6 Interest Accrual. With respect to the refund
or distribution of an Account Balance under either of Sections
3.3 or 3.4, no interest shall be paid or payable. If the Plan is
terminated under either of Sections 8.2 or 9.8, the refund of an
Account Balance shall be with interest at a per annum rate of 5%
and shall be computed upon the average balance in such
Participant's Account for the period of time following the
Granting Date applicable to such Participant and ending on the
day of the withdrawal or distribution.
ARTICLE IV
EXERCISE OF STOCK OPTION
IV.1 Exercise. If a Participant has not made an
earlier election to withdraw pursuant to either of Sections 3.3
or 3.4, he shall be deemed to have elected to exercise his Stock
Option as of each Exercise Date with respect to the applicable
Purchase Period.
IV.2 Amount of Shares of Stock.
(a) Subject to the Subsection (b) following, the
whole number of shares of Stock to which a Participant
shall be entitled ("Total Stock Entitlement") upon the
applicable Exercise Date shall be determined under the
following formula:
Account Balance = Total Stock Entitlement
Option Price
Provided, the Account Balance for purposes of this
Section 4.2 shall be determined without crediting any
interest thereon.
(b) The Total Stock Entitlement computed for each
Participant shall be reduced to the extent that any of
the following Subsections shall apply:
(i) No Participant shall be entitled to
participate in the Plan to a greater extent than
that permitted under Section 423(b)(3) of the
Code. Thus, no Employee may be granted a Stock
Option if such Employee, immediately after the
Stock Option is granted, owns stock possessing
five percent or more of the total combined voting
power or value of all classes of stock of the
Company or of its parent or any Subsidiary (if
applicable). For purposes of this Subsection, the
rules of Section 424(d) of the Code shall apply in
determining the stock ownership of an individual,
and stock which the Employee may purchase under
all outstanding stock options shall be treated as
stock owned by the Employee.
(ii) No Participant shall be entitled to
participate in the Plan to a greater extent than
that permitted under Section 423(b)(8) of the
Code. Thus, no Employee may be granted a Stock
Option which permits his rights to purchase stock
under all such "employee stock ownership plans" of
the Company and its parent or any Subsidiary (if
applicable) intended to qualify under Section 423
of the Code to accrue at a rate which exceeds
$25,000 of fair market value of such stock
(determined at the time such Stock Option is
granted) for each calendar year in which such
Stock Option is outstanding at any time. For
purposes of this Subsection, (1) the right to
purchase stock under an option accrues when the
option (or any portion thereof) first becomes
exercisable during the calendar year; (2) the
right to purchase stock under an option accrues at
the rate provided in the option, but in no case
may such rate exceed $25,000 of fair market value
of such stock (determined at the time such stock
option is granted) for any one calendar year; and
(3) a right to purchase stock which has accrued
under one option granted pursuant to any such plan
may not be carried over to any other such stock
option.
IV.3 Distribution. A Participant's Total Stock
Entitlement as determined under Section 4.2 shall be distributed
to him pursuant to Section 4.5 together with any cash which is
not applied toward the purchase of whole shares of Stock. No
interest shall be payable upon such refunded Account Balance.
IV.4 Fractional Shares. Fractional shares will not be
issued under the Plan and any accumulated payroll deductions
which would have been used to purchase fractional shares will be
returned to the Participant promptly following the termination of
all Purchase Periods, without interest.
IV.5 Issuance of Shares. The shares of Stock purchased
by a Participant on the applicable Exercise Date shall for all
purposes, be deemed to have been issued and sold at the close of
business on such Exercise Date. Prior to that time, none of the
rights or privileges of a stockholder of the Company shall exist
with respect to such shares.
ARTICLE V
MAXIMUM SHARES OF STOCK AVAILABLE
V.1 Maximum Number of Shares Available to
Participants. If on the Exercise Date of any Purchase Period the
Total Stock Entitlement for all Participants, determined under
Section 4.2 hereof exceeds the number of shares of Stock
available for issuance under the Plan, there shall be a
proportionate reduction for the ensuing applicable Purchase
Period of each Participant's Total Stock Entitlement in order to
eliminate such excess. Notwithstanding any provision herein to
the contrary, the maximum number of shares a Participant will be
allowed to purchase during any Purchase Period is 50 shares of
Stock.
V.2 Maximum Authorized Shares. Subject to adjustment
under Article VIII, the maximum number of shares of Stock which
may be issued under the Plan shall not in the aggregate exceed
100,000 shares of Stock whether it be authorized but unissued
shares of Stock or treasury shares of Stock.
V.3 Termination of Offering for the Second and
Subsequent Purchase Periods. If in the opinion of the Committee,
there is insufficient Stock available for Stock Options at any
Granting Date after the October 1, 1997 Granting Date, the
Committee may terminate the offering contemplated for any or all
succeeding Purchase Periods.
ARTICLE VI
ADMINISTRATION
VI.1 Appointment of Committee. The Plan shall be
administered by the Committee appointed by the Board and
consisting of not less than two members from the Board. The
members of the Committee shall serve at the pleasure of the
Board. Any member may serve concurrently as a member of any
other administrative committee of any other plan of the Company
or its affiliates entitling participants therein to acquire
stock, stock options or deferred compensation rights including
stock appreciation rights.
VI.2 Committee Powers and Duties. The Committee shall
have all the powers and authorities which are reasonably
appropriate and necessary to discharge its duties under the Plan.
VI.3 Committee to Make Rules and Interpret Plan. The
Committee, in its sole discretion, shall have the authority,
subject to the provisions of the Plan, to establish, adopt, or
revise rules and regulations with respect to the administration
of the Plan and to make all such determinations relating to the
Plan as it may deem necessary or advisable for the administration
of the Plan. The Committee's interpretation of the Plan and all
decisions and determinations by the Committee with respect to the
Plan shall be final, binding, and conclusive on all parties
unless otherwise determined by the Board.
ARTICLE VII
AMENDMENT OF THE PLAN
The Board may at any time, or from time to time, amend
the Plan in any respect consistent with Sections 421 and 423 of
the Code, except that, without approval of the stockholders, no
amendment shall (i) increase the maximum number of shares
reserved under the Plan other than as provided in Article VIII,
or (ii) make the Plan available to any person who is not a
Participant.
ARTICLE VIII
RECAPITALIZATION AND EFFECT OF CERTAIN TRANSACTIONS
VIII.1 Stock Adjustments. In the event that the shares
of Stock, as presently constituted, shall be changed into or
exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation
(whether by reason of merger, consolidation, recapitalization,
reclassification, stock split, combination of shares or
otherwise), or if the number of such shares of Stock shall be
increased through the payment of a stock dividend, then there
shall be substituted for or added to each share available under
and subject to the Plan as provided in Section 5.2 hereof, and
each share theretofore appropriated or thereafter subject or
which may become subject to Stock Options under the Plan, the
number and kind of shares of stock or other securities into which
each outstanding share of Stock shall be so changed or for which
each such share shall be exchanged or to which each such share
shall be entitled, as the case may be, on a fair and equivalent
basis in accordance with the applicable provisions of Section 424
of the Code; provided, in no such event will such adjustment
result in a modification of any Stock Option as defined in
Section 424(h) of the Code. In the event there shall be any
other change in the number or kind of the outstanding shares of
Stock, or any stock or other securities into which the Stock
shall have been changed or for which it shall have been
exchanged, then, if the Committee shall, in its sole discretion,
determine that such change equitably requires an adjustment in
the shares available under and subject to the Plan, or in any
Stock Option theretofore granted or which may be granted under
the Plan, such adjustments shall be made in accordance with such
determination, except that no adjustment of the number of shares
of Stock available under the Plan or to which any Stock Option
relates that would otherwise be required shall be made unless and
until such adjustment either by itself or with other adjustments
not previously made would require an increase or decrease of at
least 1% in the number of shares of Stock available under the
Plan or to which a Stock Option relates immediately prior to the
making of such adjustment (the "Minimum Adjustment"). Any
adjustment representing a change of less than such minimum amount
shall be carried forward and made as soon as such adjustment
together with other adjustments required by this Section 8.1 and
not previously made would result in a Minimum Adjustment.
Notwithstanding the foregoing, any adjustment required by this
Section 8.1 which otherwise would not result in a Minimum
Adjustment shall be made with respect to shares of Stock relating
to any Stock Option immediately prior to exercise of such Stock
Option.
No fractional shares of Stock or units of other
securities shall be issued pursuant to any such adjustment, and
any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole
share. Any adjustments under this Section 8.1 shall be made
according to the sole discretion of the Company, and its decision
shall be binding and conclusive.
VIII.2 Effect of Certain Transactions. Subject to
any required action by the stockholders, if the Company shall be
the surviving or resulting corporation in any merger or
consolidation, any Stock Option hereunder shall pertain to and
apply to the shares of stock of the Company, but a dissolution or
liquidation of the Company or merger or consolidation in which
the Company is not the surviving or the resulting corporation
shall cause the Plan and any Stock Option hereunder to terminate
upon the effective date of such dissolution, liquidation, merger
or consolidation, and the Account Balance of each Participant
shall be refunded to him. Provided, that for the purpose of this
Section 8.2, if any merger, consolidation or combination occurs
in which the Company is not the surviving corporation and is the
result of a mere change in the identity, form or place of
organization of the Company accomplished in accordance with
Section 368(a)(1)(F) of the Code, then, such event shall not
cause a termination.
VIII.3 Stockholder Approval. The Plan shall be
approved by the holders of a majority of the outstanding shares
of Stock, present, or represented, and entitled to vote at a
meeting called for such purposes, which approval must occur
within the period ending twelve (12) months after the date the
Plan is adopted by the Board. In the event stockholder approval
is not obtained within such twelve-month period, the Plan and all
such Stock Options and such Stock shall be void.
ARTICLE IX
MISCELLANEOUS
IX.1 Notices. Any notice which a Participant files
pursuant to the Plan shall be on the form prescribed by the
Committee and shall be effective when received by the Committee.
IX.2 Application of the Funds. All funds received by
the Company under the Plan may be used for any corporate purpose.
IX.3 Repurchase of Stock. The Company shall not be
required to repurchase from any Participant shares of Stock which
he acquired under the Plan.
IX.4 Alternate Contribution Methods. If authorized
payroll deductions of a Participant's periodic contributions
under Section 3.2 are not permitted by reason of the provisions
of any law applicable to an Employer, the Committee shall adopt
an appropriate alternative method under which affected
Participants may make payment for shares of Stock purchased
hereunder which would otherwise have been made pursuant to
Section 3.2.
IX.5 Nonassignability. Stock Options are exercisable
only by the Participant during his lifetime, or by his estate or
the person who acquires the right to exercise such Stock Option
upon his death by bequest or inheritance, and are not
transferable by him other than by will or the laws of descent and
distribution. No Stock Option shall be subject in any manner to
alienation, anticipation, sale, transfer, assignment, pledge, or
encumbrance, except for transfer by will or the laws of descent
and distribution. Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of, or to subject to execution,
attachment or similar process, any Stock Option contrary to the
provisions hereof, shall be void and ineffective, shall give no
right to any purported transferee, and may, at the sole
discretion of the Committee, result in forfeiture of the Stock
Option involved in such attempt.
IX.6 Government Regulation. The Company's obligation
to sell and deliver the Stock under the Plan is at all times
subject to any and all approvals, rules and regulations of any
governmental authority required in connection with the
authorization, issuance, sale or delivery of such Stock.
IX.7 Effective Date of Plan. The Plan shall become
effective on April 1, 1997, if within twelve months after that
date the Plan has been approved by the holders of a majority of
the common stock of the Company present, or represented, and
entitled to vote at a meeting called for such purposes.
IX.8 Termination of Plan. The Plan shall continue in
effect through March 31, 2002, unless terminated pursuant to
Section 8.2 or by the Board, which shall have the right to
terminate the Plan at any time. Upon the termination of the Plan
pursuant to this Section 9.8 or Section 8.2, the Account Balance
of each Participant shall be refunded to the Participant.
IX.9 No Obligations to Exercise Stock Option. The
granting of a Stock Option shall impose no obligation upon the
Participant to exercise his Stock Option.
IX.10 Right to Continued Employment. Participation
in the Plan shall not give any Participant any right to remain in
the employ of the Employer. The Employer reserves the right to
terminate any Participant at any time.
IX.11 Reliance on Reports. Each member of the
Committee and each member of the Board shall be fully justified
in relying or acting in good faith upon any report made by the
independent public accountants of the Company and upon any other
information furnished in connection with the Plan by any person
or persons other than himself. In no event shall any person who
is or shall have been a member of the Committee or of the Board
be liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information
or for any action taken, including the furnishing of information,
or failure to act, if in good faith.
IX.12 Applicable Law. This Plan shall be governed
by and interpreted in accordance with the laws of the State of
Oklahoma.
IX.13 Construction. It is intended that this Plan
shall qualify in accordance with Sections 421 and 423 of the
Code, and the provisions of this Plan shall be interpreted and
applied in a manner consistent with such intent. Pursuant to the
terms of the Plan and the applicable provisions of the Code, all
Participants in the Plan will have the same rights and privileges
and all such Participants will be treated in an equal, uniform
and nondiscriminatory manner.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET FOR MARCH 31, 1997 AND THE STATEMENT OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,430,420
<SECURITIES> 0
<RECEIVABLES> 1,130,598
<ALLOWANCES> (4,036)
<INVENTORY> 17,472
<CURRENT-ASSETS> 2,993,231
<PP&E> 3,031,420
<DEPRECIATION> 1,378,346
<TOTAL-ASSETS> 6,275,606
<CURRENT-LIABILITIES> 1,389,418
<BONDS> 0
0
0
<COMMON> 2,727
<OTHER-SE> 4,429,366
<TOTAL-LIABILITY-AND-EQUITY> 6,275,606
<SALES> 0
<TOTAL-REVENUES> 1,836,419
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,329,524
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,565
<INCOME-PRETAX> (498,670)
<INCOME-TAX> (189,495)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (309,175)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> 0
</TABLE>
