SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
AUSTRIAN TRADING SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3106038
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Landstrasse 66/3, Linz, Austria A-4020
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 011-43-732-771317
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
Common Stock, $.025 par value NASDAQ
Securities registered under Section 12(g) of the Act:
Common Stock, $.025 par value
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TABLE OF CONTENTS
PAGE
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COVER PAGE................................................................. 1
TABLE OF CONTENTS.......................................................... 2
PART I..................................................................... 3
DESCRIPTION OF BUSINESS.......................................... 3
DESCRIPTION OF PROPERTY.......................................... 8
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
EMPLOYEES....................................................... 8
REMUNERATION OF DIRECTORS AND OFFICERS........................... 9
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITYHOLDERS................................................ 10
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSACTIONS................................................... 12
SECURITIES BEING OFFERED........................................ 12
PART II................................................................... 13
MARKET PRICE OF AN DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS................... 13
LEGAL PROCEEDINGS.............................................. 14
CHANGES IN AN DISAGREEMENTS WITH ACCOUNTANTS................... 14
RECENT SALES OF UNREGISTERED SECURITIES........................ 14
INDEMNIFICATION OF DIRECTORS AND OFFICERS...................... 15
PART F/S.................................................................. 15
FINANCIAL STATEMENTS........................................... 15
PART III.................................................................. 15
INDEX TO EXHIBITS.............................................. 15
SIGNATURES................................................................ 16
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PART I
The issuer has elected to follow Form 10-SB Disclosure Alternative 2.
ITEM 6. DESCRIPTION OF BUSINESS
General
Austrian Trading Services, Inc. (the "Company"), formerly known as Big
Apple Farms, Inc. ("Big Apple"), was incorporated in the State of Delaware on
May 28, 1981 with an authorized capital of two hundred common shares, no par
value. Big Apple was formed to engage in the business of breeding, purchasing
and selling thoroughbred race horses. In June 1981, the number of authorized
common shares of the Company was increased to 20,000,000 and the par value was
increased to $.005 per share. In 1982, Big Apple became a public company by
offering 2,000,000 shares of common stock pursuant to a registration statement
on Form S-18. On February 14, 1984 Big Apple filed a Form 15 with the Securities
and Exchange Commission terminating Big Apple's duty to file reports under the
Securities and Exchange Act of 1934 pursuant to Rule 12g-4 thereunder. On July
5, 1989 by a vote of the majority of shareholders, Big Apple discontinued the
horse breeding business and focused its activities on the real estate and
construction industries. In October 1995, the par value of the Company's common
shares was increased to $.025 per share ("Common Stock" or "Shares") and a class
of 1,000,000 shares of undesignated preferred stock, $.01 par value, was
authorized. On October 23, 1995, Big Apple entered into a Stock Exchange
Agreement (the "Agreement") whereby Big Apple acquired 100% of the issued and
outstanding capital stock of HMA Handels und Montage GmbH ("HMA"), a private
Austrian company controlled by Kurt Reichenberger ("Reichenberger"). Pursuant to
the Agreement, Big Apple's Board of Directors was replaced by directors
designated by HMA. In consideration of the sale, Reichenberger received
2,241,036 shares of Common Stock or approximately 89.6% of the Company. In
February 1996, HMA changed its name to Austrian Trading Services, GmbH ("ATSI").
On December 5, 1995, Big Apple changed its name to Austrian Trading Services,
Inc. (the "Company").
The Company owns 100% of ATSI and ATSI owns 100% of Windischgarstnerhof of,
Ges.mbH ("WGH") and Kunstoff Vertrieb Micheldorf, GmbH ("KVM"). WGH is engaged
in operating an outpatient medical treatment facility in Windschgarten, Austria
(see "WGH" below). KVM is an Austrian company formed in March 1996 to
manufacture and sell a special drinking glass container (see "KVM" below"). In
May 1997, the Company entered into an agreement with P.T. Platinum Perkasa
Nusantara ("Platinum") an Indonesian based company (the "Platinum Agreement").
The Agreement provides for the Company and Platinum to investigate the
establishment of a joint project to develop and enhance the livestock industry
in the Republic of Indonesia through importing and transplanting genetically
bred livestock into Indonesia. The commencement of the project is subject to
Platinum and the Company entering into a detailed agreement setting forth the
right and responsibilities of each party as well as the completion of various
feasibility studies, due diligence and the securing of necessary government
permits (see "Platinum" below). The Company also owns a 60% interest in Mark It,
Gmbh
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("Mark It"), an Austrian based company formed in June 1997, which intends to
engage in the sale of pre-inked stamping devices for office and personal use in
Europe (see "Mark It" below). In June 1997 the Company acquired a 40% interest
in Components Development Gmbh ("Components") in exchange for a commitment to
provide funding of approximately $500,000 over a six month period. Components is
in the process of developing certain technology which Components believes has
application in the design of automobile emissions control systems (see
"Components" below). The Company intends to seek out the acquisition of other
operating companies in Europe as well as the entry into joint venture and other
participation agreements with other entities in Europe, Indonesia and South
America. There can be no assurance that any of such transactions will be
consummated.
Pursuant to the Company's reorganization in October 1995, the Company
issued 150,000 shares of Common Stock to officers, directors and certain
individuals for services rendered. In addition, the Company issued 190,000
shares to Helmut Presske, a former officer and director of WGH and a current
director of the Company, and 66,666 shares to Aribert Vogle in consideration and
retirement of debts owed by WGH to Messrs. Presske and Vogle of $400,000 and
$150,000, respectively. In December 1995, the Company issued an aggregate of
235,000 shares of Common Stock pursuant to Rule 504 of the Securities Act of
1933, as amended and Regulation D promulgated thereunder, in consideration of
legal and accounting services rendered in connection with the Company's previous
operations and in connection with the Agreement.
In January and February of 1996, the Company accepted subscription
agreements for the purchase of 1,400,000 shares of Common Stock at approximately
$2.25 per share and 2,500,000 shares of Common Stock at approximately 2.50 per
share from two foreign investors pursuant to Regulation S of the Securities Act,
as amended ("Regulation S"), and issued an aggregate of 3,900,000 shares of
Common Stock, raising $9,377,679. The Company used the proceeds to (i) retire
and cancel an aggregate of $1,758,000 in debt owed by WGH; (ii) (ii) pay a
license fee of approximately $1,846,000 for the KVM product (see "KVM" below),
which proceeds were used by KVM for product research and development; (iii) fund
approximately $1,300,000 in improvements and renovations to the WGH therapy
center; (iv) loan $1,033,521 at 8% interest to Agricola y Forestal Tegualda,
S.A. ("Agricola"), a Chilean timber company (see "Additional Transactions"
below); and (v) purchase 700,000 shares of Sigma Alpha Group, Ltd. common stock
at $4.75 per share. The remaining proceeds were used for general administrative
expenses.
In September 1996, the Company accepted a Subscription Agreement from a
foreign investor pursuant to Regulation S, for the purchase of 300,000 shares of
Common Stock at approximately $3.50 per share, yielding a total of $1,050,000.
The Company received $436,218 of such funds as of December 31, 1996 and $81,132
subsequent to December 31, 1996. There can be no assurance that the remaining
subscriptions will be filed.
In April and May 1997, the Company accepted subscriptions from Platinum for
the purchase of an aggregate of 4,000,000 shares of the Company's Common Stock
at $2.50 per share. In connection with their subscriptions, Platinum paid the
Company an aggregate of
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$100,000 in cash and the Company accepted two promissory notes from Platinum in
the amount of $4,950,000 each, to be paid by May 29, 1997. As of June 24, 1997
the Company received $4,250,000 in payments under the promissory note due in
June 1997 (see "Platinum" below).
WGH
WGH, a private Austrian company, was acquired by ATSI in October 1995. WGH
operates a 90 room out-patient medical center (the "Center") located on a 6.5
acre parcel in Windischgarsten, Austria. The Center specializes in the treatment
of patients who have hip, spinal column and joint injuries. Patients are
referred to the Center by insurance companies. The Austrian government issues
licenses to therapy facilities which meet certain standards and provide
out-patient medical care for rehabilitation in connection with hospitalization.
In October, 1996 WGH received its license for this service. WGH is paid a fee by
the insurance providers ranging from $95 to $150 per night based on the medical
treatment provided. WGH currently employs 28 persons, including a licensed
medical doctor. The Center competes with a number of larger facilities
throughout Austria.
KVM
KVM, a private Austrian company was formed by the Company in March 1996 for
the purpose of producing and distributing a proprietary new product. The product
is a glass container with a mixer inside. This "Mix and Drink" glass enables the
user to conveniently mix substances and then drink the mixture. Vertrieb
Innovativer Produkte ("VIP"), a private company located in Austria, obtained a
license from the inventor of the product ("Inventor") to produce and market the
Mix and Drink glass in June 1995. VIP originally sublicensed the production of
the product to KVM pursuant to a license agreement dated October 31, 1995 and
amended on April 24, 1996. KVM then purchased the License for approximately
$1,846,000. KVM has subcontracted out the production of Mix & Drink glass to a
single manufacturer. The Company intends to seek out additional subcontractors
in order to minimize dependence on such subcontractors.
A patent application for the Mix and Drink glasses was filed by the
Inventor in 1993 covering the entire Western Hemisphere, including the United
States. In March 1996, a Notice of Allowance and Issue Fee Due from the United
States Patent and Trademark Office, thereby ensuring the proprietary nature of
the product. Currently, similar products are being marketed in the United States
by larger companies. KVM is dependent on this patent. The Company intends to
aggressively protect its patent rights through negotiations and litigation, if
necessary. Should these negotiations or litigation be unsuccessful, KVM's market
share would be substantially reduced, although KVM believes it will still be a
viable company. KVM currently has one employee and has sold limited numbers of
mix and drink glasses in Europe.
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PLATINUM
In May 1997 the Company entered into an agreement with P.T. Platinum
Perkasa Nusantara ("Platinum") providing for the establishment of a joint
project to develop and enhance the livestock industry in the Republic of
Indonesia to importing and transplanting genetically bread livestock into
Indonesia. The project will also seek to obtain rights to genetic transfer
technology needed to genetically breed livestock in Indonesia. The agreement
requires the Company to invest an aggregate of $4,000,000 into the project in
return for a 40% interest therein. $6,000,000 in additional capital is to be
provided by Platinum and other Indonesian based shareholders. The Company
utilized the proceeds from its April and May 1997 subscription agreements to
meet its obligations under the Platinum agreement. Commencement of the project
is subject to Platinum and the Company entering into a detailed agreement
setting forth the rights and responsibilities of each party as well as the
completion of various feasibility studies, due diligence reviews and the
securing of necessary government permits.
MARK IT
In June 1997 the Company formed an Austrian based company called Mark It
Gmbh ("Mark It"). The Company retained a 60% interest in Mark It which will
engage in the sale of pre-ink stamping devices for office and personal use in
Europe. Mark It presently has two employees and subcontracts out the manufacture
of all stamping devices which it markets.
COMPONENTS
In June 1997 the Company acquired a 40% interest in Components Development
Gmbh ("Components") in exchange for approximately $17,000 and a commitment to
provide funding to Components over a six month period of $500,000. Components
has represented to the Company that Components is the owner of certain
technology which Components believes its application and design of automobile
and emission control systems. Currently Components is completing development of
a product known as the Turbo Loader. Components has represented that the Turbo
Loader will act as an add on device to existing automobile engines which will
result in compliance with a variety of emission control systems as well as
result in fuel economy and improvement to the performance of the vehicle's
engine. Components has not yet completed a market prototype of the Turbo Loader
and there can be no assurance that the Turbo Loader will be a commercially
feasible product. Components has advised the Company that approximately
$1,700,000 in total funding will be required in order to be in a position to
bring the Turbo Loader to market. Components intends to engage in discussions
with automobile manufacturers and automobile parts suppliers regarding the
possible entry into licensing and marketing agreements for the Turbo Loader.
There can be no assurance that the Turbo Loader will be successfully developed,
or if developed, generate revenues on behalf of the Company.
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ADDITIONAL TRANSACTIONS
In addition to the Company's investments in KVM, WGH, Platinum and Mark It,
the Company has entered into certain additional transactions which are
summarized below:
In December 1995 and January 1996, the Company loaned an aggregate of
$1,033,521 at 8% interest to Agricola. Agricola purchases land in Chile for the
sole purpose of planting fast growing eucalyptus trees. Agricola then harvests
these trees for timber purposes. The promissory note is to be repaid in December
1997.
In 1996 the Company entered into an agreement to fund a wax museum in
Vienna, Austria and has deposited $200,000 towards this agreement. The Company's
capital requirement for the wax museum is approximately $2,000,000, which the
Company has not yet fulfilled.
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ITEM 7. DESCRIPTION OF PROPERTY
ATSI leases a 1,500 square foot office pursuant to a written lease expiring
in 2000. The office is located at Landstrasse 66/3, A-4020 Linz, Austria. ATSI's
annual rent is $28,363, subject to certain customary increases.
WGH owns a 70,000 square foot therapy center with 90 beds. The therapy
center is located in Windischgarsten, Austria. The Company owns the property
pursuant to a $2,682,282 mortgage at 8.5% annual interest. The Company pays
monthly principal and interest amounts in the amount of approximately $26,000
per month.
KVM leases a 500 square foot office from Manfred Schonbauer, a director of
the Company, located at Mr. Schonbauer's home in Micheldorf, Austria, pursuant
to a written lease. The annual rent is $2,500. The Company believes this office
is sufficient for its needs.
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The following information sets forth the names of the officers and
directors of the Company, their present positions with the Company and
biographical information.
Kurt Reichenberger has been the president, chief executive officer and a
director of the Company since October, 1995. From 1994 to November 1995, Mr.
Reichenberger was the general manager of Private Placement Brokerage ("PPM"), a
private Austrian venture capital company specializing in providing business
expertise and funding to emerging companies. Since 1992, Mr. Reichenberger has
been a director of Mid-West Consultants Corp., an offshore private venture
capital company. Mr. Reichenberger has been in the venture capital business
since 1985.
Bernhard Perner has been chief financial officer, secretary and a director of
the Company since October, 1995. Since 1991, Mr. Perner has been a manager of
the Tax Division of Steuerkanzlei Cszepl, an Austrian accounting firm. Mr.
Perner is licensed by Austria as a company consultant (similar to a CPA license
in the U.S.). Mr. Perner provides the Company with financial expertise in
connection with acquisitions and devotes approximately 20% of his time with the
Company.
Manfred Schonbauer has been a director of the Company since October 1995, was
appointed treasurer in April 1997, and is the chief executive officer and a
director of KVM. From 1991 to 1995, Mr. Schonbauer was the youngest director
ever appointed at Raiffeisenbank in Austria. Mr. Schonbauer responsibilities
with the bank included managing the credit and financing department. From 1995
to 1996, Mr. Schonbauer was a branch director of PPM.
Harold Schneidergruber has been a director of the Company since October 1995.
Since November 1995, Mr. Schneidergruber has been managing director of PPM.
Since 1993, Mr. Schneiderguber has been a director of Cartier Capital, an
international venture capital and
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financial consulting company located in Antigua. Mr. Schneidergruber is
experienced in the venture capital.
Franz Holzinger has been a director of the Company since October 1995. Since
1987, Mr. Holzinger has worked as an independent financial consultant to Cash
Consulting Limited (see "Item 11").
Helmut Presske has been a director of the Company since October 1995. From
October 1995 through March 1997 Mr. Presske served as the chief executive
officer, chief financial officer, secretary and director of WGH. Mr. Presske has
an architect license and has worked as such for over 20 years.
Sepp Schlaminger has been the chief operating officer and a director of WGH
since 1992. Since March 1997 Mr. Schlaminger has served as the chief executive
officer, chief financial officer and secretary of WGH. From 1991 to 1992, Mr.
Schlaminger worked as a managing director at Bad Haering Therapiecenter. Mr.
Schlaminger is experienced in operating therapy centers. He graduated from
Salzberg College in Salzberg, Austria with a degree in Hotel Management.
Dr. Norma Michaelis has been the medical director of WGH since 1994. From 1991
to 1994, she worked at Landeskrankenhaus Kirchdorf, a county hospital in
Kirchdorf, Austria. Dr. Michaelis graduated from the University of Vienna with a
degree in medicine. She is also licensed to practice acupuncture and
neurotherapy.
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS
During the fiscal years ended December 31, 1995 and December 31, 1996, none
of the Company's officers or directors received any compensation or remuneration
for their services. The following table sets forth certain information regarding
officers and directors of WGH that received compensation for the fiscal year
ended December 31, 1995 and 1996.
Name Year Salary
- ---- ---- ------
Helmut Presske 1995 $36,000
Sepp Schlaminger 1995 $64,400
Helmut Presske 1996 $36,000
Sepp Schlaminger 1996 $64,400
In fiscal 1995, the aggregate amount of compensation to all executive
officers and directors of WGH as a group was $100,400. Compensation of
approximately $100,400, subject to incremental statutory increases, will be paid
to such executive officers and directors in fiscal 1996.
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ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
The following table sets forth, as of May 13, 1997, the beneficial
ownership of the Company's Common Stock by the Company's officers and directors,
and each person known by the Company to beneficially own more than 10% of the
Company's Common Stock outstanding on such date and by the officers and
directors of the Company as a group. Except as otherwise indicated, all shares
are owned directly.
Amount and
Nature of
Beneficial Percent
Name and Address Position Ownership(1) of Class
- ---------------- -------- ------------ --------
Kurt Reichenberger President, 1,241,036 13.5
Landstrasse 66/3 Chief Executive
A-4020 Linz, Austria Officer and
Director
Bernhard Perner Secretary, 25,000 **
Landstrasse 66/3 and Director
A-4020 Linz, Austria
Manfred Schonbauer Director 25,000(2) **
4563 Micheldorf and Treasurer
Mullerviertal 2
Upper Austria
Harald Schneidergruber Director 25,000(3) **
Landstrasse 66/3
A-4020 Linz, Austria
Franz Holzinger Director 70,522(4) **
Landstrasse 66/3
A-4020 Linz, Austria
Helmut Presske Director 215,000 2.3
Waldstrasse 7
A-6460 Imst, Austria
P.T. Platinum Perkasa Nusantara 2,000,000 21.8
Suite 2401, Menara Mulia
JL. Jend. Gatot Subroto Kav 9-11
Jakarta 12930 Indonesia
All officers and 1,601,558 17.5
directors as a group (6 persons)
- --------------------
** Less than 1%
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(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock which such person has
the right to acquire within 60 days of May 13, 1997. For purposes of
computing the percentage of outstanding shares of Common Stock held by each
person or group of persons named above, any security which such person or
persons has or have the right to acquire within such date is deemed to be
outstanding but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person. Except as indicated
in the footnotes to this table and pursuant to applicable community
property laws, the Company believes based on information supplied by such
persons, that the persons named in this table have sole voting and
investment power with respect to all shares of Common Stock which they
beneficially own.
(2) Does not include an aggregate of 39,800 Shares beneficially owned by
members of Mr. Schonbauer's family, of which Mr. Schonbauer disclaims
beneficial ownership.
(3) Does not include 2,900 Shares beneficially owned by a member of Mr.
Schneidergruber's family, of which Mr. Schneidergruber disclaims beneficial
ownership.
(4) Does not include 4,200 Shares beneficially owned by a member of Mr.
Holzinger's family, of which Mr. Holzinger disclaims beneficial ownership.
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ITEM 11. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
In October 1995, as part of the Company's reorganization, the Company
issued 2,241,026 Shares to Kurt Reichenberger, the president and chief executive
officer of the Company, as consideration for the acquisition of HMA Handels-und
Montage GmbH, an Austrian company wholly owned by Mr. Reichenberger.
In October 1995, the Company issued 190,000 Shares to Helmut Presske, a
director of the Company, in consideration of the retirement and satisfaction of
debts totaling an aggregate of $400,000 owed to him by WGH.
In October 1995, the Company authorized and issued 150,000 Shares to its
officers in consideration of services rendered.
In February 1996, the Company accepted the subscription of Cash Consulting
Limited for the purchase of 2,500,000 shares of Common Stock at $2.50 per share.
Franz Holzinger, a director of the Company, serves as a consultant to Cash
Consulting Limited. Mr. Holzinger holds a power of attorney for CCL, to act on
its behalf. Mr. Holzinger is not an officer or director of CCL.
ITEM 12. SECURITIES BEING OFFERED
Common Stock
Each holder of Common Stock is entitled to one vote per share on all
matters to be voted upon by the Company's stockholders. Stockholders do not have
cumulative voting rights in the election of directors. Subject to preferences
that may be applicable to any shares of Preferred Stock, the holders of Common
Stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the Board of Directors out of funds legally available
therefor. The Company has not paid and does not presently intend to pay
dividends on its Common Stock. In the event of a liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets, remaining after payment of liabilities, subject to prior
distribution rights of holders of Preferred Stock, if any, then outstanding. The
Common Stock has no preemptive or conversion rights or other subscription
rights. There are no redemption or sinking fund provisions available to the
Common Stock. All outstanding shares of Common Stock are validly authorized and
issued and are fully paid and non-assessable, and the shares of Common Stock to
be issued upon completion of the Overseas Offering will be validly authorized
and issued, fully paid and non-assessable. Common Stock
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PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS
The Company's Common Stock is quoted on the National Association of
Securities Dealers, Inc., over-the-counter market on the OTC Bulletin Board
("Bulletin Board") under the symbol "AUTR". The Common Stock commenced listing
on the Bulletin Board on January 17, 1996.
The following table sets forth, for the periods indicated, the high and low
bid prices per share of Common Stock as reflected in the Bulletin Board
Fiscal Year Ended
December 31, 1996
High Bid Low Bid
-------- -------
First Quarter 3.5625 1
Second Quarter 4.75 3.375
Third Quarter 8.125 3.5
Fourth Quarter 4 4
Fiscal Year Ended
December 31, 1997
High Bid Low Bid
-------- -------
First Quarter 4.75 4
On June 24, 1997, the last sale price of the Company's Common Stock as
reported on the Bulletin Board was $4.4375 per share.
As of May 13, 1997, the Company estimates that it had approximately 450
stockholders of record. Such number of record holders was derived from the
stockholder list maintained by the Company's transfer agent, American Stock
Transfer & Trust Co., and does not include beneficial owners of the Company
whose shares are held in the names of various dealers and clearing agencies.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends and does not
intend to do so for the foreseeable future. The Company currently intends to
retain all earnings, if any, to finance the continued development of its
business. Any future payment of dividends will be determined solely in the
discretion of the Company's Board of Directors.
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ITEM 2. LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
In October 1995, the accounting firm of Scarano & Lipton, P.C. was replaced
by Cogen Sklar LLP as the Company's independent accounting firm. There were and
are no disagreements with Scarano & Lipton, P.C.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In October 1995, as part of the Company's reorganization, the Company
issued 2,241,026 Shares to Kurt Reichenberger, the president and chief executive
officer of the Company, as consideration for the acquisition of HMA Handels-und
Montage GmbH, an Austrian company wholly owned by Mr. Reichenberger.
In October 1995, the Company issued (i) 190,000 Shares to Helmut Presske, a
director of the Company, in consideration of the retirement and satisfaction of
debts totaling an aggregate of $400,000 owed to him by WGH; and (ii) 66,666
Shares to Aribert Vogel in consideration of the retirement and satisfaction of
debts totalling $150,000 owed to him by WGH.
In October 1995, the Company issued 150,000 Shares to its officers in
consideration of services rendered.
In December, 1995, the Company issued an aggregate of 200,000 Shares for a
total purchase price of $40,000, pursuant to Rule 504 of the Securities Act and
Regulation D promulgated thereunder, for legal and accounting services rendered.
The Company also issued 35,000 Shares, at a total purchase price of $10,000.
Such Shares were issued in consideration of legal and accounting services
rendered in connection with the Company's reorganization.
In January 1996, the Company accepted the subscription of Hanover Capital
Corp. for the purchase of 1,400,000 shares of Common Stock at $2.25 per share.
The proceeds were used to satisfy outstanding debts owed by WGH of $1,758,000
and KVM of $1,200,000. The balance of $192,000 was for improvements to the WGH
facility and working capital. The Common Stock was issued pursuant to Regulation
S of the Securities Act.
In February 1996, the Company accepted the subscription of Cash Consulting
Ltd. for the purchase of 2,500,000 shares of Common Stock at $2.50 per share.
The Common Stock was issued pursuant to Regulation S of the Securities Act. The
proceeds were used to loan $1,033,521 to Agricola, $1,846,000 to purchase the
KVM license, and approximately $3,340,033 to purchase 700,000 shares of Sigma
Alpha Group, Ltd. common stock.
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In September 1996, the Company accepted the subscription of Amerikan
Investments, Ltd. for the purchase of 300,000 shares of Common Stock at
approximately $3.50 per share, pursuant to Regulation S. The Company intends to
use these proceeds to alleviate its current working capital deficit.
In December 1996, the Company issued to certain officers and consultants
69,444 shares of Common Stock pursuant to the Company's 1996 Employee Stock
Purchase Plan. The shares were issued at $2.25 per share.
In April and May 1997, the Company accepted the subscriptions of Platinum
for the purchase of an aggregate of 4,000,000 share of the Company's Common
Stock at $2.50 per share. In connection with said subscriptions, Platinum paid
the Company an aggregate of $100,000 in cash and the Company accepted two
promissory notes from Platinum in the amount of $4,950,000 each, to be paid by
May 29, 1997. As of June 24, 1997 the Company had received $4,250,000 in
payments under the note due in June 1997.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Amended Certificate of Incorporation and Amended Bylaws limit
the liability of directors and officers to the maximum extent permitted by
Delaware law. Delaware law provides that directors of a corporation will not be
personally liable for monetary damages for breach of their fiduciary duties as
directors, including gross negligence, except liability for (i) breach of the
directors' duty of loyalty; (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of the law, (iii) the
unlawful payment of a dividend or unlawful stock purchase or redemption, and
(iv) any transaction from which the director derives an improper personal
benefit. Delaware law does not permit a corporation to eliminate a director's
duty of care, and this provision of the Company's Amended and Restated
Certificate of Incorporation has no effect on the availability of equitable
remedies, such as injunction or rescission, based upon a director's breach of
the duty of care.
PART F/S
FINANCIAL STATEMENTS
The Company's audited Financial Statements are attached hereto.
PART III
INDEX TO EXHIBITS
Number
------
(3) Articles of Incorporation, as amended, and Bylaws, as amended
15
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AUSTRIAN TRADING SERVICES, INC.
By: /s/ Kurt Reichenberger
-------------------------------------
Kurt Reichenberger, President
Date: June 30, 1997
16
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Austrian Trading Services, Inc.
We have audited the accompanying consolidated balance sheets of Austrian Trading
Services, Inc. and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the year ended December 31, 1996 and for the period October 1, 1995
(inception) to December 31, 1995. These consolidated financial statements are
the responsibility of the Companies' management. Our responsibility is to
express an opinion on these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Austrian Trading
Services, Inc. and subsidiaries as of December 31, 1996 and 1995, and the
results of their operations and cash flows for the year ended December 31, 1996
and for the period October 1, 1995 (inception) to December 31, 1995, in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has incurred significant losses
of $1,787,625 and $617,567 during the periods ended December 31, 1996 and 1995,
and at December 31, 1996 had an excess of current liabilities over current
assets of $1,255,498 that raise substantial doubt about its ability to continue
as a going concern. Management's plans regarding those matters are described in
Note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
COGEN SKLAR LLP
Bala Cynwyd, Pennsylvania
May 13, 1997
-1-
<PAGE>
- 1 -
INDEPENDENT AUDITORS REPORT
To the Board of Directors and Stockholders of
Windischgarstnerhof GmbH
We have audited the accompanying balance sheet of Windischgarstnerhof GmbH as of
September 30, 1995 the related profit and loss and cash flow statement for the
year ended September 30, 1995. The financial statements in question refer to
interim financial statements as at September 30, 1995. They are 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the fnancial position of Windischgarstnerhof GmbH as
September 30, 1995 and the results of its operations for the shortened year
ended September 30, 1995 in conformity with generally accepted accounting
principles.
The financial statements have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 2 to the financial statements,
the Company has continuous net losses and negative cash flows for the years
ended December 31, 1994, 1993 and 1992. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 2. The interest in
Windischgarstnerhof GmbH was bought end of September 1995 by ATS GmbH, Austria.
At the same time ATS GmbH, Austria was bought by ATS Inc. New York.
EWB Revisions- und Treuhandgesellschaft m.b.H.
Wirtschaftsprufungs- und Steuerberatungsgesellschaft
[SEAL]
October 25, 1996
<PAGE>
AUSTRIAN TRADING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS 1996 1995
------------ ------------
CURRENT ASSETS
Cash $ 11,691 $ 1,515
Accounts receivable
Trade (net of allowance for doubtful
accounts of $346,500 in 1996) 35,595 161,713
Other 393,530 53,555
Affiliate 54,798 --
Subscription receivable 63,375 --
Interest 82,700 --
Note receivable 1,033,521 --
Inventories 26,670 14,581
Prepaid expenses 58,805 75,766
------------ -----------
TOTAL CURRENT ASSETS 1,760,685 307,130
------------ -----------
PROPERTY AND EQUIPMENT 5,833,204 6,396,097
------------ -----------
OTHER ASSETS
Note receivable -- 935,131
Marketable equity security 2,012,500 612,371
License (net of accumulated amortization
of $369,272 and $-0-) 1,477,089 1,142,381
Deposits 194,060 --
------------ -----------
3,683,649 2,689,883
------------ -----------
TOTAL ASSETS $ 11,277,538 $ 9,393,110
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdrafts $ 1,086,737 $ 224,960
Current portion of notes payable-banks 254,738 57,370
Accounts payable
Trade 966,137 714,305
Other 678,311 125,644
Accrued expenses 29,918 29,607
Income taxes payable 342 372
------------ -----------
3,016,183 1,152,258
------------ -----------
LONG TERM DEBT
Due to former stockholders 259,061 281,669
Notes payable-banks 1,344,809 2,859,984
Accruals for severance payments 42,447 36,234
Due to affiliate -- 148,950
Other liabilities -- 105,356
------------ -----------
1,646,317 3,432,193
------------ -----------
TOTAL LIABILITIES 4,662,500 4,584,451
------------ -----------
STOCKHOLDERS' EQUITY
Preferred stock, $.025 par value,
authorized 1,000,000 shares;
none issued and outstanding -- --
Common stock, $.025 par value,
authorized 20,000,000 shares;
7,307,557 and 3,126,903
shares issued and 7,307,557
and 3,114,778 shares outstanding
in 1996 and 1995 182,564 78,048
Additional paid-in capital 11,273,688 776,197
Receivable from underwriter (613,782) --
Common stock subscribed -- 4,628,444
Accumulated deficit (2,405,192) (617,567)
Net unrealized loss on marketable
equity security (1,327,533) (44,814)
Foreign currency translation adjustment (494,707) (7,405)
------------ -----------
6,615,038 4,812,903
Less treasury stock, 12,125 shares,
at cost in 1995 -- 4,244
------------ -----------
TOTAL STOCKHOLDERS' EQUITY 6,615,038 4,808,659
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,277,538 $ 9,393,110
============ ===========
The accompanying notes are an integral part of
these consolidated financial statements.
-2-
<PAGE>
AUSTRIAN TRADING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Predecessor
--------------
Period Nine
October 1, 1995 Months Ended
Year Ended (Inception) to September 30,
December 31, 1996 December 31, 1995 1995
----------------- ------------------ ---------------
SALES $ 1,652,405 $ 523,874 $ 1,248,891
COST OF SALES 1,490,302 346,630 806,989
----------- ----------- -----------
GROSS PROFIT 162,103 177,244 441,902
OPERATING EXPENSES 2,150,320 832,250 836,098
----------- ----------- -----------
LOSS FROM OPERATIONS (1,988,217) (655,006) (394,196)
OTHER INCOME 200,592 37,439 2,939
----------- ----------- -----------
NET LOSS $(1,787,625) $ (617,567) $ (391,257)
=========== =========== ===========
LOSS PER COMMON SHARE $ (0.27) ($ 0.26)
=========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES 6,558,612 2,415,424
=========== ===========
The accompanying notes are an integral part of
these consolidated financial statements.
-3-
<PAGE>
AUSTRIAN TRADING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
OCTOBER 1, 1995 (INCEPTION) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
Common Stock Additional Common
-------------------- Paid-In Stock
Shares Amount Capital Subscribed
------ ------ ------- ----------
<S> <C> <C> <C> <C>
OPENING BALANCE 167,536 $ 4,188 $ 1,770,208 --
RECAPITALIZATION -- -- (1,770,152) --
ISSUANCE OF COMMON STOCK IN REVERSE
ACQUISITION 2,241,036 56,026 (31,026) --
ISSUANCE OF COMMON STOCK FOR PROFESSIONAL
SERVICES 235,000 5,750 44,250 --
ISSUANCE OF COMMON STOCK IN EXCHANGE FOR DEBT 333,331 8,334 541,667 --
ISSUANCE OF COMMON STOCK FOR DIRECTOR FEES 150,000 3,750 221,250 --
COMMON STOCK SUBSCRIBED -- -- -- 4,628,444
NET LOSS FOR THE PERIOD OCTOBER 1, 1995 (INCEPTION)
TO DECEMBER 31, 1995 -- -- -- --
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- -- --
--------- --------- ---------- ------------
BALANCE, DECEMBER 31, 1995 3,126,903 78,048 776,197 4,628,444
COMMON STOCK SUBSCRIBED -- -- -- 5,821,557
ISSUANCE OF COMMON STOCK 4,200,000 105,000 10,345,001 (10,450,001)
ISSUANCE OF COMMON STOCK UNDER STOCK OPTION PLAN 69,444 1,736 154,514 --
RETURN AND CANCELLATION OF COMMON STOCK FROM
A DIRECTOR (76,665) (1,917) 1,917 --
RETIREMENT OF TREASURY STOCK (12,125) (303) (3,941) --
NET LOSS FOR THE YEAR ENDED DECEMBER 31, 1996 -- -- -- --
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- -- --
---------- --------- ------------ ------------
BALANCE, DECEMBER 31, 1996 7,307,557 $ 182,564 $ 11,273,688 $ --
========== ========= ============ ============
<CAPTION>
Foreign
Treasury Stock Currency
Accumulated --------------------- Translation
Deficit Shares Amount Adjustment
------- ------ ------ ----------
<S> <C> <C> <C> <C>
OPENING BALANCE $(1,770,152) 12,125 $4,244 $ --
RECAPITALIZATION 1,770,152 -- -- --
ISSUANCE OF COMMON STOCK IN REVERSE
ACQUISITION -- -- -- --
ISSUANCE OF COMMON STOCK FOR PROFESSIONAL
SERVICES -- -- -- --
ISSUANCE OF COMMON STOCK IN EXCHANGE FOR DEBT -- -- -- --
ISSUANCE OF COMMON STOCK FOR DIRECTOR FEES -- -- -- --
COMMON STOCK SUBSCRIBED -- -- -- --
NET LOSS FOR THE PERIOD OCTOBER 1, 1995 (INCEPTION)
TO DECEMBER 31, 1995 (617,567) -- -- --
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- -- (7,405)
----------- -------- ------- ---------
BALANCE, DECEMBER 31, 1995 (617,567) 12,125 4,244 (7,405)
COMMON STOCK SUBSCRIBED -- -- -- --
ISSUANCE OF COMMON STOCK -- -- -- --
ISSUANCE OF COMMON STOCK UNDER STOCK OPTION PLAN -- -- -- --
RETURN AND CANCELLATION OF COMMON STOCK FROM
A DIRECTOR -- -- -- --
RETIREMENT OF TREASURY STOCK -- (12,125) (4,244) --
NET LOSS FOR THE YEAR ENDED DECEMBER 31, 1996 (1,787,625) -- -- --
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- -- (487,302)
----------- -------- ------- ---------
BALANCE, DECEMBER 31, 1996 $(2,405,192) $ -- $ -- $(494,707)
=========== ======== ======= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-4-
<PAGE>
AUSTRIAN TRADING SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period Predecessor
October 1, 1995 -----------------
Year Ended (Inception) to Nine Months Ended
December 31, 1996 December 31, 1995 September 30, 1995
----------------- ----------------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,787,625) $ (617,567) $ (391,257)
Adjustments to reconcile net loss
to net cash provided by
(used in) operating activities
Depreciation 332,253 82,256 134,921
Amortization 367,601 -- --
Provision for losses on accounts
receivable 1,485,000 -- --
Issuance of common stock for
professional and director fees -- 275,000 --
(Increase) decrease in assets
Accounts receivable (1,368,306) (25,827) (41,960)
Other receivables (494,312) 597,977 (624,722)
Inventories (13,676) 2,151 --
Prepaid expenses 11,222 7,089 (15,136)
Increase (decrease) in liabilities
Accounts payable 316,397 102,906 462,809
Other payables 576,980 101,882 (80,977)
Accrued expenses 2,759 23,085 --
Income taxes payable -- 372 --
Accruals for severance payments 9,408 -- 6,495
Other liabilities (248,895) 105,568 (216,563)
----------- ----------- -----------
Net cash provided by (used in)
operating activities (811,194) 654,892 (766,390)
----------- ----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures (281,166) (1,149,111) (703,455)
Advances under note receivable (98,390) (935,131) --
Purchase of marketable equity security (2,682,848) (657,185) --
Acquisition of license (703,980) (1,142,381) --
Deposits (199,800) -- --
----------- ----------- -----------
Net cash used in investing activities (3,966,184) (3,883,808) (703,455)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advance from (repayment to) former
stockholders -- (1,315,634) 1,233,478
Proceeds from bank loans -- -- 454,465
Repayment of bank loans (1,371,441) (33,859) --
Bank overdraft refinanced as long-term debt 246,002 -- --
Proceeds from common stock subscribed 5,207,775 4,628,444 --
Proceeds from exercise of stock option 92,875 -- --
----------- ----------- -----------
Net cash provided by financing activities 4,175,211 3,278,951 1,687,943
----------- ----------- -----------
Effect of exchange rate changes on cash (249,434) (3,625) (40,692)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH (851,601) 46,410 177,406
CASH AND BANK OVERDRAFTS - BEGINNING OF PERIOD (223,445) (269,855) (447,261)
----------- ----------- -----------
CASH AND BANK OVERDRAFTS - END OF PERIOD $(1,075,046) $ (223,445) $ (269,855)
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 353,773 $ 202,375 $ 365,523
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Common stock issued in reverse acquisition $ -- $ 25,000
=========== ===========
Common stock issued in
exchange for debt $ -- $ 550,000
=========== ===========
Receivable from underwriter $ 617,567 $ --
=========== ===========
Subscription receivable $ 63,375 $ --
=========== ===========
Return and cancellation of
treasury stock $ 4,244 $ --
=========== ===========
Net unrealized loss on marketable
equity security $(1,282,719) $ (44,814)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-5-
<PAGE>
AUSTRIAN TRADING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
Organization and History
Austrian Trading Services, Inc., formerly known as Big Apple Farms, Inc., ("the
Company") was incorporated on May 28, 1981 in the State of Delaware.
The Company was initially in the business of boarding, breeding, purchasing and
selling thoroughbred race horses. On July 5, 1989 by a vote of the majority
stockholders, the Company discontinued the horse breeding business. Until
October 22, 1995, the Company focused on the real estate and construction
industries, conducting its operations through its wholly owned subsidiary BAF
Enterprises, Inc. ("BAF") in Newburg, New York.
Pursuant to a registration statement filed with the Securities and Exchange
Commission on Form S-18, effective June 17, 1982, Big Apple Farms, Inc. made an
initial public offering of 2,000,000 shares of common stock.
In May, 1995, the Company's Board of Directors declared a 1 for 70 reverse stock
split thereby reducing its outstanding shares of common stock from 11,727,500 to
167,536 and increasing its par value from $.005 to $.025.
Reorganization and Financial Statement Presentation
On October 23, 1995, Big Apple Farms, Inc. exchanged 89.6% of its common shares
or 2,241,036 post reverse split common shares for 100% of the outstanding shares
of Austrian Trading Services, GmbH ("ATS"), formerly known as HMA Handels-UND
Montage-GmbH ("HMA"). Prior to the stock exchange on October 23, 1995, Big Apple
Farms, Inc. sold the outstanding capital stock of BAF to existing officers and
directors of Big Apple Farms, Inc. for nominal consideration. Subsequent to the
stock exchange, Big Apple Farms, Inc. changed its name to Austrian Trading
Services, Inc.
ATS acquired the Windischgarstnerhof GmbH ("WIND"), a hotel and therapy center
on September 30, 1995 for 67,250,000 Austrian schillings or approximately
$6,710,000. The acquisition has been accounted for by the purchase method of
accounting and the purchase price approximated the fair value of the net assets
acquired.
Since ATS acquired control of the Company on October 23, 1995, ATS became the
acquiring entity and accounting survivor. Accordingly, the acquisition of ATS
was accounted for as a reverse acquisition whereby the historical financial
statements as of September 30, 1995 are those of the accounting acquirer, ATS,
and not the financial statements of the legal acquirer, the registrant. The
operations of the registrant reflect the consolidated operations of ATS for the
three months ended December 31, 1995 since ATS acquired WIND on September 30,
1995 and the only operations of ATS was its investment in WIND. The operations
for the nine months ended September 30, 1995 reflect the operations of WIND as a
predecessor business under different ownership and management.
In March 1996, ATS formed a wholly-owned subsidiary, Kumststoffvertrieb
Micheldorf, GMBH (KVM) for the purpose of marketing, producing and distributing
innovative consumer products, including the product under the licensing
agreement described in Note 6.
The operations of the registrant reflect the consolidated operations of ATS and
its wholly-owned subsidiaries (WIND and KVM) for the year ended December 31,
1996.
Basis of Consolidation
The accompanying consolidated financial statements as of December 31, 1996 and
1995 and for the periods then ended include the accounts of Austrian Trading
Services, Inc. and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
Marketable Equity Securities
Investments in public companies are carried at quoted market price and are
classified as available-for-sale. Unrealized gains and losses are recorded as a
component of stockholders' equity.
-6-
<PAGE>
AUSTRIAN TRADING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
(Continued)
Property and Equipment and Depreciation
Property and equipment of WIND was recorded at its estimated fair values as of
October 23, 1995 plus the cost of additions from October 24, 1995 through
December 31, 1996. Depreciation of property and equipment has been provided
using the straight-line method over the estimated useful lives (5 to 25 years)
of the related assets.
Income Taxes
Deferred income taxes are determined in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Under the liability
method specified by SFAS No. 109, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax bases
of assets and liabilities as measured by the enacted rates which will be in
effect when these differences are settled or realized. Deferred tax expense is
the result of changes in deferred tax assets and liabilities.
Foreign Currency Translation
Assets and liabilities of the foreign subsidiaries have been translated using
the exchange rate at the balance sheet date. The average exchange rate for the
period has been used to translate revenues and expenses. Translation adjustments
are reported separately and accumulated in a separate component of equity
(foreign currency translation adjustment).
Management Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates based on management's
knowledge and experience. Accordingly, actual results could differ from those
estimates.
Financial Instruments
The carrying amount of cash, accounts and note receivable, bank overdrafts,
accounts payable and other liabilities approximates fair value as of December
31, 1996 because of their short maturities.
The carrying value of the fixed rate long-term debt approximates fair value
since the interest rate associated with the long-term debt approximates the
current market interest rate.
Loss Per Common Share
Loss per common share is computed by dividing net loss applicable to common
stockholders by the weighted average number of shares outstanding each year.
New Authoritative Pronouncements
During March 1995, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 121, "Accounting for the Impairment of Long Lived Assets", which is
effective for fiscal years beginning after December 15, 1995. The adoption of
this standard did not have an effect on the Company's financial position or
results of operations.
The Company accounts for stock issued for compensation for services according to
the provisions of Accounting Principles Board Opinion 25 (APB 25), "Accounting
for Stock Issued to Employees". During October 1995, the FASB issued SFAS No.
123, "Accounting for Stock Based Compensation". This statement establishes
financial accounting and reporting standards for stock-based employee
compensation plans. SFAS No. 123 encourages entities to adopt a fair value based
method of accounting for stock compensation plans. However, SFAS No. 123 also
permits the Company to continue to measure compensation costs under APB 25. If
the fair value based method of accounting is not adopted, SFAS No. 123 requires
pro forma disclosures of net income and net income per common share in the notes
to financial statements. The accounting requirements of SFAS No. 123 are
effective for transactions entered into in fiscal years that begin after
December 15, 1995. The disclosure requirements of SFAS No. 123 are effective for
financial statements for fiscal years beginning after December 15, 1995, or for
an earlier fiscal year for which SFAS No. 123 is initially adopted for
recognizing compensation cost.
-7-
<PAGE>
AUSTRIAN TRADING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
(Continued)
Subsequent to December 31, 1996, the FASB issued SFAS No. 128, "Earnings Per
Share" (EPS). This statement establishes standards for computing and presenting
EPS, replacing the presentation of currently required primary EPS with a
presentation of Basic EPS. For entities with complex capital structures, the
statement requires the dual presentation of both Basic EPS and Diluted EPS on
the face of the statement of operations. Under this new standard, Basic EPS is
computed based on weighted average shares outstanding and excludes any potential
dilution; Diluted EPS reflects potential dilution from the exercise or
conversion of securities into common stock or from other contracts to issue
common stock and is similar to the currently-required fully diluted EPS. SFAS
128 is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods, and earlier application is not
permitted. The Company does not believe that this statement will have a material
impact on the computation of the EPS of the Company.
NOTE 2 - MANAGEMENT'S PLANS FOR FINANCIAL REORGANIZATION
The Company's consolidated financial statements have been presented on the basis
that it is a going concern which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As reflected in
the financial statements, the Company has incurred losses of $1,787,625 and
$617,567 for the year ended December 31, 1996 and the period October 1, 1995
(inception) to December 31, 1995 and at December 31, 1996 had a working capital
deficit of $1,255,498.
During 1996 construction was completed on the therapy center and WIND obtained
approval by the Austrian authorities to operate a therapy center and qualified
to be reimbursed through health insurance plans. Management believes that WIND
will generate a profitable operation for the year ending December 31, 1997.
In September 1996, the Company accepted a Subscription Agreement for the
purchase of 300,000 shares of common stock for $1,050,000. The Company intends
to use these proceeds to alleviate its working capital deficit (See note 9).
During March 1997, the Company received a Notice of Allowance of its application
from the U.S. Patent and Trademark Office for its new glass product. After
certain fees are paid, the application will be issued as a patent. Management
believes that sales from this product over the next four years will be
sufficient to recover the cost of its license (see Note 6).
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
1996 1995
---------- ----------
Land $ 485,876 $ 528,276
Buildings 5,086,925 5,329,153
Machinery and equipment 38,649 26,025
Furniture and fixtures 616,647 516,143
---------- ----------
6,228,097 6,399,597
Less: Accumulated depreciation 397,633 82,091
---------- ----------
5,830,464 6,317,506
Construction in progress 2,740 78,591
---------- ----------
$5,833,204 $6,396,097
========== ==========
-8-
<PAGE>
AUSTRIAN TRADING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 4 - NOTE RECEIVABLE
The Company entered into an agreement with a Chilean corporation to loan the
corporation up to $1,100,000 between October 1995 and January 1996 with
interest. The Company was to receive a one year interest payment in the amount
of $82,700 on December 15, 1996. The entire principal amount ($1,033,521) plus
all outstanding interest thereon ($82,700) are due on December 15, 1997. The
Company has the right to convert, at any time prior to the repayment of the
loan, the outstanding amount into shares of capital stock of the corporation.
The Company would receive that number of shares necessary to give the Company
that percentage of the outstanding capital stock of the corporation that
corresponds to the percentage that the loan represents of the corporation's
total equity.
NOTE 5 - MARKETABLE EQUITY SECURITIES
At December 31, 1995, the Company purchased 138,000 shares of Sigma Alpha Group,
Ltd. (Sigma) for $657,185. Sigma is developing wireless telecommunication
products which utilize radio frequencies transmitted by FM radio stations.
During the year ended December 31, 1996, an additional 562,000 shares were
purchased for $2,682,848 which increased its holdings to 700,000 shares at a
cost of $3,340,033. At December 31, 1996 and 1995 this investment is stated at
the average of the closing bid and asked price of $2,012,500 and $612,371.
Unrealized losses of $1,327,533 and $44,814 in 1996 and 1995 are recorded as a
component of stockholders' equity.
NOTE 6 - LICENSE AGREEMENT
On October 31, 1995 and amended April 24, 1996, the Company entered into an
agreement to license the rights to produce and market a proprietary new glass
product. This "Mix and Drink" glass enables the user to conveniently mix
substances and then drink the mixture. Sales are dependent upon the approval of
its patent applications in the Western Hemisphere. During March 1997, the
Company received a Notice of Allowance of its application from the U.S. Patent
and Trademark Office for its new glass product. After certain fees are paid, the
application will be issued as a patent. The original purchase price for the
license was approximately $1,142,000 and amended in April 1996 for a total cost
of approximately $1,846,000. The cost of the licensing agreement acquired was
recorded as an asset and is being amortized over five years. Management believes
that sales from this product over the next four years will be sufficient to
recover the cost of the license. However, the Company's estimate of the period
of recovery could change due to changes in its estimates of future sales.
NOTE 7 - LONG TERM DEBT
Long term debt consists of the following:
1996 1995
---------- ---------
Note payable to a bank due in monthly
installments of 86,500 schillings ($7,900
at December 31, 1996 exchange rates)
including interest at 8.5% through March 31,
2014. The note is collateralized by the building $ 862,520 2,035,650
Note payable to a bank. During March 1997 WIND
repaid 1,500,000 schillings ($136,995 at
December 31, 1996 exchange rates) to the bank
In addition, bank overdrafts of 2,693,547 schillings
($246,002) were refinanced and became part of
this note. The note is payable in monthly installments
of 150,000 schillings ($13,700 at December 31, 1996
exchange rates) including interest at 5.5%
beginning May 1, 1997. The note is due May 31, 2001
and is collateralized by the building 737,027 881,704
---------- ----------
1,599,547 2,917,354
Less current portion 254,738 57,370
---------- ----------
$1,344,809 $2,859,984
========== ==========
-9-
<PAGE>
AUSTRIAN TRADING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 7 - LONG TERM DEBT (Continued)
The aggregate maturities of the long-term debt are as follows:
Year Ending December 31,
------------------------
1997 $ 254,738
1998 164,660
1999 174,743
2000 185,467
2001 99,672
Thereafter 720,267
----------
$1,599,547
==========
Interest expense for all debt was $353,773, $202,375 and $365,523 for the year
ended December 31, 1996 and the periods ended December 31, 1995 and September
30, 1995.
NOTE 8 - DUE TO FORMER STOCKHOLDERS
The amounts due to former stockholders are due December 31, 1998. Interest is
payable annually at 8-1/2%.
NOTE 9 - CAPITAL STOCK
On October 23, 1995, Big Apple Farms, Inc. exchanged 2,241,036 of its post
reverse split common shares valued at $25,000 for 100% of the outstanding shares
of ATS.
In October 1995, the Company issued 333,331 shares of common stock valued at
$550,000 in exchange for a like amount of debt of WIND. During 1996 a director
returned 76,665 shares which were cancelled.
In October 1995, the Company issued 150,000 shares of common stock valued at
$225,000 in payment of director fees.
In December 1995, the Company issued 200,000 shares of common stock valued at
$40,000 for legal and accounting services.
In December 1995, the Company issued 35,000 shares of common stock valued at
$10,000 for legal services in connection with the stock exchange agreement.
In January and February 1996, the Company accepted the subscription for the
purchase of 1,400,000 shares of common stock at approximately $2.25 per share
and 2,500,000 shares of common stock at approximately $2.50 for a total of
$9,400,000 of which proceeds of $4,628,444 had been received as of December 31,
1995. The balance of the proceeds were received during 1996.
In September 1996, the Company accepted the subscription for the purchase of
300,000 shares of common stock at approximately $3.50 per share for a total of
$1,050,000 of which $436,218 had been received as of December 31, 1996. The
balance of the proceeds of $613,782 was due from the underwriter at December 31,
1996.
-10-
<PAGE>
AUSTRIAN TRADING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 9 - CAPITAL STOCK (Continued)
The Company maintains an Incentive Stock Option Plan whereby options are granted
to key employees at an exercise price of at least 100% of the fair market value
on the date of grant. Options may be exercised after one year and expire not
later than ten years after date of grant. The Company has reserved 1,000,000
shares of common stock under the plan. In December 1996, 69,444 shares were
issued at $2.25 per share for $156,250, of which proceeds of $92,875 had been
received as of December 31, 1996. The balance of the proceeds of $63,375 was
received in February 1997.
The Company accounts for this plan under APB Opinion No. 25, under which no
compensation cost has been recognized.
Had compensation cost for this plan been determined consistent with SFAS No.
123, the Company's net loss and net loss per share for 1996 would have been
changed to the following pro forma amounts:
Net loss
As reported $(1,787,625)
Pro forma (1,874,430)
Loss per share
As reported (0.27)
Pro forma (0.29)
NOTE 10 - INCOME TAXES
Deferred income tax assets and liabilities are computed annually for temporary
differences between the financial statement and tax basis of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities.
These are no significant temporary differences for the year ended December 31,
1996 and the three months ended December 31, 1995.
As of December 31, 1996, the Company had approximately $2,102,000 of net
operating loss carryforwards expiring through 2011, available to offset future
U.S. Federal income taxes. Also, as of December 31, 1996, the Company had
approximately $3,966,000 of net operating loss carryforwards with no expiration
period available to offset future foreign income taxes.
As a result of the capital transactions and change in control described in Notes
1 and 8, the Company is subject to limitations on the future utilization of its
U.S. net operating loss carryforwards. These limitations, described in Section
382 of the Internal Revenue Code, limit the amount of future taxable income
which may be offset by pre-change net operating loss and capital loss
carryforwards. This limitation is calculated by reference to the value of the
Company immediately before the change date, multiplied by a discount factor,
known as the "long term tax-exempt rate". Due to the limited market for the
stock, it is difficult to ascertain what value would be assigned to the Company
for purposes of Section 382. However, Section 382 of the Code also provides that
in the event the business enterprise of the loss corporation is not continued
for the two year period commencing on the change date, the net operating loss
carryforwards may no longer be available.
There is no income tax benefit for operating losses for the periods ended
December 31, 1996 and 1995 due to the following:
Current tax benefit - the operating losses cannot be carried back to
earlier years.
Deferred tax benefit - the tax benefit of the net operating losses
described above were offset by a 100% valuation allowance. Management
believes that a valuation allowance is considered necessary since it is
more likely than not that the deferred tax asset will not be realized
through future taxable income.
-11-
<PAGE>
AUSTRIAN TRADING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 11 - CONCENTRATION OF CREDIT RISK
The therapy center grants credit without collateral to its patients, most of
whom are insured under third party payor agreements. The Company maintains cash
balances in high credit quality institutions. The Company believes it is not
exposed to any significant credit risk on cash balances and accounts receivable.
NOTE 12 - SUBSEQUENT EVENT
In April and May 1997, the Company accepted the subscriptions of P.T. Platinum
Perkasa Nusantara, an Indonesian corporation ("Perkasa"), for the purchase of an
aggregate of 4,000,000 shares of the Company's common stock at $2.50 per share.
In connection with these subscriptions, Perkasa paid the Company an aggregate of
$100,000 in cash and the Company accepted two promissory notes from Perkasa in
the amount of $4,950,000 each due by May 29, 1997.
-12-
Certificate of Incorporation
of
BIG APPLE FARMS, INC.
FIRST: The name of the Corporation is BIG APPLE FARMS, INC.
SECOND: Its registered office and place of business in the State of Delaware is
to be located at 410 South State Street in the City of Dover, County of Kent.
The Registered Agent in charged thereof is XL CORPORATE SERVICES, INC.
THIRD: The nature of the business and the objects and purposes proposed to be
transacted, promoted and carried on are to do any or all things herein
mentioned, as fully and to the same extent as natural persons might or could do,
and in any part of the world, viz:
The purpose of the corporation is to engage in any lawful act or activity for
which corporation may be organized under the General Corporation Law of
Delaware. To breed, purchase, race and board thoroughbred race horses.
FOURTH: The corporation shall be authorized to issue Two Hundred (200) Shares of
No Par Value.
FIFTH: The name and address of the incorporator is as follows:
Barbara O. Cramer, 410 South State Street, Dover, DE 19901
SIXTH: The Directors shall have power to make and to alter or amend the By-Laws;
to fix the amount to be reserved as working capital, and to authorize and cause
to be executed, mortgages and liens without limit as to the amount, upon the
property and franchise of this Corporation.
With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the account and
books of this corporation, or any of them, shall be open to the inspection of
the stockholders; no stockholder shall have any right of inspecting any account,
or book, or document of this Corporation, except as conferred by the law or the
By-Laws, or by any resolution of the stockholders.
<PAGE>
The stockholders and directors shall have power to hold their meetings and
keep the books, documents and papers of the corporation outside of the State of
Delaware, at such places as may be from time to time, designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
It is the intention that the objects, purposes and powers specified in the
THIRD paragraph hereof shall, except where otherwise specified in said
paragraph, be nowise limited or restricted by reference to or inference from
the terms of any other clause or paragraph in this certificate of incorporation,
but that the objects, purposes and powers specified in the THIRD paragraph and
in each of the clauses or paragraphs of this charter shall be regarded as
independent objects, purposes and powers.
SEVENTH: The corporation shall, to the full extent permitted by Section 145 of
the Delaware General Corporation Law, as amended from time to time, indemnify
all persons whom it may indemnify pursuant thereto.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 28th day of May ,
1981.
Dated at Dover, Delaware /s/ Barbara O. Cramer (SEAL)
---------------------
Barbara O. Cramer
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
BIG APPLE FARMS, INC.
BEFORE PAYMENT OF CAPITAL
Pursuant to Section 241 of Title 8 of the Delaware
Code of 1953, as amended
I, the undersigned, being the only Incorporator of BIG APPLE FARMS, INC., a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DO HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Incorporators of BIF APPLE FARMS,
INC., duly held and convened, resolutions were adopted setting forth a proposed
amendment to the Certificate of Incorporation of said corporation and declaring
said amendment advisable. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, that the Certificate of Incorporation of this Corporation be, and
it hereby is, amended by changing the article thereof numbered FOURTH to read as
follows:
FOURTH: The corporation shall be authorized to issue Twenty Million (20,000,000)
Shares at $.005 Par Value.
SECOND: That no part of the capital of said corporation having been paid,
this certificate is filed pursuant to Section 241 of Title 8 of the Delaware
Code, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 3rd day of
June, A.D., 1981.
/s/ Barbara O. Cramer (SEAL)
----------------------------
Barbara O. Cramer
<PAGE>
CERTIFICATE OF AMENDMENT FILED
NOV 2 1981 9AM
OF [ILLEGIBLE]
SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
BIG APPLE FARMS, INC.
BEFORE PAYMENT OF CAPITAL
Pursuant to Section 241 of Title 8 of the Delaware
Code of 1953, as amended
I, the undersigned, being the only Incorporator of BIG APPLE FARMS, INC., a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DO HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Incorporators of BIF APPLE FARMS,
INC., duly held and convened, resolutions were adopted setting forth a proposed
amendment to the Certificate of Incorporation of said corporation and declaring
said amendment advisable. The resolution setting forth the proposed amendment is
as follows:
"RESOLVED, that the Certificate of Incorporation of this Corporation be,
and it hereby is, amended by changing the article thereof numbered FOURTH to
read as follows:"
FOURTH: The corporation shall be authorized to issue Twenty Million
(20,000,000) Shares at $.001 Par Value.
SECOND: That no part of the capital of said corporation having been paid,
this certificate is filed pursuant to Section 241 of Title 8 of the Delaware
Code, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 2nd day of
November, A.D., 1981.
/s/Barbara O. Cramer (SEAL)
---------------------------
Barbara O. Cramer
<PAGE>
FILED CERTIFICATE OF CHANGE OF LOCATION
APR 9 1984 9AM
[ILLEGIBLE] OF REGISTERED OFFICE
SECRETARY OF STATE
AND OF REGISTERED AGENT
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
BIG APPLE FARMS, INC.
2. The registered office of the corporation within the State of Delaware is
hereby changed to 229 South State Street, City of Dover 19901, County of Kent.
3. The registered agent of the corporation within the State of Delaware is
hereby changed to The Prentice-Hall Corporation System, Inc., the business
office of which is identical with the registered office of the corporation as
hereby changed.
4. The corporation has authorized the changes hereinbefore set forth by
resolution of its Board of Directors.
Signed on March 30, 1989.
/s/ James R. O'Connor
---------------------
-President
Attest:
/s/ Linda D. Colombo
- --------------------
Secretary
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 10/05/1994
944188455 - 915306 Certificate
for Renewal and Revival of Charter
BIG APPLE FARMS, INC., a corporation organized under the laws of Delaware, the
charter of which was voided for non-payment of taxes, now desires to procure a
restoration, renewal and revival of its charter, and hereby certifies as
follows:
1. The name of this corporation is BIG APPLE FARMS, INC.
2. Its registered office in the State of Delaware is located at 82
Loockerman Square, Suite L-100, City of Dover Zip Code 19904 County of Kent, the
name and address of its registered agent Prentice/Hall Corporation System, Inc.,
82 Loockerman Square, Suite L-100, Dover Delaware 19904.
3. The date of filing of the original Certificate of Incorporation in
Delaware was 5/28/81
4. The date when restoration, renewal and revival of the charter of this
company is to commence is the 28th day of Feb., 1994, same being to the date of
the expiration of the charter. This renewal and revival of the charter of this
corporation is to be perpetual.
5. This corporation was duly organized and carried on the business
authorized by its charter until the 1st day of March A.D. 1994, at which time
its charter became inoperative and void for non-payment of taxes and this
certificate for renewal and revival is filed by authority of the duly elected
directors of the corporation in accordance with the laws of the State of
Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312
of the General Corporation Law of the State of Delaware, as amended, providing
for the renewal, extension and restoration of charters James R. O'Connor Jr. the
last and acting President, and Linda D. Colombo, the last and acting Secretary
of BIG APPLE FARMS, INC., have hereunto set their hands to this certificate this
5th day of October 1994.
/s/ James R. O'Connor Jr.
--------------------------
Last and Acting President
ATTEST:
/s/ Linda D. Colombo, Sec.
--------------------------
Last and Acting Secretary
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
CERTIFICATE OF AMENDMENT FILED 09:00 AM 10/11/1995
950234168 - 915306
OF
CERTIFICATE OF INCORPORATION
OF
BIG APPLE FARMS, INC.
BIG APPLE FARMS, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware DOES HEREBY
CERTIFY:
That pursuant to the unanimous written consent of the Board of Directors of
Big Apple Farms, Inc., (the "Corporation") taken as of May 22, 1995, resolutions
were duly adopted setting forth a proposed amendment to the Certificate of
Incorporation of said Corporation, declaring said amendment to be advisable and
directing that the stockholders of said Corporation consider approval thereof.
The resolution setting forth the proposed amendment is as follows:
RESOLVED, that, subjest to stockholder approval, Article FOURTH
of the Certificate of Incorporation, relating to the
capitalization of the Corporation, is hereby amended and restated
in its entirety to read as follows:
"FOURTH: a) the Corporation shall be authorized to issue the
following shares:
Class Number of Shares Par Value
----- ---------------- ---------
Common 20,000,000 $.025
Preferred 1,000,000 $.01
<PAGE>
b) The designations and the powers, preferences and rights,
and the qualifications or restrictions thereof are as follows:
The Preferred Stock shall be issued from time to time in one
or more series, with such distinctive serial designations as
shall be stated and expressed in the resolution or resolutions
providing for the issue of such shares from time to time adopted
by the Board of Directors; and in such resolution or resolutions
providing for the issue of shares of each particular series, the
Board of Directors is expressly authorized to fix the annual rate
or rates of dividends for the particular series; the dividend
payment dates for the particular series and the date from which
dividends on all shares of such series issued prior to the record
date for the first dividend payment date shall be cumulative; the
redemption price or prices for the particular series; the voting
powers for the particular series; the rights, if any, of holders
of the shares of the particular series to convert the same into
shares of any other series or class or other securities of the
Corporation, with any provisions for the subsequent adjustment of
such conversion rights; and to classify or reclassify any
unissued shares by fixing or altering from time to time any of
the foregoing rights, privileges and qualifications.
All shares of Preferred Stock of any one series shall be
identical with each other in all respects, except that shares of
any one series issued at different times may differ as to the
dates from which dividends thereon shall be cumulative; and all
Preferred Stock shall be of equal rank, regardless of series, and
shall be identical in all respects except as to the particulars
fixed by the Board of Directors as hereinabove provided or as
fixed herein.
c) At 5:00 p.m., Dover, Delaware time, on the date of this
filing of this Certificate of Amendment to the Certificate of
Incorporation, all then outstanding shares of Common Stock, par
value $.005 per share, held by each holder of record on such time
and date shall be automatically changed into one (1) share of
Common Stock, par value $.025 per share, for each seventy (70)
shares of Common Stock, par value $.005 per share, without any
further action on the part of the holders thereof or the
Corporation. No fractional shares will be issued. In lieu
thereof, each holder, who would otherwise have been entitled to
receive a fraction of a share of Common Stock, will be entitled
to receive from the Corporation
2
<PAGE>
a cash payment equal to the fair value of such a fraction of a
share as of the time such fraction is determined."
That thereafter, pursuant to a resolution of the Board of Directors
directing that such amendment be considered by the stockholders of the
Corporation, the stockholders of the Corporation holding more than a majority of
the outstanding shares of Common Stock of the Corporation, in accordance with
Section 228 of the General Corporation Law of the State of Delaware, consented
in writing to and approved said amendment and delivered such written consents to
the Corporation. The Corporation thereafter provided to the other stockholders
of the Corporation the notice called for in Section 228 of the General
Corporation Law.
That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by James O'Connor, its President, and attested to by Linda Colombo, its
Secretary, this 11th day of October, 1995.
BIG APPLE FARMS, INC.
By: James O' Connor
-------------------------
James O'Connor, President
Attest:
By: Linda Colombo
---------------------
Linda Colombo, Secretary
3
<PAGE>
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT SECRETARY OF STATE
OF DIVISION OF CORPORATIONS
CERTIFICATE OF INCORPORATION FILED 01:25 PM 12/05/1995
OF 95028580 - 915306
BIG APPLE FARMS, INC.
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
I, Kurt Reichenberger, president and secretary, of Big Apple Farms, Inc.
(the "Corporation"), a corporation existing under the laws of the State of
Delaware do hereby certify as follows:
FIRST: That the Certificate of Incorporation, as amended, of said
corporation has been amended as follows:
1. By striking out the whole of Article FIRST thereof as it now exists and
inserting in lieu thereof a new Article FIRST to read in its entirety as
follows:
FIRST: The name of the Corporation is AUSTRIAN TRADING SERVICES, INC.
(the "Corporation).
SECOND: That such amendment has been duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware ("G.L.C.") by obtaining the written consent of the holders of the
majority of the stock of Big Apple Farms, Inc. entitled to vote at a meeting of
stockholders pursuant to Section 228 of the G.L.C.
IN WITNESS WHEREOF, we, the undersigned, have executed and suscribed this
certificate this 29th day of November, 1995.
/s/ Kurt Reichenberger
-----------------------------
Kurt Reichenberger, President
ATTEST:
/s/ Kurt Reichenberger
- -----------------------------
Kurt Reichenberger, Secretary
<PAGE>
February 24, 1995
AMENDED
BY-LAWS
of
BIG APPLE FARMS, INC.
ARTICLE I - OFFICES
SECTION 1. REGISTERED OFFICE. --The registered office shall be established
and maintained at in the County of Kent in the State of Delaware.
SECTION 2. OTHER OFFICES. --The corporation may have other offices, either
within or without the State of Delaware, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require.
ARTICLE II - MEETING OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. --Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Delaware, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. In the event the
Board of directors fails to determine the time, date and place of meeting, the
annual meeting of stockholders shall be held at the registered office of the
corporation in Delaware on .
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
may transact such other corporate business as shall be stated in the notice of
the meeting.
<PAGE>
SECTION 2. OTHER MEETINGS. -- Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting.
SECTION 3. VOTING --Each stockholder entitled to vote in accordance with
the terms and provisions of the Certificate of Incorporation and these By-Laws
shall be entitled to one vote, in person or by proxy, for each share of stock
entitled to vote held by such stockholder, but no proxy shall be voted after
three years from its date unless such proxy provides for a longer period. Upon
the demand of any stockholder, the vote for directors and upon any question
before the meeting shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided by majority vote
except as otherwise provided by the Certificate of Incorporation or the laws of
the State of Delaware.
SECTION 4. STOCKHOLDER LIST. --The officer who has charge of the stock
ledger of the corporation shall at least 10 days before each meeting of
stockholders prepare a complete alphabetical addressed list of the stockholders
entitled to vote at the ensuing election, with the number of shares held by
each. Said list shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall be available for inspection at the meeting.
SECTION 5. QUORUM. --Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of all the
stockholders. In case a quorum shall not be present at any meeting, a majority
in interest of the stockholders entitled to vote thereat, present in person or
by proxy, shall have power to adjourn the meeting from time to time, without
notice other than by announcement at the meeting, until the requisite amount of
stock entitled to vote shall be present. At any such adjourned meeting at which
the requisite amount of stock entitled to vote shall be represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed; but only those stockholders entitled to vote at the meeting
as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof.
bl 2
<PAGE>
SECTION 6. SPECIAL MEETINGS. --Special meetings of the stockholders, for
any purpose, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the directors
or stockholders entitled to vote. Such request shall state the purpose of the
proposed meeting.
SECTION 7. NOTICE OF MEETINGS. --Written notice, stating the place, date
and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat his
address as it appears on the records of the corporation, not less than ten nor
more than fifty days before the date of the meeting.
SECTION 8. BUSINESS TRANSACTED. --No business other than that stated in the
notice shall be transacted at any meeting without the unanimous consent of all
the stockholders entitled to vote thereat.
"Section 9. ACTION WITHOUT MEETING. Except as otherwise provided by the
Certificate of Incorporation, whenever the vote of stockholders is required or
permitted to be taken at any annual or special meeting of such stockholders,
such action may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than a
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted."
ARTICLE III -- DIRECTORS
SECTION 1. NUMBER AND TERM. --The number of directors shall be not less
than three. The directors shall be elected at the annual meeting of the
stockholders and each director shall be elected to serve until his successor
shall be elected and shall qualify. The number of directors may not be less than
three except that where all the shares of the corporation are owned beneficially
and of record by either one or two stockholders, the number of directors may be
less than three but not less than the number of stockholders.
bl 3
<PAGE>
SECTION 2. RESIGNATIONS. --Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. --If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum by a majority vote, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. REMOVAL. --Any director or directors may be removed either for
or without cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of stockholders called for the purpose and the vacancies thus
created may be filled, at the meeting held for the purpose of removal, by the
affirmative vote of a majority in interest of the stockholders entitled to vote.
SECTION 5. INCREASE OF NUMBER. --The number of directors may be increased
by amendment of these By-Laws by the affirmative vote of a majority of the
directors, though less than a quorum, or, by the affirmative vote of a majority
in interest of the stockholders, at the annual meeting or at a special meeting
called for that purpose, and by like vote the additional directors may be chosen
at such meeting to hold office until the next annual election and until their
successors are elected and qualify.
SECTION 6. COMPENSATION. --Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the board a fixed fee and expenses of attendance may be allowed for
attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation thereof.
bl 4
