SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
JYRA RESEARCH INC.
(NAME OF ISSUER IN ITS CHARTER)
DELAWARE 3679 Applied for
--------------- ----------------
(STATE OR (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION
INCORPORATION OR CODE NUMBER) NUMBER)
ORGANIZATION)
41 THURLOE SQUARE
LONDON SW7 2RS
<PAGE>
ENGLAND
Tel: 01 71 371 0702
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
RODERICK ADAMS, SECRETARY
41 THURLOE SQUARE
LONDON SW7 2RS
ENGLAND
Tel: 01 71 371 0702
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------------
COPIES TO:
JAMES BERNS, ESQ.
BERNS & BERNS
ONE ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
TELEPHONE NO.: (212) 332-3320
FACSIMILE NO.: (212) 332-3315
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO
PUBLIC:
As soon as practicable after this Registration Statement
becomes effective.
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
[_]
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<PAGE> <PAGE>
TITLE OF PROPOSED PROPOSED MAXIMUM
EACH CLASS OF AMOUNT MAXIMUM AGGREGATE
SECURITIES TO BE TO BE OFFERING PRICE OFFERING AMOUNT OF
REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $.001 par
value.................. 1,053,100 $7.125 $7,503,338 $2,587
- ---------------------------------------------------------------------------
- --------------
(1) Estimated solely for the purposes of calculating the
registration fee.
</TABLE>
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE> CROSS REFERENCE SHEET
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED
BY ITEMS OF FORM S-1
<TABLE>
<CAPTION>
<S> <C>
FORM S-1 ITEM LOCATION IN PROSPECTUS
1. Forepart of the Registration
Statement and Outside Front Cover
Page of Prospectus.................Front Cover Page of
Registration Statement;
Cross-Reference Sheet;
Outside Front Cover Page
of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus............... Inside Front Cover
Page of Prospectus and
Outside Back Cover Page
of Prospectus
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges............................Prospectus
Summary;Risk Factors
4. Use of Proceeds.....................Prospectus Summary;
Use of Proceeds
5. Determination of Offering Price.....Inapplicable
6. Dilution............................Risk Factors;
Dilution
7. Selling Security Holders............Selling Security
Holders
8. Plan of Distribution................Outside Front Cover
Page of Prospectus;
Selling Security Holders
9. Description of Securities to Be
Registered......................... Outside Front Cover
Page of Prospectus;
Prospectus Summary;
Description of
Securities
10. Interests of Named Experts and
Counsel............................Inapplicable
11. Information with Respect to the
Registrant.........................Outside Front Cover Page
of Prospectus; Risk
Factors; The Company;
Dividend Policy;
Capitalization and
Description of
Securities; Management's
Discussion and
<PAGE>
Analysis of Financial
Condition and Results of
Operations; Business;
Directors, Officers, and
Key Personnel;
Litigation; Office
Facilities;
Remuneration; Related
Party Transactions;
Trading Market of
Company's Shares;
Principal Stockholders;
Shares Eligible for
Future Sale; Financial
Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................Capitalization and
Description of
Securities
</TABLE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION
OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
JYRA RESEARCH INC.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 20, 1996
PROSPECTUS
1,053,100 SHARES OF COMMON STOCK
All of the 1,053,100 shares of Common Stock ("Shares")
offered hereby are being sold by existing shareholders of Jyra
Research Inc. ("Selling Shareholders"). No proceeds will be
received by the Company.
<PAGE>
Prior to this offering ("Offering"), there has been a
limited public market for the Common Stock of the Company on the
National Association of Securities Dealers, Inc.'s
Over-the-Counter Bulletin Board ("OTC Bulletin Board") and there
can be no assurance that any active trading market will ever
develop.
-----------
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND
INVOLVE A HIGH DEGREE OF RISK AND INVESTORS SHOULD NOT INVEST ANY
FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE
NOT BEEN RECOMMENDED OR APPROVED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE,
THESE AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> <PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by
reference to, and should be read in conjunction with, the more
detailed information and financial statements (including the
notes thereto) appearing elsewhere in this Prospectus. Unless
otherwise indicated, "Company" shall include its English
subsidiary, Jyra Research Ltd. Each prospective investor is
urged to read this Prospectus in its entirety.
THE COMPANY
The principal executive offices of the Company are located
at 41 Thurloe Square, London, England, and its telephone number
is 44 171 371 0702.
The Company was incorporated on May 2, 1996 under the laws
of Delaware. The Company's plans are to design, develop,
manufacture, and market new computer network management systems
to (i) maximize network productivity, (ii) minimize network
downtime, and (iii) solve network problems caused by the constant
increase in network traffic, combined with the growing complexity
of networks. These problems result in escalating costs and major
systems failures across the corporate spectrum. Management
believes that current network management systems do not have the
capability to effectively deal with these proband centralized
systems incorporavanced protocol decodes with expert analysis
capabilities to facilitate real-time identification, diagnosis
and resolution of network problems.
PAGE
<PAGE>
THE OFFERING
Common Stock Offered on Behalf of Selling Shareholders.......
1,053,100 shares
Common Stock Outstanding Prior to this Offering.............
6,276,600 shares
Common Stock to be Outstanding After this Offering..........
6,276,600 shares
USE OF PROCEEDS
The Shares being registered pursuant to this prospectus were
originally sold to persons located in Europe who purchased the
Shares from the Company in October and November 1996 (the
"European Offering"). These Shares will be offered for resale by
the purchasers in the European Offering (the "Selling
Shareholders"). The Company will receive no proceeds from sales
by the Selling Shareholders.
RISK FACTORS
The securities offered hereby involve a high degree of risk,
including, its status as a new business, its continued dependence
on securing additional financing, its lack of commercial
operations, its dependence upon key personnel, inexperience of
management, protection of intellectual property, competition, the
fact that its proposed products are only at the conceptual stage,
limited experience of management in manufacturing, delays in
development of software and related products, competitive
disadvantage of Company, changes in technology, risk of competing
technologies, risks associated with international operations,
dependence of the company upon unproven product, limited market
for Shares, potential sales of substantial amounts of share,
significant control and influence by existing shareholders,
limitation of officers' and directors' liabilities under Delaware
law, without limitation: See "Risk Factors."
An investment in the Shares is speculative and involves a
high degree of risk. See "Risk Factors."
<PAGE> <PAGE>
DESCRIPTION OF OFFERING
The Shares being registered pursuant to this prospectus were
originally sold to persons who purchased the Shares from the
Company in Europe during November 1996 (the "European Offering").
No Shares are being sold by the Company and the Company will
receive no proceeds from the sales by the Selling Shareholders.
Estimated expenses incurred by the Company with respect to this
Offering are $50,000. In the United States, the Shares are being
offered directly by the Selling Shareholders. No commissions are
being paid with respect to the sale of the Shares being offered
in the United States other than normal brokerage commissions.
<PAGE> <PAGE>
SELLING SECURITY HOLDERS
<TABLE>
<CAPTION>
Name
<S>
<PAGE>
Relationship
to Company
C
<PAGE>
Amount of
Shares
Owned
Prior to
Offering
C
<PAGE>
Amount
of
Shares
Offered
C
<PAGE>
Amount of
Shares and
Percentage
of Company
to be Owned
After the
Offering
C
<PAGE>
Ten Cafe & Cie None 105,000 95,000 10,000
.16%<PAGE>
Wexford Finance None 15,000 15,000 0 Banque Paribas None 80,500 50,000 30,500
.48%<PAGE>
Mees Pierson BV None 10,000 10,000 0 Mees Pierson
(Luxembourg) S.A.<PAGE>
None 10,000 10,000 0 PIM Holdings, NV None 5,000 5,000 0 Veer Palthe Voute
Asset Management<PAGE>
None 20,000 20,000 0 Belficom None 30,000 30,000 0 Optimix Vermogensb-
eheer N.V.<PAGE>
None 40,000 40,000 0 EEN g Vermogensb-
eheer B.V.<PAGE>
None 17,000 17,000 0 Loek Van Den Boog None 17,000 17,000 0
<PAGE>
PBI Securities None 15,000 15,000 0
<PAGE>
Plashof Beheer B.V. None 30,000 30,000 0 Mees Pierson None 38,000 38,000 0 Bank Von Ernst & Co.
Ltd.<PAGE>
None 404,500 72,000 332,500
5.3%<PAGE>
Int'l Publishing
Holdings, SA<PAGE>
None 425,000 300,000 125,000
2.0%<PAGE>
Grupo de Creacion
Ltd.<PAGE>
None 33,000 8,000 25,000
.4%<PAGE>
Union Bacaire Privee None 315,000 50,000 265,000
4.2%<PAGE>
Standard Bank Stock-
brokers (CL) Ltd.<PAGE>
None 20,000 20,000 0 Securities
Trading SA<PAGE>
None 10,000 110,000 10,000
.16%<PAGE>
Bertrand Chatelain None 5,000 5,000 5,000
.08%<PAGE>
Pascal Zanetti None 5,000 5,000 0 Clark & Cie None 5,000 5,000 0 Yves Gut None 10,500 6,500 4,000
.06%<PAGE>
M.F. Van Til None 10,000 10,000 0 Finter Bank None 18,000 18,000 0 Brewin Nominess
Limited<PAGE>
None 75,000 10,000 65,000
1.0%<PAGE>
Union Securities
(Int'l) Ltd.<PAGE>
* 132,600 41,600 91,000
1.4%</TABLE>
* Mr. Timothy A.B. Mills, a founder of the Company, who owns
550,000 Shares, is a director, and owns 20%, of Union Securities
(International) Ltd.
<PAGE> <PAGE>
GENERAL
Following is a glossary of terms used in this prospectus.
GLOSSARY OF TERMS
Access Terminal A screen and keyboard solely to access
information; incapable of independent
operation.
ATM Asynchronous Transfer Mode. A new
method of allowing far greater volumes
of data to be passed through a network.
Backbone Routers A series of devices used to guide and
direct data efficiently to its
destination by the most appropriate
path.
Bridges Devices that prevent local traffic from
being flooded to an entire network.
Broadcast Any data or signal that is transmitted
throughout the entire network.
Code Language in which software programs are
written.
Control Mechanisms Methods to inhibit the flow of data
communications traffic.
Dealer Feeds Electronic supply of financial market
data.
Ethernet A standard that defines the way data is
transmitted.
FDDI A standard that defines the way data is
transmitted over fiber optic cable.
Global Network A data communications network that
connects interconnects international
operations worldwide.
Serial Links A major standard for network
connectivity
across telecommunication lines.
IBM SNA A standard that defines the way in which
IBM computers are connected.
<PAGE>
Interface Modules Adaptors that connect a device to the
network.
Interop A major international trade show
attended
by leading Internet and networking
technology companies.
LAN Local Area Network. This a network
designed to interconnect personal
computers within a localized environment
by a type of highspeed data
communications arrangement.
Management System General term that refers to any system
for administering network devices or
traffic.
Mbps Millions of bits per second. A
measurement of the amount of data
passed.
A bit is the smallest unit of data.
Modern Network Generic term for new applications that
Applications use the network. Current applications
are video, image and multi-media
applications.
Network The infrastructure that interconnects
computers to one another.
Novell Netware A widely used network administration
system that allows uses to Novell-Share
software.
OEM Original Equipment Manufacturer. An
industry term for equipment originally
manufactured by a third party, but
branded and sold by a separate vendor.
On-line Active live connection.
Outsourcers Companies that are responsible for
operating and maintaining networks on
behalf of clients.
Probe A device that is connected to a network
for the proper monitoring of network
Protocols The sets of rules or standards that
describe the way in which traffic is
presented to devices on a network. The
<PAGE>
most widely used of which are IP (often
called TCP/IP) and IPX>
Protocols Decoded The ability to breakdown and analyze the
way in which traffic is presented to
network devices.
RMON A standard for describing what is
monitored in a network.
RMON Sampling A revision of the RMON standard yet to
be
ratified. Periodically monitoring
network traffic.
Serial Line Analyzers Probe devices that monitor the lines
that
connect serial networks at different
locations.
SNMP Simple Network Management Protocol. A
Standard for monitoring network
hardware.
TCP/IP A standard that describes the way in
which data traffic is transmitted across
a network.
Trunk A line that connects remote locations
over telecommunications networks.
Token Ring A standard that defines the way in which
data is transmitted.
Traffic The data that passes across a network.
UNIX A standard operating system for
computers.
Usage Accounting The ability to identify the origin of
traffic and thereby charge back network
costs to the source.
WAN Wide Area Network. A network that
connects users via telecommunications
lines.
<PAGE> <PAGE>
RISK FACTORS
The securities offered hereby are speculative in nature and
involve a high degree of risk. Accordingly, in estment in these
securities, prospective investors should carefully consider,
along with the other matters referred to herein, the following
risk factors.
1. NEW BUSINESS; CONTINUED DEPENDENCE ON SECURING ADDITIONAL
FINANCING. The Company was incorporated as a start-up business
on May 2, 1996. Accordingly, the Company, is subject to all of
the risks attendant to new business ventures including, without
limitation, raising capital, acquiring or developing products
and/or services for sale, securing appropriate leased space for
offices, obtaining necessary personnel, establishing and/or
penetrating markets for such products and/or services, and
achieving profitable operations, of which there can be no
assurance. Investors should not purchase any Shares unless they
are prepared, and can afford, to lose their entire investment.
As a new business having no sales or revenues, Management
anticipates that the Company may be dependent over the
foreseeable future upon securing additional financing, of which
there can be no assurance. There are numerous risks associated
with investments in start-up companies, including, among others,
those inherent in evaluating and acquiring a business involving
technologies with limited or no commercial histories, effectively
identifying and penetrating the market for the goods and services
to be offered, competing with other companies with greater
financial and other resources, securing adequate financing, and
achieving profitable operations, of which there can be no
assurance.
2. NO COMMERCIAL OPERATIONS. The Company has no commercial
operations, and there can be no assurance that it will ever
achieve commercial operations.
3. DEPENDENCE UPON KEY PERSONNEL. The Company is heavily
dependent upon the continued services of (a) Mr. Paul Robinson,
Chief Executive Officer and Chairman of the Board of Directors of
the Company and (b) Mr. Peter Lynch, a director and Vice
President - Technical. These are deemed to be key persons of the
Company. The Company doman life insurance on the lives of any of
these persons. In the event that any of these persons becomes
unavailable for any reason, the Company would be materially and
adversely affected.
4. INEXPERIENCE OF MANAGEMENT. Management of the Company has
had limited experience in management positions. Although members
of management have worked for many years in various large
corporations in various positions, no member of Management has
ever served in a senior managerial role.
5. FINANCIAL CONDITION OF COMPANY; DIFFICULTY IN FUNDING
<PAGE>
OPERATIONS. Athough Management believes it will begin receiving
revenues from sales of its proposed products by the second
quarter of 1997, there can be no assurance that the Company will
be able to sell any products or ever receive any revenues. After
the completion of the Company's European Offering, the Company
had approximately $3,500,000 in funds. Management believes that
these funds would be sufficient to fund operations through
mid-1998, assuming the Company receives no other funds from
sales or otherwise. There can be no assurance the Company would
be able to raise any additional necessary funds at that time.
6. PROTECTION OF INTELLECTUAL PROPERTY; COMPETITION. Management
of the Company believes that there may be a significant business
opportunity to sell worldwide Jyra's line of proposed products
("Products"). The Company intends to copyright, where
appropriate, the software which would operate its various
Products. However, there can be no assurance that the software
can be copyrighted, or, even if copyrighted, third parties will
not infringe upon or design around such copyrights to develop a
competing product. Furthermore, others may design and manufacture
superior products. In the event that a third party infringes
upon any such copyrights or makes a claim that Jyra's Products
infringe upon its proprietary rights to competing products, the
Company may not have the financial resources to enforce its
rights or successfully defend such a claim. In the event of any
infringement of the Company's rights, a claim being made against
the Company by third parties, the development of products which
are designed around copyrights held by the Company or the
development of a superior product by others, the Company's
business would be adversely affected. There has been substantial
litigation regarding patent and other intellectual property
rights in the software industry. As is typical in the software
industry, the Company anticiy receive from time to time notices
from third parties alleging infringement claims. Although there
are currently no pending lawsuits against the Company regarding
any possible infringement claims, there can be no assurance
infringement claims will not be asserted in the future or that
such assertions will not materially adversely affect the
Company's business, financial condition and results of
operations. If any such claims are asserted against the Company,
the Company may need to seek to obtain a license under the third
party's intellectual property rights. There can be no assurance a
license will be available on reasonable terms or at all. Failure
to obtain a necessary license on commercially reasonable terms
would materially adversely affect the Company's business,
financial condition and results of operations. The Company could
decide, in the alternative, to resort to litigation to challenge
such claims. Such litigation could be expensive and time
consuming and could materially adversely affect the Company's
business, financial condition and results of operations.
7. PROPOSED PRODUCTS ARE ONLY AT THE CONCEPTUAL STAGE. At the
present time, the Company has no products developed or full
system of prototypes of potential products. All of its proposed
<PAGE>
products are at the conceptual stage or early software
onlyprototype states. Based upon preliminary tests, Management
believes it is possible to use Sun Microsystem's Java language to
distribute simple network management functions to remote devices.
However, two significant phases remain to be completed: (i)
commercializing the software prototype, and (ii) implementing the
software on the Company's chosen hardware platform. There can be
no assurance the Company will be able to successfully complete
these two steps. Moreover, for its other proposed products, the
Company must design its proposed products (including writing all
required software), arrange for prototypes of the products to be
manufactured, test the prototypes, and then make a determination
of whether the product should be marketed to its intended
audience. There can be no assurance that the Company will
successfully complete all the steps necessary to bring a product
to market.
8. MANUFACTURING OF PRODUCT. At the present time the Company
has completed only a software only prototype for one of its
proposed products - the Probe. Accordingly, after the Company
has completed designing a product, it must then arrange for a
prototype or model to be manufactured. If tests of the prototype
are successful, and Management believes that there will be a
commercial demand for the product, Management must arrange for
the product to be manufactured. The Company does not plan on
manufacturing its Products itself, but intends to have outside
manufacturers produce its Products. Accordingly, the Company
will be relying upon outside manufacturers, not under its
control, to produce its products, using industry standard
components such as Intel microprocessors and network adapters
manufactured by Digital Equipment. Although the Company believes
that therenufacturers which would be available to produce its
products, delays in receiving the necessary hardware components
or other delays in manufacturing the Products could materially
adversely affect the Company. Even though Management believes
its use of standardized
industry components and outside assemblers will lessen the risks
it faces in quality control, there can be no assurance the
Company will not have quality control problems. In the United
States personal computer industry, most of the major companies
receive their components from the same sources, such as Intel,
Seagate, and others. However, there are still significant
disparities in the actual, or perceived reliability, of the
various companies' computers. Furthermore, once a company
obtains a reputation for inferior quality, even if undeserved, it
can be extremely difficult to change the public's perception.
9. LIMITED EXPERIENCE OF MANAGEMENT IN MANUFACTURING. No member
of Management has extensive experience in manufacturing products
including, but not limited to, making arrangements with
manufacturers, monitoring the manufacturing process, and ensuring
a smooth, timely flow of completed products.
<PAGE>
10. DELAYS IN DEVELOPMENT OF SOFTWARE AND RELATED PRODUCTS
COMMON IN COMPUTER INDUSTRY. Delays in the development of
software and related products are common in the computer
industry. Any delays in development could cause significant
additional expense and result in lost sales of the Company's
products, having a materially adverse effect on the Company. If
the Company is delayed in bringing its planned products to
market, the Company could be forced to seek additional financing
in order to continue operations. There can be no assurance the
Company will be able to raise any additional funds, or, even if
funds are available, on terms that are acceptable to the Company.
11. COMPETITIVE DISADVANTAGE OF COMPANY. The network system
management industry is characterized by an increasing number of
participants who have introduced oucts and services for network
management. The Company will be competing with products of other
companies, most of which have substantially greater financial,
marketing, manufacturing and technical expertise. Accordingly,
the Company is at a competitive disadvantage with respect to
these other companies and their products.
12. CHANGES IN TECHNOLOGY; RISK OF COMPETING TECHNOLOGIES.
Management believes that its ability to compete will be
dependent, in large part, upon the software it intends to
develop. Management believes that the market for the probe it
intends to develop and market is established and rapidly
expanding. There can be no assurance that the market for network
management systems will continue to grow, or that if it does
develop and grow, the Company's proposed products will be
successful. Furthermore, there can be no assurance (i) the
Company will be able to successfully identify new product and
service opportunities for the Company's products, (ii) develop
and bring any such new and enhanced products and related services
to market in a timely manner, (iii) that such products, services
or technologies can be developed or will be commercially
successful, (iv) that the Company will benefit from such
developments, or (v) that the products, services or technologies
developed by others will not render the Company's planned
products obsolete. The International Standards Organization, one
of three major international bodies that sets standards for
computer management functions, has defined five functional areas
for network management applications: (1) performance management,
(2) fault management, (3) accounting, (4) configuration
management, and (5) security management. The initial range of
the Company's products are being designed to provide solutions
addressing only the first three areas. Therefore, even if the
Company is successful in designing and manufacturing its planned
initial products, it is possible that a competitor may design and
market a product that addresses thesa more comprehensive way than
does the Company's products, thereby having a material adverse
effect on the Company.
13. SUBSTANTIAL ADDITIONAL FUNDS MAY BE REQUIRED; SUBSTANTIAL
<PAGE>
SHAREHOLDER DILUTION. Although the Company believes that
Company has sufficient funds to develop and bring its products to
market, there can be no assurance the Company's current plans and
projections are correct. In the event the Company's plans or the
basis for its assumptions change or prove to be inaccurate, or
the anticipated cash flow proves insufficient to fund the
Company's operations (due to delays, unanticipated expenses, lack
of sales revenues, problems, operating difficulties, or
otherwise) the Company would be forced to seek additional
financing. There can be no assurance that additional financing
would be available on commercially acceptable terms, or at all.
To obtain any necessary financing, the Company could sell
additional Shares or other financial instruments convertible or
exchangeable into Shares, resulting in substantial dilution to
all shareholders.
14. RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. The
Company's operations are currently headquartered in the United
Kingdom, although it plans, initially, to engage in marketing
efforts in the United States and Europe. There are certain risks
inherent in international operations including, but not limited
to, remote management, unexpected changes in regulatory
requirements, export restrictions, export controls relating to
technology, tariffs and other trade barriers, difficulties in
staffing and managing foreign operations, longer payment cycles,
problems in collecting accounts receivable, political
instability, fluctuations in currency exchange rates, seasonal
reductions in business activity during the summer months in
Europe, and potential adverse tax consequences, which could
materially adverse affect the Company's business, operating
results, and financial condition.
15. COMPETITION. The Company anticipates that it will
experiencepetition from established and emerging computer,
communications, intelligent network wiring, network management
and test equipment companies and expects such competition to
increase in the future. New and competitive entrants into the
field of network fault and performance management may come from
areas as diverse as embedded systems in network hardware from
established network hardware companies, as well as certain
software referred to as "network management" by smaller
companies. The primary competitors for the Company planned
products are Network General, Hewlett-Packard Company
("Hewlett-Packard"), and 3Com, which are already well entrenched
in the market for network management systems. Network General,
Hewlett-Packard and 3Com have greater name recognition, more
extensive engineering, manufacturing and marketing organizations
and substantially greater financial, technological and personnel
resources than those available to the Company. Other competitors
include Azure Technologies Incorporated, Frontier Software
Development, Inc., Wandel & Goltermann, Inc., Shomiti Systems,
Inc. and embedded systems companies.
<PAGE>
There can be no assurance that the Company's products will
ever receive commercial acceptance, or that there will ever be
any meaningful sales of its products. Furthermore, new companies
may emerge at any time with products that are superior, or that
the marketplace perceives are superior, to the Company's
products. New entrants, new technology and new marketing
techniques may cause customer confusion, thereby lengthening the
sales cycle process for the Company. Increased competition may
also lead to downward pricing pressure on the Company's products.
The LAN and WAN industries are characterized by rapid
technological advances and can be significantly affected by
product introductions and market activities of industry
participants. In addition to its current principal competitors,
the Company expects substantial competition from established and
emerging compu network wiring, network management, embedded
systems and test instrument companies. There can be no assurance
that the Company will be able to compete successfully in the
future with existing or anticipated competitors.
Competitive pressures from existing manufacturers who offer
lower prices or introduce new products may, in some instances,
result in delayed or deferred purchasing decisions by potential
- -- customers of the Company. Purchase delays or deferrals by
potential customers of the Company's products may require the
Company to reduce its prices. These competitive scenarios could
materially adversely affect the Company's revenues and operating
margins.
16. DEPENDENCE UPON DEVELOPING NEW PRODOUCTS. The Company
believes its future success will depend, in part, on its ability
to continue to develop, introduce and sell new products. The
Company is committed to continuing investments in research and
development; however, there is no assurance these efforts will
result in the development, timely release or market acceptance of
new products.
17. IMPACT OF GENERAL ECONOMIC CONDITIONS ON OPERATIONS AND
DEPENDENCE UPON OTHER COMPANY'S PRODUCTS AND THEIR AVAILABILITY.
The Company's proposed products may be considered by certain
customers to be capital purchases. An adverse change in general
economic conditions could cause certain of the Company's
potential customers to reduce their capital spending, which may
adversely affect the Company's operating results.
For certain critical components of its products, the Company
anticipates that it will be relying on a limited number of
suppliers. In addition, it is anticipated that some of the
Company's products will be designed around specific computer
platforms which are only available from certain manufacturers.
Any significant shortage of computer platforms or other critical
components for the Company's products could lead to cancellations
or delays of purchases of the Company's products which would
materially adversely affect the Company's operating results. If
<PAGE>
purchases of computer platforms or other components exceed
demand, the Company would incur expenses for disposing of the
excess inventory, which would also adversely affect the Company's
operating results.
18. NEED OF COMPANY TO COMPLY WITH ELECTRICAL, EMISSIONS, AND
OTHER APPLICABLE SAFETY REQUIREMENTS. There can be no assurance
that the Company's Products will meet all necessary electrical,
emissions or other applicable safety requirements in any of its
major potential markets or that standards imposed by federal or
local authorities will not be changed with material adverse
effects on the Company's activities. Moreover, compliance with
such laws may cause substantial delays and require capital
outlays in excess of those anticipated, thus, causing an adverse
effect on the Company.
19. DEPENDENCE UPON TECHNOLOGY FROM SUN MICROSYSTEMS. The
Company licenses Java and Solstice technology from Sun
Microsystems. The quality of those technologies can affect the
Company's ability to deliver and market its products in many
ways, including, but not limited to, timely delivery of product
to market, quality of finished goods, and market acceptance of
the Company's products.
20. SUBSTANTIAL IMMEDIATE DILUTION. The Selling Shareholders in
this Offering suffered immediate, substantial dilution of their
interests. Prior to the Selling Shareholders purchasing their
shares, 5,233,500 Shares were issued for $993,400. Therefore, the
Selling Sharroximately 76% percent of all cash raised and own, in
the aggregate, 17% of the Company's outstanding Shares.
21. DEPENDENCE OF THE COMPANY UPON UNPROVEN PRODUCTS.
Management believes that the Company's financial performance will
be dependent upon its ability to market its Products.
Because the Products are only at the conceptual stage, with
one product at the software only prototype stage, there can be
no assurance that the Company will be able to develop the
Products. Furthermore, even if the Company is able to develop a
product, there can be no assurance that the Company will be able
to sell any Products. Accordingly, there can be no assurance
that any significant demand for the Products will ever develop or
that the Products will be able to effectively compete with
products produced by others.
22. NO MARKET FOR SHARES; POTENTIAL SALES OF SUBSTANTIAL AMOUNTS
OF SHARES. There are presently 6,276,600 outstanding Shares.
Prior to this offering ("Offering"), there has been a
limited public market for the Common Stock of the Company on the
National Association of Securities Dealers, Inc.'s
Over-the-Counter Bulletin Board ("OTC Bulletin Board") and there
can be no assurance that any active trading market will ever
<PAGE>
develop. In the event that no liquid market for the Shares
develops, it will be extremely difficult for a shareholder to
dispose of the Shares. In the event a market develops, there can
be no assurance that the market will be strong enough to absorb
all of the Shares which may be offered for sale by existing
shareholders. The resales of substantial amounts of Shares will
have a depressive effect on the market.
23. SIGNIFICANT CONTROL AND INFLUENCE BY EXISTING SHAREHOLDERS.
At this time, Management and insiders beneficially own
approximately 44% of the Company's outstanding shares. As a
result, Management will be able to control most matters requiring
shareholder approval, such as the election of directors, or a
merger or consolidation of the Company. Undcontrol could prevent
shareholders from receiving a premium over the then current
market value for their shares.
24. LIMITATION OF OFFICERS' AND DIRECTORS' LIABILITIES UNDER
DELAWARE LAW. Pursuant to the Company's Certificate of
Incorporation, as authorized under Delaware law, officers and
directors of the Company are not liable for monetary damages for
breach of fiduciary duty, except in connection with breach of
duty or loyalty, for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, for
dividend payments or stock repurchases illegal under Delaware
law, or for any transaction in which a director has derived an
improper personal benefit. In addition, the Company's
Certificate of Incorporation provides that the Company shall
indemnify its officers and directors to the fullest extent
permitted by law for expenses incurred in the settlement of any
actions against such persons in connection with their having
served as officers or directors of the Company.
USE OF PROCEEDS
Because the Shares being offered hereby have already been
sold by the Company during November 1996, the Company will not be
receiving any proceeds from the sales of Shares by the Selling
Shareholders.
DIVIDEND POLICY
The Company has never declared or paid cash or other
dividends on its Shares and it is currently the intention of the
Company not to declare or pay cash dividends on its Shares. The
payment of cash dividends in the future will depend on the
Company's earnings, financial condition, capital needs and other
factors deemed relevant by the Board, including statutory
restrictions on the availability of capital for the payment of
dividends, the rights of holders of any series of preferred stock
that may hereafter be issued and the limitations, if any, on the
payment of dividends under any then-existing credit facility or
<PAGE>
other indebtedness. It is the current intention of the Board to
retain earnings, if any, to finance the operations and expansion
of the Company's business.
THE COMPANY
The Company was incorporated on May 2, 1996 under the laws
of Delaware. The Company's plans are to design, develop,
manufacture, and market new computer network management systems
to (i) maximize network productivity, (ii) minimize network
downtime, and (iii) solve network problems caused by the constant
increase in network traffic, combined with the growing complexity
of networks. These problems result in escalating costs and major
systems failures across the corporate spectrum. Management
believes that current network management systems do not have the
capability to effectively deal with these problems.
The Company is designing products consisting of portable
tools and centralized systems incorporating a proprietary
technology linking advanced protocol decodes with expert analysis
capabilities to facilitate real-time identification, diagnosis
and resolution of network problems.
Background
Over the past ten years corporations have moved rapidly from
using mainframe computers with numerous access terminals to
individual personal computers ("PCs"), interconnected by
networks. This has resulted in the network traffic increasing to
the point where it outstrips the capacity of the existing
networks.
A corporate network may connect thousands of individual PCs
together. The network, rather than a mainframe computer, now
connects all the parts of the organization together. This
resulting increase in network use can result in increased costs
to a company including (i) uncontrolled and unknown network
traffic, (ii) unnecessary telephone costs, and (iii) poor usage
accounting.
Management believes there a number of problems with the
management of networks today.
One major problem with existing network management systems
is their inability to determine the reason why the link between
two PCs is busy, or which type of traffic is causing the
congestion (i.e., processing, spreadsheets, dealer feeds, games,
etc.).
Management believes that another major problem with existing
network management systems is their inability to efficiently and
cost-effectively do anything other than real-time sampling. Real
time sampling will only describe the current state of the system,
which immediately after a failure is "down". Management believes
<PAGE>
that a real-time view is not effective for long-term
solving or diagnosis.
Management believes that existing network management devices
are expensive, while being limited to carrying out a single
function. Existing networks probe devices or network analyzers
require other devices for these products to work most
effectively. Accordingly, the cost of deploying these network
probes and related devices can be quite expensive.
The Company plans to design products which would provide
practical tools to address the problems of (i) uncontrolled and
unpredictable network traffic, (ii) unnecessary telephone line
charges, and (iii) poor usage accounting.
Planned Initial Products
The initial products the Company currently plans to develop
are as follows:
1. Jyra Probe
The Jyra Probe ("Probe") will initially be available as a
10/100Mbps Ethernet device. It is intended that the Probe will
support multiple packet capture contexts so that traffic streams
from different switching configurations can be separated.
The Probe will support (i) native packet capture and
filtering, (ii) RMON data capture interface allowing data capture
from existing RMON probes, and (iii) SNMP data capture interface
allowing data capture from existing SNMP devices.
The Probe will be designed to allow secure network
installation of user applications. The security will prevent the
execution of unlicensed copies of Jyra Products. The Probe will
contain authentication capability internally to prevent
unauthorized access and will be designed to support external
authentication protocols such as TACACS, CHAP, and RADIUS.
2. Manager
It is intended that the Manager will be an application suite
suitable for execution on HP/UX, Sun Solaris, IBM ALX, Windows NT
and Windows 95. Management anticipates that the initial releases
will be on Windows NT and HP/UX. It is intended that the Manager
will provide the interface between the raw statistics gathered at
the probe and the presentation layer software used to display
this data.
3. Jyra Diagnosis Pack
It is intended that this product will provide local diagnosis of
network problems. Management plans that the probe software will
be secured so that it cannot be used in non-Jyra systems.
4. Jyra Analysis Pack
<PAGE>
Management anticipates that this product will provide a global
view of the performance of applications within a network,
capturing and analyzing data from more than one probe. This
product would provide the administrator of the network system
with a view of traffic across an entire network. This would
allow the administrator to gain an understanding of the flow of
traffic and to optimize the netwout unnecessary traffic.
It is intended that this product would be equipped with
memory capacity sufficient to record problems as they occur and
play back the sequences of events that led up to the problem. In
addition, Management believes that this historical data allows
trend analysis and will provide a company with the ability to
charge its various operating companies according to their use of
the network.
It is anticipated that data analysis will be distributed
depending upon where the CPU, memory and network bandwidth
constraints exist within the monitoring system.
5. Service Management
Management anticipates that this will be an application
oriented network cost management system based upon transactional
monitoring and billing.
*******
It is the Company's goal that any products it may develop
will be compatible with the emerging standards being set by users
of the Internet and its equipment suppliers. Management hopes
that such an approach will help attract third parties to develop
applications supporting the Company's products.
However, there can be no assurance that the Company will be
able to develop any of the products described above, or that,
even if developed, that any of the products will be commercially
successful.
MANUFACTURING
After the Company completes designing a product, the Company
must then arrange for a prototype or model to be manufactured.
If tests of the prototype are successful, and Management believes
that there will be a commercial demand for the product,
Management must arrange for the product to be manufactured in
commercial quantities. Currently, the Company does not plan on
manufacturing any Products itself, but plans on having outside
manufacturers produce any Products.
Management intends that the hardware element of the Probe
will be assembled using industry standard components such as
microprocessors manufactured by Intel and network adaptors
<PAGE>
manufactured by Digital Equipment. The Probe would then
assembled by a third party assembler. Management believes the
primary advantages of using a third party to assemble the Probe
are (1) the Company would not incur the expense of operating a
manufacturing plant, and (2) the Company would achieve lower
component costs through the buying capability of the assembler
who buys standard components in large numbers.
The Company anticipates that its manufacturing operations
will not require any capital expenditures for environmental
control facilities or any special activities for protection of
the environment.
License from Sun Microsystems
On June 29, 1996, the Company entered into a Technology
License and Distribution Agreement ("Agreement") with Sun
Microsystems, Inc. ("Sun"). Unds granted a worldwide
non-exclusive license to develop and distribute products based
upon Sun's Java(TM) technology (the "Java Technology"). The
Agreement does not prohibit the Company from using technology
which is competitive with Java Technology. Although Java
Technology is a yet-untested work in progress, since Management
expects Java Technology to be a suitable basis for the Company's
initial products, Management intends to develop the Company's
Probe and related products based in large part upon Java
Technology.
Pursuant to the Agreement, the Company is required to meet
three principal payment obligations to Sun, consisting of: A.
upfront license fees; B. per unit royalties; and C. support and
update fees.
The Agreement is capable of ending either by expiration or
termination. The Agreement is scheduled to expire at the end of
its stated initial term of five (5) years, after which the
Company may, at its option, elect to renew the Agreement for as
many as five successive terms of one (1) year each. If the
Agreement ends by expiration of any such term, then, after
expiration, the Company may continue to sell its products
incorporating Java Technology as such technology existed at the
time of expiration, subject always to the Company's continuing
obligation to pay "per unit royalties."
Alternatively, if the Agreement ends by termination (as
distinguished from expiration), the Company would be required to
cease selling any products incorporating Java Technology
immediately, at which point the Company would very likely have no
practical alternative but to rewrite its products based upon
alternative technology. There can be no assurance that such
alternative technology would prove equally suitable for the
Company's products. It is possible for either party to terminate
the Agreement on grounds of the other party's breach, or upon
grounds stated in the Agreement. The Company also has the
<PAGE>
contractual right, at its option, to elect to terminate Agreement
for its convenience effective as early as the end of the second
year of the initial term.
PROPRIETARY RIGHTS AND LICENSES
At the present time, the Company does not own any patents
relating to any of its planned Products. Management intends to
rely primarily upon copyright, trademark and trade secret laws to
establish its proprietary rights in its products. Because the
LAN and WAN industry is characterized by rapid technological
change, the Company will be relying upon its innovative
management, technical expships, and marketing skills to develop,
enhance and market its products.
MARKET FOR COMPANY'S PROPOSED PRODUCTS
The market for network monitoring equipment is a result of
the general globalization of business. Corporations are
increasing selling, developing and supporting products at all
times, throughout the world. This, in turn, causes the creation
of additional corporate networks.
Management believes there are millions of computers
connected to local area networks around the world. Management
also believes that the growth of these corporate networks will
continue to grow rapidly, fueled, in part, by the growth in the
Internet and the telecommunications industry. Management
believes that the market for network monitoring equipment is
growing and that the opportunity exists for new products to find
acceptance in the marketplace.
Management believes the market for networking products is
divided into five major semi-autonomous sections as described
below.
Fortune 500 Corporations
The Fortune 500 companies are major consumers of network
management technology. Networks are crucial to the success of
these companies. Although networks are important strategic
assets for these companies, they also present major risks and
constitute major expenses. Once the Company has Products that
are ready to be marketed, the Company intends to approach
directly major corporations where Management believes the Company
has a good possibility of making sales. Initially, the Company
will focus on approaching a limited number of companies (30), to
help ensure that early sales and implementations of the Products
go smoothly. Subsequently, the Company plans to recruit up to
two marketing representatives for the United Kingdom and United
States.
Telecommunications Providers
<PAGE>
The increase in the use of the Internet and ATM services is
requiring providers of telecommunications equipment to develop
more flexible services, many of which will be billed by usage.
Manage significant demand in the area of Internet billing.
In conjunction with the marketing activities planned for the
Fortune 500 companies described above, Management plans to
initially approach major telecommunications companies in the
United Kingdom and the United States with a view to initiating
trials of the Company's systems in the areas of networking and
Internet problem solving and network chargeback. If the trials
are successful, Management believes these companies will be in a
position to distribute the Company's products to their customers.
However, there can be no assurance that (i) any
telecommunications companies will test the Company's products,
(ii) that any trials conducted would be successful, or (iii)
these companies would distribute the Company's products to their
customers.
Because virtually all of the Fortune 500 companies are
customers of major telecommunications companies, Management
intends to focus its direct marketing activities to attempt to
create demand for the Company's Products within the Fortune 500
companies, which can then be fulfilled by the major
telecommunications companies.
Outsourcers
Outsourcers are outside organizations which a company uses
to manage certain aspects of the company's operations.
Outsourcing companies can reduce the cost of network ownership
through remote management. Outsourcers must demonstrate that
their services are effective to retain their contracts. It is
not uncommon that many of these contracts do not become
profitable until they are renewed. Outsourcers require the
networks that they manage to have a greater amount of remote
diagnosis, control and measurement equipment than previously
existed.
A key element for outsourcers is providing the network
monitoring services less expensively than the company could do so
itself. Management believes that its proposed products will be
able to efficiently monitor significant events, carry out instant
diagnosis, and capture performance and billing information.
aches to outsource companies will be made by Management. Once
the Company obtains a reference customer, the Company intends to
recruit a third market representative to focus on this area,
along with third party applications vendors.
Third Party Application Developers and Consultants
Service-only companies, such as software application
<PAGE>
developers, require technologies to which they can add value.
Management believes that the ability to add local programming for
specialist applications to its proposed products will make its
products attractive to consultants and software developers.
Management intends to control the architecture and platform
licensing, not the overall market. The Company plans to market
its open probe architecture over the Internet and publish the
links to its architecture necessary for third parties to build
applications to the Probe.
Existing Data Communications Equipment and Probe Vendors
Major equipment vendors are already utilizing distributed
approaches for controlling equipment, but, generally, own no
probe technology of their own. Management intends to attempt to
license its proposed products to both major and smaller vendors
within the network industry. Once the Company has established
sales for its products in the markets described above, Mr. Paul
Robinson, CEO of the Company, will approach existing vendors.
Management believes that the potential opportunities are of high
value but not numerous, so any marketing activities will be
carried out by Management.
UNITED STATES MARKETING OPERATIONS
The Company intends to establish a sales presence in the
United States in early 1997, and plans to attend trade shows in
San Jose, California in March 1997 and in Las Vegas, Nevada in
May 1997. At these shows the Company hopes that it will be able
to publicly launch its initial products.
In addition, the Company plans on opening sales offices
in New York and/or California. Initially, the Company intends to
hire three people for i operations. However, there can be no
assurance that the Company will be able to attract qualified
salespeople or that any salespeople hired will be successful.
Moreover, there can be no assurance that the Company's products
will be well received or that the United States activities will
result in increased revenues for the Company.
COMPETITIVE TECHNOLOGY
The Company's planned products will compete in three sectors
of the systems and network management market:
1. Network Diagnosis and Analysis;
2. Remote Monitoring; and
3. Systems Management.
Management believes that the primary forces that control
these markets are:
<PAGE>
(i) minimizing overall user network cost, on the
theory that application of the appropriate technology
will reduce the number of people required to manage the
network; and
(ii) the desire on the part of managers to catch up on
communications technology. Management believes that
owners of networks generally feel that they do not have
the right degree of control, compared to other business
assets such as mainframe computers. The protocols,
applications and bandwiths in use are changing much
faster than the management technology can keep up with.
NETWORK DIAGNOSIS AND ANALYSIS
This part of the market is highly fragmented, although
products can generally be placed into three categories:
1. portable packet capture;
2. local network analysis; and
3. global network analysis.
(A) Portable Packet Capture
Devices in the class are designed to capture all traffic
from a single network segment for later analysis. The device
will attempt to decode each packet seen on the network; expert
analysis of what is actually transpiring is left to the user.
Triticom LANDecoder
Triticom is the developer is many LAN management tools
designed for network administrators and integrators. Triticom's
products include software-based network monitors, protocol
analyzers, bridges and routers, RMON and Microsoft Windows
network management software.
The Triticom LANDecoder is a software packet capture and
protocol analyzer product which runs on almost any PC. The
device is designed as an inexpensive field service tool. The
device makes it easy to capture data as it decodes a wide variety
of network protocols.
Wandel and Goltermann
The WG DA30 is the most expensive piece of network diagnosis
equipment in common use. It is typically sold to large
corporations, product manufacturers, and network integrators.
The device supports multiple physical interfaces at
<PAGE>
wire-speed through the use of multiple processors. For a user
with significant programming skills, it is possible to write
specialized capture and diagnosis routines in Occam, a
parallel-processing programming language designed to support the
SGS-Thomson (Immos) Transputer, which is attached to each
physical interface. Wandel and Goltermann also produces the
Domino, which is a single module packaged for use with a laptop
PC.
Hewlett-Packard
Hewlett-Packard is recognized as the market leader in serial
line analyzers, but it has not been able to establish the same
leadership in LAN analyzers or in RMON probes. Management of the
Company believes this is due to competition from PC-based
platforms for the low-end market.
(b) Local Network Analysis
Network General
The Expert Sniffer, sold by Network General, is a PC-based
network monitor which accumulates information about traffic flows
on Ethernet, FDDI, and Token Ring segments in almost real-time.
Following data capture, a series of expert system modules
interpret the capture data traffic to make assessments of where
any problems may lie. This expert analysis makes protocol
knowledge available to less skilled field service staff and
reduces repair time in corporate environments. The Distributed
Sniffer consists of one or more probes and a management
application sells for around the same price.
(c) Global Network Analysis
ECONet
ECONet is a PC-based application which first came to market
in early 1995, under the name CoroNet. The product won a Best in
Show award at Interop and was immediately purchased by Compuware
for $35 million. ECONet was the first product to use packet
capture and analysis techniques to attempt to automatically build
a global view of the applications in use within a network.
Compuware is now marketing the product as a relatively low-end PC
application rather than as an advanced corporate network
management tool. The product is very useful in providing network
managers application-oriented network utilization figures.
Management of the Company believes that there are no other
similar products which meets this need without significant
engineering work on the part of the end user.
Desktalk TrendSNMP+
This is a data collection and consolidation system for long-
<PAGE>
term capture of SNMP and RMON data. The product can be used as a
base for service-level monitoring, capacity planning and billing.
The basis for monitoring is limited to the functions provided by
RMON and SNMP. It uses a standard relational database. It has a
sophisticated polling engine.
REMOTE MONITORING
Current and future remote monitoring products are based on
the RMON and RMON-2 standards. RMed set of monitoring functions
which can be performed by a probe on a single network segment.
RMON-2 includes packet capture, conversation statistics and by a
breakdown by communications protocol.
The primary disadvantages of RMON are:
a. due to the requirement that standards agree among
competing manufacturers, the standard that is adopted,
usually substantially trails user needs;
b. the reporting and control mechanism for RMON is SNMP,
which leads to highly inefficient data transfers. The
fixed function of the RMON probes means that
sophisticated applications have to be executed at a
central management station, to which all data must be
transferred. The use of SNMP makes this impractical in
many networks;
c. problem analysis still requires expert individuals for
such analysis;
d. as the number of devices supported by each network
segment becomes reduced, the per-user cost of RMON
increases. Few organizations feel that they can afford
a probe per segment.
Management of the Company has had direct recent experience
constructing management reporting solutions with RMON products
and
recognize the following limitations:
a. limited programming capability at the probe;
b. very inefficient data transfer;
c. limited security for captured data; and
d. limited resilience in the management system as a whole.
Each probe vendor has its own unique management technology.
This allows the probe vendor to drive the vendor-specific
features of each offering, while allowing the products to be
demonstrated. These management applications have required the
<PAGE>
probe vendors to engage in a substantial amount of
re-engineering. As a general rule, the management applications
designed by probe vendors compare unfavorably to the products of
the leading systems management vendors.
Activity in RMON probe manufacturers is currently focused on
four areas:
a. alliances with major vendors of network switching
equipment;
b. upgrading from RMON to RMON-2;
c. supporting new physical interfaces; and
d. increasing management functionality.
The leading products in this area are manufactured by
Frontier Software, ARMON, AXON and Hewlett-Packard.
Frontier Software
Frontier Software ("Frontier") has two major products:
Netscout Probes and Netscout Manager. Generally, customers buy
one or more probes, depending upon the number of network segments
to be monitored, and one copy of the Netscout Manager.
Frontier has the most third-party relationships, and
supplies products and technology to the market leading switch
vendor, Cisco Systems. Frontier supports the widest range of
physical interfaces: 10 mbps Ethernet, Token Ring, FDDI, and
high-speed serial links. Frontier uses a ruggedized PC hardware
platform, which gives Frontier a cost advantage when developing
new probes.
SYSTEMS MANAGEMENT
Systems management products take a top-down view of the
entire information technology infrastructure within a single
corporation. They developed as an extension of the market for
network management consoles. These are large complex
applications for which development takes a long time, and
innovation is rare. Management of the Company believes that
there have been no significant technical innovations in the area
since Hewlett-Packard Openview first came to the market.
The leading corporate systems management products are:
Computer Associates Unicenter, Hewlett-Packard Openview, IBM
System View, and Tivoli.
Typical customers spend in excess of $250,000 on systems
management products, and an additional $250,000 to make the
products perform.
<PAGE>
Timetable
Management of the Company believes that it has adequate
funds to develop and bring to market its initial products.
Management anticipates that during the first half of 1997 it will
complete development and commence marketing its initial planned
products.
The primary steps the Company must complete include:
1. complete development of the software to be utilized in
the Probe and management functions;
2. location and evaluation of suitable OEM hardware
components to be used in manufacturing of Products;
3. complete management and analysis applications to enable
Company to demonstrate Company's planned Products to
potential customers.
FINANCIAL INFORMATION
Management's Discussion and Analysis of Financial Condition and
Results of Operations
For the period from May 2, 1996 (the Company's formation)
through July 18, 1996 (the date of the Company's audited
financial statements) the Company incurred a loss of $79,176.
This resulted primarily from the expenses incurred in forming the
Company and related to the Company's raising $947,750 from the
sale of 5,112,500 of its Shares. Management believes these funds
were sufficient to fund operations through February 1997,
including the development of the Company's proposed Products.
To date, the Company's only source of revenues has been
$12,000 in interest it has received from funds on deposit.
In October and November 1996, the Company issued a total of
1,043,100 Shares, raising an additional $3.1 million. The
Company currently has over $3,500,000 in cash, which Management
believes is sufficient to fund the Company's operations through
mid-1998, assuming the Company receives no other funds from sales
or otherwise.
On August 14, 1996 the Company formed a wholly-owned
subsidiary in the United Kingdom, Jyra Research Ltd., to carry
out research alieves its monthly expenses will rise significantly
in the first quarter of 1997 as it launches its products and
establishes a marketing presence in the United States. In
addition, the Company anticipates incurring costs of
approximately $100,000 in connection with the initial
manufacturing of its proposed products in the first half of 1997.
<PAGE>
In July 1996 the Company entered into a Technology License
and Distribution Agreement ("Agreement") with Sun Microsystems,
Inc. ("Sun"). Under the Agreement, the Company was granted a
worldwide non-exclusive license to develop and distribute
products based upon Sun's Java(TM) technology.
Pursuant to the Agreement, thet three principal payment
obligations to Sun, consisting of: D. upfront license fees; E.
per unit royalties; and F. support and update fees.
Selected Financial Data
Following is selected financial data of the Company for the
period from the Company's incorporation, May 2, 1996, through
July 18, 1996.
<TABLE>
<CAPTION>
<PAGE>
For the period
May 2, 1996
through July
18, 1996<PAGE>
At July 18, 1996
<S>
<PAGE>
<C> <C> Current Assets 947,254
<PAGE>
Current
Liabilities<PAGE>
78,680 Stockholders
Equity<PAGE>
868,574 Revenues 0 Loss 79,176 </TABLE>
<PAGE> <PAGE>
OFFICE FACILITIES
The Company's executive offices are located at 41 Thurloe
Square, London, England where it currently utilizes approximately
200 square feet. The Company leases approximately 1500 square
feet of space at Hamilton House, 111 Marlowes, Hemel Hempstead,
Hertfordshire HP1 1BB England from where it conducts research and
development, at an annual rental of 13,000 pounds sterling.
DIRECTORS, OFFICERS AND KEY PERSONNEL
Management
<TABLE>
<CAPTION>
<S> <C> <C>
NAME AGE POSITION
Paul Robinson 33 President, CEO, Chairman of the
Board
Peter Lynch 40 Director, VP - Technical
Roderick Adams 32 Director, VP-Corp. Development
</TABLE>
Paul Robinson has served as Chairman of the Board of
Directors, President, and Chief Executive Officer of the Company
since June 3, 1996. From August 1995 to October 1, 1996, Mr.
Robinson was an Account Manager for Cisco Systems, handling
customers in the United Kingdom financial sector. From 1992 to
August 1995 Mr. Robinson was employed by Biss Ltd. as a new
business sales executive. From 1989 to 1992 Mr. Robinson was a
sales executive for Prime Computers in the United Kingdom. In
1990, Mr. Robinson was transferred to Thailand where he was sales
manager for southeast Asia. Mr. Robinson intends to spend all of
his time on the Company's affairs.
Peter Lynch has served as a director of the Company since
its inception in May 1996. Since 1990 Mr. Lynch has held various
management positions with Wang Biss Ltd. in the areas of system
engineering, product marketing, and regional operations. Mr.
Lynch intends to spend all of his time on the Company's affairs.
Roderick Adams has served as a director of the Company since
its inception in May 1996. Since 1991 Mr. Adams has acted as a
consultant to a number of companies seeking financing. Mr. Adams
provides services and advice on corporate matters including fund
raising, listings and quotes, investor and media relations. Mr.
Adams intends to spend all of his time on the Company's affairs.
REMUNERATION
<PAGE>
SUMMARY COMPENSATION TABLE *
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
- -----------------------------------------------------------------
NUMBER OF
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul Robinson.............. 1996 46,500\1 0 0
Chairman, Chief Executive Of-
ficer, President
Peter Lynch................ 1996 46,500\2 0 0
Director, VP-Technical
Roderick Adams.............. 1996 43,000\3 0 0
Director, VP-Corp. Development
</TABLE>
* All monetary amounts in this table are in English pounds
sterling.
1/ Mr. Robinson is being compensated at an annual rate of 46,500
pounds sterling per year. Such compensation commenced on October
1, 1996. From the Company's incorporation on May 2, 1996 through
September 30, 1996, Mr. Robinson received no compensation from
the Company.
2/ Mr. Lynch is being compensated at an annual rate of 46,500
pounds sterling per year. Mr. Lynch began receiving compensation
in July 1996. Through October 31, 1996 Mr. Lynch received
compensation totaling 15,500 pounds sterling.
3/ Mr. Adams began receiving compensation at the annual rate of
43,000 pounds sterling in July 1996. Through October 31, 1996,
Mr. Adams received compensation totaling 14,333 pounds sterling.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-
END OPTIONS/SAR VALUES
At the present time, no stock options are held by any of the
Company's officers and directors. At the present time, the
Company has outstanding stock options to purchase a total of
80,000 Shares at an exercise price of $0.40 per Share and 40,000
Shares at an exercise price of $4.00 per Share.
<PAGE>
STOCK OPTION
The Company has adopted the Stock Option Plan (the "Plan")
to attract and retain officers, non-employee directors,
employees, and consultants of the Company or any of its
subsidiaries or affiliates. The Plan authorizes the purchase of
up to 300,000 shares of Common Stock through the grant of stock
options and awards of restricted stock. The Company has granted
options under the Plan to purchase 80,000 Shares of the Company's
Common Stock at the price of $0.40 per Share and 40,000 Shares at
a price of $4.00 per Share. The Plan will be administered by
either the Board of Directors or a committee of two or more
non-employee directors ("Administrator"). In general, the
Administrator will determine which eligible officers, directors,
employees and consultants of the Company may participate in the
Plan and the type, extent and terms of the stock option grants
and awards of restricted stock.
Options granted to employees may be either incentive stock
options within the meaning of Section 422 of the Code ("ISOs") or
non-ISOs. Each option has a maximum term of ten years from the
date of the grant, subject to early termination. The exercise
price of any options granted after this Offering shall be equal
to the greater of the market price per share of the Common Stock
on the date of grant or the initial public offering price. At
the discretion of the Administrator, the exercise price of the
options may be paid in cash, with shares of Common Stock having a
fair market value equal to the option exercise price, or with
other property having a fair market value equal to the option
exercise price, including other vested but u of a change in
control, as defined in the Plan, all options will become
immediately vested and exercisable and the restrictions with
regard to restricted stock will lapse, unless provided otherwise.
RELATED PARTY TRANSACTIONS
During 1996 the Company has issued a total of 132,600 Shares
to Union Securities (International) Ltd., as compensation for its
services in assisting the Company sell Shares in the (i)
June/July 1996 offering and (ii) the European Offering in
October and November 1996. Mr. Timothy A.B. Mills, a founder of
the Company, who owns 550,000 Shares, is a director, and owns
20%, of Union Securities (International) Ltd.
DILUTION
The Selling Shareholders in this Offering suffered
immediate, substantial dilution of their interests upon their
investment in the Company. Prior to the Selling Shareholders
purchasing their shares, 5,233,500 Shares were issued for
<PAGE>
$993,400. Therefore, the Selling Shareholders contributed
approximately 76% percent of all cash raised and own 17% of the
Company's outstanding Shares.
PRINCIPAL STOCKHOLDERS
The table below sets forth certain information regarding the
beneficial ownership as of the date hereof and as adjusted to
reflect the sale of Common Stock offered hereby, by (i) each
person known by the Company to own beneficially five percent or
more of the Common Stock, (ii) each of the Company's directors,
(iii) each of the Named Officers and (iv) all directors and
executive officers as a group. Except as otherwise indicated, (x)
the Company believes that each of the beneficial owners of the
Common Stock listed in the table, based on information furnished
by such owner, has sole investment and voting power with respect
to such shares, and (y) the address of the beneficial owner is
the address of the principal executive offices of the Company.
The information set forth in the table and accompanying footnotes
has been furnished by the named beneficial owners.
<TABLE>
<CAPTION>
PERCENTAGE(1)
NUMBER OF
SHARES
BENEFICIALLY BEFORE AFTER
NAME OWNED OFFERING OFFERING
- ----- ------------
- -------- --------
<S> <C> <C> <C>
Paul 735,000 11.7% 11.7%
Peter Lynch 735,000 11.7% 11.7%
Roderick Adams 730,000 11.6% 11.6%
Timothy A.B. Mills 550,000 8.8% 8.8%
All executive officers and directors as a group
(3 persons) 2,200,000 35.1% 35.1%
- - --------
</TABLE>
<PAGE> TRADING MARKET OF COMPANY'S SHARES
The Company's shares have traded on National Association of
Securities Dealers Over the Counter Bulletin Board ("OTC Bulletin
Board") since September 24, 1996. The price range of trading in
the Shares, on a quarterly basis, since that time, is as follows:
<TABLE>
<CAPTION>
OTC BULLETIN
BOARD 1996 Trades Volume
Low |High
<S> <C> <C>
1st Quarter |
2nd Quarter |
3rd Quarter .90 | 1.625 182,200
4th Quarter 1.5 | 12.00 3,389,100
</TABLE>
Note: OTC Bulletin Board Quotations - The OTC Bulletin Board
quotations represent inter-dealer prices, without mark-ups,
commissions, etc., and they may not necessarily be indicative of
actual sales prices.
The last trade of the Shares on the OTC Bulletin Board on
December 19, 1996 was $7.125.
LITIGATION
None.
CAPITALIZATION AND DESCRIPTION OF SECURITIES
The Company has one class of capital stock outstanding,
common stock having $0.001 par value ("Shares").
On December 19,600 Shares outstanding out of 20,000,000
Shares authorized.
All Shares are of the same class and have the same rights,
preferences and limitations. Holders of Shares are entitled to
<PAGE>
receive dividends in cash, property or shares when and if
dividends are declared by the Board of Directors out of funds
legally available therefor. The By-Laws impose no limitations on
the payment of dividends. A quorum for any meeting of
shareholders is a majority of Shares then issued and outstanding
and entitled to be voted at the meeting. Holders of Shares are
entitled to one vote per Share. There is no cumulative voting
with respect to the election of directors, with the result that
the holders of more than 50% of the shares voted can elect all of
the directors then being elected. Upon any liquidation,
dissolution or winding up of the business of the Company, any
assets will be distributed to the holders of Shares after payment
or provision for payment of all debts, obligations or liabilities
of the Company. Except as otherwise disclosed in this
Memorandum, there are no preemptive rights, subscription rights,
conversion rights or redemption provisions relating to the
Shares, and none of the Shares carries any liability for further
calls.
The rights of holders of Shares may not be modified other
than by vote of two-thirds of the Shares voting on such
modification.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
As permitted by the General Corporation Law of Delaware, as
amended ("DGCL"), the Company's Certificate of Incorporation
limits the personal liability of a director or officer to the
Company for monetary damages for breach of fiduciary duty of care
as a director. Liability is not eliminated for (i) any breach of
the director's duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law,
(iii) unlawful payment of dividends or stock purchases or
redemptions pursuant to Section 174 of the DGCL, or (iv) any
transaction from which the director derived an improper personal
benefit.
The Company hanto indemnification agreements with each of
its directors and executive officers. The indemnification
agreements provide that the directors and executive officers will
be indemnified to the fullest extent permitted by applicable law
against all expenses (including attorneys' fees), judgments,
fines and amounts reasonably paid or incurred by them for
settlement in any threatened, pending or completed action, suit
or proceeding, including any derivative action, on account of
their services as a director or officer of the Company or of any
subsidiary of the Company or of any other company or enterprise
in which they are serving at the request of the Company. No
indemnification will be provided under the indemnification
agreements, however, to any director or executive officer in
certain limited circumstances, including on account of knowingly
<PAGE>
fraudulent, deliberately dishonest or willful misconduct. To
extent the provisions of the indemnification agreements exceed
the indemnification permitted by applicable law, such provisions
may be unenforceable or may be limited to the extent they are
found by a court of competent jurisdiction to be contrary to
public policy.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
DELAWARE LAW
The Company is subject to Section 203 of the DGCL, which
prevents an "interested stockholder" (defined in Section 203,
generally, as a person owning 15% or more of a corporation's
outstanding voting stock) from engaging in a "business
combination" with a publicly-held Delaware corporation for three
years following the date such person became an interested
stockholder, unless: (i) before such person becamstockholder, the
board of directors of the corporation approved the transaction in
which the interested stockholder became an interested stockholder
or approved the business combination; (ii) upon consummation of
the transaction that resulted in the interested stockholder's
becoming an interested stockholder, the interested stockholder
owns at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (subject to
certain exceptions); or (iii) following the transaction in which
such person became an interested
stockholder, the business combination is approved by the Board of
the corporation and authorized at a meeting of stockholders by
the affirmative vote of the holders of 66% of the outstanding
voting stock of the corporation not owned by the interested
stockholder. A "business combination" includes mergers, stock or
asset sales and other transactions resulting in a financial
benefit to the interested stockholder.
The provisions of Section 203 of the DGCL could have the
effect of delaying, deferring or preventing a change in control
of the Company.
TRANSFER AGENT
The transfer agent for the Common Stock is the Registrar and
Transfer Company, Cranford, New Jersey.
SHARES ELIGIBLE FOR FUTURE SALE
<PAGE>
At the present time, the Company has 6,276,600 shares of
Common Stock outstanding, not including the 120,000 shares of
Common Stock issuable upon exercise of the options held by the
Company's employees, Of these outstanding shares, 5,233,500
shares may be freely traded without restriction or further
registration under the Securities Act, except that any shares
that are held by an "affiliate" of the Company (as that term is
defined in the rules and regulations under the Securities Act)
may be sold only pursuant to a registration under the Securities
Act or pursuant to an exemption from registration under the
Securities Act including the exemption provided by Rule 144
adopted under the Securities Act.
1,043,100 shares of Common Stock were sold in Europe in
October and November 1996 pursuant to the safe harbor from
registration set forth in Regulation S, promulgated under the
Securities Act. Under Regulation S, these shares are subject to
a "restricted period," that requires that the Company take such
steps as are necessary to ensure that the shares are not resold
into the United States for at least one year from the date of
sale. 1,043,100 of these shares, are being registered pursuant
to this prospectus. These Shares, if not sold pursuant to this
prospectus, will be available for resale into the United States
commencing in October 1997.
In addition, shareholders who are deemed to be affiliates
are also subject to resale limitations pursuant to Rule 144.
Currently, there are 2,750,000 shares which are held by founders
of the Company which may be deemed to be "control stock." These
shares, although not subject to a two-year holding requirement,
are still subject to the other provisions of Rule 144, so long as
the shareholder is deemed to be an "affiliate" of the Company.
In general, under Rule 144 as currently in effect, an
affiliate will be entitled to sell, within any three-month
period, that number of shares that does not exceed tthe then
outstanding shares of Common Stock or (ii) the average weekly
trading volume of the Stock during the four calendar weeks
preceding the date on which notice of such sale is given to the
Commission provided certain public information, manner of sale
and notice requirements are satisfied. A stockholder who is
deemed to be an affiliate of the Company, including members of
the Board of Directors and senior management of the Company, will
still need to comply with the restrictions and requirements of
Rule 144, other than the two-year holding period requirement, in
order to sell shares of Common Stock that are not Restricted
Securities, unless such sale is registered under the Securities
Act. A stockholder (or
stockholders whose shares are aggregated) who is deemed not to
have been an affiliate of the Company at any time during the 90
days preceding a sale by such stockholder, and who has
beneficially owned Restricted Shares for at least three years,
will be entitled to sell such shares under Rule 144 without
<PAGE>
regard to the volume limitations described above. The Commission
is currently considering a reduction in the required holding
periods under Rule 144.
No predictions can be made of the effect, if any, that
future sales of shares of the availability of shares for sale
will have on the market price prevailing from time to time.
Nevertheless, sales of substantial amounts of Shares in the
public market could adversely affect the then-prevailing market
price.
In addition, any employee, officer or director of or
consultant to the Company who purchases his or her shares
pursuant to a written plan or contract may be entitled to rely on
the resale provisions of Rule 701, promulgated under the
Securities Act ("Rule 701"). Rule 701 permits affiliates to sell
their shares which are subject to Rule 701 ("Rule 701 shares")
under Rule 144 without complying with the holding period
requirements of Rule 144. Rule 701 further provides that
non-affiliates may sell Rule 701 shares in reliance on Rule 144
without having to comply with the public information, volume
limitation or notice provisions of Rule 144. In both cases, a
holder of Rule 701 shares is required to wait until 90 days after
the date of this Prospectus. At the present time, there are no
Rule 701 shares outstanding.
LEGAL MATTERS
The legality of the securities offered hereby will be passed
upon for the Company by Berns & Berns, New York, New York.
EXPERTS
The financial statements as of July 18, 1996, and for the
period from May 2, 1996 through July 18, 1996 included in this
Prospectus have been audited by Faw, Casson & Co., LLP,
independent auditors, as stated in their reports appearing herein
and elsewhere. Such financial stan included herein in reliance
upon the reports of such firm given upon their authority as
experts in auditing and accounting.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration
Statement under the Securities Act with respect to the Securities
offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the
exhibits thereto, certain portions having been omitted from
this Prospectus in accordance with the rules and regulations of
the Commission. For further information with respect to the
Company, the securities offered by this Prospectus and such
omitted information, reference is made to the Registration
<PAGE>
Statement, including any and all exhibits and amendments thereto.
Statements contained in this Prospectus concerning the provisions
of any documents filed as an exhibit are of necessity brief
descriptions thereof and are not necessarily complete, and in
each instance reference is made to the copy of the document filed
as an exhibit to the Registration Statement, each such statement
being qualified in its entirety by this reference.
Following the effectiveness of the Registration Statement,
the Company will be subject to the informational requirements of
the Securities Exchange Act of 1934, as amended, and in
accordance therewith will file reports, proxy statements and
other information with the Commission. Such reports, proxy
statements and other information may be inspected and copied at
the public reference facilities of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and
7 World Trade Center, New York, New York 10048. Copies of such
material, including the Registration Statement, can be obtained
from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission also maintains a site on the World Wide Web that
contains reports, proxy and information statements and other
information regarding registrants that file electronically of
such site is http://www.sec.gov.
The Company intends to furnish its stockholders with annual
reports containing audited financial statements, quarterly
reports containing unaudited financial information and such other
periodi Company may determine to be appropriate or as may be
required by law.
<PAGE> <PAGE>
FINANCIAL STATEMENTS
JYRA RESEARCH CORP.
INDEX TO FINANCIAL STATEMENTS
PAGE
Independent Auditors'
Report........................................ F-4
Financial Statements for the period from May 2, 1996 to July 18,
1996:
Balance Sheet................................F-5
Statement of Operations and Retained Earnings
(Deficit)..................................F-6
Statement of Cash Flows......................F-7
Notes to Consolidated Financial
Statements..................................F-8
F-1
<PAGE> <PAGE>
JYRA RESEARCH INC.
London, England
**********
AUDITED FINANCIAL STATEMENTS
Period May 2, 1996 To July 18, 1996
F-2
<PAGE> <PAGE>
C O N T E N T S
******************************
PAGES
Independent Auditors Report F-4
Balance Sheet F-5
Statement Of Operations And Retained Earnings (Deficit)F-6
Statement of Cash Flows F-7
Notes To Financial Statements F-8
*****************************
F-3
<PAGE> <PAGE>
INDEPENDENT AUDITORS REPORT
BOARD OF DIRECTORS
JYRA RESEARCH INC.
London, England
We have audited the accompanying balance sheet of JYRA
Research, Inc. as of July 18, 1996, and the related statements of
operations and retained earnings (deficit) and cash flows for the
period May 2, 1996 through July 18, 1996. These financial
statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of JYRA Research Inc., at July 18, 1996, and the results of its
operations and its cash flows for the period May 2, 1996 through
July 18, 1996, in conformity with generally accepted accounting
principles.
Dover, Delaware
July 23, 1996
F-4
<PAGE> <PAGE>
JYRA RESEARCH INC.
BALANCE SHEET
JULY 18, 1996
_________________________________________________________________
_____
A S S E T S
CURRENT ASSETS
Cash And Cash Equivalents $947,254
L I A B I L I T I E S
CURRENT LIABILITIES
Accounts Payable $78,680
S T O C K H O L D E R S E Q U I T Y
COMMON STOCK
Authorized: 20,000,000 Shares, $.001 Par Value
Issued And Outstanding: 2,750,000 Shares $ 2,750
COMMON STOCK SUBSCRIBED 945,000
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (79,176)
TOTAL STOCKHOLDERS EQUITY 868,574
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $947,254
See Accompanying Notes To Financial Statements.
F-5
<PAGE>
JYRA RESEARCH INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
MAY 2, 1996 THROUGH JULY 18, 1996
________________________________________________________________
REVENUE $ -
DEVELOPMENT AND ADMINISTRATIVE EXPENSES
Supplies $ 280
Wire Charges 496
Commissions 36,400
Legal Fees 42,000
TOTAL DEVELOPMENT AND ADMINISTRATIVE EXPENSES
79,176
NET LOSS
(79,176)
RETAINED EARNINGS AT MAY 2, 1996 -
RETAINED EARNINGS (DEFICIT) AT JULY 18, 1996
(79,176)
See Accompanying Notes To Financial Statements.
F-6
<PAGE> <PAGE>
- 4 -
JYRA RESEARCH INC.
STATEMENT OF CASH FLOWS
MAY 2, 1996 THROUGH JULY 18, 1996
_________________________________________________________________
CASH FLOWS USED FOR OPERATING ACTIVITIES
Net Loss $(79,176)
Adjustments To Reconcile Net Loss To Net Cash
Used For Operating Activities:
Increase In Accounts Payable 78,680
NET CASH USED FOR OPERATING ACTIVITIES $(496)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Increase In Common Stock 2,750
Increase In Common Stock Subscribed
945,00IDED BY FINANCING ACTIVITIES 947,750
NET INCREASE IN CASH AND CASH EQUIVALENTS 947,254
CASH AND CASH EQUIVALENTS AT MAY 2, 1996 -
CASH AND CASH EQUIVALENTS AT JULY 18, 1996 $947,254
See Accompanying Notes To Financial Statements.
F-7
<PAGE> <PAGE>
JYRA RESEARCH, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 18, 1996
_________________________________________________________________
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Company's Activities
The Company was incorporated in the State of Delaware May
2, 1996. The Company's plans are to develop new computer
network management systems to solve network problems
caused by the constant increase in network traffic and
growing complexity of networks.
Cash
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be
cash equivalents.
NOTE B - COMMON SUBSCRIBED STOCK
The Company has raised $945,000 by an offering memoran-
dum. It will be converted to 2,362,500 shares of common
stock.
NOTE C - COMMITMENT
The Company has entered into an agreement with another
corporation pursuant to which the Company was granted a
worldwide non-exclusive license to develop and distribute
products based upon the Corporation's technology.
Also pursuant to the agreement, the Company is required
to meet three principal payment obligations consisting
of: (a) upfront license fees; (b) per unit royalties;
and (c) support and update fee.
The agreement is capable of ending either by expiration
or termination. The agreement is schedul the end
of its stated initial term of five (5) years,
after which the Company may, at its option, elect to
renew the agreement for as many as five successive terms
<PAGE>
of one (1) year each. If the agreement ends by expira-
tion of any such term, then, after expiration, the
F-8
Company may continue to sell it products incorporating
the Corporation's technology as such technology existed
at the time of expiration, subject always to the
Company's continuing obligation to pay "per unit
royalties".
F-9
<PAGE> <PAGE>
TABLE OF CONTENTS
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . 7
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . 8
THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . 8
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 8
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . 8
DESCRIPTION OF OFFERING. . . . . . . . . . . . . . . . . . . . 9
SELLING SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . 10
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
GLOSSARY OF TERMS. . . . . . . . . . . . . . . . . . . . . . . 12
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . 15
New Business; Continued Dependence on Securing Addi-
tional Financing . . . . . . . . . . . . . . . 15
No Commercial Operations . . . . . . . . . . . . . . . 15
Dependence Upon Key Personnel. . . . . . . . . . . . . 15
Inexperience of Management . . . . . . . . . . . . . . 15
Financial Condition of Company; Difficulty in Funding
Operations . . . . . . . . . . . . . . . . . . 15
Protection of Intellectual Property; Competition . . . 16
Proposed Products are Only at the Conceptual Stage . . 16
Manufacturing of Product . . . . . . . . . . . . . . . 17
Limited Experience of Management in Manufacturing. . . 17
Delays in Development of Software and Related Products
are Common in Computer Indust. . . . . . . . . 18
Competitive Disadvantage of Company. . . . . . . . . . 18
Changes in Technology; Risk of Competing Technologies. 18
Substantial Additional Funds May be Required; Substan-
tial Shareholder Dilution. . . . . . . . . . . 18
Risks Associated with International Operations . . . . 19
Competition. . . . . . . . . . . . . . . . . . . . . . 19
Dependence Upon Developing New Products. . . . . . . . 20
Impact of General Economic Conditions on Operations and
Dependence Upon Other Company's Products and
their Availability . . . . . . . . . . . . . . 20
Need of Company to Comply with Electrical, Emissions,
and Other Applicable Safety Requirements . . . 21
Dependence upon Technology from Sun Microsystems . . . 21
Substantial Immediate Dilution . . . . . . . . . . . . 21
Dependence of the Company Upon Unproven Products . . . 21
No Market For Shares; Potential Sales of Substantial
Amounts of Shares. . . . . . . . . . . . . . . 21
Significant Control and Influence by Existing Share-
holders. . . . . . . . . . . . . . . . . . . . 22
Limitation of Officers' and Directors' Liabilities
<PAGE>
under Delaware Law . . . . . . . . . . . . . . 22
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 22
DIVIDEND POLICY. . . . . . . . . . . . . . . . . . . . . . . . 22
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . 23
Background . . . . . . . . . . . . . . . . . . . . . . 23
Planned Initial Products . . . . . . . . . . . . . . . 24
Jyra Probe . . . . . . . . . . . . . . . . . . 24
Manager. . . . . . . . . . . . . . . . . . . . 24
Jyra Diagnosis Pack. . . . . . . . . . . . . . 24
Jyra Analysis Pack . . . . . . . . . . . . . . 24
Service Management . . . . . . . . . . . . . . 25
MANUFACTURING. . . . . . . . . . . . . . . . . . . . . . . . . 25
License from Sun Microsystems. . . . . . . . . . . . . 26
PROPRIETARY RIGHTS AND LICENSES. . . . . . . . . . . . . . . . 27
MARKET FOR COMPANY'S PROPOSED PRODUCTS . . . . . . . . . . . . 27
Fortune 500 Corporations . . . . . . . . . . . . . . . 27
Telecommunications Providers . . . . . . . . . . . . . 27
Outsourcers. . . . . . . . . . . . . . . . . . . . . . 28
Third Party Application Developers and Consultants . . 28
Existing Data Communications Equipment and Probe Ven-
dors . . . . . . . . . . . . . . . . . . . . . 28
UNITED STATES MARKETING OPERATIONS . . . . . . . . . . . . . . 29
COMPETITIVE TECHNOLOGY . . . . . . . . . . . . . . . . . . . . 29
NETWORK DIAGNOSIS AND ANALYSIS . . . . . . . . . . . . . . . . 30
Portable Packet Capture. . . . . . . . . . . . . . . . 30
Triticom LANDecoder. . . . . . . . . . . . . . 30
Wandel and Goltermann. . . . . . . . . . . . . 30
Hewlett-Packard. . . . . . . . . . . . . . . . 30
Local Network Analysis . . . . . . . . . . . . . . . . 31
Network General. . . . . . . . . . . . . . . . 31
Network Analysis. . . . . . . . . . . . . . . . . . . . . . . .31
ECONet . . . . . . . . . . . . . . . . . . . . 31
Desktalk TrendSNMP+. . . . . . . . . . . . . . 31
REMOTE MONITORING. . . . . . . . . . . . . . . . . . . . . . . 32
Frontier Software. . . . . . . . . . . . . . . . . . . 33
SYSTEMS MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 33
Timetable. . . . . . . . . . . . . . . . . . . . . . . 34
FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . 34
Management's Discussion and Analysis of Financial Con-
dition and Results of Operations . . . . . . . 34
Selected Financial Data. . . . . . . . . . . . . . . . 35
<PAGE>
OFFICE FACILITIES. . . . . . . . . . . . . . . . . . . . . . . 36
DIRECTORS, OFFICERS AND KEY PERSONNEL. . . . . . . . . . . . . 36
Management . . . . . . . . . . . . . . . . . . . . . . 36
REMUNERATION . . . . . . . . . . . . . . . . . . . . . . . . . 36
STOCK OPTION PLAN. . . . . . . . . . . . . . . . . . . . . . . 38
RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . 38
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
PRINCIPAL STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . 39
TRADING MARKET OF COMPANY'S SHARES . . . . . . . . . . . . . . 40
LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . 40
CAPITALIZATION AND DESCRIPTION OF SECURITIES . . . . . . . . . 40
INDEMNIFICATION OF OFFICERS AND DIRECTORS. . . . . . . . . . . 41
DELAWARE LAW . . . . . . . . . . . . . . . . . . . . . . . . . 42
TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . 42
SHARES ELIGIBLE FOR FUTURE SALE. . . . . . . . . . . . . . . . 42
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 44
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . 44
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 46
INDEPENDENT AUDITORS REPORT. . . . . . . . . . . . . . . . . . 49
<PAGE> <PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the Company's estimates of the
expenses to be incurred by it in connection with the issuance and
distribution of the securities being registered, other than
underwriting discounts and commissions:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee..... $2,587
Fees and expenses of Regis.......................... 40,000*
Accounting fees and expenses....................... 2,000*
Miscellaneous......................................
-----------
Total.................................................. $
</TABLE>
===========
- - ---------
* Estimated
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware,
as amended ("DGCL"), authorizes a Delaware corporation to
indemnify its officers, directors, employees and agents against
expenses and liabilities incurred in legal proceedings involving
such persons because of their holding or having held such
positions with the corporation and to purchase and maintain
insurance for such indemnification. The Company's By-Laws and
Article 8 of its Certificate of Incorporation, as amended,
substantively provide that the Company indemnify its officers,
direc- tors, employees and agents to the fullest extent permitted
by Section 145 of the DGCL.
In accordance with Section 102(b)(7) of the DGCL, Article
8 of the Company's Certificate of Incorporation eliminates the
personal liability of directors to the Company or its
stockholders for monetary damages for breach of fiduciary duty as
a director with certain limited exceptions set forth in Section
102(b)(7).
The Company has also entered into indemnification
agreements with each of its directors and executive officers. The
indemnification agreements provide that the directors and
executive officers will be indemnified to the fullest extent
<PAGE>
permitted by applicable law against all expenses (including
attorneys' fees), judgments, fines and amounts reasonably paid or
incurred by them for settlement in any threatened, pending or
completed action, suit or proceeding, including any deriva- tive
action, on account of their services as a director or officer of
the Company or of any subsidiary of the Company or of a or
enterprise in which they are serving at the request of the
Company. No indemnifi- cation will be provided under the
indemnification agreements, however, to any director or executive
officer in certain limited circumstances, including on account of
knowingly fraudulent, deliberately dishonest or willful
misconduct. To the extent the provisions the provisions of the
inreements exceed the indemnification permitted by applicable
law, such provisions may be unenforceable or may be limited to
the extent they are found by a court of competent jurisdiction to
be contrary to public policy.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Described below is information regarding all securities that have
been issued by the Company since its incorporation on May 2,
1996.
1. On May 10, 1996, the Company sold a total of 2,750,000 Shares
to Messrs. Paul Robinson, Peter Lynch, Roderick Adams and Timothy
A.B. Mills, founders of the Company, at a price of $.001 per
share, for an aggregate offering price of $2,750. The Shares
were offered and sold pursuant to the exemption from registration
set forth in Rule 504, promulgated under the Securities Act of
1933, as amended (the "Securities Act").
2. During July 1996, the Company sold a total of 2,483,500
Shares to approximately 50 investors, located in various
countries in Europe, at a price of $.40 per Share, receiving
proceeds of $993,400. The Shares were offered and sold pursuant
to the exemption from registration setforth in Rule 504,
promulgated under the Securities Act.
3. During October and November 1996, the Company sold a total of
1,043,100 Shares to 29 investors, located in various countries in
Europe, at a price of $3.00 per Share, receiving proceeds of
$3,129,300. The Shares were offered and sold pursuant to the
exemption from registration set forth in the rules comprising
Regulation S, promulgated under the Securities Act.
<PAGE> ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
*3.01(i) --Certificate of Incorporation of the Registrant.
*3.01(ii) --By-Laws of the Registrant.
**4.01 --Specimen Certificate representing the Common Stock,
par value $0.001
per share.
**5.01 --Opinion of Berns & Berns.
*10.01 --1996 Stock Option Plan.
**10.02 --Technology License and Distribution Agree19, 1996 with
Sun Microsystems, Inc.
**10.03 --Form of Indemnification Agreement of Directors.
**11.01 --Statement Regarding Computation of per share earnings.
*21.01 --Subsidiaries of the Registrant.
</TABLE>
<PAGE> <PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
**23.01 --Consent of Berns & Berns (included in Exhibit 5)
**23.02 --Consent of Faw, Casson & Co. LLP
**27.01 --Financial Data Schedule
</TABLE>
--------
* Filed herewith
** To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(1) to file, during any period in which offers or sales are being
made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggre- gate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) and to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) that, for the purpose of determining any liability unes
Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered
<PAGE>
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering;
(4) to provide to the Underwriter at the closing specified in the
Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriter to permit
prompt delivery to each purchaser;
(5) insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the
successful defense of any action suit or proceeding) is asserted
by such director, officer or controlling person in connection
with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue;
(6) for purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of pro the
Company pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective;
(7) for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
<PAGE> <PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED IN THE CITY OF LONDON, ENGLAND, ON DECEMBER 20, 1996.
Jyra Research Inc.
By: /Paul Robinson/
Paul Robinson,
President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE
<PAGE>
TITLE DATE
<PAGE>
/s/ Paul Robinson
Paul Robinson<PAGE>
President, Chief Execu-
tive Officer, Director
(Principal Executive
Officer)<PAGE>
Dec. 20,
1996<PAGE>
/s/ Roderick Adams
Roderick Adams<PAGE>
Chief Financial Officer,
Director (Principal Fi-
nancial and Accounting
Officer)<PAGE>
Dec. 20,
1996<PAGE>
/s/ Peter Lynch
Peter Lynch<PAGE>
Director Dec. 20,
1996<PAGE> <PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITPAGE NUMBER
------- ----------------------
<S> <C>
*3.01(i) --Certificate of Incorporation of the Registrant.
*3.01(ii) --By-Laws of the Registrant.
**4.01 --Specimen Certificate representing the Common Stock,
par value $0.001 per share.
**5.01 --Opinion of Berns & Berns.
*10.01 --1996 Stock Option Plan.
**10.02 --Technology License and Distribution Agreement dated
July 19, 1996 with Sun Microsystems, Inc.
**10.03 --Form of Indemnification Agreement of Directors.
**11.01 --Statement Regarding Computation of per share earnings.
**23.01 --Consent of Berns & Berns (included in Exhibit 5)
**23.02 --Consent of Faw, Casson & Co. LLP
**27.01 --Financial Data Schedule
</TABLE>
* Filed herewith
** To be filed by amendment
<PAGE> <PAGE>
3.01(i) Certificate of Incorporation
CERTIFICATE OF INCORPORATION
OF
JYRA RESEARCH INC.
The undersigned, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the
General Corporation Law of the State of Delaware, does hereby
certify as follows:
I. The name of the corporation (hereinafter referred to as the
"Corporation") is Jyra Research Inc.
II. The address of the registered office of the Corporation in
the State of Delaware is 15 East North Street, City of Dover,
County of Kent 19901. The name of its registered agent at such
address is United Corporate Services, Inc.
III. The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
IV. The Corporation shall have authority to issue twenty million
(20,000,000) shares of Common Stock, par value $.001 per share.
V. The term of existence of the Corporation shall be perpetual.
VI. The stockholders may hold their meetings, annual or special,
within or without the e as may be provided in the By- Laws, and
the Board of Directors or any Committee thereof may hold all or
any of their meetings within or without the State of Delaware at
such places as the By-Laws or the Board of Directors may
designate. The Corporation may have one or more offices and keep
any of the books of the Corporation subject to the provisions of
the laws of the State of Delaware within or without the State of
Delaware at such places as may from time to time be designated by
the Board of Directors. Elections of directors need not be
written ballot unless the By-Laws of the Corporation shall so
provide.
VII. The Corporation shall possess and may exercise all the
powers and privileges granted by the General Corporation Law or
by any other law of the State of Delaware at the time in force or
by this Certificate of Incorporation, together with any powers
<PAGE>
incidental thereto, so far as such powers and such privileges are
necessary or convenient to the conduct, promotion or attainment
of the purpose set forth in Article III of this Certificate of
Incorporation.
VIII. The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by paragraph
7 of section 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented from time
to time. Except as and to the extent otherwise required by
Delaware law, the directors of the Corporation shall not be
liable to the Corporation or the stockholders of the Corporation
for any damage arising out of or in connection with or resulting
from any breach of a director's fiduciary duty. The Corporation
shall, to the full extent permitted by the General Corporation
Law of the State of Delaware, indemnify all persons whom this
Corporation may indemnify pursuant thereto and, in connection
therewith, to the full extent permitted by Delaware law, advance
expenses to all such persons in connection with the investigation
and defense of indemnifiable actions brought against them.
Directors and officers of the Corporation shall not be obligated
to repay funds so advanced unless it shall be specifically
determined that such director or officer shall not be entitled to
such indemnification. The indemnification provided by this
Section shall not limit or exclude any rights, indemnities or
limitations of liability to which any person may be entitled,
whether as a matter of law, under the By-laws of the Corporation,
by agreement, vote of the stockholders or disinterested directors
of the Corporation, or otherwise.
IX. All transactions between the Corporation and one or more of
its directors or officers, or between the Corporation and any
other corporation, partnership, association or other organization
in which one or more of its directors or officers are officers or
directors or have a financial interest, shall be valid to the
full extent permitted by the General Corporation Law of the State
of Delaware.
X. The name of the incorporator is James Berns, and the mailing
address of the incorporator is One Rockefeller Plaza, New York,
New York 10020. Signed at New York, New York on May 1, 1996.
James Berns, Esq.
One Rockefeller Plaza
New York, New York 10020
<PAGE>
Exhibit 3.02 By-laws of Registrant.
JYRA RESEARCH INC.
(A Delaware Company)
BY-LAWS
<PAGE> <PAGE>
JYRA RESEARCH INC.
(A Delaware Company)
BY-LAWS
ARTICLE 1
STOCKHOLDERS . . . . . . . . . . . . . 1
Section 1.1 Annual Meetings. . . . . . . . . . . . . . . . . 1
Section 1.2 Special Meetings.. . . . . . . . . . . . . . . . 1
Section 1.3 Notice of Meetings.. . . . . . . . . . . . . . . 1
Section 1.4 Business Transacted at Special Meetings of
Stockholders. .. . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.5 Quorum.. . . . . . . . . . . . . . . . . . . . . 1
Section 1.6 Consent of Stockholders in Lieu of Meeting.. . . 2
Section 1.7 Approval or Ratification by Stockholders.. . . . 2
ARTICLE 2
BOARD OF DIRECTORS. . . . . . . . . 2
Section 2.1 General Powers.. . . . . . . . . . . . . . . . . 2
Section 2.2 Number and Term of Office. . . . . . . . . . . . 2
Section 2.3 Election of Directors. . . . . . . . . . . . . . 2
Section 2.4 Annual and Regular Meetings. . . . . . . . . . . 3
Section 2.5 Special Meetings; Notice.. . . . . . . . . . . . 3
Section 2.6 Quorum.. . . . . . . . . . . . . . . . . . . . . 3
Section 2.7 Telephone Meetings; Action Without a Meeting.. . 3
Section 2.8 Resignations.. . . . . . . . . . . . . . . . . . 4
Section 2.9 Removal of Directors.. . . . . . . . . . . . . . 4
Section 2.10 Vacancies and Newly Created Directorships.. . . 4
Section 2.11 Compensation. . . . . . . . . . . . . . . . . . 4
ARTICLE 3
<PAGE>
COMMITTEES. . . . . . . . . . . 4
Section 3.1 How Constituted. . . . . . . . . . . . . . . . 4
Section 3.2 Powers.. . . . . . . . . . . . . . . . . . . . . 5
Section 3.3 Proceedings. . . . . . . . . . . . . . . . . . . 5
Section 3.4 Quorum and Manner of Acting; Telephone Meetings. 5
Section 3.5 Resignation. . . . . . . . . . . . . . . . . . . 5
Section 3.6 Removal. . . . . . . . . . . . . . . . . . . . . 5
Section 3.7 Vacancies. . . . . . . . . . . . . . . . . . . . 5
ARTICLE 4
OFFICERS . . . . . . . . . . 6
Section 4.1 Number.. . . . . . . . . . . . . . . . . . . . 6
Section 4.2 Election.. . . . . . . . . . . . . . . . . . . 6
Section 4.3 Additional Officers. . . . . . . . . . . . . . 6
Section 4.4 Salaries.. . . . . . . . . . . . . . . . . . . 6
Section 4.5 Resignations.. . . . . . . . . . . . . . . . . 6
Section 4.6 Removal and Vacancies. . . . . . . . . . . . . 6
Section 4.7 Duties of the President. . . . . . . . . . . . 7
Section 4.8 Duties of the Vice Presidents. . . . . . . . . 7
Section 4.9 Duties of the Secretary. . . . . . . . . . . . 7
Section 4.10 Duties of the Controller. . . . . . . . . . . 7
Section 4.11 Employee Bonds. . . . . . . . . . . . . . . . 7
ARTICLE 5
CAPITAL STOCK. . . . . . . . . 8
Section 5.1 Certificates of Stock. . . . . . . . . . . . . 8
Section 5.2 Signatures.. . . . . . . . . . . . . . . . . . 8
Section 5.3 Lost, Stolen or Destroyed Certificates.. . . . 8
Section 5.4 Transfer of Stock. . . . . . . . . . . . . . . 8
Section 5.5 Record Date. . . . . . . . . . . . . . . . . . 8
<PAGE>
Section 5.6 Registered Stockholders. . . . . . . . . . . . 9
ARTICLE 6
INDEMNIFICATION . . . . . . . . 9
Section 6.1 Actions Against Officers and Directors . . . . 9
Section 6.2 Insurance. . . . . . . . . . . . . . . . . . . 9
ARTICLE 7
GENERAL PROVISIONS. . . . . . . . 9
Section 7.1 Dividends. . . . . . . . . . . . . . . . . . . 9
Section 7.2 Reserves.. . . . . . . . . . . . . . . . . . . 10
Section 7.3 Checks.. . . . . . . . . . . . . . . . . . . . 10
Section 7.4 Fiscal Year. . . . . . . . . . . . . . . . . . 10
Section 7.5 Seal.. . . . . . . . . . . . . . . . . . . . . 10
Section 7.6 Offices. . . . . . . . . . . . . . . . . . . . 10
ARTICLE 8
AMENDMENTS. . . . . . . . . . 10
Section 8.1 Amendments.. . . . . . . . . . . . . . . . . . 10
<PAGE> <PAGE>
BY-LAWS
ARTICLE 1
STOCKHOLDERS
Section 1.1 Annual Meetings. The annual meeting of
the Stockholders of the Company for the election of directors and
for the transaction of such other business as properly may come
before such meeting shall be held at such place either within or
without the State of Delaware and at 10:00 A.M. local time on the
fourth Tuesday in March (or, if such is a legal holiday, then on
the next succeeding business day), or at such other time and date
as shall be fixed from time to time by resolution of the Board of
Directors and as set forth in the notice of the meeting. The
Chairman of the Board or, in his absence, the President, shall
determine the purpose or purposes and the agenda of and order of
business at all regular and special meetings called by the Board
and of any committee on which he serves.
Section 1.2 Special Meetings. Special meetings of
the stockholders many time by the President (or, in the absence
or disability of the President, by any Vice President), or by the
Board of Directors, and may be called by one-fourth of the shares
of stock of the Company issued and outstanding and entitled to
vote at such meeting. Any such request by stockholders shall
state the purpose or purposes of the proposed meeting. Such
special meetings of the stockholders shall be held at such
places, within or without the State of Delaware, as shall be
specified in the respective notices or waivers of notice.
Section 1.3 Notice of Meetings. The Secretary or
any Assistant Secretary shall cause notice of the time, place and
purpose or purposes of each meeting of the stockholders (such
notice to contain the name of the person or persons calling the
meeting, unless such meeting is the annual meeting of the
stockholders) to be mailed, not less than ten but not more than
sixty days prior to the meeting, to each stockholder of record
entitled to vote at his post-office address as the same appears
on the books of the Company at the time of such mailing. Such
further notice shall be given as may be required by law. Notice
of any meeting of stockholders need not be given to any
stockholder who shall sign a waiver of such notice in writing,
whether before or after the time of such meeting. Attendance of
any stockholder at any meeting in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of
notice of such meeting, shall constitute a waiver of notice by
him. Notice of any adjourned meeting of the stockholders of the
Company need not be given.
Section 1.4 Business Transacted at Special Meetings
of Stockholders. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the
notice thereof.
<PAGE>
Section 1.5 Quorum. Except as at the time otherwise
required by statute or by the Certificate of Incorporation, the
pres- ence at any stockholders meeting, in person or by proxy, of
a majority of the shares of stock then issued and outstanding and
enti- tled to vote at the meeting, shall be necessary and
sufficient to constitute a quorum for the transaction of
business.
Section 1.6 Consent of Stockholders in Lieu of
Meeting. To the extent permitted by any statute at the time in
force, whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken for or in connection with any
corporate action, by any statute, by the Certificate of
Incorporation or by these By-Laws, the meeting and vote of
stockholders may be dispensed with if the holders of outstanding
stock 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
shall consent in writing to such corporate action being taken.
Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing.
Section 1.7 Approval or Ratification by
Stockholders. The board of directors in its discretion may
submit any act, transaction or contract for approval or
ratification at any annual meeting of the stockholders, or at any
special meeting of the stockholders called for the purpose of
considering any such act, transaction or contract. Any act,
transaction or contract that shall be approved or be ratified by
the vote of the stockholders holding a majority in voting power
of the issued and outstanding shares of the capital stock of the
Company present in person or by proxy at such meeting and
entitled to vote thereat on such matter (provided that a quorum
shall be present) shall be as valid and as binding upon the
Company and upon all the stockholders as if it had been approved
or ratified by every stockholder of the Company.
ARTICLE 2
BOARD OF DIRECTORS
Section 2.1 General Powers. The property, affairs
and business of the Company shall be managed by the Board of
Directors. Each Director shall be at least eighteen years of
age, and each Director shall be a stockholder; provided,
however, that existing Directors shall have the power to waive
this requirement in circumstances which they deem, in their
discretion, to be appropriate. The Board of Directors may
exercise all the powers of the Company, whether derived from law
or the Certificate of Incorporation, except such powers as are,
by statute, by the Certificate of Incorporation or by these
By-Laws, vested solely in the stockholders of the Company.
<PAGE>
Section 2.2 Number and Term of Office. The Board of
Directors shall consist of at least one and not more than seven
Direc- tors, such number to be fixed from time to time by
resolution of the Board of Directors. The initial Board of
Directors shall consist of one (1) Director. Each Director
(whenever elected) shall hold office until his successor shall
have been elected and shall qualify or until he shall have
resigned in the manner provided in Section 2.8, or shall have
been removed in the manner provided in Section 2.9.
Section 2.3 Election of Directors. The Directors
elected by the Incorporator shall hold office until the first
annual meeting of stockholders, and until their successors shall
have been elected and qualified. Commencing with the first
annual meeting of stockholders, except as otherwise provided in
Sections 2.9 and 2.10, the Directors shall be elected annually at
the annual meeting of the stockholders. In the event of the
failure to elect Directors at an annual meeting of the
stockholders, then Directors may be elected at any regular or
special meeting of stockholders entitled to vote for the election
of Directors provided that notice of such meeting shall contain
mention of such purpose. At each meeting of the stockholders for
the election of Directors, provided a quorum is present, the
Directors shall be chosen and elected by a plurality of the votes
validly cast at such election.
Section 2.4 Annual and Regular Meetings. The annual
meeting of the Board of Directors for the choosing of officers
and for the transaction of such other business as may come before
the meeting shall be held in each year as soon as possible after
the annual meeting of the stockholders at the place of such
annual meeting of the stockholders, and notice of such annual
meeting of the Board of Directors shall not be required to be
given. The Board of Directors from time to time may provide by
resolution for the holding of regular meetings and fix the time
and place (which may be within or outside the State of Delaware)
thereof. Notice of such regular meetings need not be given;
provided, however, that in case the Board of Directors shall fix
or change the time or place of regular meetings, notice of such
action shall be mailed promptly to each Director who shall not
have been present at the meeting at which such action was taken.
Section 2.5 Special Meetings; Notice. Special
meetings of the Board of Directors shall be held whenever called
by a majority of the Board of Directors, by the President (or, in
the absence or disability of the President, by any Vice
President), or by any two Directors, at such time and place
(which may be within or outside of the State of Delaware) as may
be specified in the respective notices or waivers of notice
thereof. Neither the business to be transacted at nor the
purpose of any special meeting need be specified in the waiver of
notice of such meeting. Special meetings of the Board of
Directors may be called on one day's notice to each Director,
<PAGE>
personally or by telephone, telegram or telecopier, or on two
days' notice by mail. Notice of any special meeting need not be
given to any Director who shall be present at such meeting, and
any business may be transacted thereat. No notice need be given
of any adjourned meeting.
Section 2.6 Quorum. At all meetings of the Board of
Directors, the presence of a majority of the total number of
Directors shall be necessary and sufficient to constitute a
quorum for the transaction of business. Except when otherwise
required by statute, the act of a majority of the Directors
present at any meeting at which a quorum is present shall be the
act of the Board of Directors. In the absence of a quorum, a
majority of the Directors present may adjourn the meeting for
time to time, until a quorum shall be present.
Section 2.7 Telephone Meetings; Action Without a
Meeting. Any one or more members of the Board or any Committee
thereof may participate in a meeting of the Board or Committee by
means of a conference telephone or any means of communication by
which all persons participating in the meeting can hear each
other at the same time, and participation at such a meeting shall
constitute presence in person at such meeting for all purposes.
Any action required or permitted to be taken at any meeting of
the Board of Directors or Committee may be taken without a
meeting, if written consents thereto are signed by all members of
the Board or Committee, as the case may be, and such written
consents are filed with the minutes of proceedings of the Board
or Committee.
Section 2.8 Resignations. Any Director may resign
at any time by delivering a written resignation to the Company.
Unless otherwise specified therein, such resignation shall take
effect upon receipt thereof.
Section 2.9 Removal of Directors. Except as the
stockhold- ers may otherwise agree, any Director may be removed
at any time for cause upon the affirmative vote of the holders of
majority of the outstanding shares of stock of the Company
entitled to vote for the election of such Director, held at a
special meeting of such stockholders called for the purpose.
Except as the stockholders may otherwise agree, any vacancy in
the Board of Directors caused by any such removal may be filled
at such meeting by the stockholders entitled to vote for the
election of the Director so removed. Except as the stockholders
may otherwise agree, if such stockholders do not fill such
vacancy at such meeting, such vacancy may be filled in the manner
provided in Section 2.10.
Section 2.10 Vacancies and Newly Created
Directorships. If any vacancies shall occur in the Board of
Directors, by reason of death, resignation, removal (for or
without cause) or otherwise, or if the authorized number of
<PAGE>
Directors shall be increased, the Directors then in office shall
continue to act, and, except as the stockholders may otherwise
agree, such vacancies may be filled by a majority of the
Directors then in office, though less than a quorum, and the
Directors so chosen shall hold office until the next annual
election and until their successors are duly elected and
qualified, unless sooner displaced. Any such vacancies or newly
created Director- ships may also be filled by the stockholders in
accordance with the provisions of Section 2.9.
Section 2.11 Compensation. The amount, if any,
which each Director shall be entitled to receive as compensation
for his services as such shall be fixed from time to time by
resolution of the Board of Directors.
ARTICLE 3
COMMITTEES
Section 3.1 How Constituted. The Board of
Directors, by resolution or resolutions adopted by a majority of
the whole Board of Directors, may designate an Executive
Committee and/or one or more other Committees, each such
Committee to consist of such number of Directors as from time to
time shall be fixed by resolution or resolu- tions similarly
passed. The Board of Directors shall designate the Chairman of
each such committee. Thereafter, members (and alternate members,
if any) of each such Committee shall be designated annually, in
like manner, at any regular or special meeting of the Board of
Directors; provided, however, that any such Committee, from time
to time, may be abolished by resolution or resolutions similarly
passed, and may be re-designated in like manner. Each member
(and each such alternate member) of any such Committee shall hold
office until his successor shall have been designated or until he
shall cease to be a Director, or until his death, or until he
shall have resigned in the manner provided in Section 2.8, or
shall have been removed in the manner provided in Section 2.9.
Section 3.2 Powers. Each Committee shall have and
may exercise such powers of the Board as provided by resolution
or resolu- tions passed to the extent permitted by law. Any such
Committee may be granted power to authorize the seal of the
Company to be affixed to any or all papers which may require it.
Section 3.3 Proceedings. Subject to the provisions
of Section 2.7, each such Committee may fix its own rules of
procedure and may meet at any such place or places (within or
outside the State of Delaware) at such time or times and upon
such notice (or without notice) as it shall determine from time
to time. It shall keep a record of its proceedings and shall
report such proceedings to the Board of Directors at a meeting of
the Board of Directors when required.
<PAGE>
Section 3.4 Quorum and Manner of Acting; Telephone
Meetings. Except as may be otherwise provided in the resolution
designating any such Committee, at all meetings of any such
Committee the presence of members (or alternate members, if any)
consisting of a majority of the total authorized membership of
such Committee shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the act of the
majority of the members (or such alternates) present at any
meeting at which a quorum is present shall be the act of such
Committee. In the absence or disqualification of any member or
alternate member of such Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in
the place of any such absent or disqualified member. The members
(or such alternates) of any such Committee shall act only as a
Committee, and individual members (or such alternates) thereof
shall have no power as such. Telephonic meetings may be held as
provided in Section 2.7.
Section 3.5 Resignation. Any member (and any
alternate member) of any such Committee may resign at any time by
delivering a written resignation to either the President, a Vice
President, the Secretary or an Assistant Secretary. Unless
otherwise specified therein, such resignation shall take effect
upon receipt thereof.
Section 3.6 Removal. Except as the stockholders may
otherwise agree, any member (and any alternate member) of any
such Committee may be removed at any time, either for or without
cause, by resolution adopted by the Board of Directors.
Section 3.7 Vacancies. If any vacancy shall occur
in any such Committee, by reason of disqualification, death,
resignation, removal or otherwise, the remaining members (and
such alternate members) shall continue to act and any such
vacancy may, except as the stockholders may otherwise agree, be
filled at any meeting of the Board of Directors by resolution
adopted by the Board of Directors.
<PAGE> <PAGE>
ARTICLE 4
OFFICERS
Section 4.1 Number. The officers of the Company
shall be chosen by the Board of Directors and may be a President,
a Vice Presi- dent, a Secretary and a Controller, who shall hold
office until their successors are chosen and qualify. The Board
of Directors may also choose one or more Assistant Vice
Presidents, Assistant Secretaries and Assistant Controllers. Any
number of offices may be held by the same person, but no officer
may execute, acknowledge or verify any instru- ment in more than
one capacity if such instrument is required by law, by the
Certificate of Incorporation, or by these By-laws to be execut-
ed, acknowledged, or verified by two or more officers, and the
President (unless he shall be absent or unavailable, in which
case the Controller) must be one of such executing, acknowledging
or verifying officers.
Section 4.2 Election. The Directors elected by the
Incor- porator may elect a President, one or more Vice
Presidents, one or more Assistant Vice Presidents, a Secretary,
an Assistant Secretary, and a Controller. Thereafter, the Board
of Directors at its first meeting of stockholders shall elecne or
more Vice Presidents, one or more Assistant Vice Presidents, a
Secretary, an Assistant Secretary, and a Controller. Any officer
so elected shall hold office for the term for which he is elected
and until a successor is elected, subject to earlier termination
due to removal or resignation.
Section 4.3 Additional Officers. The Board of
Directors may appoint such other officers and agents as it shall
deem necessary who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
Section 4.4 Salaries. The salaries of all officers
and agents of the Company shall be fixed by the Board of
Directors.
Section 4.5 Resignations. Any officer may resign at
any time by delivering a written resignation to the Company.
Unless other- wise specified therein, such resignation shall take
effect upon receipt thereof.
Section 4.6 Removal and Vacancies. Except as the
stock- holders may otherwise agree, any officer elected or
appointed by the Board of Directors may be removed at any time
either with or without cause by the affirmative vote of a
majority of the Board of Directors. Except as the stockholders
may otherwise agree, any vacancy occurring in any office of the
Company shall be filled by the Board of Directors.
Section 4.7 Duties of the President. The President
shall be the chief executive officer of the Company. He shall,
<PAGE>
when present, preside at all meetings of the stockholders,
Directors, and all committees on which he serves, shall have the
general and executive management and control of the business of
the Company, and shall see that all orders and votes of the Board
are carried into effect, except where and to the extent that the
execution of such orders and votes of the Board and management of
the business of the Company are expressly delegated by the Board
of Directors to some other officer or agent, or a Committee, of
the Company. He shall execute bonds, mortgages, notes,
contracts, agreements, and other contracts, obligations or
instruments in the name of the Company, may countersign and
deliver all certificates for shares of the capital stock of the
Company and other documents requiring a seal under the seal of
the Company, 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 another officer or agent of the Company.
Section 4.8 Duties of the Vice Presidents. In the
event of the absence or disability of the President, the first
Vice President shall perform all the duties of the President, and
when so acting shall have all the powers of, and be subject to
all the restrictions upon, the President. Except where by law
the signature of the President is required, the Vice President
shall possess the same power as the President to sign all
certificates, contracts, obligations and other instruments of the
Company; provided the signature of the Controller of the Company
shall also be obtained. The Vice President shall perform such
other duties and may exercise such other powers as from time to
time may be assigned to him by these By-Laws or by the Board of
Directors or by the President.
Section 4.9 Duties of the Secretary. The Secretary
shall, if present, act as Secretary of, and keep the minutes of,
all the proceedings of the meetings of the stockholders and of
the Board of Directors, and of any committee of the Board of
Directors in one or more books to be kept for that purpose; shall
perform such other duties as shall be assigned to him by the
President or the Board of Directors; and, in general, shall
perform all duties incident to the office of Secretary.
Section 4.10 Duties of the Controller. The
Controller shall keep or cause to be kept full and accurate
records of all receipts and disbursements in the books of the
Company and shall have the care and custody of all funds and
securities of the Company. He shall disburse the funds of the
Company 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 Controller, and shall
perform such other duties as may be assigned to him by the Presi-
dent or the Board of Directors. He shall prepare or cause to be
prepared appropriate financial statements for the Company. The
Controller shall also perform such other duties as may be
<PAGE>
assigned to him by the President or the Board of Directors; and,
in general, shall perform all duties incident to the office of
Controller. Except where by law the signature of the President
is required, the Controller shall possess the same power as the
President to sign all certificates, contracts, obligations and
other instruments of the Company; provided the signature of any
Vice President of the Company shall also be obtained.
Section 4.11 Employee Bonds. The Board of Directors
may require the Controller, the Assistant Controllers and any
other officers, agents or employees of the Company to give bond
for the faithful discharge of their duties, in such sum and of
such character as the Board may from time to time prescribe.
ARTICLE 5
CAPITAL STOCK
Section 5.1 Certificates of Stock. Every holder of
stock in the Company shall be entitled to have a certificate
signed by, or in the name of the Company by, the President or
Vice President, and by the Controller or an Assistant Controller,
or the Secretary or an Assistant Secretary of the Company,
certifying the number of shares owned by him in the Company.
Each such certificate shall state upon the face thereof: (i)
that the Company is formed under the laws of Delaware, (ii) the
name of the person or persons to whom the stock is issued, and
(iii) the number and class of shares, and the designation of the
series, if any, which such certificate represents.
Section 5.2 Signatures. Any or all of the signatures
on such certificate may be a facsimile if the certificate is
countersigned by a transfer agent or registered by a registrar
other than the Company itself or its employee. 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 may be issued by the
Company with the same effect as if he were such officer, trans-
fer agent or registrar at the date of issue.
Section 5.3 Lost, Stolen or Destroyed Certificates.
The Board of Directors may direct that a new certificate or
certificates be issued in place of any certificate or
certificates theretofore issued by the Company alleged to have
been stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certifi- cate of stock to be lost
or destroyed. When authorizing such issue of a new certificate
or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the Company a
<PAGE>
bond in such sum as it may direct as indemnity against any claim
that may be made against the Company with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 5.4 Transfer of Stock. Except as the
stockholders may otherwise agree, upon surrender to the Company
or the transfer agent of the Company of a certificate for shares
duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the
Company to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction
upon its books.
Section 5.5 Record Date. In order to determine the
stock- holders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, 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 change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may
fix in advance a record date, which shall not be more than fifty
nor less than ten days before the date of such meeting, or other
corporate action or event to which it relates. If no record date
is fixed, the record date shall be that date prescribed by
statute as then in effect.
Section 5.6 Registered Stockholders. Prior to due
present- ment for registration of transfer of a security in
registered form, the Company may treat the registered owner as
the person exclusively entitled to vote, to receive
notifications, and otherwise to exercise all the rights and
powers of an owner.
ARTICLE 6
INDEMNIFICATION
Section 6.1 Actions Against Officers and Directors.
The Company shall indemnify to the full extent now or hereafter
authorized or permitted by the Delaware General Corporation Law
(or any successor or related statute or statutes and whether or
not specifically required, permitted, or authorized thereby) any
person made, or threat- ened to be made, a party to an action,
suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that he is or was a director
or officer of the Company or is or was serving as an officer or
director of any other corporation at the request of the Company.
The indemnification provided hereby shall continue as to a person
who has ceased to be a director or officer, inure to the benefit
of his heirs, executors and administrators, and shall not be
deemed exclusive of any other rights provided by any law,
agreement, vote of stockholders or directors or otherwise.
<PAGE>
Section 6.2 Insurance. The Company may purchase and
maintain insurance on behalf of any such person against any
liability (including legal expenses) asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the Company would have the power
to indemnify him against such liability under the Delaware
General Corporation Law or any successor or related statute or
statutes.
ARTICLE 7
GENERAL PROVISIONS
Section 7.1 Dividends. Dividends upon the stock of
the Company, subject to the provisions of the Certificate 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, bonds, in property, or in shares of stock,
subject to provisions of the Certificate of Incorporation.
Section 7.2 Reserves. Before payment of any
dividend, there may be set aside out of any funds of the Company
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
Company, or for such other purposes as the Directors shall think
conducive to the interest of the Company, and the Directors may
modify or abolish any such reserve.
Section 7.3 Checks. All checks or demands for money
and notes of the Company shall be signed by such officer or
officers or such other person or persons as the Board of
Directors may from time to time designate.
Section 7.4 Fiscal Year. The fiscal year of the
company shall be fixed by resolution of the Board of Directors.
Section 7.5 Seal. The corporate seal shall have
inscribed thereon the name of the Company, the year of its
incorporation, and the words "Corporate Seal, Delaware". The
seal may be used in causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Section 7.6 Offices. An office of the Company shall
be located at such place or places as the Board of Directors
shall desig- nate from time to time. The Company may have
offices at such places both within or outside the State of
Delaware as the Board of Directors may from time to time
determine or the business of the Company may require.
<PAGE>
ARTICLE 8
AMENDMENTS
Section 8.1 Amendments. Except as the stockholders
may otherwise agree, these By-Laws may be altered, amended or
repealed by a majority of the stockholders of the Company at any
regular meeting of the stockholders or at any special meeting of
the stockholders if notice of such alteration or repeal be
contained in the notice of such special meeting. Except as the
stockholders may otherwise agree, these By-Laws may likewise be
amended by a majority vote of all Directors at any regular or
special meeting of the Board of Directors if notice of such
alteration or repeal be contained in the notice of such special
meeting.
Exhibit 10.01 Stock Option Plan
JYRA RESEARCH INC. STOCK OPTION PLAN Dated July 20, 1996
1. Purpose. The purpose of this Plan is to provide financial
incen- tives to Key Employees of Jyra Research Inc. whose
entrepreneurial and management talents and commitments are
essential for the continued growth and expansion of that
corporation's business. It is intended that both options which
qualify as incentive stock options within the meaning of Section
422A of the Internal Revenue Code ("Incentive Stock Options") and
options which do not qualify as incentive stock options
("Non-Incentive Stock Options") may be granted under this Plan.
2. Definitions. For purposes of this Plan:
a. Board means the board of directors of the
Corporation.
b. Code means the Internal Revenue Code of 1986, as
amended.
c. Committee means a group of persons appointed by, and
serving at the pleasure of, the Board, whose purpose is to
administer the Plan and perform the functions set forth herein
for the Committee.
d. Common Stock means the Common Stock, par value $0.001
per share, of the Corporation, and any other stock or securities
resulting from the adjustment thereof or substitution therefor as
described in paragraph X below.
e. Corporation means Jyra Research Inc.
f. Disability means the condition which results when an
individual has become permanently and totally disabled within the
meaning of Section 105(d)(4) of the Code.
g. Key Employee means an officer or a director of the
Corpora- tion or any Subsidiary thereof, and such other key
<PAGE>
employees of the Corporation or any Subsidiary thereof designated
by the Committee as being eligible to receive options under the
Plan.
h. Optionee means a Key Employee to whom an option has
been granted under this Plan.
i. Plan means the Jyra Research Inc. Stock Option Plan
as set forth in this instrument and as it may be amended from
time to time.
j. Stock Option Agreement (or the "Agreement") means the
written agreement between a Key Employee and the Corporation
evidencing the grant of an option under the Plan and setting
forth the terms and conditions of that option.
k. Subsidiary means a subsidiary corporation of the
Corpora- tion within the meaning of Section 425(f) of the Code.
l. Successor Corporation means a corporation, or a
subsidiary of such corporation, which issues or assumes a stock
option in a transaction to which Section 425(a) of the Code
applies.
m. Ten-Percent Stockholder means a Key Employee who, at
the time an option is to granted to such employee, owns stock
possessing more than ten percent of the total combined voting
power of all classes of stock of the Corporation, or of a
Subsidiary within the meaning of Section 422A(b)(6) of the Code.
3. Administration. The Plan shall be administered by the
Committee, which shall keep minutes of its meetings. The
Committee shall have all of the powers necessary to enable it to
carry out its duties under the Plan properly, including the power
and duty to construe and interpret the Plan and to determine all
questions arising under it. The Committee's interpretations and
determinations shall be conclusive and binding upon all persons.
It may also establish, from time to time, such regulations,
provisions, procedures and conditions regarding the options and
granting of options which in its opinion may be advisable in
administering the Plan. A majority of the Committee shall
constitute a quorum, and the acts of a majority of the members
present at any meeting at which there is a quorum, or acts
approved in writing by a majority of its members, shall be acts
of the Committee.
4. Eligibility. Only Key Employees shall be eligible to be
granted options to purchase Common Stock under the Plan. The
Committee shall, from time to time, (i) determine those Key
Employees to whom stock options shall be granted; (ii) determine
the number of shares and conditions of each such option; and
(iii) grant such options.
5. Shares Available for Option. The Board shall cause to be
made available for the purposes of the Plan a total of 300,000
shares of Common Stock (or the number and kind of shares of stock
or other securities which, in accordance with paragraph X below,
are substituted for those 300,000 shares or to which those shares
are adjusted). The aggregate fair market value (as fixed at the
<PAGE>
time the option is grant- ed) of the Common Stock for which a Key
Employee may be granted Incen- tive Stock Options in any calendar
year (under the Plan and all other plans of the Corporation, or
those of any Subsidiary corporations required to be aggregated
for this purpose under the provisions of Section 422A(b)(8) of
the Code), shall not exceed $100,000 plus the "unused limit
carryover" to that calendar year within the meaning of Section
422A(b)-(8) and 422A(c)(4) of the Code. In the event that an
option granted under the Plan to any Key Employee expires or is
terminated unexercised as to any shares covered by the option,
those shares shall thereafter be available for the granting of
future options under the Plan.
6. Grant of Options. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Key
Employees to whom options are to be awarded and to determine the
number of shares to be covered by each option, whether an option
is intended to be an Incentive Stock Option or a Non-Incentive
Stock Option and the other terms thereof; provided, however, that
no Incentive Stock Option shall be awarded to any Key Employee
who is not an employee of the Corporation at the time the option
is granted. The terms of each option need not be the same, but
may vary for options granted under the Plan at the same time or
from time to time. The Committee may also grant more than one
option to a given Key Employee during the term of the Plan,
either in addition to, or in substitution for, one or more
options previously granted that Key Employee.
7. Option Price. The Committee shall establish the option
price at the time an option is granted. The option price for
shares of Common Stock subject to an Incentive Stock Option shall
not be less than 100% of the fair market value of such shares at
the time the option is granted; provided, however, that the
option price for shares of Common Stock subject to an Incentive
Stock Option shall be at least 110% of the fair market value of
such shares at the time such option is grant- ed, if the option
is granted to a Ten-Percent Stockholder.
8. Exercise of Options.
a. Each option granted under the Plan shall be
exercisable at such time, in such amount and upon such conditions
as may be determined by the Committee at the time of the granting
of the option and set forth in the Stock Option Agreement. In
the case of an option not immediately exercisable in full, the
Committee may, from time to time and in its sole discretion,
accelerate the time at which all or any part thereof may be
exercised.
b. The Committee shall determine the term of each option
at the time it is granted. However, (i) no Incentive Stock
Option granted under the Plan shall be exercisable more than ten
years after the date it is granted to a Key Employee other than a
Ten-Percent Stockholder; and (ii) no Incentive Stock Option
<PAGE>
granted under the Plan shall be exercisable more than five years
after the date it is granted to a Key Employee who is a
Ten-Percent Stockholder. Not less than 100 shares may be
purchased at any one time upon the exercise of an option, unless
the number of shares so purchased constitutes the total number
then exercisable under the option.
c. Options granted under the Plan shall not be
transferable by the Optionee except by will, or if the Optionee
dies interstate, by the laws of descent and distribution of the
state of the Optionee's domicile at the time of his death.
During an Optionee's lifetime, options granted under the Plan are
exercisable only by the Optionee.
d. Subject to the terms and conditions and within the
limita- tions of the Plan, and, if applicable, Section 422A of
the Code, the Committee may modify, extend, replace or renew
outstanding options granted under the Plan, or accept the
surrender of outstanding options (to the extent they have not yet
been exercised) and grant new options in substitution for them.
Notwithstanding the foregoing, however, other than modifica-
tions made pursuant to paragraph X below, no modification of an
option shall alter or impair any rights or obligations under any
option granted under the Plan without the affected Optionee's
consent.
e. In the event that the employment of an Optionee shall
be terminated (other than by reason of his death or Disability),
such option may, except as otherwise provided in the Stock Option
Agreement or subparagraph X hereof, be exercised (to the extent
exercisable at the time of the termination of employment of the
Key Employee) at any time within three months (or such longer
period as determined pursuant to paragraph X below) after such
termination of employment, but in no event after the expiration
of the term of the option. Thereafter, such option shall be
deemed terminated. In the event that the employment of an
Optionee shall be terminated by reason of his death or
Disability, such option may, except as otherwise provided in the
Stock Option Agreement or subparagraph X hereof be exercised (to
the extent exercis- able on the date of the Key Employee's death
or Disability) at any time within one year (or such longer period
as determined pursuant to paragraph X below) after the date of
such death or Disability, but in no event after the expiration of
the term of the option. Thereafter, such option shall be deemed
terminated. In the event of an Optionee's death, such Optionee's
options shall be exercisable, to the extent provided in the Plan
or under the Stock Option Agreement, by the legatee or legatees
under such Optionee's will, or by such Optionee's personal
representatives or distributees.
f. Each option shall be confirmed by a Stock Option
Agreement which shall be executed by the Corporation and by the
Optionee.
<PAGE>
g. The option price for each share of Common Stock
purchased pursuant to the exercise of an option shall be paid in
full at the time the option is exercised and shall be paid in
cash. Each share to be issued upon such exercise shall be issued
and delivered to the person entitled to receive it at the
principal office of the Corporation.
h. To the extent that an option is not exercised within
the period of time prescribed by the Plan and the Stock Option
Agreement confirming the option, or, as provided for in the Plan
or the Stock Option Agreement, the option is terminated, the
option shall lapse and all rights of the Optionee with respect to
it shall terminate.
i. Nothing in the Plan or in the Stock Option Agreement
shall confer on any employee any right to continue in the employ
of the Corporation or any Subsidiary or Successor Corporation;
affect the right of the Corporation or any Subsidiary or
Successor Corporation to terminate such employee's employment at
any time; or be deemed a waiver or modification of any provision
contained in any agreement between the employee and the
Corporation or any Subsidiary or successor corporation. The
Stock Option Agreement may contain such provisions as the
Committee shall approve with reference to the effect of approved
leaves of absence.
9. Changes in Common Stock.
a. In the event that the outstanding shares of the
Common Stock are changed into or exchanged for a different number
or kind of shares of stock or other securities of the Corporation
or of another corporation or entity, whether through
reorganization, recapitalization, stock dividend, stock split-up,
combination of shares, merger, consolidation, or otherwise, the
Committee shall make appropriate adjustments to the maximum
number and class of shares of stock as to which options may be
granted under the Plan and the number and class of shares of
stock with respect to which options have been granted under the
Plan and the option price for such shares. The Committee's
adjust- ment shall be effective and binding for all purposes of
the Plan and each Stock Option Agreement entered into under the
Plan. No adjustment provided for in this paragraph X shall
require the Corporation or such other corporation or entity to
issue a fractional share, and the total adjustment with respect
to each Stock Option Agreement shall be limited accordingly.
b. Upon the effective date of any merger, consolidation,
reorganization, liquidation or sale of all or substantially all
of the assets of the Corporation (a "Terminating Event"), the
Plan and any unexercised options granted under the Plan shall
terminate unless provision shall be made in writing in connection
with such Terminating Event for the continuance of the Plan and
<PAGE>
for the assumption of such unexercised options by a successor
employer or parent or subsidiary thereof or for the substitution
for such unexercised options of new options covering shares of
such successor with appropriate adjustments as to number and kind
of shares and prices of shares subject to such new options. In
such event, the Plan and the unexercised options theretofore
granted or the new options substituted therefore shall continue
in the manner and under the terms provided in the Plan.
10. Amendment or Termination of Plan. The Board shall have the
right to amend, suspend or terminate the Plan at any time;
provided that, except as and to the extent authorized and
permitted by paragraph X above or paragraph X below, no amendment
shall be made which shall (i) increase the total number of shares
which may be issued and sold pursuant to the exercise of options
granted under the Plan, (ii) increase the total number of shares
which may be covered by any option or options to one individual,
(iii) extend the period for granting or exercising any option, or
(iv) change the class of employees eligible to receive options,
unless such amendment is made by or with the approval of the
shareholders of the Corporation. With the exception of any
amendment made pursuant to paragraph X below, the rights of an
Optionee under any option granted prior to an amendment,
suspension or termination of the Plan shall not be adversely
affected thereby except with the consent of the Optionee.
11. Indemnification of Stock Option Committee. The members of
the Committee shall be indemnified by the Corporation for any
acts or omissions as a member of the Committee to the full extent
permitted under applicable law, including the Delaware General
Corporation Law, as amended from time to time.
12. Compliance with Law and Other Conditions. All options and
Stock Option Agreements shall be governed by the laws of the
State of Dela- ware to the extent not superseded by the laws of
the United States. No shares shall be issued pursuant to the
exercise of any option granted under the Plan prior to compliance
by the Corporation or any successor thereto, to the satisfaction
of their counsel, with any applicable laws. The Stock Option
Agreements and amendments thereto shall set forth any
requirements for, or restriction of, exercise that the Committee
deems appropriate to comply with any securities or other laws or
regulations or exemption therefrom, including but not limited to,
restrictions as to the times permitted for exercise. In the
event that the Committee does restrict such times, it may extend
the three month and one year periods stated in subparagraph X
above, should the end of such periods fail to occur during a time
in which the exercise is permitted, provided that in no event may
such period be extended beyond the term provided for in
subparagraph X above.
13. Good Faith Attempts. To the extent consistent with Section
422A(c)(1) of the Code and regulations issued by the Secretary of
the Treasury for Incentive Stock Options, (i) the requirement set
<PAGE>
forth in paragraph X above that the option price of an Incentive
Stock Option granted under the Plan be not less than 100% of the
fair market value of the Common Stock subject to the option at
the time it is granted to a Key Employee other than a Ten-Percent
Stockholder, and not less than 110% of the fair market value of
the Common Stock subject to the option at the time it is granted
to a Ten-Percent Shareholder, and (ii) the limitation on the
aggregate fair market value of the Common Stock for which a Key
Employee may be granted Incentive Stock Options as set forth in
para- graph X above, shall be considered to have been met if the
Committee has made a good faith attempt, within the meaning of
Section 4221(c)(1).
14. Construction. It is intended that all Incentive Stock
Options granted under the Plan shall qualify under Section 422A
of the Code. To that end, the Plan and all Stock option
Agreements providing for Incentive Stock Options entered into
pursuant to it shall be construed and interpreted so that all
Incentive Stock Options granted under the Plan meet the
requirements of Section 422A of the Code, unless the terms and
provi- sions of the instrument clearly and unequivocally require
a contrary interpretation or construction.
15. Effective Date and Duration of Plan. The effective date of
the Plan shall be the date of its adoption by the Board. No
options may be granted under the Plan after the date ten years
from the date the Plan is adopted by the Board.
JYRA RESEARCH INC.
___________________
Paul Robinson, Director
___________________
Peter Lynch, Director
___________________
Roderick Adams, Director
21.01 Subsidiaries of the Registrant.
The only subsidiary of the Registrant is Jyra Research Ltd., a
corporation organized under the laws of the United Kingdom.
CONSENT AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
<PAGE>
We hereby consent to the use in the Registration Statement of our
report dated July 23, 1996, relating to the financial statements
of Jyra Research Inc., and to the reference to our firm under the
caption "Experts" in the Prospectus.
Faw, Casson & Co. LLP
Dover, Delaware
December 23, 1996
<PAGE>
