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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
to
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
VISCORP
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Nevada 88-0101953
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
111 North Canal Street, Suite 933 60606
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Chicago, Illinois (Zip Code)
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(Address of principal executive offices)
Issuer's telephone number, (312) 655-0903
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which each
to be so registered class is to be registered
None None
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Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.01 par value
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(Title of class)
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(Title of class)
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AN INVESTMENT IN THE COMPANY IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER THE RISK FACTORS INVOLVED IN AN
INVESTMENT IN THE COMPANY, INCLUDING THE FOLLOWING: (A) THAT THE COMPANY IS A
DEVELOPMENT STAGE COMPANY THAT HAS GENERATED NO CASH REVENUES SINCE ITS
INCEPTION, (B) THE COMPANY'S HISTORY OF LOSSES, (C) DOUBT AS TO WHETHER THE
COMPANY CAN CONTINUE AS A GOING CONCERN, (D) INTENSE COMPETITION IN THE INDUSTRY
IN WHICH THE COMPANY OPERATES, (E) VOLATILITY OF THE COMPANY'S STOCK PRICE AND
(F) THE UNCERTAINTY OF FUTURE FUNDING. PROSPECTIVE INVESTORS SHOULD CAREFULLY
READ EACH SECTION OF THIS REGISTRATION STATEMENT WHICH CONTAIN THESE AND OTHER
RISK FACTORS.
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ITEM 1. BUSINESS.
GENERAL
Visual Information Service Corp. ("VISC") was incorporated in Illinois in
May, 1990 and was founded to develop an electronic device capable of adding
modem, video data and telephone features to an ordinary television receiver over
a telephone line. On November 28, 1995, VISC merged into Global Telephone and
Communications, Inc. (GTCI), and pursuant to the merger each share of common
stock of VISC was exchanged for four shares of common stock of GTCI. Following
the merger, GTCI changed its name to Viscorp. As used herein, the Company
refers to Viscorp and its subsidiary VISC.
The Company continues to be in the development phase of operation. The
Company has developed two products -- the Universal Internet Television
Interface ("UITI") and the Electronic Device ("ED"). The Company is also
engaged in certain initial marketing efforts with respect to UITI and ED. Since
1990, the Company has generated losses as a result of significant expenditures
on research and development and substantial overhead expenses.
The Company has generated losses since its inception in May 1990 and cannot
currently generate sufficient revenues and cash flow from operations to meet its
business obligations. In prior years, the Company was able to raise capital by
issuing its Common Stock in private placements. The Company's future operations
are predicated on raising additional capital in debt or equity markets. Any
implementation of the commercialization of the UITI and ED is dependent on
obtaining additional financing that is necessary to achieve a level of sales
adequate to support the Company's operations.
PRODUCTS
The UITI is a set top device which is designed to give the home television
viewer access to the Internet, World Wide Web and other on-line services. The
ED is an enhanced set top device which, in addition to on-line services, will
feature capabilities such as telephone reception and dial-up, facsimile, pay-
per-view options and electronic mail. The UITI and ED are designed to be placed
next to or on top of a standard television set and connect directly to a
telephone jack either through a conventional telephone wire or through wireless
radio frequency connectivity. Through the use of specifically configured fonts,
the television set presents text
(2)
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and graphics that can be viewed at normal viewing distances. The UITI and ED
are equipped with a modem, video and audio circuitry, and a controller.
Extensive functions may also be controlled with an enhanced remote control.
In April, 1996, the Company entered into an agreement with Solectron France
S.A., a US-based manufacturing company listed on the New York Stock Exchange
("Solectron"), pursuant to which Solectron will produce the first 30 prototypes
of UITI at Solectron's facilities in France.
The Company conducted a field test of a preliminary prototype of the ED
with Booth Communications, a cable television system operator based in
Birmingham, Michigan. The ED was placed in the homes of approximately twenty
cable subscribers and connected to the existing cable set-top box to provide
access to the Internet, CompuServe and other services, including facsimile, TV-
based speaker phone, caller ID and pay-per-view ordering. Sigma Research
Management Group, an independent market-research firm, conducted a series of
quantitative and qualitative studies (including focus groups) of the
participating cable subscribers. The trial lasted approximately six months and
was concluded in March, 1996. The study concluded that some functions provided
by the ED may require some redesign, changes to the feature array and expansion
of capability. Technical and market-research results from this trial has been
incorporated into the Company's revised prototype design of the UITI.
Although the field test demonstrated the functionality of the Company's
products, there is no assurance that the Company will be able to successfully
manufacture or market the UITI and the ED.
PATENTS
The Company owns several patents covering the features of the UITI and the
ED, which expire commencing on March 7, 2012, assuming all maintenance fees are
paid. The Company relies on patents to protect its proprietary rights. The
Company's success will depend in part on its ability to obtain patent protection
for its products and to operate without infringing on the patent or other
proprietary rights of others. There can be no assurance that patent
applications filed by the Company will result in the issuance of patents or the
scope and breadth of those previously granted to the Company or that any patents
now or hereafter owned by the Company will afford protection against competitors
which develop similar technology or provide products with competitive advantages
to those designed by the Company. In addition, there can be no assurance that
any patents issued to the Company will be held valid if subsequently challenged
or that others will not claim rights in the patents and other proprietary
technology without violating any of the Company's proprietary rights. There can
be no assurance that others will not independently develop similar products,
duplicate the Company's products or design products that circumvent any patents
used by the Company. Moreover, in the absence of patent protection, the
Company's business may be adversely affected by competitors who independently
develop substantially equivalent or superior technology.
(3)
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LICENSES
In December 1995, the Company entered into an agreement with Amiga
Technologies GmbH, a German company ("Amiga"), for a nonexclusive,
nontransferable license to the Amiga computer operating system technology. The
initial term of the agreement expires December 26, 1998. Unless terminated, in
accordance with the terms of the agreement, the agreement is renewable for
subsequent three-year periods at the licensee's option. In January 1996, the
Company paid an initial royalty deposit of $450,000 to Amiga. The Company is
required to pay usage royalties as defined in the agreement. The Company
intends to use the Amiga operating system and chip sets in producing the UITI
and ED and also intends to license the Amiga technology to others. The Company
believes the Amiga operating system will enhance the operational capacity of the
UITI and ED. The Company has produced a prototype of the base board utilizing
the Amiga operating system and chip sets which boards will be used to produce
the UTI and the ED which is currently in the process of being tested.
In December 1994, the Company entered into a license agreement with NTN
Communications, Inc. ("NTN"). The initial term of the agreement expires
December 31, 2001. Unless terminated, in accordance with the terms of the
agreement, the agreement will be extended for a period of seven years. The
Company has a nonexclusive worldwide license to promote, market and develop an
on-line computer service, which will be provided by NTN, for use with the
Company's product. The technology of this service provides two-way interactive
computerized games that are broadcast to multiple locations, can be played by
multiple participants at each location and enables the retrieval and processing
of data entered by the participants. The Company is required to pay usage
royalties as defined in the agreement. The Company agreed to pay NTN $250,000
upon signing the agreement. To date, the Company has paid $200,000 of this
amount, with $50,000 due to NTN on August 31, 1996. The use of this license has
not yet generated any revenues for the Company.
In January 1995, the Company entered into a license agreement with Digital
Sciences, Inc. ("Digital") to license the ED technology and services. The
agreement with Digital ("Digital Agreement") grants to Digital an exclusive
license to use the ED technology and services solely in the health care industry
in the United States and Canada for a period of ten years. The Company received
on February 27, 1995 an initial license fee payable in the form of 250,000
shares of Digital valued at $629,688, which amount reflected a discount from the
trading price of the stock because the shares were restricted. In addition,
Digital is obligated to pay a license fee based on a percentage of gross
revenues derived from the use of the ED technology and services. The Company
did not receive any license fees from Digital in 1995, other than the initial
license fee, and there is no assurance that the Digital agreement will generate
license fees in the future.
OTHER MATERIAL AGREEMENTS
On July 18, 1996, the Company entered into an agreement ("Amiga Agreement")
to acquire all of the assets of Amiga. The Company is acquiring these assets
from the bankruptcy estate of Escom Beteiligungs GmbH (a former manufacturer and
distributor of IBM compatible computers throughout Europe). The purchase price
for all of the assets of Amiga is $20.0 million less certain administrative
costs associated with releasing the inventory to the Company,
(4)
<PAGE>
estimated to be approximately $1.3 million. The purchase price is payable in
three installments, with the first installment occurring 30 days after the
Company posts a bank guarantee for such payment, which guarantee must be secured
within 30 days of the date of the Amiga Agreement. The first payment of $10.0
million is due approximately 60 days from the date of the Amiga Agreement, with
additional payments of $5.0 million and $3.7 million to occur 60 and 90 days,
respectively, after posting such bank guarantee.
Amiga will be acquired by a newly formed Delaware corporation ("Acquisition
Corp.") which was formed expressly for the contemplated transaction. The
Company intends to establish an operating entity in Switzerland, which will
enter into a series of sales representation agreements with sales organizations
located throughout the European community.
Prior to the Company posting the bank guarantee for the purchase price,
Amiga is obligated to continue its ongoing operations, including the sale of
existing inventories. Any funds received by Amiga from sales between July 15,
1996 and date the Company posts the bank guarantee will be deposited in a bank
account which will be transferred to the Company as part of the purchase of the
Amiga assets. As of July 30, 1996, such sales totaled $743,202. Although the
Company is currently seeking the financing necessary to consummate this deal,
the Company has not obtained any commitments from lenders. There is no
assurance the Company will be able to obtain the necessary financing to
consummate this transaction with Amiga.
COMPETITION
The Company faces intense competition within the interactive television
("ITV") industry, an industry in the midst of a period of significant volatility
due the convergence of computing, telephony and television. Currently, there
are many companies developing, in various stages, systems similar to the
Company's products. Products or procedures may become commercially available
that are competitive with the Company's products. Most of the Company's
competitors have substantially longer operating histories and substantially
greater financial and managerial experience and resources. However, the Company
does not believe that any of these companies are currently developing products
with the same set of performance capabilities the Company expects to develop
with its products.
Competitors for the Company include the following: (i) television
manufacturers such as Sony Electronics Corp. and Philips Consumer Electronics
Co. -- often working in conjunction with computer companies -- that plan to
introduce Internet-access set-top devices and/or "smart" interactive TV sets;
(ii) computer companies such as Oracle Corp., IBM Corp., Sun Microsystems Inc.,
Netscape Communications Corp. and Apple Computer Inc. who have announced plans
to develop "network computers", which are stripped-down devices to be used in
place of an expensive hard drive on the home personal computer to provide access
to the Internet and e-mail; (iii) video game companies such as Sega Genesis,
Sony Electronics Corp., and Philips Consumer Electronics Co. that plan to
enhance their game machines with Internet access and on-line capabilities; (iv)
cable television set-top device manufacturers such as General Instrument and
Scientific Atlanta that are enhancing the overall performance capabilities of
their current analog and newer all-digital converter boxes; and (v) independent
companies like the Company.
(5)
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EMPLOYEES
In addition to its officers, the Company has eight employees in its office
in Chicago. The Company also routinely utilizes the services of consultants.
(6)
<PAGE>
ITEM 2. FINANCIAL INFORMATION.
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
the financial statements, related notes and other information included elsewhere
in this Registration Statement. The statement of operations data set forth
below for each of the years ended December 31, 1991, 1992, 1993, 1994 and 1995
are derived from financial statements of the Company that have been audited by
Blackman Kallick Bartelstein, LLP, independent auditors. The selected financial
data for the three months ended March 31, 1995 and 1996 are unaudited and
include, in the opinion of the Company, all adjustments, consisting of only
normal recurring accruals, that the Company considers necessary for a fair
presentation of its results for such periods.
<TABLE>
<CAPTION>
Three Months Ended March
Years Ended December 31, 31,
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1991 1992 1993 1994 1995 1995 1996
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<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Income 0 0 0 0 (629,688)(1) (629,688)(1) 0
Operating Expenses . . . . . .
Research and development . . 75,592 199,924 622,428 701,460 1,134,262 215,076 249,238
Travel and entertainment . . 11,633 53,233 122,840 194,162 620,012 134,213 105,075
Legal fees . . . . . . . . . 34,553 66,078 150,133 28,508 552,109 144,606 85,893
Consulting . . . . . . . . . 6,678 39,711 17,789 73,786 353,915 165,500 91,000
Other general and
administrative including
salaries . . . . . . . . . 117,357 239,085 335,170 316,448 562,191 132,104 212,982
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Total Operating
Expenses . . . . . . . . . 245,813 598,031 1,248,360 1,314,364 3,222,489 791,499 744,188
Operating Losses . . . . . . . 245,813 598,031 1,248,360 1,314,364 2,592,801 161,811 744,188
Other expense (income)
Interest expense - other
(stockholder debt) . . . . . 32,380 67,552 109,429 2,910 0 3,498
Interest expense - other . . 0 0 0 0 1,103 0 0
Interest income. . . . . . . 0 0 0 (4,095) (8,761) (1,685) (1,638)
Loss on disposal of
equipment. . . . . . . . . . 0 0 2,817 757 0 0 0
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Net loss . . . . . . . . . 278,193 665,583 1,360,606 1,311,026 2,588,053 160,126 746,048
Average shares outstanding . . 1,000 1,000 7,104,092 11,775,976 17,190,915 3,698,958 21,628,000
Loss per share . . . . . . . 278 666 .19 .11 .15 .04 .03
BALANCE SHEET DATA
Total assets . . . . . . . . . 46,246 29,492 16,982 664,328 1,258,853 6,948 693,445
Total liabilities. . . . . . . 424,807 1,073,636 1,622,532 170,576 552,217 418,071 658,573
Shareholders equity (deficit). (378,561) (1,044,144) (1,605,550) 493,752 706,636 11,687 519,963
</TABLE>
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(1) Represents the estimated market value of the 250,000 shares of Digital
received by the Company as the initial license fee under the Digital
License Agreement. See "Item 1. - Business - Licenses".
(7)
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The information in this section should be read together with the
consolidated financial statements and notes thereto that are included elsewhere
in this Registration Statement.
The Company has incurred net losses in its last three fiscal years.
Moreover, there can be no assurance that the ED or the UITI will ever generate
significant revenues, will generate any revenues or that they will do so in the
time periods estimated by the Company. There can be no assurance that any of
the Company's products will be introduced or marketed successfully, or that the
Company will ever achieve a profitable level of operations or, if profitability
is achieved, that it can be sustained.
The Company's auditors have included an explanatory paragraph in their
report with respect to the Company's financial statements included herein which
states that the Company cannot currently generate sufficient revenues and cash
flow from operations to meet its business obligations and, therefore, future
operations are predicated on raising additional capital in debt or equity
markets.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995
The Company had no license income in the first quarter of fiscal 1996
compared to $629,688 in the first quarter of fiscal 1995. The $629,688
represented the value of the 250,000 shares of Digital stock received by the
Company as an initial license fee pursuant to the Digital Agreement in 1995.
Research and Development Expenses increased to $249,238 for the first
quarter of 1996 from $215,076 for the first quarter of fiscal 1995 an increase
of $34,162. This increase was due to the increased activity relating to the
production of a prototype of the ED.
Travel and entertainment expenses decreased to $105,075 for the first
quarter of fiscal 1996 from $134,213 for the first quarter of fiscal 1995 a
decrease of $29,138. The decrease was due to the reduction in travel by one of
the Company's executive officers in connection with work relating to the
Company's patents.
Legal fees decreased to $85,893 for the first quarter of fiscal 1996 from
$144,606 for the first quarter of fiscal 1995, a decrease of $58,713. This
decrease was due to reduced activity relating to the Bushnell litigation and
reduced capital raising activities by the Company.
Other general and administrative expenses increased to $212,982 for the
first quarter of 1996 from $132,104 for the first quarter of 1995, an increase
of $80,878. This increase was due to the preparation and production of
marketing and advertising materials and to the relocation of the Company into
larger office facilities.
(8)
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1995 COMPARED TO 1994.
License income for 1995 was $629,688 which represented the value of 250,000
shares of Digital stock issued to the Company in payment of an initial license
fee pursuant to the Digital Agreement. The value of the stock of Digital
received by the Company reflected a discount from the trading price because the
stock was restricted.
Research and Development Expenses increased to $1,134,262 for fiscal 1995
from $701,460 for fiscal 1994, an increase of $432,802. This increase was due
to: (i) costs related to the field test of the ED with Booth Communications;
(ii) additional costs related to the continuing development of the printed
circuit layout for the base board, including fees for engineers and consultants;
and (iii) costs of producing design and mechanical drawings for manufacturers of
the prototypes of the UITI and the ED.
Travel and Entertainment Expenses increased to $620,012 for fiscal 1995
from $194,162 for fiscal 1994, an increase of $425,850. Because the Company was
successful in developing a prototype of the UITI and the ED during 1995, the
Company significantly increased its marketing efforts to develop relationships
with companies to manufacture and distribute the Company's products and to raise
additional equity financing.
Legal fees increased to $552,109 for fiscal 1995 from $28,908 for fiscal
1994, an increase of $523,201. This increase was due to: (i) legal fees
related to a lawsuit filed against the Company in December 1994 by a former
director and officer of the Company; (ii) legal fees related to the merger of
VISC and GTCI; and (iii) legal fees related to the negotiation and
documentation of the license agreements with Amiga and Digital.
Consulting fees for consultants other than engineers increased to $353,915
for fiscal 1995 from $73,786 for fiscal 1994, an increase of $280,129. This
increase was due primarily to the consulting fees associated with the
formulation of the Company's business plan in 1995.
Other general and administrative expenses increased to $562,191 for fiscal
1995 from $316,448 for fiscal 1994, an increase of $245,743. This increase was
primarily due to the increased salaries resulting from the hiring of additional
personnel, directors fees paid to the Chairman and printing costs associated
with the preparation of the Company's business plan.
1994 COMPARED TO 1993.
Research and Development Expenses increased to $701,460 for fiscal 1994
from $622,428 for fiscal 1993, an increase of $79,032. This increase was due to
a general increase in activity of the Company in the continuing developing of
its products.
Travel and Entertainment Expenses increased to $194,162 for fiscal 1994
from $122,840 for fiscal 1993, an increase of $71,322. The increase reflects
increased marketing efforts to develop relationships with companies to
manufacture and distribute the Company's products.
(9)
<PAGE>
Legal fees decreased to $28,908 for fiscal 1994 from $150,133 for fiscal
1993, a decrease of $121,225. This decrease was primarily due to
capitalizing legal expenses in connection with the Company's patents.
Consulting fees for consultants (other than engineers) increased to $73,786
for fiscal 1994 from $17,789 for fiscal 1993, an increase of $55,997. This
increase was due to the increase in the number of consultants retained in 1994.
The Company had no interest expense for fiscal 1994 compared to $109,429 in
fiscal 1993. Such amount represented interest accrued on a loan by Jerome
Greenberg to the Company, which loan was exchanged for common stock in November,
1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company has generated losses since its inception in May 1990 and cannot
currently generate sufficient revenues and cash flow from operations to meet its
business obligations. In prior years, the Company was able to fund its
operations through the issuance of its Common Stock in transactions exempt under
the Securities Act of 1933, and through stockholder loans. Any implementation
of the commercialization of the UITI and ED is dependent on obtaining additional
financing that is necessary to achieve a level of sales adequate to support the
Company's operations. The Company cannot currently generate sufficient revenues
and cash flow from operations to meet its business obligations and, therefore,
future operations are predicated on raising additional capital in debt or equity
markets
ITEM 3. PROPERTIES.
The Company currently leases its 3,100 square foot office facility pursuant
to a lease that expires on February 28, 1997. The annual base rent for this
facility is approximately $44,000. The Company believes that its facilities are
in good condition and adequate for its current operations.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of July 31, 1996 by (a) each director and
executive officer of the Company, (b) each person known by the Company to own
beneficially five percent or more of the Common Stock and (c) all current
executive officers and directors as a group.
DIRECTORS, OFFICERS NUMBER OF SHARES PERCENT OF
AND FIVE PERCENT BENEFICIALLY COMMON STOCK
STOCKHOLDERS OWNED OUTSTANDING
Jerome Greenberg 6,658,000(1) 29
William H. Buck 2,384,000(2) 10.4
(10)
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Roger Remillard 1,744,000(3) 7.6
Donald Gilbreath 1,230,400(4) 5.4
Robert E. Reid 40,000 *
Mitchell J. Melamed 40,000(5) *
David Rosen -- --
Robert Wussler -- --
All directors and officers 12,096,400 52.7
as a group (eight persons)
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* Less than one percent.
(1) Includes 100,000 shares which may be acquired pursuant to the exercise of
vested stock options
(2) Includes 384,000 shares which may be acquired pursuant to the exercise of
vested stock options
(3) Includes 488,000 shares which may be acquired pursuant to the exercise of
vested stock options
(4) Inclues 230,400 shares which may be acquired pursuant to the exercise of
vested stock options.
(5) Includes 40,000 shares which may be acquired pursuant to the exercise of
vested stock options
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each of
the directors and executive officers of the Company:
NAME AGE POSITION
---- --- --------
Jerome Greenberg 70 Chairman of the Board of Directors,
Treasurer and Director
William H. Buck 37 President and a Director
Roger Remillard 47 Vice President - Technology and a Director
Donald Gilbreath 38 Vice President - Engineering
David Rosen 56 Vice President - Marketing
Mitchell J. Melamed 52 Secretary
Robert J. Wussler 59 Director
Robert E. Reid 77 Director
Thomas Glenndahl 50 Director
JEROME GREENBERG. Mr. Greenberg is a co-founder and major shareholder of
the Company and has been the Chairman and Treasurer from its inception in
May, 1990.
(11)
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From 1982 and 1989 he was the principal shareholder and President of Leader
Communications Inc. ("Leader"), a Chicago-based cellular phone and two-way radio
company. In 1989, Mr. Greenberg sold Leader to Fleet Call, Inc., which
subsequently changed its name to NextTel. Mr. Greenberg is also the President
of Hampden Green Management Corporation, a private real estate management and
development company, which is not an active entity at this time.
WILLIAM E. BUCK. Mr. Buck has been the President of the Company since
November 1994. Prior to joining the Company in November 1994, from July 1994
to October 1994 he worked on and completed a consulting assignment for
Command Performance Network, Inc. which involved the creation of a joint
venture with NTN Communications, Inc. to form an international gaming
network. From September 1993 to June 1994, Mr. Buck was the Vice
President-Business Development for ICTV Inc. ("ICTV"). In this position he
was responsible for developing strategic alliances with application
providers, multiple system cable operators and regional bell operating
companies. Prior to joining ICTV, he worked as an independent consultant for
a number of companies with interests in the interactive television industry.
From 1991 to 1992, he served as Vice President - Strategic Development for IT
Network, Inc., the successor to Cableshare, Inc.("Cableshare") and in 1990
was President of Cableshare (U.S.) Limited, a subsidiary of Cableshare. Mr.
Buck is a graduate of the U.S. Military Academy at West Point and currently
holds the rank of Major in the Michigan National Guard.
ROGER REMILLARD. Mr. Remillard is a co-founder of the Company and has
served as a director and Vice President - Technology since the Company's
inception. Mr. Remillard is the inventor of the ED and has filed several
patents relating to interactive television technology. Prior to 1990, Mr.
Remillard served as a consultant in the communications industry, specializing in
the field of two-way, rapid cellular telephony and data-radio communications.
DONALD GILBREATH. Mr. Gilbreath has served as Vice President - Engineering
since he joined the Company in November 1994. Prior to November 1994, he worked
for the Company as a consultant and was instrumental in designing, and producing
the initial prototypes of, the ED. He formed Gilbreath Systems Inc. ("Gilbreath
Systems") a general engineering consulting company in 1992. From 1980 to 1991,
Mr. Gilbreath worked for Commodore International Ltd., a computer manufacturer
which filed for bankruptcy in April 1994, where he served in various capacities,
including Director of Product and Market Development (1987 to 1991), Director of
Research and Development (1985 to 1987) and Manager, Consumer Products Research
and Development (1985 to 1987). Under his direction, Commodore developed the
first consumer-priced multimedia compact disc player.
DAVID ROSEN. Mr. Rosen became the Vice President - Marketing when he
joined the Company in April, 1996. Prior to such date, he was a consultant to
the Company. In 1992, he formed his own consulting company called Praxis. Many
of his clients are in the communications and media area. There may be conflicts
of interest between Mr. Rosen's position with the Company and the activities
related to his consulting company. From 1990 to 1992, he was director of
international marketing of Commodore International.
MITCHELL J. MELAMED. Mr. Melamed has served as Secretary of the Company
since May 1990. Mitchell Melamed is a practicing attorney and is presently a
partner in the law firm of
(12)
<PAGE>
Frank, Miller, Melamed & Tabis, P.C., in Chicago, Illinois. He has been with
this firm and its predecessors since 1975.
ROBERT J. WUSSLER. Mr. Wussler was elected to the Board of Directors on
May, 1996. From 1992 to the present he has been the President and Chief
Executive Officer of the Wussler Group, located in Potomac, Maryland, advising
companies in TV, cable, interactive and other related activities. From 1989 to
1992, he was the President and CEO of COMSAT Video Enterprises which was in the
business of satellite delivery of entertainment to the U.S. lodging industry.
ROBERT E. REID. Mr. Reid was appointed to the Board of Directors in May,
1996. Mr. Reid has been the President of Engis Corporation ("Engis") based in
Wheeling, Illinois, since 1972. Engis is in the business of utilizing
industrial diamonds in machinery.
THOMAS GLENNDAHL. Mr. Glenndahl was elected to the Board of Directors on
August 5, 1996. He is the founder and, since 1982 has been the Chief
Executive Officer of the Aspect Group, an international education group with
offices in 26 countries.
BOARD OF DIRECTORS
All directors are elected to one-year terms by the Company's shareholders
and serve until their successors are duly elected and qualified. There has been
no election held by the Company for the past three years, but the Company
expects a meeting to be held in 1996. Executive officers of the Company are
appointed by the Board of Directors and serve at its discretion.
ITEM 6. EXECUTIVE COMPENSATION.
The following table sets forth certain information with respect to
compensation for fiscal years 1993, 1994 and 1995 paid to the Company's Chief
Executive Officer. No other executive officers of the Company received
compensation in excess of $100,000 during such periods.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME YEAR SALARY ($) BONUS ($) OPTIONS COMPENSATION($)
- ------------------------------- ------ ------------ ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
William H. Buck
Chief Executive Officer
and Director . . . . . . . .
1995 60,000 -- -- --
1994 5,000 -- 384,000 --
1993 -- -- -- --
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
(13)
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SHARES OPTIONS POTENTIAL REALIZABLE VALUE
UNDERLYING GRANTED TO AT ASSUMED ANNUAL RATES OF
OPTIONS EMPLOYEES EXERCISE OR STOCK PRICE APPRECIATION FOR
GRANTED IN FISCAL BASE PRICE EXPIRATION OPTION TERM
NAME (#) YEAR ($/SH) DATE 5% ($) 10% ($)
- -------------------------- ---------- ---------- ----------- ---------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
William H. Buck . . . . .
Chief Executive Officer 384,000 0 .625 11/11/99 66,307 382,080
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL THE-MONEY OPTIONS AT
YEAR-END (#) FISCAL YEAR-END($)(1)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C>
William H. Buck . . . . . . . . . . . . . . . . . . . 384,000/0 4,080,000/0
Chief Executive Officer
</TABLE>
- -------------------------
(1) The value of "in the money" options represents the difference
between the exercise price of such option and the $11.25 closing price of the
company's Common Stock as quoted on the Nasdaq Bulletin Board on July 31,
1996.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of William
H. Buck, Roger Remillard, Jerome Greenberg and Donald Gilbreath. Each of the
employment agreements provides for an initial term expiring in November,
1997, which are automatically renewed for one-year periods unless notice of
non-renewal is given at least 120 days prior to the end of the expiration
term. Mr. Buck's employment agreement provides for an annual base salary of
$60,000 (subject to annual increase based upon the Consumer Price Index)
("CPI") and granted options to purchase 384,000 of Common Stock, at an
exercise price of $.625 per share. Mr. Remillard's employment agreement
provides for an annual base salary of $60,000 (subject to annual increase
based upon the CPI) and granted options to purchase 288,000 at an exercise
price of .625 per share. Mr. Greenberg's employment agreement provides for
an annual base salary of $37,500 (subject to annual increase based upon the
CPI) and granted options to purchase 100,000 shares of Common Stock at an
exercise price of $.625 per share. Mr. Gilbreath's employment agreement
provides for an annual salary of $48,000 (subject to annual increase based
upon the CPI) and granted options to purchase 230,400 shares of Common Stock
at an exercise price of $.625 per share. The information regarding options
in this section are adjusted for the merger between GTCI and VISC.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company made advances to a Roger Remillard during 1993. The Company
provided an allowance for the full amount of this receivable, as the Company did
not expect these advances to be repaid, resulting in bad debt expenses of
$127,532 in 1993. During 1994, this receivable was forgiven and the receivable
and related allowance were written off.
The Company loaned $39,238 to William H. Buck and $18,670 to Roger
Remillard during 1995. The Company has made an allowance for doubtful
collection of these amounts.
(14)
<PAGE>
Such amounts may be deemed additional compensation for Mr. Buck and Mr.
Remillard during 1996.
ITEM 8. LEGAL PROCEEDINGS.
The Company and certain officers and directors are defendants in a
lawsuit filed by a former employee. This lawsuit was filed on December 15,
1994 in the California Superior Court and was subsequently removed to the
United States District Court for the Northern District of California. The
second amended complaint dated April 30, 1996 alleges multiple claims
including breach of fiduciary duty, breach of oral agreement, wrongful
termination of employment, interference with contract, breach of employment
agreement and fraudulent misrepresentation all arising out of the plaintiff's
employment over a period of 2 1/2 months as the Company's President, the
termination of his employment and the aborted negotiations for a proposed
merger between the Company and the plaintiff's company. Damages claimed are
in excess of $10 million for failure to transfer one million shares of the
Company's stock allegedly promised to the plaintiff, salary and expenses
arising out of his employment relationship and punitive damages. The Company
has filed a crosscomplaint for fraud, breach of fiduciary duty, declaratory
relief, rescission and negligent interference with prospective business
advantage. The Company believes the allegations are without merit and
intends to vigorously defend itself and its directors and officers against
the action.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The Company's shares have been traded on a limited basis on the Nasdaq,
Bulletin Board under the symbol VICP since December 27, 1995. The following
table sets forth the range of high and low sales prices as reported on the
Nasdaq Bulletin Board. These prices reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
PERIOD LOW HIGH
Fourth quarter of 1995 (beginning December 8, 1995) 5-1/8 5-3/8
First quarter of 1996 7-1/2 8-1/4
Second Quarter of 1996 8-1/8 11-3/8
Third Quarter of 1996 (through July 31, 1996) 10-3/4 11/1/4
There were approximately 130 shareholders of record of the Common Stock as
of July 31, 1996.
(15)
<PAGE>
DIVIDENDS
The Company has never declared or paid cash dividends on its Common Stock
and does not anticipate paying cash dividends in the foreseeable future, but
intends to retain future earnings, if any, for reinvestment in the future
operation and expansion of the Company's business and related development
activities. Any future determination to pay cash dividends will be at the
discretion of the Board of Directors and will be dependent upon the Company's
financial condition, results of operations, capital requirements and such other
factors as the Board of Directors deems relevant, as well as the terms of any
financing arrangement.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
On May 13, 1993, upon the exercise of an option to purchase common stock
of VISC ("VISC Stock") by Jerome Greenberg, VISC issued 799,200 shares of
VISC Stock to Mr. Greenberg at a price of $1.00 per share. On December 31,
1993, upon the exercise of an option to purchase VISC Stock by Roger
Remillard, the Company issued 199,800 shares of VISC Stock to Mr. Remillard
at a price of $1.00 per share.
In November, 1994, VISC issued 160,000 shares of VISC Stock to Jerome
Greenberg upon conversion of a $400,000 loan Mr. Greenberg made to VISC in a
transaction not involving a public offering exempt pursuant to Section 4(2) of
the Securities Act of 1933, as amended ("Securities Act").
In November 1994, VISC entered into an agreement with a placement agent,
West America Securities ("West"), for a private offering. This private offering
resulted in the sale of 500,000 units at a purchase price of $2.50 per unit for
a total consideration of $1,250,000. Each unit consisted of one share of VISC
Stock, one Class A warrant and one Class B warrant. Each Class A warrant
entitled the registered holder to purchase one share of VISC Stock at an
exercise price of $5.00 at any time on or before March 1, 1995. Each Class B
warrant entitled the registered holder to purchase one share of VISC Stock at an
exercise price of $7.50 at any time on or before April 30, 1995. None of the
Class A warrants or Class B warrants were exercised prior to the expiration
date. West received 50,000 shares of VISC Stock and 12,000 units valued at
$155,000 as compensation for its services and costs. Attorneys' and finders'
fees totalling $108,833 were incurred and are included as stock issuance costs.
One of the consultants participating in the private placement received $25,000
in cash, 10,000 shares of VISC Stock with a deemed value of $25,000 and an
option, exercisable until November 27, 2000, to purchase 30,000 shares of VISC
Stock at $2.50 per share.
In April and May 1995, VISC issued 53,000 shares of VISC Stock for an
aggregate offering price of $265,000 in a transaction not involving a public
offering exempt pursuant to Regulation S of the Securities Act.
On August 30, 1995, VISC issued 8,000 shares of VISC Stock for an aggregate
offering price of $20,000 in a transaction not involving a public offering
exempt pursuant to Regulation S of the Securities Act.
(16)
<PAGE>
During 1995, VISC issued a total of 1,100,000 shares of VISC Stock for an
aggregate offering price of $2,750,000 in a transaction not involving a public
offering exempt pursuant to Regulation S under the Securities Act. Dextro
Establishment, the placement agent, received finder's fees totalling $330,000 in
connection with this offering which were included as stock issuance costs.
In April and May, 1995, VISC issued 176,500 shares of VISC Stock to
certain individuals in exchange for past services provided to VISC in a
transaction not involving a public offering under Section 4(2) of the
Securities Act.
In February 1996, the Company issued 20,000 shares of Common Stock for an
aggregate offering price of $50,000 in a transaction exempt pursuant to
Regulation S of the Securities Act. Grammont, Inc., a French brokerage firm,
received $5,000 in connection with this offering.
From March 1996 to April 1996, the Company issued 500,000 shares of Common
Stock for an aggregate offering price of $1,000,000 in a transaction not
involving a public offering exempt pursuant to Regulation D of the Securities
Act.
On April 26, 1996, upon the exercise of an option to purchase Common Stock
by a shareholder, the Company issued 400,000 shares of Common Stock to such
shareholder at a price of $.625 per share.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The authorized capital of the Company consists of 50,000,000 Shares of
Common Stock, par value $0.01 per share. The following summary of certain
provisions of the Common Stock does not purport to be complete and is subject
to, and qualified in its entirety by, the provisions of the Company's Articles
of Incorporation and Bylaws that are included as exhibits to this Registration
Statement and by provisions of applicable law.
As of July 31, 1996 there were 21,728,000 shares of Common Stock of the
Company issued and outstanding. Each stockholder is entitled to one vote for
each share of Common Stock held of record on all matters submitted to a vote of
stockholders, including the elections of the members of the Board of Directors
of the Company. Holders of Common Stock have no preemptive rights and no rights
to convert their Common Stock into any other securities, and there are no
redemption provisions with respect to such shares. Upon liquidation,
dissolution or winding up of the Company, the holders of the Common Stock are
entitled to share ratably in all assets remaining after payment of the Company's
liabilities. All outstanding shares of Common Stock are fully paid and non-
assessable.
VISC is currently not in good standing in the State of Illinois due to
certain issues regarding the calculation of its paid in capital to give effect
to the merger of VISC and GTCI. The Company is currently in the process of
resolving these issues with the Secretary of State of Illinois and expects that
VISC will be in good standing before this Registration Statement becomes
effective.
(17)
<PAGE>
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Corporate Stock
Transfer in Denver, Colorado.
SHARES ELIGIBLE FOR FUTURE SALE
As of July 31, 1996 there were approximately 2,150,000 shares of Common
Stock which may be sold without restriction under the Securities Act. There are
approximately 1,060,000 shares issued in reliance on Regulation S of the
Securities Act that may become unrestricted assuming compliance with Regulation
S. From September, 1995 to November, 1995 the Company made an offering in
reliance upon Regulation S and at the conclusion thereof 4,700,000 shares were
issued.
Under Rule 144 under the Securities Act the shares held by Messrs.
Greenberg and Remillard are currently available for sale, subject to the volume
limitations of Rule 144. The number of shares currently held by these two
individuals equal 7,814,000 shares in the aggregate. In November, 1994, Messrs.
Buck and Gilbreath acquired shares of Common Stock upon joining the Company.
Their shares would be available for sale subject to the limitations of Rule 144
in November, 1996.
In general, under Rule 144 as currently in effect, a stockholder,
including an "affiliate" of the Company, as that term is defined in Rule 144
(an "Affiliate"), who has beneficially owned his or her restricted securities
(as that term is defined in Rule 144) for at least two years from the later
of the date such securities were acquired from the Company or (if applicable)
the date they were acquired from an Affiliate is entitled to sell, within any
three-month period, a number of such shares that does not exceed the greater
of one percent of the then outstanding shares of Common Stock (approximately
217,280 shares as of July 31, 1996) or the average weekly trading volume in
the Common Stock during the four calendar weeks preceding the date on which
notice of such sale was filed under Rule 144, provided certain requirements
concerning availability of public information, manner of sale and notice of
sale are satisfied. In addition, under Rule 144(k), if a period of at least
three years has elapsed between the later of the date restricted securities
were acquired from the Company and the date they were acquired from an
Affiliate of the Company, a stockholder who is not an Affiliate of the
Company at the time of sale and has not been an Affiliate for at least three
months prior to the sale would be entitled to sell the shares immediately
without compliance with the foregoing requirements under Rule 144.
Stock options have been granted to certain individuals pursuant to a
plan under Rule 701 under the Securities Act. Pursuant to Rule 701, 90 days
after an issuer becomes subject to the reporting requirements of section 13
or 15(d) of the Securities Exchange Act of 1934, the securities issued in
compliance with Rule 701 may be resold: (a) by persons other than Affiliates
in reliance on Rule 144 without compliance with the volume limitation or
holding period requirement of Rule 144, and (b) by Affiliates in reliance on
Rule 144 without compliance with the holding period requirement of Rule 144.
Options to purchase 1,712,480 shares of Common Stock have been
granted by the Company pursuant to this plan.
(18)
<PAGE>
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section XIV of the Company's Articles of Incorporation provides that the
Company shall indemnify and hold the officers and directors of the Company
harmless and free from liability for any claims against said officer and/or
director arising out of the performance of their duties on behalf of the Company
and shall, further, reimburse said person for any legal expenses incurred in the
defense of such claim.
Reference is made to Sections 2 and 3 of Article 78 of the Nevada Revised
Statutes which provides for indemnification of directors and officers in certain
circumstances.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The required financial statements are included under the section
"Financial Statements" in this Registration Statement.
(19)
<PAGE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS WITH ACCOUNTANTS ON
ACOUNTING NAD FINANCIAL DISCLOSURE.
Not Applicable.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
Consolidated Balance Sheets (Unaudited) as of March 31, 1996 and March
31, 1995
Consolidated Statements of Operations (Unaudited) for the Three Months
Ended March 31, 1996 and March 31, 1995 and Period from inception (May
1, 1990) to March 31, 1996
Consolidated Statements of Cash Flows (Unaudited) for the Three Months
Ended March 31, 1996 and March 31, 1995 and Period from inception (May
1, 1990) to March 31, 1996
Consolidated Balance Sheets as of December 31, 1995, 1994 and 1993.
Consolidated Statements of Operations for the years ended December
31, 1995, 1994 and 1993 and Period from inception (May 1, 1990)
through December 31, 1995
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1994 and 1993 and Period from inception (May 1, 1990)
through December 31, 1995
Notes to Consolidated Financial Statements
(b) Exhibits
2.1* Agreement and Plan of Reorganization dated as of October 12,
1995 by and between Global Telephone and Communications,
Inc. and Visual Information Service Corp. and its
shareholders.
3.1 Articles of Incorporation, as amended, of VisCorp
3.2* Articles of Incorporation, as amended of Visual Information
Service Corp.
3.3 By-laws of VisCorp
3.4* By-laws of Visual Information Service Corp.
4.1* Form of the Company's Stock Certificate
(20)
<PAGE>
10.1* Service Agreement dated as of April 8, 1996 between Viscorp
and Solectron France, S.A.
10.2* Technology License Agreement dated as of January 1, 1995 by
and between Visual Information Services Corp. and Digital
Sciences, Inc.
10.3* Employment Agreement between Visual Information Services
Corp. and Jerome Greenberg dated as of November 12, 1994.
10.4* Employment Agreement between Visual Information Services
Corp. and Don Gilbreath dated as of November 12, 1994.
10.5* Employment Agreement between Visual Information Services
Corp. and William Buck dated as of November 12, 1994.
10.6* Employment Agreement between Visual Information Services
Corp. and Roger Remillard dated as of November 12, 1994.
10.7* Employment Agreement between Visual Information Services
Corp. and David Rosen dated as of May 1, 1996.
10.8* License Agreement between Amiga Technologies GmbH and Visual
Information Service Corp. dated as of December 26, 1995.
10.9* Agreement for the Purchase of Inventories, Industrial
Property Rights and certain other Rights and Assets between
Escom AG, Amiga Technologies GmbH and VisCorp Acquisitions
Inc. dated July 18, 1996.
10.10* Gateway Information Provider Agreement between NTN
Communications, Inc. and Visual Information Services Corp.
dated as of December 13, 1994.
10.11* Viscorp Stock Option Plan
21* Subsidiaries
- ------------------------------
*Previously filed
(21)
<PAGE>
FINANCIAL STATEMENTS
(22)
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Balance Sheets (Unaudited)
As of March 31, 1996 and 1995
ASSETS
<TABLE>
<CAPTION>
AT MARCH 31,
------------------------
(Unaudited) (Unaudited)
1996 1995
------------ ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . $106,547 $6,948
Receivables:
Officers (Net of allowance for doubtful accounts of
$57,908 in 1995). . . . . . . . . . . . . . . . . . . . . . . 24,598 0
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 562,300 0
---------- ----------
Total Current Assets . . . . . . . . . . . . . . . . . . . . 693,445 6,948
---------- ----------
PROPERTY AND EQUIPMENT, AT COST
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,849 44,339
Furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,656 2,656
Test equipment. . . . . . . . . . . . . . . . . . . . . . . . . 4,883 4,883
---------- ----------
70,388 51,878
Less accumulated depreciation. . . . . . . . . . . . . . . . . . (28,636) (17,636)
---------- ----------
Total Property and Equipment, Net. . . . . . . . . . . . . . 41,752 34,242
---------- ----------
OTHER ASSETS
Investment securities -- Digital Sciences, Inc. . . . . . . . . 343,750 284,375
Intangible assets (Net of accumulated amortization) . . . . . . 93,919 74,946
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,670 5,873
---------- ----------
Total Other Assets . . . . . . . . . . . . . . . . . . . . . 443,339 365,194
---------- ----------
$1,178,536 $406,384
---------- ----------
---------- ----------
</TABLE>
(23)
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)(UNAUDITED)
<TABLE>
<CAPTION>
AT MARCH 31,
--------------------------
(Unaudited) (Unaudited)
1996 1995
---------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . $409,134 $417,317
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 11,547 754
Stockholders loans including accrued interest at a rate of
5.97%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237,892 0
---------- ----------
Total Current Liabilities . . . . . . . . . . . . . . . . . 658,573 418,071
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . 216,280 2,541,167
Additional paid-in capital . . . . . . . . . . . . . . . . . . 7,640,498 1,669,361
Deficit accumulated during the development stage . . . . . . . (7,050,877) (3,896,902)
Net unrealized investment losses . . . . . . . . . . . . . . . (285,938) (345,313)
---------- ----------
Total Stockholders' Equity (Deficit). . . . . . . . . . . . 519,963 11,687
---------- ----------
$1,178,538 $406,384
---------- ----------
---------- ----------
</TABLE>
(24)
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31, 1996 and 1995 and
Period from May 1, 1990 (Inception) through March 31, 1996
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------- From Inception
(Unaudited) (Unaudited) (May 1, 1990) to
1996 1995 March 31, 1996*
----------- ---------- ----------------
<S> <C> <C> <C>
LICENSE INCOME . . . . . . . . . . . . . . $ 0 $(629,688) $(629,688)
OPERATING EXPENSES
Research and development . . . . . . . . . 249,238 215,076 3,215,226
Travel and entertainment . . . . . . . . . 105,075 134,213 1,116,812
Legal fees:
Employee litigation . . . . . . . . . . . 14,432 47,678 308,219
Other . . . . . . . . . . . . . . . . . . 71,461 96,928 610,469
Consulting . . . . . . . . . . . . . . . . 91,000 165,500 584,612
Other general and administrative . . . . . 212,982 132,104 1,639,275
---------- ---------- ----------
Total Operating Expenses . . . . . . . 744,188 791,499 7,474,613
---------- ---------- ----------
OPERATING LOSS . . . . . . . . . . . . . . 744,188 161,811 6,844,925
---------- ---------- ----------
OTHER EXPENSE (INCOME)
Interest expense -- Stockholder debt . . . 3,498 0 215,769
Interest expense -- Other. . . . . . . . . 0 0 1,103
Interest income. . . . . . . . . . . . . . (1,638) (1,685) (14,494)
Loan on disposal of equipment. . . . . . . 0 0 3,574
---------- ---------- ----------
Total Other (Income) Expense, Net. . . 1,860 (1,685) 205,952
---------- ---------- ----------
NET LOSS . . . . . . . . . . . . . . . . . $746,048 $160,126 $7,050,877
---------- ---------- ----------
---------- ---------- ----------
AVERAGE SHARES OUTSTANDING . . . . . . . . 21,628,000 3,698,958
---------- ----------
---------- ----------
LOSS PER SHARE . . . . . . . . . . . . . . $0.03 $0.04
---------- ----------
---------- ----------
</TABLE>
* The data for the period December 31, 1995 to March 31, 1996 is unaudited.
(25)
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1996 and 1995 and
Period from May 1, 1990 (Inception) through March 31, 1996
<TABLE>
<CAPTION>
THREE MONTHS ENDED FROM INCEPTION
MARCH 31, MARCH 31, (MAY 1, 1990) TO
(UNAUDITED) (UNAUDITED) MARCH 31,
1996 1995 1996*
----------- ----------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . $(746,048) $(160,126) (7,050,877)
Depreciation and amortization . . . . . . . . . . . . . . . 3,284 2,040 63,214
License income received in stock. . . . . . . . . . . . . . 0 (629,688) (629,688)
Services paid in stock. . . . . . . . . . . . . . . . . . . 0 0 441,250
Interest on stockholder loans . . . . . . . . . . . . . . . 3,496 0 215,769
Provision for losses on employee advances . . . . . . . . . 0 0 299,055
Loss on disposal of equipment . . . . . . . . . . . . . . . 0 0 3,574
(Increase) decrease in prepaid expenses . . . . . . . . . . (462,300) 100,000 (562,300)
Increase in:
Accounts payable. . . . . . . . . . . . . . . . . . . . . 104,245 138,605 359,134
Accrued expenses. . . . . . . . . . . . . . . . . . . . . (1,387) (4,306) 11,547
---------- ---------- ----------
Total Adjustments. . . . . . . . . . . . . . . . . . . . (352,660) (393,349) 201,555
---------- ---------- ----------
Net Cash Used in Operating Activities. . . . . . . . . . (1,098,708) (553,475) (6,849,322)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment . . . . . . . . . . . . . . 0 0 500
Capital expenditures. . . . . . . . . . . . . . . . . . . . (10,077) (6,351) (80,233)
Net advances to employee and related company. . . . . . . . (24,598) 0 (323,653)
Patents and other expenditures. . . . . . . . . . . . . . . 0 0 (128,396)
---------- ---------- ----------
Net Cash Used in Investing Activities. . . . . . . . . . (34,675) (6,351) (531,782)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings from stockholders. . . . . . . . . . . . . . 0 0 3,090,484
Proceeds from issuance of common stock. . . . . . . . . . . 500,000 0 4,786,000
Payment of stock issuance costs . . . . . . . . . . . . . . 0 0 (388,833)
---------- ---------- ----------
Net Cash Provided by Financing Activities. . . . . . . . 500,000 0 7,487,651
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . (633,383) (559,826) 106,547
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . . . . 739,930 552,878 0
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . $ 106,547 $ 6,948 106,547
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
* The data for the period December 31, 1995 to March 31, 1996 is unaudited
(26)
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED FINANCIAL STATEMENTS AND
INDEPENDENT AUDITOR'S REPORT
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Years Ended December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C O N T E N T S
---------------
<TABLE>
<CAPTION>
REFERENCE PAGE
--------- ----
<S> <C> <C>
Independent Auditor's Report 1-2
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Stockholders' Equity (Deficit) 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7-16
Consolidated Other General and Administrative Expenses 17
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
Stockholders
Viscorp
Chicago, Illinois
We have audited the accompanying consolidated balance sheets of VISCORP (A
DEVELOPMENT STAGE ENTERPRISE) as of December 31, 1995, 1994 and 1993, and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the years then ended and for the period from May 1, 1990 (inception) through
December 31, 1995 (the cumulative period). These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of VISCORP (A DEVELOPMENT STAGE
ENTERPRISE) as of December 31, 1995, 1994 and 1993, and the results of its
operations and its cash flows for the years then ended and for the cumulative
period, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the company
will continue as a going concern. The company cannot currently generate
sufficient revenues and cash flow from operations to meet its business
obligations. Therefore, future operations are predicated on raising additional
capital in debt or equity markets. These factors raise substantial doubt about
the company's ability to continue as a going concern. Any implementation of the
commercialization of the electronic device is dependent upon obtaining
additional financing as may be necessary to ultimately achieve a level of sales
adequate to support the company's operations. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
<PAGE>
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule
of operating expenses is presented for analysis purposes and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/S/ Blackman Kallick Bartelstein, LLP
March 21, 1996, except for Note 16, as to
which the date is April 23, 1996
- 2 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Balance Sheets
December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
<CAPTION>
1995 1994 1993
----------- --------- ---------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (Note 3) $ 739,930 $ 552,878 $ -
Receivables
Officers (Net of allowance for doubtful
accounts of $57,908 in 1995) - - -
Other (Net of allowance for doubtful
accounts of $25,000 in 1995) - - -
Prepaid expenses 100,000 6,573 -
----------- --------- ---------
Total Current Assets 839,930 559,451 -
----------- --------- ---------
PROPERTY AND EQUIPMENT, AT COST
Equipment 52,772 37,988 17,985
Furniture 2,656 2,656 6,801
Test equipment 4,883 4,883 4,883
----------- --------- ---------
60,311 45,527 29,669
Less accumulated depreciation (26,028) (15,596) (13,687)
----------- --------- ---------
Total Property and
Equipment, Net 34,283 29,931 15,982
----------- --------- ---------
OTHER ASSETS
Investment securities - Digital Sciences, Inc.
(Notes 4, 12 and 16) 284,375 - -
Intangible assets (Net of accumulated
amortization) (Note 5) 94,595 74,946 1,000
Other 5,670 - -
----------- --------- ---------
384,640 74,946 1,000
----------- --------- ---------
$ 1,258,853 $ 664,328 $ 16,982
----------- --------- ---------
----------- --------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 3 -
<PAGE>
EXHIBIT A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
1995 1994 1993
----------- --------- ---------
<S> <C> <C> <C>
CURRENT LIABILITIES
Checks issued in excess of funds on deposit $ - $ - $ 31,745
Accounts payable 304,889 165,516 75,285
Due to affiliated company - - 18,689
Accrued expenses 12,934 5,060 2,652
Stockholder loans including accrued
interest at a rate of 5.97% 234,394 - -
----------- --------- ---------
Total Current Liabilities 552,217 170,576 128,371
STOCKHOLDER LOANS, INCLUDING ACCRUED
INTEREST AT A RATE OF 10% - - 1,494,161
----------- --------- ---------
Total Liabilities 552,217 170,576 1,622,532
----------- --------- ---------
STOCKHOLDERS' EQUITY (DEFICIT) (Exhibit C)
(Notes 6 and 14)
Common stock 212,080 2,541,167 800,200
Additional paid-in capital 7,144,698 1,669,361 -
Deficit accumulated during the
development stage (6,304,829) (3,716,776) (2,405,750)
Net unrealized investment losses (Note 4) (345,313) - -
----------- --------- ---------
Total Stockholders' Equity (Deficit) 706,636 493,752 (1,605,550)
----------- --------- ---------
$1,258,853 $ 664,328 $ 16,982
----------- --------- ---------
----------- --------- ---------
</TABLE>
- 3a -
<PAGE>
EXHIBIT B
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Operations
Years Ended December 31, 1995, 1994 and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
May 1, 1990
(Inception)
through
December 31,
1995 1994 1993 1995
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
LICENSE INCOME (Note 12) $(629,688) $ - $ - $(629,688)
----------- ---------- ---------- ----------
OPERATING EXPENSES
Research and development 1,134,262 701,460 622,428 2,965,988
Travel and entertainment 620,012 194,162 122,840 1,011,737
Legal fees
Employee litigation 287,990 5,797 - 293,787
Other 264,119 22,711 150,133 539,008
Consulting 353,915 73,786 17,789 493,612
Other general and administrative 562,191 316,448 335,170 1,426,293
----------- ---------- ---------- ----------
Total Operating Expenses 3,222,489 1,314,364 1,248,360 6,730,425
----------- ---------- ---------- ----------
OPERATING LOSS 2,592,801 1,314,364 1,248,360 6,100,737
----------- ---------- ---------- ----------
OTHER EXPENSE (INCOME)
Interest expense - Stockholder debt 2,910 - 109,429 212,271
Interest expense - Other 1,103 - - 1,103
Interest income (8,761) (4,095) - (12,856)
Loss on disposal of equipment - 757 2,817 3,574
----------- ---------- ---------- ----------
Total Other (Income)
Expense, Net (4,748) (3,338) 112,246 204,092
----------- ---------- ---------- ----------
NET LOSS $ 2,588,053 $ 1,311,026 $ 1,360,606 $ 6,304,829
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
AVERAGE SHARES OUTSTANDING
(Note 2) 17,190,915 11,775,976 7,104,092
----------- ---------- ----------
----------- ---------- ----------
LOSS PER SHARE (Notes 2 and 14) $ .15 $ .11 $ .19
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 4 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Stockholders' Equity (Deficit)
Years Ended December 31, 1995, 1994, and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock
$.01 Par Value
(25,000,000 Shares Common Stock
Authorized) No Par Value
------------------------- -------------------------
Shares Amount Shares Amount
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE, MAY 1, 1990 (INCEPTION)
May 1, 1990 - Sale of 1,000 shares -
$1 per share - $ - 1,000 $ 1,000
NET LOSS THROUGH 1991 - - - -
----------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1991 - - 1,000 1,000
NET LOSS FOR THE YEAR - - - -
----------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1992 - - 1,000 1,000
OPTION AGREEMENT - $1.00 per share (Note 10) - - 799,200 799,200
NET LOSS FOR THE YEAR - - - -
----------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1993 - - 800,200 800,200
OPTION AGREEMENT - $1.00 per share (Note 10) - - 199,800 199,800
THREE-FOR-ONE STOCK SPLIT (Note 14) - - 2,000,000 -
SALES OF STOCK (Note 6) - - 500,000 1,250,000
CONVERSION OF STOCKHOLDER LOAN - - 160,000 400,000
STOCK EXCHANGED FOR SERVICES (Note 6) - - 62,000 155,000
STOCK ISSUANCE COSTS (Note 6) - - - (263,833)
NET LOSS FOR THE YEAR - - - -
----------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1994 - - 3,722,000 2,541,167
SALE OF STOCK (Note 6) - - 1,161,000 3,035,000
STOCK EXCHANGED FOR SERVICES (Note 6) - - 176,500 441,250
STOCK ISSUANCE COSTS (Note 6) - - - (330,000)
EFFECT OF MERGER (Note 2) 21,208,000 212,080 (5,059,500) (5,687,417)
NET LOSS FOR THE YEAR - - - -
----------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1995 21,208,000 $ 212,080 $ - $ -
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 5 -
<PAGE>
EXHIBIT C
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional during the
Paid-In Development
Capital Stage
----------- -----------
<S> <C> <C>
Balance, May 1, 1990 (Inception)
May 1, 1990 - Sale of 1,000 shares -
$1 per share $ - $ -
Net Loss through 1991 - (379,561)
----------- -----------
Balance, December 31, 1991 - (379,561)
Net Loss for the Year - (665,583)
----------- -----------
Balance, December 31, 1992 - (1,045,144)
Option Agreement - $1.00 per share (Note 10) - -
Net Loss for the Year - (1,360,606)
----------- -----------
Balance, December 31, 1993 - (2,405,750)
Option Agreement - $1.00 per share (Note 10) - -
Three-for-One Stock Split (Note 14) - -
Sales of Stock (Note 6) - -
Conversion of Stockholder Loan 1,669,361 -
Stock Exchanged for Service (Note 6) - -
Stock Issuance Costs (Note 6) - -
Net Loss for the Year - (1,311,026)
----------- -----------
Balance, December 31, 1994 1,669,361 (3,716,776)
Sale of Stock (Note 6) - -
Stock Exchanged for Service (Note 6) - -
Stock Issuance Costs - -
Effect of Merger 5,475,337 -
Net Loss for the Year - (2,588,053)
----------- -----------
Balance, December 31, 1996 $ 7,144,698 $(6,304,829)
----------- -----------
----------- -----------
</TABLE>
- 5a -
<PAGE>
EXHIBIT D
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
May 1, 1990
(Inception)
through
December 31,
1995 1994 1993 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,588,053) $ (1,311,026) $ (1,360,606) $ (6,304,829)
------------ ------------ ------------ ------------
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 13,136 4,798 19,993 59,930
License income received in stock (629,688) - - (629,688)
Services paid in stock 441,250 - - 441,250
Interest on stockholder loans 2,910 - 109,429 212,271
Provision for losses on employee advances 82,908 - 127,532 299,055
Loss on disposal of equipment - 757 2,817 3,574
(Increase) decrease in prepaid expenses (93,427) (6,573) 1,425 (100,000)
Increase in
Accounts payable 139,373 40,231 16,794 254,889
Accrued expenses 7,874 2,408 1,717 12,934
------------ ------------ ------------ ------------
Total Adjustments (35,664) 41,621 279,707 554,215
------------ ------------ ------------ ------------
Net Cash Used in Operating
Activities (2,623,717) (1,269,405) (1,080,899) (5,750,614)
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment - 500 - 500
Capital expenditures (14,784) (20,004) (11,725) (70,156)
Net advances to employee and related company (82,908) - (127,532) (299,055)
Patents and other expenditures (28,023) (73,946) - (128,396)
------------ ------------ ------------ ------------
Net Cash Used in Investing Activities (125,715) (93,450) (139,257) (497,107)
------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayments of) checks issued in excess
of funds on deposit - (31,745) 30,156 -
Net borrowings from stockholders 231,484 775,000 1,190,000 3,090,484
Net repayments to affiliated company - (18,689) - -
Proceeds from issuance of common stock 3,035,000 1,250,000 - 4,286,000
Payment of stock issuance costs (330,000) (58,833) - (388,833)
---------- ---------- ---------- ----------
Net Cash Provided by Financing
Activities 2,936,484 1,915,733 1,220,156 6,987,651
---------- ---------- ---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 187,052 552,878 - 739,930
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 552,878 - - -
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 739,930 $ 552,878 $ - $ 739,930
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 6 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the company and
its wholly owned subsidiary after eliminating material intercompany balances and
transactions.
CASH EQUIVALENTS
For purposes of the statements of cash flows, the company considers all highly
liquid debt investments purchased with original maturities of three months or
less and money market accounts to be cash equivalents. As of December 31, 1995,
substantially all funds are held in a money market account at one financial
institution. The company does not believe it is exposed to any significant
credit risk on cash equivalents.
INVESTMENT SECURITIES
As of December 31, 1995, marketable equity securities have been categorized as
available for sale and as a result are stated at fair value. These securities
are held for noncurrent uses, such as capital expenditures, business expansion
or acquisitions and therefore are classified as long-term assets. Unrealized
holding losses are included as a component of stockholders' equity until
realized.
PROPERTY AND EQUIPMENT
The company's policy is to depreciate property and equipment over the estimated
useful lives of the assets as indicated in the following tabulation by use of
accelerated methods.
YEARS
Equipment 5
Furniture 7
Test equipment 5
LOSS PER SHARE
Loss per share is based upon the weighted average number of shares outstanding
during the year (Note 2).
- 7 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
INTANGIBLES
Legal fees incurred for patents allowed and/or pending have been capitalized.
The company received approval for several patents in 1995 which are being
amortized over 17 years. No amortization is being taken on patents not yet
issued as of December 31, 1995.
Legal fees incurred for trademarks pending have been capitalized. No
amortization was taken in 1995 as the trademarks had not been issued as of
December 31, 1995.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, advances receivable and
accounts payable are a reasonable estimate of their fair value. Investment
securities are carried at their fair value.
NOTE 2 - NATURE OF OPERATIONS
The company was formed in Chicago, Illinois in May 1990. The company is a
development stage enterprise and was founded to develop an electronic device
(ED) capable of adding modem, video data and telephone features to an ordinary
television receiver over a telephone line. The company is currently engaged in
the continuing development of that product and certain initial marketing
efforts. In 1995, the product has reached the demonstration stage, and the
company is seeking partners with software capabilities to utilize the ED
technology.
On November 28, 1995, the company merged with Global Telephone and
Communications, Inc. (GTCI) and reorganized under Section 368(a)(1)(B) of the
Internal Revenue Code. The merger was executed by an exchange of four shares of
GTCI stock for every share of Viscorp stock, resulting in the stockholders of
the former Viscorp retaining voting control over the merged entity. Accordingly,
for accounting purposes, the acquisition has been treated as a recapitalization
of Viscorp with Viscorp as the acquiror (reverse acquisition). The 1994 and
1993 loss per share and average shares outstanding amounts have been restated to
include the effect of the recapitalization due to the merger.
- 8 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
NOTE 2 - NATURE OF OPERATIONS (Continued)
Upon completion of the reorganization, GTCI changed its name to Viscorp. Pro
forma results of operations have not been presented because the effects of this
acquisition were not significant.
NOTE 3 - CASH AND CASH EQUIVALENTS
1995 1994
-------- --------
Cash $8,547 $5,564
Money market funds* 731,383 -
U.S. Treasury Bill* - 547,314
-------- --------
$739,930 $552,878
-------- --------
-------- --------
*At cost (which approximates fair value)
NOTE 4 - INVESTMENT SECURITIES
Investment securities classified as noncurrent assets as of December 31, 1995
include marketable equity securities with a cost of $629,688, gross unrealized
losses of $345,313 and an estimated fair value of $284,375.
NOTE 5 - INTANGIBLES
Intangible assets consist of the following:
1995 1994
------- -------
Patents and patents pending $80,194 $73,946
Trademark and trademarks pending 17,105 1,000
------- -------
97,299 74,946
Less accumulated amortization (2,704) -
------- -------
$94,595 $74,946
------- -------
------- -------
- 9 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
NOTE 6 - COMMON STOCK
In November 1994, the company entered into an agreement with a placement agent
for a private offering. This private offering resulted in the sale of 500,000
units at a purchase price of $2.50 per unit for a total consideration of
$1,250,000. Each unit consisted of one share of common stock, one class A
warrant and one class B warrant. The placement agent received 50,000 shares of
common stock and 12,000 expense units valued at $155,000 as compensation for its
services and costs. Each expense unit was composed of one share of common
stock, one class A warrant and one class B warrant. In addition, attorney and
finder's fees totaling $108,833 were incurred and are included as stock issuance
costs. Also, one of the consultants participating in the private placement was
granted an option, which was exercisable until March 8, 1998, for the purchase
of 20,000 shares at the price of $2.50 per share. This fee was revised in
1995. The previous options granted were cancelled and in exchange the
consultant received $25,000 in cash, 10,000 shares of common stock with a deemed
value of $25,000 and an option, which is exercisable until November 27, 2000,
for the purchase of 30,000 shares at the price of $2.50 per share.
Each class A warrant entitled the registered holder to purchase one share of
common stock at an exercise price of $5.00 at any time on or before March 1,
1995. Each class B warrant entitled the registered holder to purchase one share
of common stock at an exercise price of $7.50 at any time on or before April 30,
1995. None of the class A warrants were exercised by the March 1, 1995
expiration date, nor were any class B warrants exercised by the April 30, 1995
expiration date.
During 1995, the company entered into an agreement with Dextro Establishment,
located in Liechtenstein in Europe to raise equity financing solely from
offshore purchasers and purchasers who may be deemed "accredited investors" as
those terms are generally defined under Regulation S and Regulation D,
respectively, promulgated by the U.S. Securities and Exchange Commission. A
total of 1,100,000 shares of the company's stock were issued at a purchase price
of $2.50 per share for a total of $2,750,000. The placement agent received
finder's fees totaling $330,000 which are included as stock issuance costs.
Prior to signing the agreement with Dextro, the company was able to raise
$285,000 through the issuance of 53,000 shares at a purchase price of $5.00 per
share and 8,000 shares at a purchase price of $2.50 per share.
In addition, an officer of the company and outside consultants received 150,000
and 26,500 shares, respectively, during 1995 as payment for services rendered,
valued at the price of $2.50 per share.
- 10 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
NOTE 7 - INCOME TAXES
The company had elected to be taxed as an S corporation under provisions of the
Internal Revenue Code. Under these provisions, the company did not pay federal
and state corporate income taxes on its taxable income but was responsible for
state replacement taxes. The election was terminated effective November 12,
1994.
The company has net operating loss carryforwards of approximately $3,325,000 for
federal and Illinois tax return purposes that may be offset against future
taxable income. If not used, the carryforwards will expire as follows:
Operating
Losses
----------
2009 $1,076,200
2010 2,249,000
----------
$3,325,200
----------
----------
Because of the uncertainty of ever utilizing the loss carryforwards, a deferred
tax asset of approximately $1,330,100 has been offset in total by a valuation
allowance.
Principal reasons for variations between the statutory federal rate and the
effective rates were as follows:
1995 1994
------- -------
U.S. federal statutory income tax rate 34.00% 34.00%
State income taxes, net of federal tax benefit - 4.71
Permanent differences regarding compensation - 17.85
S Corporation income - (25.29)
Valuation allowance (34.00) (32.01)
Other - .74
------- -------
-% -%
------- -------
------- -------
- 11 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
NOTE 8 - OPERATING LEASES
The company entered into one-year leases for its office facilities. The lease
for one of its offices is with a significant stockholder. Total rental expense
for all operating leases, except those with terms of one month or less that were
not renewed, was $8,400, $15,650 and $17,100 for the years ended December 31,
1995, 1994 and 1993, respectively. The amount of related party rent expense
included above was $8,400, $9,100 and $8,400 for the years ended December 31,
1995, 1994 and 1993, respectively. Effective March 1, 1996, the company entered
into a one-year lease with a nonrelated party at an annual rental of $43,960.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
EMPLOYMENT AGREEMENTS
The company has entered into separate employment agreements with four of its
officers. All agreements expire November 11, 1997. All agreements
automatically renew for an additional one- year period unless the company or the
employee notifies the other party not less than 120 days prior to the expiration
of the agreement of the company's or the employee's intent to let the agreement
expire.
LITIGATION
In December 1994, a former director and officer of the company filed a lawsuit
in a California court against the company and several of its officers and
directors alleging that the company violated an alleged agreement with him to
become an executive officer of the company and claims damages in excess of
$5,000,000. The lawsuit alleges, among other things, that such acts constitute
breach of fiduciary duty, breach of oral agreement, interference with
contractual relations, conspiracy, restitution and fraud. This lawsuit is in
the discovery stage but the company believes the allegations are without merit
and intends to vigorously defend itself and its directors and officers against
the action. The company has filed a counterclaim in this matter.
- 12 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
NOTE 10 - STOCK OPTIONS
On May 13, 1993, the company granted two stockholders (holders) an option to
purchase 799,200 and 199,800 shares (unadjusted for 1994 stock split - see Note
15) of common stock. The option price was $1 per share. The option could only
be exercised by the holder for no less than all of the shares. As of December
31, 1993, options to purchase 199,800 shares of common stock were outstanding.
On May 13, 1993 and August 31, 1994, options were exercised for 799,200 and
199,800 shares (unadjusted for 1994 stock split - see Note 15), respectively.
Payment was executed by retiring stockholder advances in the amount of $799,200
and $199,800, respectively.
In November 1994, the company adopted a stock option plan that reserved 465,000
authorized but unissued shares of common stock. Also in November 1994, the
company authorized the issue of options to purchase 250,600 shares of common
stock at an exercise price of $2.50 per share. These options were issued to
employees who are officers of the company. Options to purchase 53,200 shares of
the common stock were immediately vested with the balance of the options vesting
over a two-year period commencing February 1, 1995. These options will expire
in November 2004. None of these options were exercised during the 1994 fiscal
year. As of December 31, 1994, options to purchase 250,600 shares of common
stock were outstanding.
In September 1995, the company adopted a stock option plan which will reserve
2,400,000 authorized but unissued shares of common stock at an exercise price of
$.625. These options have been issued to employees who are officers of the
company and various individuals and companies who rendered services to the
company. The date to grant options expires June 30, 1996 and the options expire
on June 30, 2001. There are 1,573,700 options outstanding as of December 31,
1995. The options referred to in the prior paragraph were rolled into this
plan.
NOTE 11 - RELATED PARTY TRANSACTIONS
The company made advances to a stockholder during 1993. The company provided an
allowance for the full amount of this receivable, as the company did not expect
these advances to be repaid, resulting in bad debt expense of $127,532 in 1993.
During 1994, this receivable was forgiven and the receivable and related
allowance were written off.
In addition, the company advanced monies to a stockholder in 1995 and has
provided an allowance of the full amount of the receivable of $57,908, as the
company does not expect to be repaid.
See Notes 6 and 8 for additional related party disclosures.
- 13 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
NOTE 12 - LICENSE FEE INCOME
In January 1995, the company entered into a license agreement with Digital
Sciences, Inc. to license the ED technology and services. The agreement
provides for Digital Sciences, Inc. to have an exclusive license to use ED
technology and services in the health care industry in the United States and
Canada for a period of ten years. The company received on February 27, 1995 an
initial license fee payable in the form of 250,000 shares of Digital Sciences,
Inc. with a fair value of $629,688, reflecting a discount from trading price as
the shares were not yet registered. The company recognized this stock receipt
as income during 1995 as all the requirements of the company under the agreement
were completed during the year. In addition, Digital Sciences, Inc. will pay a
license fee based on a percentage of gross revenue derived from the use of the
ED technology and services. The company did not receive any such license fees
in 1995.
NOTE 13 - LICENSE FEE EXPENSE
In 1994, as part of an agreement with NTN Communications, Inc. (NTN), the
company paid and expensed a license fee of $200,000. The initial term of the
agreement expires December 13, 2001. Unless terminated, in accordance with the
terms of the agreement, the agreement will be extended for a period of seven
years. The company has a nonexclusive worldwide license to promote, market and
develop an online computer service (service), which will be provided by NTN, for
use with the company's product. The technology of the service provides two-way
interactive computerized games that are broadcast to multiple locations, can be
played by multiple participants at each location and allow the retrieval and
processing of data entered by the participants. The company is required to pay
usage royalties as defined in the agreement.
NOTE 14 - COMMON STOCK SPLIT
In November 1994, the board of directors authorized a three-for-one stock split
of common shares effective immediately, which resulted in an increase of
authorized shares from 1,000,000 as of December 31, 1993 to 10,000,000 as of
December 31, 1994. All loss per share and average shares outstanding amounts
included in these financial statements have been adjusted for the stock split.
- 14 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
NOTE 15 - UNCERTAINTY - GOING CONCERN
The accompanying financial statements have been prepared assuming the company
will continue as a going concern. The company cannot currently generate
sufficient revenues and cash flow from operations to meet its business
obligations. Therefore, future operations are predicated on raising additional
capital in debt or equity markets. These factors raise substantial doubt about
the company's ability to continue as a going concern. Any implementation of
the commercialization of the electronic device is dependent upon obtaining
additional financing as may be necessary to ultimately achieve a level of sales
adequate to support the company's operations. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Management is continuing its efforts to obtain additional funding from private
and venture capital sources and, with its merger with GTCI (Note 2), from public
sources so the company can meet its obligations and sustain future operations.
See Note 16 for additional information.
NOTE 16 - SUBSEQUENT EVENTS
In January 1996, the company finalized an agreement with Amiga Technologies GmbH
(Amiga), a German company, for a nonexclusive, nontransferable license to the
Amiga computer operating system technology. The initial term of the agreement
was to expire December 26, 1998. Unless terminated, in accordance with the
terms of the agreement, the agreement is to be renewable for subsequent three-
year periods at the licensee's option. In January 1996, the company paid an
initial royalty deposit of $450,000 to Amiga. The company is required to pay
usage royalties as defined in the agreement.
In April 1996, the company signed a letter of understanding with Amiga and its
parent, Escom AG, to acquire inventory and intellectual property, including
patents and the Amiga computer operating system referred to above. The
tentative acquisition price of the aforementioned assets is $40 million and is
subject to normal due diligence and the completion of the transaction. The
company intends to sell the inventory in the normal course of business through
distribution agreements. In addition, the company intends to incorporate the
patented technology as an integral component of the ED device. In the event
this transaction is closed, the royalty deposit above will be used to offset the
acquisition price.
In February 1996, the company raised $50,000 through the issuance of 20,000
shares of common stock. In addition, from March 1 through April 11, 1996, the
company raised $1,000,000 through the issuance of 500,000 shares of common stock
and $250,000 through the exercise of 400,000 options at a price of $.625 per
share which was convertible into 400,000 shares.
- 15 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- --------------------------------------------------------------------------------
NOTE 16 - SUBSEQUENT EVENTS (Continued)
On February 5, 1996, the stockholders and board of directors approved an
increase in the number of authorized common shares from 25,000,000 to
50,000,000.
On March 22, 1996, the stockholders of Digital Sciences, Inc. (Notes 4 and 12)
approved the acquisition of Digital Sciences, Inc. by Resource Finance Group
Ltd. Digital Sciences, Inc. merged into DSI Acquisition Corp., a newly-formed,
wholly owned subsidiary of Resource Finance Group Ltd. On April 1, 1996,
Resource Finance Group Ltd. merged into Intelligent Decision Systems Inc., a
wholly owned subsidiary of Resource Finance Group Ltd. Each Digital Sciences,
Inc. common share was converted into one common share of Intelligent Decision
Systems Inc. As of April 11, 1996, Intelligent Decision Systems Inc.'s common
stock was traded on the OTC Bulletin Board at approximately $2.25 per share.
The company's per share carrying value for these shares is $1.75 as of December
31, 1995.
NOTE 17 - RECLASSIFICATION
For comparability, the 1994 and 1993 financial statements reflect
reclassifications where appropriate to conform to the financial statement
presentation used in 1995.
- 16 -
<PAGE>
SCHEDULE B-1
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Other General and Administrative Expenses
Years Ended December 31, 1995, 1994 and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
May 1, 1990
(Inception)
through
December 31,
1995 1994 1993 1995
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Salaries $166,483 $47,427 $ - $213,910
Payroll taxes 10,887 3,338 - 14,225
Equipment rental - 722 - 722
Advertising - 69 38,214 46,545
Business plan 39,141 2,500 - 41,641
Accounting 59,811 46,920 14,050 136,256
Automobile - 14,159 12,829 37,773
Depreciation and amortization 8,161 3,235 19,993 53,392
Dues and subscriptions - 1,621 1,959 4,620
Delivery - 4,994 - 4,994
Office 25,812 2,489 2,182 34,912
Miscellaneous 26,820 12,152 10,471 49,845
Promotion 16,372 15,318 46,569 94,734
Repair and maintenance 1,344 131 1,312 4,875
Rent and utilities 8,610 15,969 17,653 67,231
Bank charges 486 479 1,385 2,350
Insurance 19,016 2,125 - 21,141
Telephone 58,840 34,372 26,487 137,321
Printing - 5,406 14,534 20,229
Bad debts - Related parties 57,908 - 127,532 274,055
Bad debts - Other 25,000 - - 25,000
Directors' fee 37,500 4,500 - 42,000
Outside services - 98,522 - 98,522
-------- -------- -------- ----------
Total (Exhibit B) $562,191 $316,448 $335,170 $1,426,293
-------- -------- -------- ----------
-------- -------- -------- ----------
</TABLE>
See independent auditor's report regarding supplemental information.
- 17 -
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this amendment to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
VISCORP
August 19, 1996 By: /s/ Jerome Greenberg
---------------------
VisCorp, Chairman of the Board
<PAGE>
ARTICLES OF EXCHANGE
FIRST: The name and place on incorporation of the corporation whose shares
will be acquired is Visual Information Services Corp., a corporation duly
organized and existing in the state of Illinois (the "Illinois corporation")
(the laws of which state permit this exchange) and Global Telephone and
Communications, Inc., duly organized and existing in the state of Nevada (the
"Nevada Corporation")
SECOND: The Plan of Exchange has been adopted by the board of directors of
each corporation that is a party to the exchange;
THIRD: The approval of the stockholders of both of these corporations were
required and received and that the stockholders of both corporations took such
action without a meeting but by written consents thereto signed by stockholders
holding at least a majority of the voting power in the Nevada Corporation and at
least 2/3 of the voting power in the Illinois corporation.
(a) In the Nevada corporation there are 970,000 shares of common stock
outstanding of which 720,000 shares have voted by written consent in
favor of the Plan; and
(b) In the Illinois corporation, as of October 1, 1995, there were
4,477,000 shares of Common Stock outstanding and in excess of
3,050,000 shares have voted by written consent in favor of the plan.
FOURTH: The complete executed plan of exchange is on file at the place of
business of the Nevada corporation located at 3061 Probasco Way, Sparks, Nevada
89431 and a copy of the plan will be furnished by the Nevada Corporation, on
request and without cost to any stockholder of any corporation which is a party
to this plan of exchange.
Global Telephone and Communications, Inc.
By
-----------------------------------------
Kim L. Farran, President
By
-----------------------------------------
Kim L. Farran, Secretary
State of Nevada )
)s.s.
County of Washoe )
On November 20th, 1995 personally appeared before me, a Notary Public Kim
L. Farran who acknowledged that he executed the above instrument.
--------------------------------------------
Signature of Notary
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
CAMPER CLUBS OF AMERICA, INC.
ARTICLE I
The name of the Corporation shall be CAMPER CLUBS OF AMERICA, INC.
ARTICLE II
The purpose for which this Corporation is organized is the transaction of
any or all lawful business for which corporations may be incorporated under the
laws of the State of Nevada, as may be amended from time to time.
ARTICLE III
The Corporation initially intends to conduct the business of owning and
operating recreational vehicle parks and campgrounds.
ARTICLE IV
The Principal office or place of business of the Corporation shall be in
Washoe County at 741 Skiway, Incline Village, Nevada.
ARTICLE V
The existence of the Corporation shall be perpetual.
ARTICLE VI
The Corporation shall have authority to issue 10,000,000 shares of Common
Stock $.01 par value per share.
ARTICLE VII
The name and address of the initial agent is: A.J. Banford, 741 Skiway,
Incline Village, Nevada 89402.
ARTICLE VIII
The members of the governing Board shall be called Directors. The number
of persons to serve on the Board of Directors shall be fixed by the Bylaws. The
initial Board of Directors
<PAGE>
shall consist of three (3) Directors. The persons who are to serve as Directors
until the first Annual Meeting of Shareholders or until their successors are
elected and qualified are:
Helen J. Brown Robert Wessels
4801 N. LaLomitz 9757 Mira Del Rio
Tucson, Arizona 85704 Sacramento, CA 95827
Steven Clements
1580 N. Kolb Road
Tucson Arizona 85715
ARTICLE IX
The names of the incorporators of the Corporation and their addresses are:
Robert Wessels
9757 Mira Del Rio
Sacramento, CA 95827
Helen J. Brown
4801 N. LaLomitz
Tucson, Arizona 85704
ARTICLE X
The Board of Directors of the Corporation may, from time to time,
distribute on a pro rata basis to its shareholders, out of the capital surplus
of the Corporation, a portion of its assets, in cash or property.
ARTICLE XI
The Board of Directors of the Corporation may, from time to time, cause the
Corporation to purchase its own shares to the extent of the unreserved and
unrestricted earned and capital surplus of the Corporation.
ARTICLE XII
The Corporation may issue rights and options to purchase shares of stock of
the Corporation to Directors, Officers or Employees of the Corporation or any
affiliate thereof, and no shareholder approval or ratification of any such
issuance of rights and options shall be required.
-2-
<PAGE>
ARTICLE XIII
The stock of the Corporation after payment of the subscription price and
when issued shall not be assessable.
IN WITNESS WHEREOF, we have hereunto executed this instrument this 25th day
of May, 1984.
/s/ Helen Brown
---------------------------------------
Helen Brown
/s/ Robert Wessels
---------------------------------------
Robert Wessels
STATE OF ARIZONA )
) ss.
COUNTY OF PIMA )
This instrument was acknowledged before me this 25th day of May, 1994, by
HELEN BROWN and ROBERT WESSELS.
---------------------------------------
Notary Public
My Commission Expires:
- -----------------------
-3-
<PAGE>
AMENDMENT TO
ARTICLES OF INCORPORATION
OF
CAMPER CLUBS OF AMERICA, INC.
A NEVADA CORPORATION
On the 8th day of August, 1987, the following resolution was adopted for
the purposes of amending the Articles of Incorporation of the above captioned
corporation:
RESOLVED, that the Articles of Incorporation of said corporation are
hereby amended by adding thereto as Section XIV the provisions of NRS.78,
Section 2 and 3 as amended and set forth as follows:
The Corporation shall indemnify and hold the Officers and Directors of the
Corporation harmless and free from liability for any claims received
against said Officer and/or Director in the performance of their duties on
behalf of the Corporation and shall, further, reimburse said persons for
any legal expenses incurred in the defense of such claim pursuant to
NRS.78, Section 2 and 3 as amended.
The undersigned, Fred V. Schiemann, Secretary of the above captioned
corporation, hereby certifies and confirms that the above resolution is a true,
correct and complete copy of the resolution adopted at the special meeting of
the Board of Directors and Shareholders at 136 Vista Street, in the City of
Reno, County of Washoe on the 8th day of August, 1987, at 11:00 in the a.m. of
said day.
IN WITNESS WHEREOF, the undersigned has executed this Amendment and
Certificate this 11th day of August, 1987.
/s/ Helen J. Brown /s/ Fred V. Schiemann
- -------------------------------- --------------------------------------
Helen J. Brown Fred V. Schiemann
President Secretary/Treasurer
<PAGE>
AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
CAMPER CLUBS OF AMERICA, INC.
The undersigned, being an Officer and Director of the Corporation, and in
pursuance of the corporate laws of the State of Nevada, being Chapter 78 of the
Nevada Revised Statutes, do hereby adopt the following Amendments to its
Articles of Incorporation:
(1) The number of authorized shares of common stock is twenty-five (25)
million, par value $.001.
(2) There are 3,500,000 shares of non-cumulative Series A Convertible
Preferred Stock, paying a 8% dividend, semi-annually authorized. The
conversion price to common stock will be $1.00 per share.
The above Amendments to the Articles of Incorporation were adopted by the
shareholders of the Corporation on the 27th day of March, 1988, by a majority
vote of the shareholders of the corporation.
Dated this 27th day of March, 1988.
--------------------------
HELEN J. BROWN, PRESIDENT
- -------------------------------------------
FRED V. SCHIEMANN, Secretary/Treasurer-Director
- ---------------------------- ----------------
Notary Seal
STATE OF NEVADA
COUNTY OF WASHOE
ON DECEMBER 9TH, 1991, PERSONALLY APPEARED BEFORE ME, A NOTARY PUBLIC, WHO
ACKNOWLEDGED THAT FRED V. SCHIEMANN AND HELEN J. BROWN EXECUTED THE ABOVE
INSTRUMENT.
---------------------
Notary
<PAGE>
AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
CAMPER CLUBS OF AMERICA, INC.
We the undersigned, being the directors and officers of the corporation, and the
pursuance of the corporate laws of the State of Nevada, being Chapter 78 of the
Nevada Revised Statutes, do hereby adopt the following Amendment to its Articles
of Incorporation:
1. The name of the corporation is B.T.C., Enterprises
The above amendment to the Articles of Incorporation was adopted by the
shareholders of the Corporation on the 25th day of October, 1991, by a majority
vote of the shareholders of the corporation.
Dated this 1st day of November, 1991.
/s/ Helen J. Brown
- -------------------------------------------------
Helen J. Brown, President & Director
/s/ Fred V. Schiemann
- -------------------------------------------------
Fred V. Schiemann, Secretary/Treasurer & Director
/s/ William P. Long
- -------------------------------------------------
William P. Long, Director
State of Nevada )
) ss
County of Washoe )
On this 1st day of November, 1991, personally appeared before me, a notary
public, Helen J. Brown, Fred V. Schiemann, and William P. Long, who acknowledged
that they executed the above instrument.
- ---------------------------------
Notary Public
-6-
<PAGE>
AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
B.T.C. ENTERPRISES, INC.
We the undersigned, being directors and Officers of the corporation, and in
pursuance of the corporate laws of the State of Nevada, being Chapter 78 of the
Nevada revised Statutes, do hereby adopt the following Amendment to its Articles
of Incorporation.
ARTICLE 1
The name of the corporation shall be CARAVELLE HOLDING, INC.
ARTICLE IV
There shall be a reverse split of the common shares of one new share for each
two shares previously issued and outstanding. The corporation shall have the
authority to issue twenty five million (25,000,000) shares of common stock two
tenths of one cent ($.002) par value per share.
The company shall cancel all 3,500,000 of the previously authorized 3,500,000
shares of non-cumulative Series A Preferred Stock paying an 8% dividend.
Each share of common stock shall be entitled to one vote on all matters and
cumulative voting shall be denied.
There shall be no preemptive rights as to any of the shares of common stock,
which the corporation is authorized to issue.
The above amendments to the Articles of Incorporation was adopted by the
shareholders of the Corporation on the 21st day of December, 1991, by a majority
vote of the shareholders of the Corporation.
<PAGE>
This 21st day of December, 1991.
/s/ Helen J. Brown
- -----------------------------------------
Helen J. Brown
President & Director
/s/ Fred V. Schiemann
- -----------------------------------------
Fred V. Schiemann
Secretary & Director
State of Nevada )
) ss
County of Washoe )
On this 21st Day of December, 1991, personally appeared before me, a notary
public, Helen J. Brown & Fred V. Schiemann who acknowledged that they executed
the above instrument.
- ----------------------------
Notary Public
-2-
<PAGE>
CERTIFICATE TO DECREASE NUMBER OF AUTHORIZED SHARES
PURSUANT TO NRS Section 78.207
of
CARAVELLE HOLDING, INC.
Pursuant to the provisions of NRS, Section 78.207(4), the undersigned
president and secretary of CARAVELLE HOLDING, INC., a Nevada corporation (the
"Corporation"), do hereby certify as follows:
1. The name of the Corporation is:
CARAVELLE HOLDING, INC.
2. The Board of Directors of the Corporation, by Unanimous Written
Consent Pursuant to NRS Section 78.315(2) dated April ___, 1994, adopted
resolutions (the "Resolutions") in accordance with NRS Section 78.207(1) to
decrease the number of authorized shares of common stock (the "Common Stock") of
the Corporation and correspondingly decrease the number of issued shares of the
same class held by each stockholder of record at the Effective Time of the
change (as herein defined). The Resolutions also provided for a corresponding
change in the par value of the Common Stock.
3. The following is provided as required by NRS Section 78.207(4):
(a) THE CURRENT NUMBER OF AUTHORIZED SHARES AND THE PAR VALUE, IF
ANY, OF EACH CLASS AND SERIES, IF ANY, OF SHARES BEFORE THE
CHANGE. The current number of authorized shares of Common Stock
is 25,000,000 shares. The par value of the Common Stock before
the change is $0.002 per share. The Corporation is not
authorized to issue any other class or series of shares.
(b) THE NUMBER OF AUTHORIZED SHARES AND THE PAR VALUE, IF ANY, OF
EACH CLASS AND SERIES, IF ANY, OF SHARES AFTER THE CHANGE. The
number of authorized shares of Common Stock after the change
shall be 5,000,000 shares. The par value of the Common Stock
after the change shall be $0.01 per share. After the change, the
Corporation shall not be authorized to issue any other class or
series of shares other than 5,000,000 shares of Common Stock, par
value $0.01 per share.
(c) THE NUMBER OF SHARES OF EACH AFFECTED CLASS AND SERIES, IF ANY,
TO BE ISSUED AFTER THE CHANGE IN EXCHANGE FOR EACH ISSUED SHARE
OF THE SAME CLASS OR SERIES. The affected class is Common Stock.
At the Effective Time of the change (as defined herein), each
issued share of Common Stock shall be reduced and converted into
and shall become two-tenths of a share (.2 shares) of Common
Stock, par value $0.01 per share, and that the number of shares
of Common Stock held by each shareholder after the
-1-
<PAGE>
Effective time shall equal the number of shares of Common Stock
held by them immediately prior to the Effective Time divided by
five (5).
(d) THE PROVISIONS, IF ANY, FOR THE ISSUANCE OF FRACTIONAL SHARES, OR
FOR THE PAYMENT OF MONEY OR THE ISSUANCE OF SCRIP TO STOCKHOLDERS
OTHERWISE ENTITLED TO A FRACTION OF A SHARE AND THE PERCENTAGE OF
OUTSTANDING SHARES AFFECTED THEREBY. To the extent required in
connection with the holdings of any shareholder, the Corporation
shall issue fractional shares so that, for example, the holder of
11 shares immediately prior to the Effective Time shall hold,
after the Effective Time, 2.2 shares. No money will be paid to
any stockholder and no scrip will be issued to any stockholder
and the percentage of stockholders otherwise entitled to a
fraction of share that will receive money or scrip shall be zero
percent (0%).
(e) SHAREHOLDER APPROVAL REQUIREMENTS. Approval of the stockholders
is not required pursuant to NRS Section 78.207(1) and (2).
(f) WHETHER THE CHANGE IS EFFECTIVE ON FILING THE CERTIFICATE OR, IF
NOT, THE DATE AND TIME AT WHICH THE CHANGE WILL BE EFFECTIVE.
The change described in this certificate shall become effective
at 11:59 p.m. Pacific Daylight Time, on the date of filing in the
office of the Secretary of State of Nevada of this Certificate
(the "Effective Time").
DATED this 13th day of April, 1994.
/s/ Fred V. Schiemann
---------------------------------------
Fred V. Schiemann, President
/s/ Fred V. Schiemann
---------------------------------------
Fred V. Schiemann, Secretary
-2-
<PAGE>
STATE OF NEVADA )
) ss. ACKNOWLEDGEMENT OF PRESIDENT
County of Washoe )
On this 13th day of April, 1994, before me, the undersigned Notary Public,
personally appeared FRED V. SCHIEMANN, known to me or satisfactorily proven to
be the person whose name is subscribed to the foregoing instrument, and
acknowledged the he/she executed the same in the capacities and for the purposes
therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the
day and year first above written.
-------------------------------------------------
Notary Public
My Commission Expires:
- ---------------------
STATE OF NEVADA )
) ss. ACKNOWLEDGEMENT OF SECRETARY
County of Washoe )
On this 13th day of April, 1994, before me, the undersigned Notary Public,
personally appeared FRED V. SCHIEMANN, known to me or satisfactorily proven to
be the person whose name is subscribed to the foregoing instrument, and
acknowledged the he/she executed the same in the capacities and for the purposes
therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the
day and year first above written.
-------------------------------------------------
Notary Public
My Commission Expires:
- ---------------------
-3-
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF
CARAVELLE HOLDING, INC.
Pursuant to the provisions of NRS Section 78.390, the undersigned president
and secretary of CARAVELLE HOLDING, INC., a Nevada corporation (the
"Corporation"), do hereby certify as follows:
1. The Board of Directors of the Corporation, by Unanimous Written
Consent Pursuant to NRS Section 78.315(2) dated June ___, 1994, adopted
resolutions in accordance with NRS Section 78.390(1)(a) directing that the
Articles of Incorporation, as amended, be amended as follows:
(a) NAME CHANGE. Article I of the original Articles of Incorporation
is amended to read as follows:
"ARTICLE I
The name of the Corporation shall be: ONE PLUS, INC."
(b) CORRECTION OF SCRIVENER'S ERROR. The amendment to the Articles
of Incorporation of the Corporation filed on January 24, 1992 which purported to
amend "ARTICLE IV" was intended to refer to and amend "ARTICLE VI." The
reference in the center of page 1 of such January 24, 1992 amendment to "ARTICLE
IV" is hereby amended to read "ARTICLE VI."
(c) CHANGE IN AUTHORIZED CAPITAL STOCK. Article VI of the Articles
of Incorporation, as amended, is amended so as to increase the number of shares
of capital stock which the Corporation shall have the authority to issue to
twenty-five million (25,000,000) shares of common stock, par value $0.01 per
share. Such change shall not alter or change the issued and outstanding shares
of common stock of the Corporation. Article VI of the Articles of
Incorporation, as previously amended (including, without limitation, such
amendments as were filed on December 10, 1991, January 24, 1992 and May 19,
1994), is hereby deleted and the following is inserted in its place:
"ARTICLE VI
The Corporation shall be authorized to issue only one class
of stock which shall be Common Stock, par value $0.01 per share.
The total number of shares of stock which the Corporation shall
-1-
<PAGE>
have the authority to issue is twenty-five million (25,000,000)
shares of Common Stock, par value $0.01 per share."
2. The number of shares of Common Stock of the Corporation issued
and outstanding and entitled to vote on the amendment to the Articles of
Incorporation is five million (5,000,000) shares.
3. The foregoing amendment has been consented to and approved by
written consent pursuant to NRS Section 78.320 signed by stockholders holding
shares of stock of the Corporation entitling them to exercise at least a
majority of the voting power of each class of stock outstanding and entitled to
vote thereon.
DATED this _________ day of June, 1994.
/s/ William G. Perrot
--------------------------------------------
William G. Perrot, President
/s/ Fran Peter Archuleta
--------------------------------------------
Fran Peter Archuleta, Secretary
-2-
<PAGE>
STATE OF NEVADA )
) ss. ACKNOWLEDGEMENT OF PRESIDENT
County of Washoe )
On this 15th day of June, 1994, before me, the undersigned Notary Public,
personally appeared WILLIAM G. PERROT, known to me or satisfactorily proven to
be the person whose name is subscribed to the foregoing instrument, and
acknowledged that he/she executed the same in the capacities and for the
purposes therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the
day and year first above written.
-------------------------------------------------
Notary Public
My Commission Expires:
- --------------------
STATE OF NEVADA )
) ss. ACKNOWLEDGEMENT OF SECRETARY
County of Washoe )
On this 15th day of June, 1994, before me, the undersigned Notary Public,
personally appeared FRAN PETER ARCHULETA, known to me or satisfactorily proven
to be the person whose name is subscribed to the foregoing instrument, and
acknowledged that he/she executed the same in the capacities and for the
purposes therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the
day and year first above written.
-------------------------------------------------
Notary Public
My Commission Expires:
- --------------------
-3-
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
One Plus Inc.
--------------------------------
Name of Corporation
the undersigned James S. Dixon and
------------------------------------
President or Vice President
James S. Dixon of One Plus Inc.
- ------------------------------------- -------------------------------------
Secretary or Assistant Secretary Name of Corporation
do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the 7th day of November, 1994, adopted a resolution to amend the
original articles as follows:
Article I is hereby amended to read as follows:
The name of the Corporation shall be:
Global Telephone and Communications, Inc.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 1 MILLION that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/ James S. Dixon
---------------------------------------
President or Vice President
/s/ James S. Dixon
---------------------------------------
Secretary or Assistant Secretary
State of Arizona )
) ss.
County of Maricopa )
On January 10, 1995, personally appeared before me, a Notary Public, James
S. Dixon, who acknowledged that they executed the above instrument.
---------------------------------------
Signature of Notary
My Commission Expires
------------------
<PAGE>
The foregoing unanimous actions of the Board of Directors of Global
Telephone and Communications Inc., a Nevada corporation, be and hereby are taken
and adopted as acts of the Corporation effective as of the dates herein
provided.
/s/ Wayne Halliburton
---------------------------------------
Wayne Halliburton, DIRECTOR
/s/ Clara M. Dixon
---------------------------------------
Clara M. Dixon, DIRECTOR
/s/ Kim L. Farran
---------------------------------------
Kim L. Farran, DIRECTOR
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<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
Global Telephone and Communications, Inc.
---------------------------------------------------
NAME OF CORPORATION
We the undersigned Roger Remillard and
---------------------------------------------
PRESIDENT OR VICE PRESIDENT
Mitchell J. Melamed of Global Telephone and Communications, Inc.
- --------------------------------- ------------------------------------------
SECRETARY OR ASSISTANT SECRETARY NAME OF CORPORATION
do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened
and held on the 27th day of NOVEMBER, 1995, adopted a resolution to amend
the original articles as follows:
Article I is hereby amended to read as follows:
"ARTICLE I
The name of the corporation shall be VisCorp"
The number of shares of the corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation are 970,000 ; that the said
change(s) and amendment has been consented to and approved by a majority vote of
the stockholders holding at least a majority of each class of stock outstanding
and entitled to vote thereon.
Roger Remillard - Vice President
--------------------------------------------
PRESIDENT OR VICE PRESIDENT
Mitchell J. Melamed - Secretary
--------------------------------------------
SECRETARY OR ASSISTANT SECRETARY
State of ILLINOIS )
) ss.
County of COOK )
On November 27, 1995, personally appeared before me, a Notary Public,
ROGER REMILLARD and MITCHELL J. MELAMED who acknowledged that they executed
the above instrument.
--------------------------------------------
SIGNATURE OF NOTARY
<PAGE>
ARTICLES OF EXCHANGE
FIRST: The name and place on incorporation of the corporation whose shares
will be acquired is Visual Information Services Corp., a corporation duly
organized and existing in the state of Illinois (the "Illinois corporation")
(the laws of which state permit this exchange) and Global Telephone and
Communications, Inc., duly organized and existing in the state of Nevada (the
"Nevada Corporation")
SECOND: The Plan of Exchange has been adopted by the board of directors of
each corporation that is a party to the exchange;
THIRD: The approval of the stockholders of both of these corporations were
required and received and that the stockholders of both corporations took such
action without a meeting but by written consents thereto signed by stockholders
holding at least a majority of the voting power in the Nevada Corporation and at
least 2/3 of the voting power in the Illinois corporation.
(a) In the Nevada corporation there are 970,000 shares of common stock
outstanding of which 720,000 shares have voted by written consent in
favor of the Plan; and
(b) In the Illinois corporation, as of October 1, 1995, there were
4,477,000 shares of Common Stock outstanding and in excess of
3,050,000 shares have voted by written consent in favor of the plan.
FOURTH: The complete executed plan of exchange is on file at the place of
business of the Nevada corporation located at 3061 Probasco Way, Sparks, Nevada
89431 and a copy of the plan will be furnished by the Nevada Corporation, on
request and without cost to any stockholder of any corporation which is a party
to this plan of exchange.
Global Telephone and Communications, Inc.
By
-----------------------------------------
Kim L. Farran, President
By
-----------------------------------------
Kim L. Farran, Secretary
State of Nevada )
)s.s.
County of Washoe )
On November 20th, 1995 personally appeared before me, a Notary Public Kim
L. Farran who acknowledged that he executed the above instrument.
--------------------------------------------
Signature of Notary
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF
VISCORP
Pursuant to the provisions of NRS Section 78.390, the undersigned president
and secretary of VisCorp, a Nevada corporation (the "Corporation"), do hereby
certify as follows:
1. The Board of Directors of the Corporation, by Unanimous Written
Consent pursuant to NRS Section 78.315(2) dated March 5, 1996, adopted
resolutions in accordance with NRS Section 78.390(1)(a) directing that the
Articles of Incorporation, as amended, be amended as follows:
CHANGE IN AUTHORIZED CAPITAL STOCK. Article VI of the Articles of
Incorporation, as amended, is amended so as to increase the number of shares of
capital stock which the Corporation shall have the authority to issue to fifty
million (50,000,000) shares of common stock, par value $0.01 per share. Such
change shall not alter or change the issued and outstanding shares of common
stock of the Corporation. Article VI of the Articles of Incorporation, as
previously amended (including, without limitation, such amendments as were filed
on December 10, 1991, January 24, 1992, May 19, 1994, and June 15, 1994), is
hereby deleted and the following is inserted in its place:
"ARTICLE VI
The Corporation shall be authorized to issue only one class of
stock which shall be Common Stock, par value $0.01 per share.
The total number of shares of stock which the Corporation shall
have the authority to issue is fifty million (50,000,000) shares
of Common Stock, par value $0.01 per share"
2. The number of shares of Common Stock of the Corporation issued and
outstanding and entitled to vote on the amendment to the Articles of
Incorporation is Twenty-One Million Six Hundred Eight Thousand (21,608,000)
shares.
3. The foregoing amendment has been consented to and approved by written
consent pursuant to NRS Section 78.320 signed by stockholders holding shares of
stock of the Corporation entitling them to exercise at least a majority of the
voting power of each class of stock outstanding and entitled to vote thereon.
Dated this 19th day of March, 1996.
/s/ Jerome Greenberg
---------------------------------------------
Jerome Greenberg, President
/s/ Mitchell J. Melamed
---------------------------------------------
Mitchell J. Melamed, Secretary
<PAGE>
Exhibit 3.3
BYLAWS
OF
VISCORP
I. CORPORATION ARTICLES
1.01. REFERENCES THERETO. Any reference herein made to the
corporation's articles will be deemed to refer to its articles of incorporation
and all amendments thereto as at any given time on file with the Arizona
Corporation Commission, together with any and all certificates filed by the
corporation with the Arizona Corporation Commission pursuant to applicable law.
1.02. SENIORITY THEREOF. The articles will in all respects
be considered senior and superior to these bylaws, with any inconsistency to be
resolved in favor of the articles, and with these bylaws to be deemed
automatically amended from time to time to eliminate any such inconsistency
which may then exist.
II. CORPORATION OFFICES
2.01. KNOWN PLACE OF BUSINESS. The known place of business
of the corporation in the State of Arizona shall be the office of its statutory
agent unless otherwise designated in the articles. The corporation may have
such other offices either within or without the State of Arizona, as the board
of directors may designate or as the business of the corporation may require
from time to time.
2.02. CHANGE THEREOF. The known place of business and the
office of its statutory agent may be changed from time to time by the board of
directors by filing a statement with the Arizona Corporation Commission pursuant
to applicable law.
III. SHAREHOLDERS MEETINGS
3.01. ANNUAL MEETINGS. Each annual meeting of the
shareholders is to be held on the first Monday in the month of August of each
year, commencing with the year 1985 (unless that day be a legal holiday, in
which event the annual meeting will be held on the next succeeding business day)
at a time of day and place as determined by the board of directors, or in the
absence of action by the board, as set forth in the notice given, or waiver
signed, with respect to such meeting pursuant to Section 3.03 below. If any
such annual meeting is for any reason not held on the date determined as
aforesaid, a deferred annual meeting may thereafter be called and held in lieu
thereof, and the same proceedings (including the election of directors) may be
conducted thereafter. Any director elected at any annual meeting or deferred
annual
<PAGE>
meeting, will continue in office until the election of his successor, subject to
his earlier resignation pursuant to Section 7.01 below.
3.02. SPECIAL MEETINGS. Special meetings of the shareholders
may be held whenever and wherever called for by the chairman of the board, the
president of the board of directors, or by the written demand of the holders of
10% of all issued and outstanding shares of the corporation entitled to vote at
the meeting.
3.03. NOTICES. Not less than ten (10) nor more than fifty
(50) days (inclusive of the date of meeting) before the date of any meeting of
the shareholders and at the direction of the person or persons calling the
meeting, the secretary of the corporation will cause a written notice setting
forth the time, place and general purposes of the meeting to be deposited in the
mail, with first class or airmail postage prepaid, addressed to each shareholder
of record at his last address as it then, or on the applicable record date,
appears on the corporation's records. Any shareholder may waive call or notice
of any annual, deferred annual or special meeting (and any adjournment thereof)
at any time before, during which or after it is held. Attendance of a
shareholder at any such meeting in person or by proxy will automatically
evidence his waiver of call and notice of such meeting (and any adjournment
thereof) unless he or his proxy is attending the meeting for the express purpose
of objecting to the transaction of business thereat because it has not been
properly called or noticed. No call or notice of a meeting of the shareholders
will be necessary if each of them waives the same in writing or by attendance as
aforesaid.
3.04 SHAREHOLDERS OF RECORD. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders
(and at any adjournment thereof), or shareholders entitled to express written
consent to corporate action without a meeting, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other lawful action, the board of directors may fix in
advance a record date which shall not be more than sixty (60) nor less than ten
(10) days before the date of such meeting, nor more than sixty (60) nor less
than ten (10) days prior to any such other action.
If no record date is fixed for determining shareholders entitled to
notice of or to vote at a meeting of shareholders, the record date shall be at
four o'clock in the afternoon on the day before the day on which notice is
given, or, if notice is waived, at the commencement of the meeting. If no
record date is fixed for determining shareholders entitled to express written
consent to corporate action without meeting, the record date shall be the time
of the day on which the first written consent is served upon an officer or
director of the corporation.
A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting and further provided that the adjournment or adjournments of
any such meeting do not exceed thirty (30) days in the aggregate.
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<PAGE>
3.05. VOTING RECORD. The officer or agent having charge of
the stock transfer books for shares of the corporation shall make a complete
record of the shareholders entitled to vote at a meeting of the shareholders
(and at any adjournment thereof), arranged in alphabetical order, with the
address of and the number of shares held by each. Such record shall be produced
and kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting for the
purposes thereof.
3.06. PROXIES. Any shareholder entitled to vote thereat may
vote by proxy at any meeting of the shareholders (and at any adjournment
thereof) which is specified in such proxy, provided that his proxy is executed
in writing by him or his duly authorized attorney-in-fact. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy. The burden of proving the validity of any proxy undated,
irrevocable, or otherwise contested at any such meeting of the shareholders will
rest with the person seeking to exercise the same. A telegram or cablegram
appearing to have been transmitted by a shareholder or by his duly authorized
attorney-in-fact may be accepted as a sufficiently written and executed proxy.
3.07. VOTING. Except for the election of directors (which
will be governed by cumulative voting pursuant to applicable law) and except as
may otherwise be required by the corporation's articles or Section 3.08 below,
each issued and outstanding share of the corporation (specifically excluding
shares held in the treasury of the corporation) represented at any meeting of
the shareholders in person or by proxy given pursuant to Section 3.06 above,
will be entitled to one vote. Unless otherwise required by the corporation's
articles or by applicable law, any question submitted to the shareholders will
be resolved by a majority of the votes cast thereon provided that such votes
constitute a majority of the quorum of that particular meeting, whether or not
such quorum is then present. The voting will be by ballot on any question as to
which a ballot vote is demanded, prior to the time the voting begins, by any
person entitled to vote on such question; otherwise, a voice vote will suffice.
No ballot or change of vote will be accepted after the polls have been declared
closed following the ending of the announced time for voting.
3.08. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of the
corporation held by another corporation may be voted by such corporation's
officer, agent or proxy as its bylaws may prescribe, or in absence of such bylaw
provision, by any other person designated by resolution of its board of
directors, and such officer, agent or other person so designated may vote such
corporation's shares in this corporation in person or by proxy appointed by him.
Shares held by an administrator, executor, guardian or conservator may
be voted by such representative, either in person or by proxy, without a
transfer of such shares into his name. Shares standing in the name of a
trustee, other than a trustee in bankruptcy, may be voted by such
representative, either in person or by proxy, but no such trustee shall be
entitled to vote shares held by him without a transfer of such shares into his
name.
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<PAGE>
Shares standing in the name of a receiver, trustee in bankruptcy, or
assignee for the benefit of creditors may be voted by such representative,
either in person or by proxy. Shares held by or under the control of such a
receiver or trustee may be voted by such receiver or trustee, either in person
or by proxy, without the transfer thereof into his name if authority so to do be
contained in an appropriate order of the court by which such receiver or trustee
was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
If shares stand in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety or tenants by community property or otherwise, or if two or more
persons have the same fiduciary relationship respecting the same share, unless
the corporation is given written notice to the contrary and is furnished with a
copy of the instrument or order appointing them or creating the relationship
wherein it is so provided, their acts with respect to voting shall have the
following effect: (1) If only one votes, his act binds; (2) If more than one
votes, the act of the majority so voting binds all; and (3) If more than one
votes, but the vote is evenly split on any particular matter, each faction may
vote the shares in question proportionally.
Shares standing in the name of a married woman but not also standing
in the name of her husband with such a designation of mutual relationship on the
certificate, may be voted and all rights incident thereto may be exercised in
the same manner as if she were unmarried.
Shares of its own stock belonging to the corporation or to another
corporation, if a majority of the shares entitled to vote in the elections of
directors of such other corporation is held, directly or indirectly, by the
corporation, shall neither be entitled to vote nor counted for quorum purposes.
Nothing in this section shall be construed as limiting the right of the
corporation to vote its own stock held by it in a fiduciary capacity.
3.09. QUORUM. At any meeting of the shareholders, the
presence in person or by proxy of the holders of a majority of all issued and
outstanding shares of the corporation will constitute a quorum of the
shareholders for all purposes. In the absence of a quorum, any meeting may be
adjourned, from time to time but not exceeding thirty (30) days in the
aggregate, by its chairman until a quorum is formed without notice by
announcement at the meeting, or with notice pursuant to Section 3.03, a new
record date is fixed for the adjourned meeting. At any such adjourned meeting
at which a quorum is present, any business may be transacted which might have
been transacted at the meeting as originally noticed. The shareholders present
at a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal or temporary absence of enough shareholders to
leave less than a quorum.
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<PAGE>
3.10. ELECTION INSPECTORS. The board of directors, in
advance of any meeting of the shareholders, may appoint an election inspector or
inspectors to act at such meeting (and at any adjournment thereof). If an
election inspector or inspectors are not so appointed, the chairman of the
meeting may, or upon request of any person entitled to vote at the meeting will,
make such appointment. If any person appointed as an inspector fails to appear
or act, a substitute may be appointed by the chairman of the meeting. If
appointed, the election inspector or inspectors (acting through a majority of
them if there be more than one) will determine the number of shares outstanding,
the authenticity, validity and effect of proxies and the number of shares
represented at the meeting in person and by proxy; they will receive and count
votes, ballots and consents and announce the results thereof; they will hear and
determine all challenges and questions pertaining to proxies and voting; and, in
general, they will perform such acts as may be proper to conduct elections and
voting with complete fairness to all shareholders. No such election inspector
need be a shareholder of the corporation.
3.11. ORGANIZATION AND CONDUCT OF MEETINGS. Each meeting of
the shareholders will be called to order and thereafter chaired by the chairman
of the board of directors if there is one; or, if not, or if the chairman of the
board is absent or so requests, then by the president; or if both the chairman
of the board and the president are unavailable, then by such other officer of
the corporation or such shareholder as may be appointed by the board of
directors. The corporation's secretary will act as secretary of each meeting of
the shareholders; in his absence the chairman of the meeting may appoint any
person (whether a shareholder or not) to act as secretary thereat. After
calling a meeting to order, the chairman thereof may require the registration of
all shareholders intending to vote in person, and the filing of all proxies,
with the election inspector or inspectors, if one or more have been appointed
(or, if not, with the secretary of the meeting). After the announced time for
such filing of proxies has ended, no further proxies or changes, substitutions
or revocations of proxies will be accepted. If directors are to be elected, a
tabulation of the proxies so filed will, if any person entitled to vote in such
election so requests, be announced at the meeting (or adjournment thereof) prior
to the closing of the election polls. Absent a showing of bad faith on his
part, the chairman of a meeting will, among other things, have absolute
authority to fix the period of time allowed for the registration of shareholders
and the filing of proxies, to determine the order of business to be conducted at
such meeting and to establish reasonable rules for expediting the business of
the meeting (including any informal, or question and answer portions thereof).
3.12. SHAREHOLDER APPROVAL OR RATIFICATION. The board of
directors may submit any contract or act for approval or ratification of the
shareholders, either at a duly constituted meeting of the shareholders (the
notice of which either includes mention of the proposed submittal or is waived
pursuant to Section 3.03) or by written consent by a majority of the
shareholders of the Corporation to corporate action without a meeting pursuant
to Section 3.14. If any contract or act so submitted is approved or ratified by
a majority of the votes cast thereon at such meeting or by such unanimous
written consent, the same will be valid and binding upon the corporations the
act of its shareholders pursuant to Section 3.07 and Section 3.14.
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<PAGE>
3.13. INFORMALITIES AND IRREGULARITIES. All informalities or
irregularities in any call or notice of a meeting of the shareholders or in the
areas of credentials, proxies, quorums, voting and similar matters, will be
deemed waived if no objection is made at the meeting.
3.14. ACTION BY SHAREHOLDERS WITHOUT A MEETING. Any action
required or permitted to be taken at a meeting of the shareholders of the
corporation, may be taken without a meeting if a consent in writing, setting
forth the action so taken, is signed by a majority of the shareholders entitled
to vote with respect to the subject matter thereof. Such consent shall have the
same effect as a unanimous vote of the shareholders of the corporation.
IV. BOARD OF DIRECTORS
4.01. MEMBERSHIP. The business and property of the
Corporation shall be conducted and managed by its board of directors, which
shall consist of six members. The members of the board of directors need not be
shareholders of the Corporation nor residents of the State of Nevada. Election
of the members of the board of directors will regularly take place at each
annual meeting of the shareholders, but such election may be held at any other
meeting of the shareholders. The board will have the power to fill any
vacancies which may occur in its membership pending the next annual meeting of
the shareholders. The directors shall be divided into two classes, as equal in
number as possible, with respect to the times for which they shall severally
hold office. Directors of the first class chosen shall be non-employee
directors and shall hold office for one year or until the first annual election
following their election, and directors of the second class first chosen shall
be employee directors and shall hold office for three years or until the third
annual election following their election, and, in each case, until their
successors shall be duly elected and shall qualify.
4.02. REGULAR MEETINGS. A regular annual meeting of the
board of directors is to be held immediately after and at the same place as each
annual meeting of the shareholders. Regular meetings, other than the annual
ones, may be held at regular intervals at such places and at such times as the
board of directors may provide.
4.03. SPECIAL MEETINGS. Special meetings of the board of
directors may be held whenever and wherever called for by the chairman of the
board, the president or the number of directors which would be required to
constitute a quorum.
4.04. NOTICES. No notice need be given of regular meetings
of the board of directors. Written notice of the time and place (but not
necessarily the purpose or all of the purposes) of any special meeting will be
given to each director in person or via mail or telegram addressed to him at his
latest address appearing on the corporation's records. Notice to any director
of any such special meeting will be deemed given sufficiently in advance when,
if given by mail, the same is deposited in the mail, with first class or air
mail postage prepaid at least four days before the meeting date, or if
personally delivered or given by telegram, the same is
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<PAGE>
handed to the director, or the telegram is delivered to the telegraph office for
fast transmittal, at least 48 hours prior to the convening of the meeting. Any
director may waive call or notice of any meeting (and any adjournment thereof)
at any time before, during which or after it is held. Attendance of a director
at any meeting will automatically evidence his waiver of call and notice of such
meeting (and any adjournment thereof) unless he is attending the meeting for the
express purpose of objecting to the transaction of business thereat because it
has not been properly called or noticed. No call or notice of a meeting of
directors will be necessary if each of them waives the same in writing or by
attendance as aforesaid. Any meeting, once properly called and noticed (or as
to which call and notice have been waived as aforesaid) and at which a quorum is
formed, may be adjourned to another time and place by a majority of those in
attendance.
4.05. QUORUM. A quorum for the transaction of business at
any meeting or adjourned meeting of the board of directors will consist of a
majority of those then in office.
4.06. VOTING. Any question submitted to any meeting or
adjourned meeting of the board of directors will be resolved by a majority of
the votes cast thereon; in case of an equality of votes, the chairman of the
meeting will have a second or deciding vote.
4.07. EXECUTIVE COMMITTEE. The board of directors may, by
resolution adopted by a majority of the whole board, name one or more of its
members as an executive committee. Such executive committee will have and may
exercise the powers of the board of directors in the management of the business
and affairs of the corporation while the board is not in session, subject to
such limitations as may be included in the board's resolutions; provided,
however, that such executive committee shall not have the authority of the board
of directors in reference to the following matters: (1) the submission to
shareholders of any action that requires the authorization or approval under
applicable law; (2) the filling of vacancies on the board of directors or in any
committee of the board of directors; (3) the amendment or repeal of the bylaws,
or the adopting of new bylaws; and (4) the fixing of compensation of directors
for serving on the board or on any committee of the board of directors. A
majority of those named to the executive committee will constitute a quorum.
4.08. OTHER COMMITTEES. The board of directors may from time
to time, by resolution adopted by a majority of the whole board, appoint other
standing or temporary committees from its membership and vest such committees
with such powers as the board may include in its resolution; provided, however,
that such committees shall be restricted in their authority as specifically set
forth with respect to the executive committee in Section 4.07 above. A majority
of those named to any such committees will constitute a quorum.
4.09. PRESUMPTION OF ASSENT. A director of the corporation
who is present at a meeting of the board of directors, or of any committee, at
which action is taken on any corporate matter will be presumed to have assented
to the action taken unless his dissent is entered in the minutes of the meeting
or unless he files his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or forwards such
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<PAGE>
dissent by registered or certified mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent will
not be available to a director who voted in favor of the action.
4.10. COMPENSATION. By resolution of the board of directors,
each director may be paid his expenses, if any, of attendance at each meeting of
the board of directors or of any committee, and may be paid a fixed sum for
attendance at each such meeting or a stated salary as a director or committee
member. No such payment will preclude any director from serving the corporation
in any other capacity and receiving compensation therefor.
4.11. ACTION BY DIRECTORS WITHOUT A MEETING. Any action
required or permitted to be taken at a meeting of the board of directors or of a
committee of the corporation may be taken without a meeting if all directors or
committee members, as the case may be, consent thereto in writing. Such consent
shall have the same effect as a unanimous vote of the directors or committee
members of the corporation.
4.12. MEETINGS BY CONFERENCE TELEPHONE. Any member of the
board of directors or of a committee of the corporation may participate in any
meeting thereof by means of a conference telephone or similar communication
equipment whereby all members participating in such meeting can hear one
another. Such participation shall constitute attendance in person, unless
otherwise stated as provided in Section 4.04.
V. OFFICERS - GENERAL
5.01. ELECTIONS AND APPOINTMENTS. The board of directors
will elect or appoint the officers of the corporation, including (if they choose
to have one) the chairman of the board. Such election or appointment will
regularly take place at each annual meeting of the board of directors, but
elections of officers may be held at any other meeting of the board. A person
elected or appointed to any office will continue to hold that office until the
election or appointment of his successor, subject to action earlier taken
pursuant to Sections 5.04 or 7.01. Any two or more offices may be held by the
same person except for the offices of president and secretary.
5.02. ADDITIONAL APPOINTMENTS. In addition to the officers
contemplated in Article VI, the board of directors may appoint other corporate
or divisional officers having such authority to perform such duties as may be
prescribed from time to time by the board of directors, by the president or in
the case of assistant officers (as, for example, one or more assistant
secretaries), by his or their superior officers (which, in the foregoing
example, would be the secretary). Each of such assistant officers (in the order
designated by the board) will be vested with all of the powers and charged with
all of the duties (including those herein specifically set forth) of his
superior officer in the event of such superior officer's absence or disability.
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<PAGE>
5.03. BONDS AND OTHER REQUIREMENTS. The board of directors
may require any officer to give bond to the corporation (with sufficient surety,
and conditioned for the faithful performance of the duties of his office) and to
comply with such other conditions as may from time to time be required of him by
the board.
5.04. REMOVAL OR DELEGATIONS. The board of directors may,
whenever in its judgment the best interests of the corporation will be served
thereby, remove any officer or agent of the corporation or temporarily delegate
his powers and duties to any other officer or to any director. Such removal or
delegation shall be without prejudice to the contract rights, if any, of the
person so removed or whose powers and duties have been delegated. Election or
appointment of an officer or agent shall not of itself create contract rights.
5.05. SALARIES. Officer salaries may from time to time be
fixed by the board of directors or (except as to his own) left to the discretion
of the president. No officer will be prevented from receiving a salary by
reason of the fact that he is also a director of the corporation.
VI. SPECIFIC OFFICERS
6.01. CHAIRMAN OF THE BOARD. The board of directors may
elect a chairman to serve as a general executive officer of the corporation, and
when elected, the chairman shall have general supervision, direction and control
of the business and affairs of the Corporation, subject to the control of the
board of directors. If elected, the chairman will preside at all meetings of
the board of directors and be vested with such other powers and duties as the
board may from time to time delegate to him.
6.02. PRESIDENT AND VICE PRESIDENT. The president will
supervise the business and affairs of the corporation and the performance by all
of its other officers of their respective duties, subject to the control of the
board of directors and of its chairman if the chairman has been specifically
designated as chief executive officer of the corporation (failing which, the
president will be such chief executive officer and, as such, shall have the
functions, authority and duties provided for the Chairman of the Board when
there is an office of Chairman of the Board). Except in those instances in
which the authority to execute is expressly delegated to another officer or
agent of the corporation or a different mode of execution is expressly
prescribed by the board of directors or these by-laws, he may execute for the
corporation certificates for its shares, and any contracts, deeds, mortgages,
bonds or other instruments which the board of directors has authorized to be
executed, and he may accomplish such execution either under or without the seal
of the corporation and either individually or with the secretary, any assistant
secretary, or any other officer thereunto authorized by the board of directors,
according to the requirements of the form of the instrument. He may vote all
securities which the corporation is entitled to vote except as and to the extent
such authority shall be vested in a different officer or agent of the
corporation by the board of directors.
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6.03. VICE-PRESIDENTS. The vice-president (or in the event
there be more than one vice-president, each of the vice-presidents) shall assist
the president in the discharge of his duties as the president may direct and
shall perform such other duties as from time to time may be assigned to him by
the president or by the board of directors. In the absence of the president or
in the event of his inability or refusal to act, the vice-president (or in the
event there be more than one vice-president, the vice-presidents in the order
designated by the board of directors, or by the president if the board of
directors has not made such a designation, or in the absence of any designation,
then in the order of seniority of tenure as vice-president) shall perform the
duties of the president, and when so acting, shall have all powers of and be
subject to all the restrictions upon the president. Except in those instances
in which the authority to execute is expressly delegated to another officer or
agent of the corporation or a different mode of execution is expressly
prescribed by the board of directors or these by-laws, the vice-president (or
each of them if there are more than one) may execute for the corporation
certificates for its shares, and any contracts, deeds, mortgages, bonds or other
instruments which the board of directors has authorized to be executed, and he
may accomplish such execution either under or without the seal of the
corporation and either individually or with the secretary, any assistant
secretary, or any other officer thereunto authorized by the board of directors,
according to the requirements of the form of the instrument.
6.04. CHIEF FINANCIAL OFFICER. The chief financial officer,
when elected, shall perform such duties and have such other powers as may from
time to time be prescribed by the board of directors, the chairman of the board
or the president.
6.05. CHIEF OPERATING OFFICER. The chief operating officer,
when elected, shall perform such duties and have such other powers as may from
time to time be prescribed by the board of directors, the chairman of the board
or the president.
6.06. TREASURER. The treasurer shall be the principal
accounting and financial officer of the corporation. He shall: (a) have charge
of and be responsible for the maintenance of adequate books of account for the
corporation; (b) have charge and custody of all funds and securities of the
corporation, and be responsible therefor and for the receipt and disbursement
thereof; and (c) perform all the duties incident to the office of treasurer and
such other duties as from time to time may be assigned to him by the president
or by the board of directors. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the board of directors may determine.
During any period when there shall be an office of the Chief Financial Officer,
the Treasurer shall report to the Chief Financial Officer, and shall perform
such duties and have such other powers as may from time to time be prescribed by
the Chief Financial Officer.
6.07. SECRETARY. The secretary shall: (a) record the minutes
of the shareholders' and the board of directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these by-laws or as required by law; (c) be custodian of
the corporate records and of the seal of the corporation; (d) keep a register of
the post-office address of each shareholder which shall be
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furnished to the secretary by such shareholder; (e) sign with the president, or
a vice-president, or any other thereunto authorized by the board of directors,
certificates for shares of the corporation, the issue of which shall have been
authorized by the board of directors, and any contracts, deeds, mortgages, bonds
or other instruments which the board of directors has authorized to be executed,
according to the requirements of the form of the instrument, except when a
different mode of execution is expressly prescribed by the board of directors or
these by-laws; (f) have general charge of the stock transfer books of the
corporation; (g) perform all duties incident to the office of secretary and such
other duties as from time to time may be assigned to him by the president or by
the board of directors.
6.08. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers and assistant secretaries shall perform such duties as
shall be assigned to them by the treasurer or the secretary, respectively, or by
the president or the board of directors. The assistant secretaries may sign
with the president or the board of directors. The assistant secretaries may
sign with the president or a vice-president, or any other thereunto authorized
by the board of directors, certificates for shares of the corporation, the issue
of which shall have been authorized by the board of directors, and any
contracts, deeds, mortgages, bonds or other instruments which the board of
directors has authorized to be executed, according to the requirements of the
form of the instrument, except when a different mode of execution is expressly
prescribed by the board of directors or these by-laws. The assistant treasurers
shall respectively, if required by the board of directors, give bonds for the
faithful discharge of their duties in such sums and with such sureties as the
board of directors shall determine.
VII. RESIGNATIONS AND VACANCIES
7.01. RESIGNATIONS. Any director, committee member, or
officer may resign from his office at any time by written notice delivered or
addressed to the corporation at its known place of business. Any such
resignation will be effective upon its receipt by the corporation unless some
later time is therein fixed; and then from that time the acceptance of any
resignation will not be required to make it effective.
7.02. VACANCIES. If the office of any director, committee
member or officer becomes vacant by reason of his death, resignation,
disqualification, removal or otherwise, the board of directors may choose a
successor to hold office for the unexpired term.
VIII. SEAL
8.01. FORM THEREOF. The board of directors may provide for a
seal of the corporation which will have inscribed thereon the name of the
corporation, the state and year of its incorporation.
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IX. CERTIFICATES REPRESENTING SHARES
9.01. FORM THEREOF. Each certificate representing shares of
the corporation will be in such form as may from time to time be approved by the
board of directors, will be consecutively numbered and will exhibit such
information as may be required by applicable law.
9.02. SIGNATURES AND SEAL THEREON. All certificates issued
for shares of the corporation (whether new, reissued or transferred) will bear
the signatures of the president or a vice president, and of the secretary or an
assistant secretary, and the impression of the corporation's corporate seal, if
any. The signatures of such officers of the corporation, and the impression of
its corporate seal, may be in facsimile form on any certificates which are
manually countersigned by an independent transfer agent and/or registered by a
registrar duly appointed by the corporation and other than the corporation
itself or one of its employees. If a supply of unissued certificates bearing
the facsimile signature of a person remains when that person ceases to hold the
office of the corporation indicated on such certificates, they may still be
countersigned, registered, issued and delivered by the corporation's transfer
agent and/or registrar thereafter, the same as though such person had continued
to hold the office indicated on such certificate.
9.03. OWNERSHIP. The corporation will be entitled to treat
the registered owner of any share as the absolute owner thereof and,
accordingly, will not be bound to recognize any beneficial, equitable or other
claim to, or interest in, such share on the part of any other person, whether or
not it has notice thereof, except as may expressly be provided by applicable
law.
9.04. TRANSFERS. Transfers of shares of the corporation may
be made on the stock transfer books of the corporation only at the direction of
the person named in the certificate therefor (or by his duly authorized
attorney-in-fact) and upon the surrender of such certificate.
9.05. LOST CERTIFICATES. In the event of the loss, theft or
destruction of any certificate representing shares of the corporation or of any
predecessor corporation, the corporation may issue (or, in the case of any such
shares as to which a transfer agent and/or registrar have been appointed, may
direct such transfer agent and/or registrar to countersign, register and issue)
a new certificate, and cause the same to be delivered to the owner of the shares
represented thereby, provided that the owner shall have submitted such evidence
showing the circumstances of the alleged loss, theft or destruction, and his
ownership of the certificate, as the corporation considers satisfactory,
together with any other facts which the corporation considers pertinent, and
further provided that a bond shall have been provided in form and amount
satisfactory to the corporation (and to its transfer agent and/or registrar, if
applicable), unless the shares represented by the certificate lost, stolen or
destroyed have at the time of the issuance of the new certificate a market value
of $500 or less (as determined by the corporation on the basis of such
information as it may select), in which case the requirements of a bond may
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be waived. The corporation may act through its president, any vice president,
its secretary or its treasurer for any purpose of this Section 9.05.
X. DIVIDENDS
10.01. Subject to such restrictions or requirements as may be
imposed by applicable law or the corporation's articles or as may otherwise be
binding upon the corporation, the board of directors may from time to time
declare and the corporation may pay dividends on shares of the corporation
outstanding on the dates of record fixed by the board, to be paid in cash, in
property or in shares of the corporation on or as of such payment or
distribution dates as the board may prescribe.
XI. AMENDMENTS
11.01. The bylaws may be altered, amended, supplemented, repealed
or temporarily or permanently suspended, in whole or in part, or new bylaws may
be adopted, at any duly constituted meeting of the shareholders or the board of
directors (the notice of which meeting either includes mention of the proposed
action relative to the bylaws or is waived pursuant to Section 3.03 or Section
4.04, whichever is applicable) or, alternatively, by unanimous written consent
to corporate action without a meeting of the shareholders or the board of
directors pursuant to Section 3.14 or Section 4.11, whichever is applicable.
If, however, any such action arises as a matter of necessity at any such meeting
and is otherwise proper, no notice thereof will be required.
Said shares of common stock were sold pursuant to state qualification
registration and an exemption provided by Section 3(6) of the 1933 Securities
Act, Regulation D Rule 504 thereunder.
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