FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________ to ___________.
Commission file number 0-21853
CADAPULT GRAPHIC SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0413539
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
110 Commerce Drive, Allendale, New Jersey 07401
Address of principal executive offices) (Zip Code)
(201) 236-1100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __X__ No____
As of November 1, 1998, the registrant had 2,811,518 shares of common stock,
par value $.001 per share, outstanding.
Transitional Small Business Disclosure Format (check one): Yes____ No __x__
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet as of September 30, 1998 and
June 30, 1998 (unaudited) . . . . . . . . . . . . . . . . . . . .3
Consolidated Statements of Operations For the Three
Months Ended September 30, 1998 and 1997 (unaudited) . . . . . . 4
Consolidated Statement of Changes in Stockholder's Equity
For the Three Months Ended September 30, 1998 (unaudited) . . . .5
Consolidated Statements of Cash Flows For the Three
Months Ended September 30, 1998 and 1997 (unaudited) . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . 7
2
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Cadapult Graphic Systems, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
ASSETS September 30, June 30,
1998 1998
------------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 485,185 $ 22,820
Accounts Receivable, less allowance 1,187,411 1,653,624
for doubtful accounts of $22,500
Attorney Escrow Account - 320,000
Inventories 724,929 1,057,084
Prepaid and refundable income taxes 46,295 46,295
Prepaid expenses and other current assets 53,081 38,591
---------- ----------
Total Current Assets 2,496,901 3,138,414
PROPERTY AND EQUIPMENT, NET 262,743 232,024
OTHER ASSETS:
Goodwill and other intangible assets 417,259 410,195
Deferred Tax Asset 39,000 -
Security Deposits 31,343 31,343
---------- ----------
487,602 441,538
TOTAL ASSETS $3,247,246 $3,811,976
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to Bank $ 850,000 $ 695,000
Current maturities of long-term debt 89,347 89,220
Accounts Payable 1,185,033 1,936,974
Accrued Expenses and other 54,667 131,510
current liabilities
Due to officer - 20,000
Deferred Revenue 192,383 144,600
---------- ----------
2,371,430 3,017,304
OTHER LIABILITIES:
Long-term debt, less current maturities 134,403 156,990
Note payable to related party 20,832 20,832
---------- ----------
155,235 177,822
COMMITMENTS
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value, authorized
50,000,000 shares, issued 2,811,518 in
September and 2,583,518 in June 2,812 2,583
Additional paid-in capital 685,981 423,167
Retained Earnings 31,788 191,100
---------- ----------
Total Stockholders' equity 720,581 616,850
Total Liabilities and Stockholders' Equity $3,247,246 $3,811,976
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
Cadapult Graphic Systems, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1998 1997
---------- ----------
<S> <C> <C>
NET SALES $1,943,161 $1,669,309
---------- ----------
COSTS AND EXPENSES:
Cost of sales 1,399,500 1,215,925
Selling, general and administrative expenses 716,171 482,185
---------- ----------
LOSS FROM OPERATIONS (172,511) (28,801)
INTEREST EXPENSE, NET 25,801 19,017
---------- ---------
LOSS BEFORE INCOME TAXES (CREDITS) (198,312) (47,818)
INCOME TAXES (CREDITS):
Current - -
Deferred (39,000) (19,000)
---------- ----------
(39,000) (19,000)
NET LOSS $(159,312) $ (28,818)
========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTNADING 2,704,953 1,630,000
========== ==========
NET LOSS PER COMMON SHARE-
BASIC AND DILUTED $ (0.06) $ (0.02)
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
Cadapult Graphic Systems, Inc. and Subsidiaries
Consolidated Statement of Changes in Stockholders' Equity
For the Three Months Ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Total
Common Stock Additional Stock-
---------------- Paid-in Retained holders
Shares Amount Capital Earnings Equity
--------- ------ ---------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCES, JUNE 30, 1998 2,583,518 $2,583 $ 423,167 $ 191,100 616,850
PERIOD ENDED SEPTEMBER 30, 1998
Sale of Common Stock issued
through Private Placement 228,000 229 249,771 - 250,000
Issuance of Warrants for
Services - - 13,043 - 13,043
Net loss - - - (159,312) (159,312)
--------- ------ ---------- --------- ---------
BALANCES, SEPTEMBER 30, 1998 2,811,518 $2,812 $ 685,981 $ 31,788 $ 720,581
========= ====== ========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
Cadapult Graphic Systems, Inc. and Subsidiaries
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(159,312) $ (28,818)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Depreciation and amortization 31,381 22,500
Deferred income taxes (39,000) (42,177)
Issuance of Warrants for services 13,042 -
Changes in operating assets and liabilities:
Accounts receivable 466,213 (227,728)
Inventories 332,155 65,119
Prepaid and refundable income taxes - (12,516)
Prepaid expenses and other current (14,490) 31,724)
assets
Security deposits - 1,823
Accounts payable (751,941) 147,165
Accrued expenses and other current (76,844) 23,795
liabilities
Deferred revenue 47,783 (62,030)
---------- ----------
Net cash flows from operating activities (151,013) (144,592)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES-
Costs related to acquisition (16,090) -
Purchases of property and equipment (53,072) (47,963)
---------- ----------
Net cash flows from investing activities (69,162) (47,963)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Note payable to bank 155,000 (50,000)
Payments on long term debt (22,460) (2,352)
Due to officer (20,000) -
Attorney Escrow Account 320,000 -
Sale of common stock, Net 250,000 -
---------- ----------
Net cash flows from financing activities 682,540 (52,352)
---------- ----------
NET CHANGE IN CASH 462,365 (244,907)
CASH, BEGINNING OF PERIOD 22,820 317,796
---------- ----------
CASH, END OF PERIOD $ 485,185 $ 72,889
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 25,801 $ 19,017
========== ==========
Income taxes paid - -
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
CADAPULT GRAPHIC SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The consolidated balance sheet as of June 30, 1998 has been derived from
the unaudited balance sheet that was included in the Company's transition
report filed on Form 10-QSB/A for the two month transition period ended June
30, 1998 and is presented for comparative purposes. All other financial
statements are unaudited. All material intercompany accounts and transactions
have been eliminated. In the opinion of management, all adjustments, which
include only normal recurring adjustments necessary to present fairly the
financial position, results of operations and cash flows for all periods
presented, have been made. The results of operations for interim periods are
not necessarily indicative of the operating results for the full year.
Footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been omitted
in accordance with the published rules and regulations of the Securities and
Exchange Commission. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's Form
8K/A.
NOTE 2 - ORGANIZATION AND NATURE OF BUSINESS
Pursuant to an Agreement and Plan of Reorganization dated June 5, 1998
(the "Plan"), between the Registrant; Cadapult Graphic Systems, Inc., a New
Jersey corporation ("Cadapult"); all of the stockholders of Cadapult (the
"Cadapult Stockholders"); Jenson Services, Inc., a Utah corporation ("Jenson
Services"); and Duane S. Jenson and Jeffrey D. Jenson (collectively, the
"Jensons"), the Cadapult Stockholders became the controlling stockholders of
the Registrant in a transaction viewed as a reverse acquisition, and Cadapult
became a wholly-owned subsidiary of the Registrant. The Plan was treated as a
recapitalization of Cadapult for accounting purposes, and the closing date of
the Plan was June 18, 1998. The historical financial statements of Seafoods
Plus Ltd. prior to the merger will no longer be reported, as Cadapult's
financial statements are now considered the financial statements of the
ongoing reporting entity.
7
<PAGE>
On August 10, 1998, the stockholders approved an amendment to the
Certificate of Incorporation of the Company to change the Company's name from
Seafoods Plus Ltd. to Cadapult Graphic Systems, Inc. The stockholders also
approved the reincorporation of the Company as a Delaware corporation and a
related Agreement and Plan of Merger pursuant to which the Company will be
merged into a wholly-owned Delaware subsidiary. The Board of Directors of the
Company and its New Jersey Subsidiary have authorized a Parent/Subsidiary
merger of the two companies.
On June 24, 1998, the Company elected to change its fiscal year from a
December 31 year end to a June 30 year end.
The Company is engaged in the business of providing computer graphics
systems, peripherals, supplies, training and service to graphics professionals.
The Company is a value-added dealer of computer graphics equipment and
supplies, including animation and design software and workstations, publishing
software and workstations, file servers, networks, color scanners and color
printers and copiers. The Company's markets include advertising and marketing
companies, printers, quick print shops, services bureaus, animators and
industrial designers, as well as the broad market for color printers.
NOTE 3 - PRIVATE PLACEMENT
In August 1998, the Company completed a private placement through the sale
of 524,000 shares of its Common stock for $655,000. Expenses associated with
the private placement are estimated at $35,000, providing the Company with net
proceeds of $620,000.
NOTE 4 - COMMITTMENT
On September 4, 1998, the Company entered into a Lease Modification
Agreement for its New Jersey headquarters facility, to extend its current
lease to March 31, 2002. The Annual Base Rental will be reduced to $79,332
from $91,232 effective March 31, 1999.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis should be read in conjunction with the
information set forth in the unaudited financial statements and notes thereto,
included elsewhere herein, and the audited financial statements and the notes
thereto, included in the Form 8K/A.
Results of Operations
For the Three Months Ended September 30, 1998 and 1997
- ------------------------------------------------------
Sales. Consolidated sales for the three months ended September 30, 1998
compared to the same period in 1997, increased approximately 16% to $1,943,161
from $1,669,309. The revenue mix in 1998 between systems, supplies and
services has remained comparable to the same period in 1997. The increase in
sales can be primarily attributed to the acquisition of BBG Technologies in
March 1998, and the increase in sales personnel.
Cost of Sales. Cost of Sales for the three months ended September 30, 1998
were $1,399,500, or approximately 72% of sales, as compared to $1,215,925 or
approximately 73% of sales for the comparable period in 1997. The Cost of
Revenues in 1998 have remained consistent from the same period in 1997, along
with the revenue mix.
Selling, General and Administrative. For the three months ended September 30,
1998, Selling, General and Administrative expenses increased to $716,171 from
$482,185, which represents an increase to 37% of sales from 29% of sales. The
increase in 1998 is due mainly to an increase in legal, accounting and
consulting fees associated with the merger and being a publicly held company,
to amortization of goodwill resulting from the acquisition of BBG Technologies
in March 1998, and to increased payroll resulting from an increase in personnel
to 28 employees from 23 employees. The increase in personnel can be attributed
to additions in sales, technical and administrative staff in preparation for
future acquisitions.
Interest Expense. For the three months ended September 30, 1998, Interest
expense increased to $25,801 from $19,017. The increase in 1998 is due
primarily to the increase in borrowing due to the acquisition of BBG
Technologies in March 1998.
Income Taxes. For the three months ended September 30, 1998, the Company has
recorded a tax benefit of a net operating loss carryforward of $39,000 net of a
$39,000 valuation allowance. For the three months ended September 1997, the
Company was able to carry back its net operating losses.
Net Loss. For the three month period ended September 30, 1998, the Company
incurred a net loss of $159,312 or $0.06 per share as compared to a net loss of
$28,818 or $0.02 per share for the corresponding three month period ended
September 30, 1997.
9
<PAGE>
Liquidity and Capital Resources
The Company has an agreement with a bank under which it can borrow up to
$1,200,000 under a revolving line of credit, subject to availability of
collateral. Borrowings bear interest at 1% over the bank's base rate, are
payable on demand and are collateralized by all assets of the Company. As of
September 30, 1998 the Company had used $850,000 of this line.
In August of 1998, the Company successfully completed a private offering for
$655,000 consisting of 524,000 shares of Common Stock at a purchase price of
$1.25. Expenses associated with the private placement are estimated at $35,000,
providing the Company with net proceeds of $620,000. The Company plans to use
the proceeds for strategic acquisitions complimentary to its core business.
The Company had a positive cash flow of $462,365 for the three months ended
September 30, 1998. This resulted primarily from the proceeds of the private
placement. Cash used in operations resulted in negative cash flows of $151,012
which primarily consists of a decrease in accounts receivable of $466,213 and a
decrease in inventory of $332,155, offset by a decrease in accounts payable and
accrued liabilities of $828,785.
Seasonality
It is anticipated that the Company's cash flow from operations will be
significantly greater in the fall and winter months than in the spring and
summer months due to the purchasing cycles associated with the Company's
products. In the event that the Company is unable to generate sufficient cash
flows from operations during the seasons of peak operations, the Company may be
required to utilize other cash reserves (if any) or seek additional equity/debt
financing to meet operating expenses, and there can be no assurance that there
will be any other cash reserves or that additional financing will be available
or, if available, on reasonable terms.
Year 2000 Discussion
Many computer programs were designed to perform data computations on the last
two digits of the numerical value of the year. When computations referencing
the year 2000 are performed, these programs may interpret -00- as the year 1900
and could either corrupt the date-related computations or not process them at
all. As a result, many software and computer systems may need to be upgraded
or replaced in order to comply with such year 2000 requirements.
10
<PAGE>
The Company has reviewed all its computer systems, which are provided by
third-party manufacturers. The manufacturers have represented to the Company
that their systems are or will be year 2000 compliant. The Company does not
anticipate incurring significant additional costs to address the year 2000
issue, although the effectiveness of the Company's present efforts to address
the issues cannot be assured. However, the Company could be adversely
impacted by year 2000 issues faced by significant customers, vendors,
suppliers and financial service organizations with whom the Company conducts
business. The Company still needs to determine the degree of preparedness of
its customers, vendors, suppliers and financial service organizations and
whether alternate vendors, suppliers and financial service organizations will
be needed or available in the event of any disruption in the supply of goods or
services to the Company.
Forward Looking Statements
The foregoing management discussion and analysis contains forward-looking
statements and information that are based on management's beliefs, as well as
assumptions made by, and information currently available to, management. These
forward-looking statements are based on many assumptions and factors, and are
subject to many conditions, including the Company's continuing ability to
obtain additional financing, dependence on contracts with suppliers,
competitive pricing for the Company's products, demand for the Company's
products which depends upon the condition of the computer industry, and the
effects of increased indebtedness as a result of the Company's business
acquisitions. Except for the historical information contained in this new
release, all forward-looking information are estimates by the Company's
management and are subject to various risks, uncertainties and other factors
that may be beyond the Company's control and may cause results to differ from
management's current expectations, which may cause actual results,
performance or achievements of the Company to be materially different from
future results, performance or achievements expressed or implied by such
forward-looking statements.
11
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
Between June and August 1998, the Company offered and sold 524,000 shares of
common stock, par value $.001 per share, at an aggregate price of $655,000,
in reliance upon Sections 4(2) and/or 3(b) of the Securities Act of 1933, as
amended. The Company sold the shares of common stock to a limited number of
persons. The shares of common stock are not registered under the Securities
Act of 1933, as amended, and may not be offered or sold in the United States
absent registration or an applicable exemption from registration. The
Company intends to use the proceeds for working capital purposes, including
the acquisition of other businesses.
Item 4. Submission of Matters to a Vote of Security Holders.
On August 10, 1998, the Company held a special meeting of shareholders. A
proposal to adopt the Company's 1998 Incentive Plan, pursuant to which
options to purchase shares of common stock will be granted to employees,
directors and others, was approved, with 1,588,000 votes cast for, no votes
cast against, no votes withheld, and no abstentions. A proposal to approve
the reincorporation of the Company as a Delaware corporation and a related
Agreement and Plan of Merger was approved, with 1,588,000 votes cast for, no
votes cast against, no votes withheld, and no abstentions. A proposal to
approve an amendment to the Certificate of Incorporation to change the
Company's name was approved, with 1,588,000 votes cast for, no votes cast
against, no votes withheld, and no abstentions.
Item 5. Other Information.
As previously reported on Form 10-QSB, pursuant to proposals submitted to a
vote of shareholders of the Company, as stated in Item 4 above (the
"Shareholder Actions"), the Company has reincorporated in Delaware. A
registration statement on Form S-8 (the "Registration Statement") was filed
with the Securities and Exchange Commission on August 13, 1998 to register
the Incentive Shares.
The Company, pursuant to a unanimous vote of its board of directors, has
effected the merger of its operating subsidiary, Cadapult Graphic Systems Inc.,
a New Jersey corporation, into the parent Delaware corporation. The Company
filed a Certificate of Ownership and Merger in Delaware on or about August
14, 1998, and a Certificate of Merger in New Jersey on or about October 13,
1998.
12
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The following exhibits are filed with this report:
Exhibit 3.1: Certificate of Merger of Seafoods Plus, Ltd. into Cadapult
Graphic Systems, Inc.
Exhibit 3.2: Certificate of Ownership and Merger Merging Cadapult Graphic
Systems Inc. into Cadapult Graphic Systems, Inc.
Exhibit 3.3: Certificate of Merger of Domestic and Foreign Corporations
into Cadapult Graphic Systems, Inc.
Exhibit 11: Statement Concerning Computation of Per Share Earnings is
hereby incorporated by reference to "Financial Statements"
of Part I - Financial Information, Item 1 - Financial
Statements, contained in this Form 10-QSB.
Exhibit 27: Financial Data Schedule for the three months ended
September 30, 1998
(b) Reports on Form 8-K.
As previously reported on Form 10-QSB, on July 7, 1998, the Company submitted a
Form 8-K reporting the acquisition of Cadapult Graphic Systems Inc.; on July
10, 1998, the Company submitted a Form 8-K reporting the change in its fiscal
year; on July 13, 1998, the Company submitted a Form 8-K reporting the
dismissal of its former principal accountants; on July 13, 1998, the Company
submitted a Form 8-K reporting the selection of its new principal accountants;
and on or about August 31, 1998, the Company submitted a Form 8-K/A, amending
its Form 8-K filed on July 7, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CADAPULT GRAPHIC SYSTEMS, INC.
Date: November 2, 1998 /s/ Michael W. Levin
-------------------------------------
Michael W. Levin
President and Chief Executive Officer
13
CERTIFICATE OF MERGER
OF
SEAFOODS PLUS, LTD.
(a Utah corporation)
INTO
CADAPULT GRAPHIC SYSTEMS, INC.
(a Delaware corporation)
The undersigned corporation, Cadapult Graphic Systems, Inc., does hereby
certify as follows:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger are as follows:
NAME STATE OF INCORPORATION
------------------------------ ----------------------
Cadapult Graphic Systems, Inc. Delaware
Seafoods Plus, Ltd. Utah
SECOND: That an Agreement and Plan of Merger between the parties to the
merger has been approved, adopted, certified, executed and acknowledged by each
of the constituent corporations in accordance with the requirements of Section
252 of the General Corporation Law of Delaware.
THIRD: That the name of the surviving corporation of the merger is
Cadapult Graphic Systems, Inc., a Delaware corporation.
FOURTH: That the Certificate of Incorporation of Cadapult Graphic
Systems, Inc., a Delaware corporation which is surviving the merger, shall
be the Certificate of Incorporation of the surviving corporation.
FIFTH: That the executed Agreement and Plan of Merger is on file at the
principal place of business of the surviving corporation, the address of
which is 110 Commerce Drive, Allendale, New Jersey 07401.
SIXTH: That a copy of the Agreement and Plan of Merger will be
furnished by the surviving corporation, upon request and without cost, to any
stockholder of any constituent corporation.
SEVENTH: The authorized capital stock of the only foreign constituent
corporation which is a party to the merger is as follows:
Par Value
Corporation Class No. of Shares Per Share
-------------- ------------ ------------- ------------
Seafoods Plus,
Ltd. (Utah) Common Stock 50,000,000 $.001 Par Value
EIGHTH: The Agreement and Plan of Merger provides that upon the filing
of the Certificates of Merger with respect to the Merger with the Secretary
of State of Delaware and the Secretary of State of Utah, each share of Common
Stock of the merged corporation, Seafoods Plus, Ltd., a Utah corporation,
issued and outstanding immediately prior to the merger and all rights in
respect thereto shall be changed and converted into one share of Common
Stock of the surviving corporation, Cadapult Graphic Systems, Inc., a
Delaware corporation.
IN WITNESS WHEREOF, the undersigned President and Secretary, having
been thereunto duly authorized have executed the foregoing Certificate of
Merger for the corporation under the penalties of perjury this 10th day of
August, 1998.
Dated: August 10, 1998
CADAPULT GRAPHIC SYSTEMS, INC.
By: /s/ Michael W. Levin
---------------------------
Michael W. Levin
Chairman and President
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
CADAPULT GRAPHIC SYSTEMS INC.
(a New Jersey corporation)
INTO
CADAPULT GRAPHIC SYSTEMS, INC.
(a Delaware corporation)
(Pursuant to Section 253 of the
General Corporation Law of Delaware)
Cadapult Graphic Systems, Inc., a Delaware corporation (the
"Corporation"), does hereby certify as follows:
FIRST: That the Corporation is incorporated pursuant to the General
Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares of
each class of the capital stock of Cadapult Graphic Systems Inc., a New Jersey
corporation ("CGSI").
THIRD: That the Corporation, by the following resolutions of its Board
of Directors, duly adopted on the 10th day of August, 1998, determined to
merge CGSI into itself on the conditions set forth in such resolutions:
WHEREAS, this Corporation lawfully owns all the outstanding stock of
CGSI, and
WHEREAS, this Corporation desires to merge into itself the said CGSI
and to be possessed of all the estate, property, rights, privileges and
franchises of said corporation,
NOW, THEREFORE, be it
RESOLVED: That the Corporation merge into itself its subsidiary, CGSI,
and assume all of said subsidiary's liabilities and obligations;
RESOLVED: That the President and Secretary of this Corporation be and
they hereby are directed to make, execute and acknowledge a certificate of
ownership and merger setting forth a copy of the resolution to merge said
CGSI into this Corporation and to assume said subsidiary's liabilities and
obligations and the date of adoption thereof and to file the same in the
office of the Secretary of State of Delaware and a certified copy thereof in
the office of the Recorder of Deeds of New Castle County; and
FURTHER RESOLVED, that the officers of this Corporation be and they
hereby are authorized and directed to do all acts and things whatsoever,
whether within or without the State of Delaware; which may be in anyways
necessary or proper to perfect said merger.
IN WITNESS WHEREOF, said Cadapult Graphic Systems, Inc. has caused its
corporate seal to be affixed and this certificate to be signed by Michael W.
Levin, its authorized officer, this 10th day of August, 1998.
CADAPULT GRAPHIC SYSTEMS, INC.
(a Delaware corporation)
By: /s/ Michael W. Levin
---------------------
Michael W. Levin
President
CERTIFICATE OF MERGER
OF DOMESTIC AND FOREIGN CORPORATIONS
INTO
CADAPULT GRAPHIC SYSTEMS, INC.
Pursuant to the provisions of Section 14A:10-7 of the New Jersey
Business Corporation Act, the undersigned domestic corporation and foreign
corporation adopt the following Certificate of Merger for the purpose of
merging them into one of such corporations:
FIRST: The names of the undersigned corporations and the states under
The laws of which they are respectively organized are:
Name of Corporation State of Incorporation
- ------------------------- ----------------------
Cadapult Graphic Systems Inc. New Jersey
Cadapult Graphic Systems, Inc. Delaware
(d/b/a Cadgraphics Systems, Inc.)
SECOND: The laws of the state under which such foreign corporation is
organized permit such merger, and such laws will be complied with upon the
filing of this Certificate of Merger.
THIRD: The name of the surviving corporation of the merger is Cadapult
Graphic Systems, Inc. The surviving corporation is to be governed by the laws
of the State of Delaware.
FOURTH: The following Agreement and Plan of Merger (the "Plan") was
adopted by the Board of Directors of the undersigned foreign corporation in
accordance with the Delaware General Business Law and the shareholders of the
undersigned domestic corporation approved the Plan in accordance with the New
Jersey Business Corporation Act:
AGREEMENT AND PLAN OF MERGER, dated this 10th day of August, 1998 (the
"Agreement"), pursuant to Sections 14A:10-7 of the New Jersey Business
Corporation Act and Section 253 of the Delaware General Business Law between
Cadapult Graphic Systems Inc., a New Jersey corporation ("CGS") and Cadapult
Graphic Systems, Inc. (d/b/a Cadgraphics Systems, Inc.), a Delaware corporation
("Cadapult").
WITNESSETH THAT:
WHEREAS, both of the constituent corporations desire to merge into a
single corporation;
NOW, THEREFORE, the corporations, parties to this Agreement and Plan of
Merger, in consideration of the premises and the mutual covenants, agreements
and provisions contained herein, do hereby prescribe the terms and
conditions of said merger and plan of carrying the same into effect, as
follows:
FIRST: CGS, which shall be the merged corporation, shall be merged into
Cadapult, which shall be the surviving corporation, pursuant to the terms of
this Agreement.
SECOND: There are 2,555,518 shares of common stock of the surviving
corporation heretofore issued and outstanding. There are 319.6748 number of
shares of common stock of the merged corporation heretofore issued and
outstanding. Upon filing of a Certificate of Merger and a Certificate of
Ownership and Merger with respect to the merger with the Secretary of State
of New Jersey and the Secretary of State of Delaware, respectively, each share
of common stock of CGS, the merged corporation, issued and outstanding
immediately prior to the merger and all rights in respect thereof shall be
cancelled.
THIRD: Certain terms and conditions of the merger are as follows:
(a) The Certificate of Incorporation of Cadapult as in effect
on the date of the merger provided for in this Agreement and Plan of Merger
shall continue in full force and effect as the Certificate of Incorporation
of the corporation surviving this merger, unless and until the same shall be
amended or modified in accordance with the provision thereof and of the General
Corporation Law of Delaware, which power to amend or modify is hereby expressly
reserved. Such Certificate of Incorporation shall constitute the Certificate
of Incorporation of Cadapult separate and apart from this Agreement and Plan of
Merger and may be separately certified as the Certificate of Incorporation of
Cadapult.
(b) The Bylaws of the surviving corporation as they exist on the
effective date of this merger shall be and remain the Bylaws of the surviving
corporation until the same shall be altered, amended or repealed as therein
provided.
(c) The directors and officers of the surviving corporation, who are
the present directors and officers of Cadapult, shall continue in office until
the next annual meeting of stockholders and until their successors shall have
been elected and qualify.
(d) This merger shall become effective upon filing of the Certificate
of Merger of CGS and the Certificate of Ownership and Merger of Cadapult in the
forms of Exhibits A and B annexed hereto, respectively, with the Secretary of
State of New Jersey and the Secretary of the State of Delaware.
(e) Upon the effectiveness of the merger as provided herein, all of
the property, rights, privileges, franchises, patents, trademarks, licenses,
registrations and other assets of every kind and description of the merged
corporations shall be transferred to, vested in, and devolve upon the surviving
corporation without further act or deed, and all property, rights, and every
other interest of the surviving corporation and the merged corporations shall
be as effectively the property of the surviving corporation as they were of the
surviving corporation and the merged corporation, respectively.
(f) Prior to the effectiveness of the merger, the merged corporation
hereby agrees from time to time, as and when requested by the surviving
corporation or by its successors or assigns, to execute and deliver or cause to
be executed and delivered all such documents, deeds and instruments and to take
or cause to be taken such further or other action as the surviving corporation
may deem necessary or desirable in order to vest in and confirm to the
surviving corporation title to and possession of any property of the merged
corporation acquired or to be acquired by reason of or as a result of the
merger herein provided for and otherwise to carry out the intent and purposes
hereof, and the proper officers and directors of the merged corporation are
fully authorized in the name of the merged corporation or otherwise to take any
and all such action; the proper officers and directors of the surviving
corporation are fully authorized, in the name of the merged corporations or
otherwise, following the effectiveness of the merger, t o execute and deliver
or cause to be executed and delivered all such documents, deeds and instruments
and to take or cause to be taken such further or other actions as the surviving
corporation may deem necessary or desirable in order to vest in and confirm to
the surviving corporation title to and possession of any property of the merged
corporations acquired or to be acquired by reason of or as a result of the
merger herein provided for and otherwise to carry out the intent and purposes
hereof.
FOURTH: (a) Directors. The names and post office addresses of the
directors of Cadapult, who shall be three in number and who shall hold
office from the effective date until the next annual meeting of stockholders
of Cadapult and until their successors shall be duly elected and qualify, are
as follows:
Name Post Office Address
----------------- ------------------------
Michael W. Levin 8 Meadow Lane
Allendale, NJ 07041
Frances Blanco 1128 Park Avenue
Hoboken, NJ 07030
Paul C. Baker 98 Chestnut Ridge Road
Saddle River, NJ 07675
(b) Officers. The names and post office addresses of the officers of
Cadapult who shall be three in number and who shall hold office from the
effective date until their successors shall be duly elected and qualify or
until they shall resign or be removed from office, are as follows:
Name Offices Post Office Address
----------------- ---------------------- --------------------
Michael W. Levin Chairman of the Board, 8 Meadow Lane
Chief Executive Officer Allendale, NJ
and President 07401
Frances Blanco Vice President, 1128 Park
Treasurer and Avenue
Secretary Hoboken, NJ
07030
Duncan Huyler Vice President 551 Lattintown Road
Marlboro, NY
12542
(c) Vacancies. If, upon the effective date, a vacancy exists still on
the Board of Directors or in any of the offices of Cadapult as the same are
specified above, such vacancy shall hereafter be filled in the manner provided
by law and the Bylaws of Cadapult.
FIFTH: Anything contained herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and abandoned by the Board of
Directors of any constituent corporation at any time prior to the date of
filing of a Certificate of Merger with respect to the merger with the Secretary
of State of New Jersey, and a Certificate of ownership and Merger with respect
to the merger with the Secretary of State of Delaware provided that an
amendment made subsequent to the adoption of this Agreement and Plan of Merger
by the stockholders of any constituent corporation shall not (a) alter or
change the amount or kind of shares, securities, cash, property and/or rights
to be received in exchange for or on conversion of all or any of the shares of
any class or series thereof of such constituent corporation, (b) alter or
change any term of the Certificate of Incorporation of the surviving
corporation to be effected by the merger, or (c) alter or change any of the
terms and conditions of this Agreement and Plan of Merger if such alteration or
change would adversely affect the holders of any class of such constituent
corporation or any series of any such class.
FIFTH: The Board of Directors of the undersigned foreign corporation
has approved the Plan on the 10th day of August, 1998, and the approval of the
shareholders of the undersigned foreign corporation is not required under the
Delaware General Business Law, and the shareholders of the undersigned domestic
corporation has approved the Plan on the 10th day of August, 1998.
SIXTH: As to each of the undersigned corporations whose shareholders are
entitled to vote, the number of shares voted for and against the Plan,
respectively:
Name of Corporation Voted for Plan Voted Against Plan
- ------------------- -------------- ------------------
Cadapult Graphic 319.6748 0
Systems Inc.
Cadapult Graphic 100 0
Systems, Inc.
(d/b/a Cadgraphics
Systems, Inc.)
SEVENTH: If the surviving corporation is to be governed by the laws of
any other state, such surviving corporation hereby: (a) agrees that it may be
served with process in the state of New Jersey in any proceeding for the
enforcement of any obligation of the undersigned domestic corporation and
(b) irrevocably appoints the Secretary of State of Utah as its agent to
accept service of process in any such proceeding.
Dated: August 10, 1998
CADAPULT GRAPHIC SYSTEMS INC.
(a New Jersey corporation)
By: /s/ Michael W. Levin
-----------------------
Michael W. Levin
President
By: /s/ Frances Blanco
-----------------------
Frances Blanco
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 485,185
<SECURITIES> 0
<RECEIVABLES> 1,209,911
<ALLOWANCES> 22,500
<INVENTORY> 724,929
<CURRENT-ASSETS> 2,496,901
<PP&E> 865,741
<DEPRECIATION> 602,998
<TOTAL-ASSETS> 3,247,246
<CURRENT-LIABILITIES> 2,371,430
<BONDS> 0
0
0
<COMMON> 2,812
<OTHER-SE> 717,769
<TOTAL-LIABILITY-AND-EQUITY> 3,247,246
<SALES> 1,943,161
<TOTAL-REVENUES> 1,943,161
<CGS> 1,399,500
<TOTAL-COSTS> 1,399,500
<OTHER-EXPENSES> 716,171
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 251,801
<INCOME-PRETAX> (198,312)
<INCOME-TAX> (39,000)
<INCOME-CONTINUING> (159,312)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (159,312)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
