October 9, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: William Underhill
RE: Coral Development Corp.
File # 333-6410
Dear Mr. Underhill:
On behalf of the above registrant enclosed please find a
copy of Post-Effective Amendment #1, together with copies of
Exhibits.
This Post-Effective Amendment relates to the proposed
acquisition by the registrant of OmniComm Systems, Inc. and is
being filed in accordance with Rule 419. As the acquisition must
be consummated within 18 months of June 5, 1997 (the effective
date) and shareholders must be given at least twenty business days
to consider the transaction, it would be appreciated if you would
please review the material as expeditiously as possible as we are
most anxious to have the post-effective amendment declared
effective as soon as possible and no later than October 31, 1998.
Very truly yours,
Gerald A. Kaufman
As filed with the Securities and Exchange Commission on October , 1998
Registration Statement No. 333-6410
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 1
to
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
CORAL DEVELOPMENT CORP.
(Name of small business issuer in its charter)
Delaware 6770 11-3349762
(State or other (Primary Standard
jurisdiction of Industrial Classification (I.R.S. Employer
incorporation) Code Number) Identification)
Arthur Seidenfeld
240 Clarkson Avenue
Brooklyn, New York 11226
(718)469-3132
(Name, Address and telephone number of agent for service)
COPIES TO:
Gerald A. Kaufman
33 Walt Whitman Road
Huntington Station, New York 11746
(516)271-2055
(516)271-2488 (Fax Number)
Approximate date of proposed sale to the public:
As soon as practicable after the Registration Statement becomes effective.
Cross-Reference Sheet showing location in the Prospectus of Information
required by Items in Part 1 of Form SB-2
Form SB-2 Item Number and Caption Prospectus Caption
1. Front of the Registration Statement
and outside Front Cover Page of
Prospectus............................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Page Inside Front and Outside
of Prospectus............................ Back Cover
3. Summary Information and Risk Factors..... Prospectus Summary;
High Risk Factors
4. Use of Proceeds.......................... Use of Proceeds
5. Determination of Offering Price.......... Outside Front Cover Page;
High Risk Factors
6. Dilution................................. Not Applicable
7. Selling Security Holders................. Not Applicable
8. Plan of Distribution..................... Plan of Offering
9. Legal Proceedings........................ Litigation
10. Directors, Executive Officers
Promoters and Control Persons............ Management
11. Security ownership of Certain Beneficial
Owners and Management.................... Principal Shareholders;
Certain Transactions
12. Description of the Securities............ Description of Securities
13. Interest of Named Experts and Counsel.... Legal Matters; Experts
14. Statement as to Indemnification.......... Indemnification
15. Organization Within Last Five Years...... Proposed Business
16. Description of Business.................. Prospectus Summary;
Proposed Business
17. Management's Discussion and Analysis
Plan of Operation........................ Management's Discussion
18. Description of Property.................. Proposed Business
Form SB-2 Item Number and Caption Prospectus Caption
19. Certain Relationships and
Related Transactions..................... Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters Information.......... Description of Securities
21. Executive Compensation................... Management
22. Financial Statements..................... Financial Statements
23. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure..................... Not Applicable
PROSPECTUS
CORAL DEVELOPMENT CORP.
550,000 SHARES OF COMMON STOCK
In June 1997, Coral Development Corp., (the "Company") consummated
a "blank check/blind pool" offering of 403,000 shares of Common Stock as a
dividend to the shareholders of Modern Technology Corp. ("MTC"), subject to
the provisions of Rule 419 ("Rule 419") of Regulation C of the Rules and
Regulations of the Securities Act of 1933, as amended. As described more
fully herein, the Company has entered into an acquisition agreement.
Accordingly this Prospectus is being distributed to those persons who
received shares in the initial offering in order to meet the reconfirmation
requirements of Rule 419. (See "SEC Regulations Concerning 'Blank Check'
Issuers").
Pursuant to Rule 419 at the conclusion of the initial offering of
the dividend all shares were placed in escrow until a prescribed acquisition
is consummated subject to reconfirmation by the original recipients of the
shares. The Company received no proceeds from the offering. Expenses of the
offering were advanced by MTC.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION. PROSPECTIVE PURCHASERS SHOULD BE PREPARED TO LOSE
THEIR ENTIRE INVESTMENT. (SEE "HIGH RISK FACTORS" AND "DILUTION").
There is no public market for the Company's securities and there
can be no assurance that a trading market will develop in the event the
acquisition is consummated. (See "High Risk Factors").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998
THE COMPANY HAS REGISTERED THE DISTRIBUTION OF THE DIVIDEND SHARES
IN THE STATES OF COLORADO AND NEW YORK AND IS RELYING UPON SELF-EXECUTING
EXEMPTIONS IN THE STATES OF CONNECTICUT, DELAWARE, DISTRICT OF COLUMBIA,
FLORIDA, ILLINOIS, INDIANA, IOWA, KENTUCKY, MARYLAND, MASSACHUSETTS,
MICHIGAN, MISSOURI, NEBRASKA, NEW JERSEY, OHIO, PENNSYLVANIA, TEXAS,
VIRGINIA, WASHINGTON AND WYOMING ("INITIAL DISTRIBUTION STATES"). IN
ADDITION, THE COMPANY WILL MAKE AN EFFORT TO REGISTER OR OBTAIN AN EXEMPTION
FROM REGISTRATION FOR THE DISTRIBUTION TO MTC SHAREHOLDERS RESIDING IN THE
STATE OF CALIFORNIA, THE ONE REMAINING STATE IN WHICH MTC SHAREHOLDERS
RESIDE. SHARES WHICH ARE NOT TRANSFERABLE TO MTC SHAREHOLDERS IN THE STATE
OF CALIFORNIA BECAUSE OF RESTRICTIONS APPLICABLE UNDER THE BLUE SKY LAWS OF
SUCH STATE WILL BE HELD IN A SEPARATE LOCK-UP ESCROW ACCOUNT PURSUANT TO THE
TERMS OF A BLUE SKY LOCK-UP ESCROW AGREEMENT (SEE "RISK FACTORS'). IN ORDER
TO RECEIVE SHARES IN THE DISTRIBUTION, STOCKHOLDERS MUST BE RESIDENTS OF THE
INITIAL DISTRIBUTION STATES. PERSONS WHO ARE NOT RESIDENTS OF THE INITIAL
DISTRIBUTION STATES WILL NOT RECEIVE SHARES UNTIL DISTRIBUTION TO SUCH
PERSONS CAN BE MADE IN COMPLIANCE WITH STATE BLUE SKY LAWS APPLICABLE TO SUCH
PERSONS (SEE "RISK FACTORS - LIMITED STATE REGISTRATION; RESTRICTED RESALES
OF THE SECURITIES" AND SHARES SUBJECT TO BLUE SKY LOCK-UP ESCROW AGREEMENT').
AS INDICATED ABOVE, THE COMPANY'S OFFERING IS SUBJECT TO THE PROVISIONS OF
RULE 419. PURCHASERS OF SHARES IN ANY SECONDARY TRADING MARKET WHICH MAY
DEVELOP AFTER A BUSINESS COMBINATION HAS BEEN CONSUMMATED AND THE SHARES
RELEASED FROM ESCROW, MUST BE RESIDENTS OF THE INITIAL DISTRIBUTION STATES.
THE COMPANY WILL SEEK TO OBTAIN QUALIFICATION FOR RESALES OF THE SHARES IN AS
MANY JURISDICTIONS AS POSSIBLE, OR TO QUALIFY THE SHARES FOR EXEMPTIONS WHICH
WILL PERMIT THEIR RESALE, AND TO ADVISE SHAREHOLDERS OF RESALE LIMITATIONS IN
THE POST-EFFECTIVE AMENDMENT THAT DESCRIBES A TARGET BUSINESS AND PROPOSED
BUSINESS COMBINATION.
UNTIL 90 DAYS AFTER RELEASE OF SECURITIES FROM THE RULE 419 ESCROW
ACCOUNT ALL DEALERS WHO EFFECT TRANSACTIONS IN CORAL DEVELOPMENT CORP. COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS.
AVAILABLE INFORMATION
The Company files reports and other information with the Securities
and Exchange Commission (the "Commission"). However, following completion of
this Offering, the Company intends to furnish its stockholders with annual
reports containing audited financial statements examined and reported upon by
its independent public accounting firm and such interim reports, in each case
as it may determine to furnish or as may be required by law. After the
effective date of this Offering, the Company will continue to be subject to
the report requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act') and in accordance therewith will file periodic reports
and other information with the Commission.
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Reports and other information filed by the Company can be inspected
and copied at the public reference facilities maintained at the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at certain of
the Commission's regional offices located at 7 World Trade Center, New York,
New York 10048 and 500 West Madison Street, Chicago, Illinois 60661. Copies
of such material can be obtained upon written request addressed to the
Commission, Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Commission also maintains a web site on
the Internet (http://www.sec.gov) that contains reports and other information
regarding issuers that file electronically with the Commission through the
Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"). The
Company presently does file through EDGAR and will be required to do so in
the future. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which have been omitted
in accordance with the rules and regulations of the Commission. For further
information reference is made to the Registration Statement.
This Prospectus contains information concerning the Company as of
October, 1998. The delivery of this Prospectus at any time does not
constitute a representation that the information contained herein is correct
as of any other date, and the delivery of this Prospectus shall not imply
that there has been no change in the business or affairs of the Company since
that date. No dealer, salesman or other person has been authorized to
furnish information or to make any representations other than as set forth in
this Prospectus. If furnished or made, such information or representation
must not be relied upon as having been authorized by MTC or the Company.
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY AND SHOULD BE
READ IN CONJUNCTION WITH THE DETAILED INFORMATION AND FINANCIAL STATEMENTS
INCLUDING THE NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS.
The Company
Coral Development Corp. (the "Company") was incorporated under the
laws of the State of Delaware on November 19, 1996. The Company had no
predecessors and had no history prior to its date of organization. Since the
date of its incorporation the Company has conducted no business activity
other than organizational activities including, in June, 1997, the
distribution of 403,000 shares subject to Rule 419. The Company's present
address is 240 Clarkson Avenue, Brooklyn, New York 11226, telephone (718)
469-3132.
The initial distribution of the Shares by the Company was a "blank
check/blind pool" offering subject to Rule 419. The proposed business of the
Company was to provide a mechanism to take advantage of business
opportunities which management believes arise from time to time. On July 22,
1998 the Company entered into an agreement with OmniComm Systems, Inc.
("OmniComm") whereby the Company and OmniComm would merge and OmniComm
shareholders would receive 940,000 shares of the Common Stock of the Company
plus an additional 2,687,000 shares that may issue if options are exercised
that will vest if certain revenue levels are met. Consummation of the
acquisition is subject to the provisions of Rule 419, particularly the
3
reconfirmation of the offering by a sufficient number of the original
recipients of the shares. (See "Business -- Acquisition"). Confirmation
will also indicate a shareholder's consent to amend the Certificate of
Incorporation to change the state of incorporation to Florida and to change
the name of the Company to OmniComm Systems, Inc.
OmniComm is a systems integrator. OmniComm is a provider of
services and products designed to build, manage and enhance computer networks
for large enterprises. Upon consummation it is expected that the Company
will change its name to OmniComm Systems, Inc. and move its office to 3250
Mary Street, Suite 307, Coconut Grove, Florida 33130, telephone number
(305)448-4700.
SEC Regulations concerning "Blank Check" Issuers
The Securities and Exchange Commission, has adopted rules (Rule 419
of Regulation C of the Rules and Regulations of the Securities Act of 1933,
as amended) relating to "blank check" issuers (a development stage company
that has no specific business plan or has indicated that its plan is to
engage in a merger or acquisition with an unidentified company). These rules
provide that there be deposited promptly into an escrow or special account
all offering proceeds received less underwriting commissions and expenses and
all securities issued. The monies (less 10% which may be withdrawn for
expenses) must remain in escrow until the earlier of (i) an acquisition
("Business Combination") meeting certain criteria having occurred and the
offering is reconfirmed or (ii) 18 months from the date hereof. During such
escrow period no trading in a company's securities may take place. This has
applied to the Company and its initial offering, except that there were no
offering proceeds.
Investors' Rights To Reconfirm Investment Under Rule 419
Deposit of Offering Proceeds and Securities
Rule 419 required that the net offering proceeds, after deduction
for underwriting compensation and offering expenses, and all securities to be
issued be deposited into an escrow or trust account (the "DEPOSITED FUNDS"
and "DEPOSITED SECURITIES", respectively) governed by an agreement which
contains certain terms and provisions specified by the rule. Under Rule 419,
the DEPOSITED FUNDS and DEPOSITED SECURITIES will be released to the Company
and to investors, respectively, only after the Company has met the following
three conditions. First, the Company must execute an agreement for an
acquisition meeting certain prescribed terms and conditions (such as the
agreement with OmniComm). Second, the Company must successfully complete a
reconfirmation offering, which includes certain prescribed terms and
conditions (which is the purpose of this Prospectus). Third, the actual
acquisition(s) meeting the prescribed criteria must be consummated (see
"Prescribed Acquisition Criteria" and "Reconfirmation Offering").
Accordingly, the Company entered into an escrow agreement with the
Jersey Transfer and Trust Company (the "Escrow Agent") which provided that:
(1) No proceeds were to be received so NO PROVISIONS OF DEPOSITED
FUNDS WERE MADE.
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(2) All securities issued in connection with the offering and any
other securities issued with respect to such securities, including securities
issued with respect to stock splits, stock dividends or similar rights were
deposited directly into the escrow account promptly upon issuance. The
identity of the investors were included either on the stock certificates or
other documents evidencing the securities. The securities held in the escrow
account are to remain as issued and deposited and are to be held for the sole
benefit of the investors who retain the voting rights, if any, with respect
to the securities held in their names. The securities held in the escrow
account may not be transferred, disposed of nor any interest created therein
other than by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order (relating to property settlement between
spouses) as defined by the Internal Revenue Code of 1986 or Table 1 of the
Employee Retirement Income Security Act.
(3) Warrants, convertible securities or other derivative
securities relating to securities held in the escrow account may be exercised
or converted in accordance with the terms provided, however, that the
securities received upon exercise or conversion together with any cash or
other consideration paid in connection with the exercise or conversion, are
to be promptly deposited into the escrow account.
Prescribed Acquisition Criteria
Rule 419 requires that before the DEPOSITED FUNDS and the DEPOSITED
SECURITIES can be released the Company must first execute an agreement(s) to
acquire an acquisition candidate(s) meeting certain specified criteria. The
agreement must provide for the acquisition of a business(es) or assets that
will constitute a business and for which the fair value of the business or
net assets represents at least 80% of the maximum offering proceeds (in this
case $30,300, the amount paid by MTC for the Shares). For purposes of the
offering, the fair value of the business(es) or assets to be acquired must be
at least $24,240. Since the Company has entered into an acquisition
agreement meeting the above criteria, the Company must not successfully
complete the mandated reconfirmation offering and consummate the
acquisition(s). OmniComm, which is being acquired, has been valued at
$160,125. This is supported by the financial statements of OmniComm.
OmniComm has net assets, as of June 30, 1998, of $160,125.
Reconfirmation Offering
Upon execution of the acquisition agreement, meeting the prescribed
acquisition criteria discussed above, Rule 419 requires that the Company
conduct a reconfirmation offering. According to Rule 419(e), the terms of
the reconfirmation offering must include the substantive condition that the
acquisition(s) will be consummated only if the number of investors
representing 80% of the shareholders reconfirm their investment. To comply
with this provision, the agreement for the acquisition includes as a
condition precedent to the consummation of the acquisition(s) that the number
of investors representing 80% of the shareholders elect to reconfirm their
investment. This Prospectus, together with the Reconfirmation Request should
meet this condition. Accordingly an investor must affirmatively indicate
his/her approval of the acquisition on the Reconfirmation Request with this
Prospectus. Pursuant to the Rule each purchaser is given at least 20
5
business days and no more than 45 business days from date of this Prospectus,
which must be sent by first class mail within five business days of date of
this Prospectus, to notify the Company in writing (through the Reconfirmation
Request) of their election to remain an investor. The last business date for
the investors to notify the Company of their decision is , 1998.
If an investor does not reply by that date, it will be deemed that the
investor has indicated a negative response and he/she will not receive any
shares of Coral.
Offer Results
In June, 1997, the Company completed a distribution to the public
of 403,000 shares. The offering involved no proceeds and the shares were
placed in the Rule 419 escrow account. During the period through the date
hereof the Company has expended approximately $35,600 primarily for general
administrative expenses, including legal and accounting, and expenses of
investigation and evaluation. These expenses were advanced by MTC.
Within five business days from date of this Prospectus all
shareholders of the Company who received shares on the initial offer will be
mailed a copy of this Prospectus and Reconfirmation Request and asked to
approve or disapprove of the transaction. This Prospectus contains
information concerning the acquisition agreement, the proposed business of
OmniComm, the proposed new management and other information which the Company
believes necessary to make a decision. An indication of approval of the
transaction will be considered to be a consent to amend the Certificate of
incorporation to change the state of incorporation and the name of the
Company.
The consummation of the acquisition of OmniComm will take place
only if investors owning shares representing at least 80% of the outstanding
shares, indicate their approval. Any purchaser who indicates disapproval or
who does not confirm the investment will not receive the dividend shares. If
80% do not approve, the acquisition will not be consummated and the dividend
shares will be returned to MTC and shareholders will not receive anything.
If the acquisition is consummated, the Company will initially issue
940,000 shares (subject to an additional 2,687,000 in the event certain
earnings levels are met over certain time periods) which will initially
represent 70% of the outstanding shares assuming none of the shareholders
indicate disapproval. A new board of directors will be appointed (see
"Management").
6
HIGH RISK FACTORS
PURCHASE OF THE SHARES OFFERED HEREBY INVOLVES EXTREME RISKS AND
THE POSSIBILITY OF A LOSS OF A PURCHASER'S ENTIRE INVESTMENT. PROSPECTIVE
INVESTORS SHOULD CONSIDER, IN ADDITION TO ALL MATERIAL SET FORTH HEREIN, THE
FOLLOWING SPECIFIC RISKS:
No Operating History; No Assurance of Success or Profitability
The Company through OmniComm was recently organized and faces all
of the risks inherent in a new business and those risks specifically inherent
in the investigation and acquisition of or involvement in a new business
opportunity. The continued investment in the securities offered hereby must
be regarded as the placing of funds at a high risk in a new or "start-up
venture with all of the unforeseen costs, expenses, problems and difficulties
to which such ventures are subject. There can be no assurance that the
Company will be able to generate sufficient revenues or profits therefrom or
have the financial ability to support the new business opportunity. (See
"PROPOSED BUSINESS"). OmniComm was organized in March of 1997. Its
operations are subject to the risks inherent in the establishment of a new
business enterprise, including the absence of operating history. The
likelihood of the success of the Company must be considered in light of the
problems, expenses, difficulties, complications, and delays frequently
encountered in connection with the formation of a new business and the
competitive environment in which the Company will operate.
Control by Present Stockholders
Following the issuance of the Shares offered hereby, the
stockholders of OmniComm will own approximately 70% of the Company's
outstanding shares (90% if certain earnings levels are met) and will be in a
position to elect all the directors and control of the Company. There is no
cumulative voting.
Dependence on and Need to Recruit and Retain Key Management and Technical
Personnel
The Company's success depends to a significant extent on its
ability to attract and retain key personnel. In particular, the Company is
dependent on its senior management team and, in particular, Randall Smith and
Clifton Middleton. Competition for such technical personnel is intense and
no assurance can be given that the Company will be able to recruit and retain
such personnel. The failure to recruit and retain management and technical
personnel could have a material adverse effect on the Company's growth,
revenues and results of operations.
Possible Need for Additional Financing
The funds presently available to the Company may not be adequate
for it to carry out its plans. Even if the Company does have sufficient
funds, it is likely that it will not have sufficient capital to exploit fully
such opportunity. Therefore, the ultimate success of the Company will depend
upon its ability to raise additional capital. Although Management of the
Company is continuously seeking additional capital it has not investigated in
7
depth the current availability, source or terms of acquiring additional
capital and will not do so until it has determined a need for such financing.
If additional capital is needed, there is no assurance that required funds
will be available from any source or, if available, that it can be obtained
on terms acceptable to the Company. If not available, it will be necessary
for the Company to limit its operations to those that can be financed with
its limited capital. (See "PROPOSED BUSINESS").
Competition
The markets in which the Company operates are characterized by
intense competition from several types of technical service providers,
including mainframe and mid-range computer manufacturers and outsourcers
entering the PC services marketplace. These include Digital Equipment
Corporation Multi-Vendor Services, Electronic Data Systems Corporation,
Hewlett-Packard Company Multi-Vendor Services, Vanstar, and IBM Global
Services.
The market for e-commerce services and applications includes a
large number of competitors and is subject to rapid change. Primary
competitors include participants from a variety of market segments, including
systems consulting and implementation firms, application software firms,
service groups of computer equipment companies, systems integration
companies, general management consulting firms and programming companies.
Most of the competitors have significantly greater financial, technical and
marketing resources and name recognition than the Company. In addition, the
Company competes with its clients' internal resources, particularly where
these resources represent a fixed cost to the client. Such competition will
impose additional financial and pricing pressures on the Company.
The Company expects to face further competition from new market
entrants and possible alliances between competitors in the future. Certain
of the Company's current and potential competitors may have greater
financial, technical, marketing and other resources than the Company. As a
result, they may be able to respond more quickly to new or emerging
technologies and changes in customer requirements or to devote greater
resources to the development, promotion and sales of their services than the
Company.
Significant Fluctuations in Revenues and Operating Results
The Company's revenues and operating results have varied
significantly since inception and are likely to continue to do so in the
future. Revenues and operating results may fluctuate as a result of the
demand for the Company's products and services, the introduction of new
hardware and software technologies offering improved features, the
introduction of new services by the Company and its competitors, changes in
the level of operating expenses, the timing of major service projects,
inventory adjustments, competitive conditions and economic conditions
generally. In particular, the Company's operating results are highly
sensitive to changes in the mix of the Company's product and service
revenues, product margins and interest rates. Further, the purchase of the
Company's products and services generally involves a significant commitment
of capital, with the attendant delays frequently associated with large
capital expenditures and authorization procedures within an organization.
8
For these and other reasons, the Company's operating results are subject to
a number of significant risks over which the Company has little or no
control, including customers' technology life cycle needs, budgetary
constrains and internal authorization reviews. In addition, the general
availability of certain products, particularly state of the art computing and
data communications products, is occasionally restricted. Accordingly, the
Company believes that period-to-period comparisons of its operating results
should not be relied upon as an indication of future performance. In
addition, the results of any quarterly period are not necessarily indicative
of results to be expected for a full fiscal year.
Management of Expanding Operations and Increased Service Focus
The Company's anticipated growth resulting from expanding
operations and acquisitions will place significant demands on the Company's
management, operational and technical resources. Such growth is expected to
challenge the Company's sales, marketing, technical and support personnel and
senior management. The Company's future performance will depend in part on
its ability to manage expanding domestic and international operations and to
adapt its operational systems to respond to changes in its business. In
particular, the Company's success will depend on its ability to attract,
retain and train adequate numbers of technical field personnel and
effectively integrate any acquired business operations. The failure of the
Company to manage its growth and increase service focus effectively or to
train its technical field personnel could have a material adverse effect on
the Company's business, financial condition and results of operations.
Risks Associated with Rapid Technological Change
The markets for the Company's product and service offerings are
characterized by rapidly changing technology and frequent new product and
service offerings. The introduction of new technologies can render existing
products and services obsolete or unmarketable. The Company's continued
success will depend on its ability to enhance existing products and services
and to develop and introduce, on a timely and cost-effective basis, new
products and services that keep pace with technological developments and
address increasingly sophisticated customer requirements. There can be no
assurance that the Company will be successful in identifying, sourcing,
developing and marketing product and service enhancements or new products and
services that respond to technological change, that the Company will not
experience difficulties that could delay or prevent the successful
development, introduction and marketing of product and service enhancements
or new products and services, or that its product and service enhancements
and new products and services will adequately meet the requirements of the
marketplace and achieve marketing acceptance. The Company's business,
financial condition and results of operations could be materially adversely
affected if the Company were to incur delays in sourcing and developing
product and service enhancements or new products and services or if such
product and service enhancements or new products and services did not gain
market acceptance. In addition, the Company has developed proprietary
automated systems to enhance the delivery of its services. No assurance can
be given that the Company's automated systems will function as anticipated,
will result in lower costs to the Company or its customers or will not be
rendered obsolete as a result of technological change.
9
Dependence on Key Vendors and Product Supply
A significant portion of the Company's operating revenue is derived
from sales of PC network hardware, peripherals and software, including
products of various major vendors. The Company's agreements with those
vendors from which it purchases products directly generally contain
provisions for periodic renewals and for termination by the vendor without
cause, generally upon relatively short notice. The loss of a major vendor,
the deterioration of the Company's relationship with a major vendor or the
failure of the Company to establish good relationships with major new vendors
as they develop could have a material adverse effect on the Company's
business.
The personal computer industry experiences significant product
supply shortages and customer order backlogs from time to time due to the
inability of certain manufacturers to supply certain products on a timely
basis. In addition, certain vendors have initiated new channels of
distribution that increase competition for the available product supply. The
Company has experienced product supply shortages in the past and expects to
experience such shortages from time to time in the future. Failure to obtain
adequate product supplies or fulfill customer orders on a timely basis could
have a material adverse effect on the Company's business, financial condition
and results of operations.
Concentration of Revenues
Since inception, the Company has derived approximately 75% of its
revenues from one of its customers. To the extent that the Company is
successful in expanding its relationship with new and existing customers
among large enterprises such as the Fortune 1000, its revenues may become
less concentrated. While the Company seeks to build long-term customer
relationships, revenues from any particular customer can fluctuate from
period due to such customer's purchasing patterns. Any termination or
significant disruption of the Company's relationships with any of its
principal customers could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition,
deterioration in the financial condition of any of its principal customers
could expose the Company to the possibility of large accounts receivable
write-offs, which could materially adversely affect the Company's financial
condition and results of operations.
Acquisitions
As part of its growth strategy, the Company intends to pursue the
acquisition of companies that sell products and services that either
complement or expand its existing business. As a result, the Company
continually evaluates potential acquisition opportunities, some of which may
be material in size and scope. The Company has recently consummated a number
of such acquisitions. Acquisitions, including those recently consummated,
involve a number of special risks, including the diversion of management's
attention to the assimilation of the operations and personnel of the acquired
companies, the incorporation of acquired products and services into the
Company's offerings, adverse short-term effects on the Company's operating
results, the amortization of acquired intangible assets, the loss of key
employees and the difficulty of presenting a unified corporate image. There
10
can be no assurance that the Company's acquisitions can be integrated into
the Company's operations successfully.
The Company intends to actively pursue existing and future
acquisition opportunities. No assurance can be given that the Company will
have adequate resources to consummate any acquisition, that any acquisition
by the Company will or will not occur, that if any acquisition does occur it
will not materially adversely affect the Company or that any such acquisition
will be successful in enhancing the Company's business. The Company's
ability to consummate acquisitions will be limited by the availability of
attractive candidates at appropriate terms, the Company's capital resources
and prevailing economic and market conditions.
Proprietary Technology; Limited Copyrights
Although OmniComm anticipates that its activities may result in a
number of copyright applications and copyrights, it presently has limited
copyright protection such rights as only may exist under principles of common
law and no assurance can be given that any such additional copyrights will
issue or, if issued, will provide significant commercial protection.
OmniComm does not have copyright protection under federal copyright statutes.
The extent to which OmniComm may be required to seek licenses under such
copyrights or other proprietary rights, and the cost or availability of such
licenses cannot now be predicted. In addition, OmniComm intends to rely to
a significant extent on proprietary know-how. There can be no assurance that
others will not independently develop superior know-how to obtain access to
know-how used by OmniComm which OmniComm now considers proprietary.
No Trading
There is no present trading market for the shares of Common Stock
offered hereby and there can be no assurance that a market will develop at
the conclusion of this Offering. Under SEC Rule 15g-8 of the Securities
Exchange Act of 1934 trading was prohibited in any security that was held and
deposited in an escrow account pursuant to Rule 419 (and to date there has
been no trading). Although, the Company plans to seek a "bulletin board"
listing once Rule 419 has been satisfied, even if a market should develop
there can be no assurance that it will be sustained. Hence there can be no
assurance that investors will be able to resell the Shares should they desire
to do so.
Broker-Dealer Sales of Common Stock; Penny Stock Rules
As the Company's securities are not listed on NASDAQ (and the
Company initially will not qualify for NASDAQ) or certain other national
securities exchanges and the offering price was below $5.00, it is most
likely that resale of such securities will also be below $5.00 and subject to
the requirements of the penny stock rules absent the availability of another
exemption. The SEC has adopted rules (Rules 15g-2 through 15g-6 of the
Securities Exchange Act of 1934) that regulate broker-dealer practices in
connection with transactions in "penny stocks". Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided by the exchange or system). The penny stock rules require
a broker-dealer to deliver a standardized risk disclosure document prepared
11
by the SEC, to provide the customer with current bid and offer quotations for
the penny stock, the compensation of the broker-dealer and its salesperson in
the transaction, monthly account statements showing the market value of each
penny stock held in the customer's account, to make a special written
determination that the penny stock is suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the
penny stock rules. As the Company's securities will be subject to the penny
stock rules, investors in this offering may find it more difficult to sell
their securities. As the Company's securities will be subject to the
existing or proposed regulations on penny stocks, the market liquidity for
the Company's securities could be severely and adversely affected by limiting
the ability of broker/dealers to sell the Company's securities and the
ability of purchasers in this offering to sell their securities in the
secondary market.
Regulations
The Company has registered the Distribution of Dividend Shares in
the States of Colorado and New York and is relying upon a self executing
exemption for the Distribution in the States of Connecticut, Delaware,
District of Columbia, Florida, Illinois, Indiana, Iowa, Kentucky, Maryland,
Massachusetts, Michigan, Missouri, Nebraska, New Jersey, Ohio, Pennsylvania,
Texas, Virginia, Washington and Wyoming. In addition, the Company will make
an effort to register or obtain an exemption from registration of the
Distribution in the State of California, the one remaining State in which MTC
stockholders reside.
Several states currently will permit secondary market sales of
these securities, upon release from escrow, (i) if certain financial and
other information with respect to the Company is published in a recognized
securities manual, (ii) after a certain period has elapsed from the date of
this Prospectus, or (iii) pursuant to exemptions applicable to certain
institutional investors. However, the Company does not expect to be able to
be listed in any recognized securities manual until after the consummation of
the OmniComm acquisition, if at all. The Company will seek to obtain
qualification for resales of the Shares in as many jurisdictions as possible,
or to qualify the Shares for exemptions which will permit their resale, and
to advise stockholders of resale limitations.
Shares Subject to Blue Sky Lock-Up Escrow Agreement
Shares which are not distributable to MTC stockholders in
California because of restrictions applicable under the blue sky laws of such
State will be held by MTC in a separate escrow account maintained by the
Escrow Agent pursuant to the terms and conditions of a Blue Sky Lock-Up
Agreement between MTC, the Company and the Escrow Agent ("Lock-Up
Agreement"). A total of five stockholders (1.34%) in California, entitled to
receive an aggregate of 504 (0.1%) Shares, will not be permitted to receive
them because of such restrictions. Pursuant to terms of the Lock-Up
Agreement, MTC will hold the Shares and the Company will undertake reasonable
efforts to register, or obtain an exemption from registration, for
Distribution to such MTC stockholders. MTC stockholders whose Shares are
held in escrow pursuant to the Lock-Up Agreement will be entitled to no fewer
12
than 20 and no more than 45 business days from the Effective Date of the
Post-Effective to notify the Company in writing that such stockholders elect
to receive their Shares once the Shares become distributable in California.
If the Company does not receive written notification from a stockholder
within 45 business days, the stockholder's right to receive such Shares shall
terminate and the Shares will be returned to MTC.
In the event a Business Combination has occurred, but, at such
time, the shares are still subject to the Lock-Up Agreement, then (i) the
Company shall continue reasonable efforts to obtain a registration or
exemption from registration for the Distribution of such shares until
registration or an exemption is available; and (ii) the Escrow Agent shall
hold the Shares in the lock-up escrow account until the Company has obtained
such registration or exemption.
MTC stockholders located within California will be notified by
letter of this Distribution and the commitments of MTC and the Company
contained in the Lock-Up Agreement. In addition, the Company will continue
to keep stockholders apprised of any changes with respect to the Distribution
of Shares in California, and will distribute the Post-Effective Amendment to
the stockholders and provide them with the opportunity to elect to receive
their Shares once they are distributable.
Upon written notification from MTC and the Company that the
requirements of Rule 419 have been satisfied and registration or an exemption
has been obtained for the Distribution of the Shares held in the lock-up
escrow account to stockholders in California, the Escrow Agent shall prepare
and replace such Shares held by MTC with the Company Shares recorded in the
stockholders' names.
Arbitrary Determination of Offering Price
There was no offering price and any trading price may bear no
relationship whatsoever to the assets, book value, earnings or net worth of
the Company and should not be considered to be an indication of the actual
value of the Company.
Possible Rule 144 Sales
The 940,000 shares to be issued to OmniComm are "restricted
securities" and in the future, may be sold in compliance with Rule 144
adopted under the Securities Act of 1933. Rule 144 provides, in essence,
that a person, holding "restricted" securities for a period of two years, may
thereafter sell, in brokerage transactions, an amount not exceeding 1% of the
Company's outstanding common stock, during any three-month period. Persons
who are not affiliated with the Company and who have held their restricted
securities for at least three years are not subject to the 1% volume
transaction limitation but must sell in a brokerage transaction. Sales of
the Company's common stock by present shareholders under Rule 144, may have
a depressive effect on the price of the Company's common stock in any market
which may develop.
13
USE OF PROCEEDS
There are no proceeds to be received by the Company.
CAPITALIZATION
The following table sets forth the capitalization of the Company on
June 30, 1998 and as adjusted to reflect the issuance of 940,000 shares to
shareholders of OmniComm.
Authorized (1) Actual Adjusted (2)(3)
Common Stock 20,000,000 403,000 1,343,000
$.001 par value 403 1,593
Additional Paid in Capital 29,897 29,897
Retained Earnings (deficit) (9,395) 150,480
Total Stockholders' Equity $20,905 $ 181,970
(1) Assumes the acquisition of OmniComm and the approval of the increase in
authorized shares from 2,500,000 to 20,000,000 as well as the two-for-one
share split.
(2) Assumes the issuance of 940,000 shares to the shareholders of OmniComm.
(3) Does not include 2,687,000 shares reserved for employee stock options to
be issued if certain earnings levels are achieved.
DIVIDEND POLICY
The Company has never paid cash dividends on its Common Stock. For
the foreseeable future, the Company anticipates that it will retain its
earnings, if any, for use in financing future growth, and does not presently
anticipate paying cash dividends to holders of Common Stock.
14
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company
The proposed business of the Company is to provide a mechanism to
take advantage of business opportunities. Through inception November 19,
1996 to June 30, 1998, the Company conducted no business other than
organizational activities.
On June 5, 1997, a registration statement relating to a dividend
distribution of 403,000 shares of the Company's Common Stock was declared
effective. The offering was made pursuant to Rule 419. The Company realized
no net proceeds.
On July 22, 1998, the Company signed an agreement with OmniComm and
all its shareholders the terms of which are described elsewhere in this
Prospectus.
OMNICOMM
Results of Operations
From the date of inception (March 4, 1997) to December 31, 1997
From the date of inception (March 4, 1997) through December 31,
1997, the Company was a subchapter S Corporation. During this period, the
Company had a gross profit of $61,125 on revenues of $210,373 and net income
of $7,320. A significant portion, approximately eighty percent (80%), of the
revenue generated during this period was from a single client, Commercial
Services International, Inc. The source of the revenue was primarily from
hardware procurement.
For the six month period ending June 30, 1998
From January 1, 1998 through June 30, 1998 the Company had a gross
profit of $314,932 on revenues of $768,004 and a net income of $171,082.
A significant portion, approximately seventy percent (70%), of the
revenue generated during this period was from a single client, Commercial
Services International, Inc. The source of the revenue was primarily from
hardware procurement. The Company revoked its subchapter S status effective
January 1, 1998.
15
Comparison between the period ending December 31, 1997 and the six month
period ending June 30, 1998
The significant increase in revenue is attributed to the Company
expanding its operations. During the six month period ending June 30, 1998
the Company hired two additional full time employees and relocated its
operations to 3250 Mary Street, Suite 307, Miami, Florida 33133. There was
an attendant increase in expense during this period as the Company expanded
its operations. General and administrative expenses increased from $47,157
during the period ending December 31, 1997 to $140,502 for the six months
ending June 30, 1998.
Acquisition of Education Navigator, Inc.
On June 26, 1998 the Company, through its wholly owned subsidiary
OmniCommerce Systems, Inc., acquired all of the issued and outstanding shares
of Education Navigator, Inc. a Florida corporation (EdNav). Each share of
EdNav voting common stock issued and outstanding at the time of closing was
converted into and exchanged for four hundred forty-one and 2/100 (441.2)
shares of voting common stock of Company, and the Company paid additional
monetary consideration of six hundred dollars ($600) per share for each share
of EdNav voting common stock (six hundred thousand dollars ($600,000) in the
aggregate of all of the Ednav shares).
The payment to the shareholders of EdNav of $600,000 was structured
as follows: (a) seventy five thousand dollars ($75,000) was paid on the
closing (less a credit for the $5,000 deposit previously paid by Company to
the EdNav shareholders); (b) six hundred forty-five thousand dollars
($645,000) was paid at closing by the deliver of a promissory note issued by
the Company which providing for payments of principal as follows: within
sixty (60) days of closing: $75,000; on or before December 31, 1998:
$95,000; on the first anniversary date of the closing: $237,500; on the
second anniversary date of the closing: $237,500. In addition, the
shareholders of EdNav were issued 441,200 shares of Common Stock of the
Company.
From January 1, 1998 through June 26, 1998 EdNav had a gross profit
of $60,827 on revenues of $76,541 and net income of $21,242.
Other Matters
In order to flatten its cash flow requirements the Company entered
into a factoring agreement with Bankest Capital Corporation on March 3, 1998.
The fees and charges for the factoring arrangement are customary and
reasonable. The Company does not factor all invoices, but selectively
factors invoices as the need arises.
16
PROPOSED BUSINESS
Business
The Company was incorporated under the laws of Delaware on November
19, 1996. The Company completed a "blind pool/blank check" offer pursuant to
Rule 419 by having MTC distribute its shares as a dividend to MTC
shareholders. On July 27, 1998 it signed an agreement with OmniComm whereby
the Company and OmniComm would merger and the Company would issue 940,000
shares to the Shareholders of Omni in exchange for all their shares (which
are all the outstanding shares of Omni).
Company shareholders are urged to read this Prospectus carefully.
Then they should indicate on the Reconfirmation Request accompanying the
Prospectus whether or not they wish to reconfirm. To reconfirm your request
must reach the Company on or before December 5, 1998. A lack of response
will be counted as a negative response. To consummate the transaction those
shareholders representing 80% of the 403,000 outstanding shares must
reconfirm. If less than 80% approve, shareholders will not receive any
shares. If 80% approve, those shareholders not approving will not receive
any shares.
Business Overview
Omnicomm is an information and technology integration company
located in Coconut Grove, Florida. The Company provides customized,
integrated solutions for its customers' networking needs by combining a
comprehensive offering of dynamic web and data base applications with its
expertise in designing and configuring networks.
From date of inception (March 4, 1997) to July 26, 1998, OmniComm
Systems, Inc. (formerly known as The Premisys Group, Inc.) was a systems
integrator: a provider of services and products designed to build, manage
and enhance computer network infrastructures, local and wide area, for
businesses.
On July 26, 1998, the Company, through its wholly owned subsidiary
OmniCommerce Systems, Inc. acquired all of the issued and outstanding shares
of Education Navigator, Inc. a Florida corporation. OmniCommerce provides
the technical and business know how to integrate existing legacy hardware
networks and data into applications for e-commerce, extranets, intranets,
virtual private networks (VPNs), and private networks.
Industry Overview
It is axiomatic that the computer has revolutionized how business
is conducted. The use of information has grown exponentially with the
expanded use of the computer in business. Accordingly, client/server
computing has grown dramatically for businesses in recent years as personal
computer ("PC"), software, and network technologies have improved and end
users have demanded more and easier access to data and applications.
17
In conjunction with the dramatic growth of client/server computing,
the Internet has made the transmittal and attendant use of information
including electronic commerce, both business to business and business to
consumer, affordable to even the smallest enterprises. consequently, the
demand for applications to be used within this environment is increasing
proportionately. In a recent study completed by the United States Department
of Commerce titled "The Emerging Digital Economy" it states that "although
still in an embryonic state analysts predict businesses will trade as much as
$300 billion annually over the Internet in the next five years". Forrester
Research, for example, estimated business to business transactions would grow
from $7.8 billion in 1997 to $326 billion in 2002.
The Company believes many corporations are eager to implement the
most advanced technologies in an effort to increase productivity and
profitability. However, today's chief information officers are faced with
limited resources and the challenge of designing new networks, integrating
the latest technologies, migrating to new systems and training new end users.
They are seeking assistance in transforming and re-engineering their
businesses to take advantage of new technologies. They also recognize these
new technologies require infrastructures that need to be developed and
managed differently from traditional network systems.
OMNICOMM SYSTEMS, INC.
OmniComm brings together the two vital components that allow an
organization to exchange and use information either to gain a competitive
advantage or, quite simply, to make more money: systems integration and
electronic commerce (e-commerce) applications.
OmniComm provides the necessary network structure for an
organization to exchange information both internally within the organization
and with clients, vendors, or others who are not part of the organization.
OmniComm network deployment services include product procurement,
configuration, distribution, installation, cabling and connectivity. The
Company sources personal computers, mid-range and mainframe computers, and
servers, network products, computer peripherals and software to equip the
network environment.
Through its wholly owned subsidiary OmniCommerce, OmniComm provides
the technical and business know how to integrate existing legacy hardware
networks and data into applications for e-commerce, extranets, intranets,
virtual private networks (VPNs), and private networks. OmniComm can
establish a seamless and secure connection between the organization and the
Internet allowing an organization to conduct its business with clients,
vendors, and other business partners over the Internet. Not simply creating
a brochure for an organization, but creating a full fledged business
conducted over and on the network, principally the Internet, with the
capabilities to purchase, order, market and sell. OmniComm becomes the
business service provider for the organization. It provides the back end -
data base applications and hardware (servers, hosting, and the network) - and
the front end - the dynamic web page - of the business.
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APPLICATIONS
TrialMaster TM..
TrialMaster is a full-featured distributed application that
facilitates the collection, verification and management of clinical data via
the Internet or Intranets. TrialMaster allows clinical sites and research
sponsors to perform data collection and data management via a direct, secure
network connection using standard web browser or e-mail software.
TrialMaster automates the entire process of data collection and verification,
effectively reducing development and testing time for medical drug and device
research projects.
TrialMaster supports and integrates with all current standard
clinical databases ranging from Oracle and Microsoft SQL to Access. This
provides for full integration with legacy data and procedures of an Internet
based data collection and review system.
Enterprise E-Commerce
Enterprise e-commerce allows an enterprise to access and transmit
to vendors and client critical pricing and product information where response
time is critical to maintaining or gaining a competitive advantage.
Enterprise e-commerce is a fully integrated Internet business
system. The system includes electronic data interchange (EDI), purchase
ordering and marketing and full integration with legacy data applications and
procedures. The system is developed for a wholesale/retail distributor that
has multiple vendors/clients (50-500) and a need to transmit pricing and
product information on an immediate basis.
Retail Site
On a smaller scale than enterprise e-commerce, but just as robust,
OmniComm has developed a full retail site for businesses to establish a
complete presence on the Internet. OmniComm's application provides for the
use of dynamic web page applications that create a complete "store front" on
the Internet.
CLIENTS AND REPRESENTATIVE SOLUTIONS
OmniComm's clients consist of Office Depot, Inc., Associated
Grocers, United Interactive Technologies, Inc., Mayor's Jewelers, and
Commercial Services International, Inc. During the first six months of 1998,
OmniComm derived a significant percentage, 90%, of its business from one
client, Commercial Services International, Inc. However, it is expected that
this considerable concentration of revenue will lessen over the coming months
as the Company incorporates more fully the acquisition of Education
Navigator, Inc. and increases its offering of services. Three recent
examples of the Company's significant engagements include the following:
19
Retail. OmniComm was approached by a retail sales company to provide a
complete solution to establishing a centralized retail sales network where
the operations were located outside of the United States where the
telecommunications infrastructure was inadequate to support the transmittal
of data. OmniComm suggested a dedicated point of sale (POS) system networked
through dedicated servers platformed on an IBM AS 400. To circumvent the
inadequate telecommunications infrastructure the Company suggested and
implemented a radio frequency (RF) system to transmit data from approximately
15 retail establishments to a central location, which in turn was transmitted
to the United States via a dialup connection.
Wholesale. Education Navigator, Inc., n/k/a OmniCommerce Systems, Inc., was
asked by a wholesale food distributor to provide an Internet solution to
supplying pricing and product information to approximately 500 affiliated
clients on a daily basis.
The Company provided the client four integrated e-commerce
services:
1. Online catalog for their 528 associated clients that allows 7/24
access to pricing and margin data.
2. Downloadable on demand pricing files to drive the client's point of
sale systems.
3. Internet electronic data interchange (EDI) to facilitate ordering
from vendors.
4. Internet Grocery Stores that enable their associates to operate
online virtual stores.
These applications allowed the customer to automate the time
critical vendor and customer services of pricing and ordering at a fraction
of previous costs. Additionally, the customer can now offer all of their
clients the ability to sell products online with a full featured,
customizable website with pricing and inventory keyed to their normal
marketing and advertising promotions. These Internet e-commerce services
clearly make the customer a leader in providing advanced distribution
services, cost savings and state of the art e-commerce solutions to their
associated grocers.
Retail. Education Navigator, Inc., n/k/a OmniCommerce Systems, Inc., was
asked by a high-end jewelry store chain to develop and maintain a full-
fledged storefront for the Internet. The Company maintains a site which
provides customers with an on-line catalog including photographs of selected
products, a reminder service for special occasions, a shopping basket for
purchasing, and electronic marketing automation (EMA) to contact customers
concerning special offers and promotions. All of the foregoing is connected
to the stores centralized legacy data systems.
EMPLOYEES
The Company and its wholly owned subsidiary, OmniCommerce Systems, Inc.,
currently have eight (8) full time employees.
20
SALES AND MARKETING
The Company has relied on personal contacts and "word of mouth"
advertising for all of its business. The Company expects to put into place
a more structured and planned marketing strategy over the next 1-2 months.
The Company has retained a consulting product manager to market and sell the
TrailMaster application.
COMPETITION
The market for the type of services and applications the Company
provides includes a large number of competitors and is subject to rapid
change. Primary competitors include participants from a variety of market
segments, including systems consulting and implementation firms, application
software firms, service groups of computer equipment companies, systems
integration companies, general management consulting firms and programming
companies. Most of the competitors have significantly greater financial,
technical and marketing resources and name recognition that the Company. In
addition, the Company competes with its clients' internal resources,
particularly where these resources represent a fixed cost to the client.
Such competition will impose additional financial and pricing pressures on
the Company. See "Risk Factors--Competition".
The Company believes that the most significant competitive factors
it faces is a lack of operating history and an attendant perception of a lack
of experience in competing in such a changing and competitive environment.
The Company believes, however, that its technical expertise, the knowledge
and experience of its principals of the industry, quality of service and
responsiveness to client needs and speed in delivering solutions will allow
it to compete favorably within this environment.
INTELLECTUAL PROPERTY RIGHTS
Its methodologies and other proprietary intellectual property
rights in part, was a cause of OmniComm's acquisition of Education Navigator,
Inc. (n/k/a OmniCommerce Systems, Inc). The Company believes that such
intellectual property has a value and may be subject to certain statutory
protections and is currently investigating the most appropriate way to
proceed.
The Company relies upon a combination of nondisclosure and other
contractural arrangements and trade secret, copyright and trademark laws to
protect its proprietary rights and the proprietary rights of third parties
from whom the Company licenses intellectual property. The Company enters
into confidentiality agreement with its employees and limits distribution of
proprietary information. There can be no assurance that the steps taken by
the Company in this regard will be adequate to deter misappropriation of
proprietary information or that the Company will be able to detect
unauthorized use and take appropriate steps to enforce its intellectual
property rights. See "Risk Factors - Intellectual Property Rights".
21
The Company is in the process of registering the trademarks
"OMNICOMM SYSTEMS, INC.", AND "TRAILMASTER" with the U.S. Patent and
Trademark Office. The Company intends to make such other state and federal
filings as the Company deems necessary and appropriate to protect its
intellectual property rights.
PROPERTY
OmniComm's principal executive offices currently are located at
3250 Mary Street, Suite 307, Miami, Florida 33133. The Company currently is
on a month to month lease at this location. The Company has also entered
into a five year lease for space at 9400 South Dadeland Boulevard, Suite 112,
Miami, Florida 33131. The operations of OmniCommerce will be conducted from
this location. OmniComm does not expect that any additional space will be
required for the foreseeable future.
MANAGEMENT
Currently, Arthur Seidenfeld and Anne Seidenfeld are the board of
directors and executive officers of the Company. Upon consummation of the
acquisition the Seidenfelds will resign and the officers and directors will
be as follows:
Name Age Position
Randall G. Smith 41 President and Director
Peter S. Knezevich 42 Chief Financial Officer &
Director
Clifton R. Middleton 51 Vice President
Randall G. Smith, 41, Director, President and Chief Technical
Officer. Mr. Smith has been a Director of OmniComm Systems, Inc. since
inception and shall serve as a Director until the next annual meeting. Since
inception (June 30, 1998) Mr. Smith has been Director and Chief Technical
Officer of OmniCommerce Systems, Inc., the wholly owned subsidiary of
OmniComm Systems, Inc.
From December 1995 to May 1997, Mr. Smith was Director of
Operations for Global Communications Group, a Miami, Florida, based systems
integrator.
From November 1993 to December 1994, Mr. Smith was General Manager
and Chief Operating Officer of Genesis International, a Charlotte, North
Carolina, based regional systems integrator.
From January 1989 to November 1993, Mr. Smith was Executive Vice
President and Chief Operating Officer of CableNet, Inc., a Charlotte, North
Carolina based engineering company that developed, manufactured and marketed
world-wide computer interface products. Mr. Smith developed the Company's
first product; the universal network adapter utilizing a proprietary dual
ram-linked RISC processor architecture.
22
Peter S. Knezevich, 42, Director, Chief Operating and Financial
Officer. Mr. Knezevich has been a Director of OmniComm Systems, Inc., since
October of 1997 and shall serve as a Director until the next annual meeting.
Since inception (June 30, 1998) Mr. Knezevich has been Director and Chief
Operating and Financial Officer of OmniCommerce Systems, Inc., the wholly
owned subsidiary of OmniComm Systems, Inc.
From April 1995 to September 1997, Mr. Knezevich was Vice President
and General Counsel of Imaging Diagnostic systems, Inc., a development stage,
reporting and publicly traded company.
From May 1994 to March 1995, Mr. Knezevich was in the private
practice of law.
From June 1991 to April 1994, Mr. Knezevich was an associate with
the Miami, Florida law firm of Ferrell and Fertel, P.A.
Clifton R. Middleton, 51, Vice President and Director of Internet
Development and Applications. Since inception (June 30, 1998) Mr. Middleton
has been Director and President of OmniCommerce Systems, Inc., the wholly
owned subsidiary of OmniComm Systems, Inc. Prior to June 1998, for the past
five years, he was President of Education Navigator, Inc., acquired by
OmniComm.
Remuneration
During the past fiscal year ended December 31, 1997, no officer or
director of OmniComm received any remuneration. Officers of Coral received
no remuneration.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of the date of this Prospectus
the number and percentage (before and after giving effect to the consummation
of the acquisition hereby) of shares of Common Stock of the Company, owned of
record and beneficially, by each officer and director of the Company and by
any other person owning more than 5% of the Company's outstanding Common
Stock, and by all Officers and Directors as a group.
Percentage Percentage
Shares of Prior to After
Name* Common Stock Acquisition Acquisition (3)
Arthur Seidenfeld(1)(2) 193,096 47.9% 14.4%
Anne Seidenfeld(1)(2) 48,530 12.0% 3.6%
Randall Smith 421,461 31.0%
Peter Knezevich 281,640 21.0%
Clifton Middleton 102,461 8.0%
Hugh McCallum 102,461 8.0%
Lawton Jackson 31,977 2.0%
All directors and
officers as a group 241,626 59.9%
(2,3 persons) (3) 805,562 59.9%
23
*The address for the above persons is 240 Clarkson Avenue, Brooklyn, NY 11226
(1) May be deemed to be a parent and promoter as such terms are defined
under the Securities Act.
(2) Current directors and an officer who will resign upon the acquisition.
(3) Based upon 1,343,000 shares outstanding which reflects the 940,000
shares to be issued to Omni shareholders.
CERTAIN TRANSACTIONS
The Company was incorporated on November 19, 1996 in the State of
Delaware by MTC. Arthur Seidenfeld, a shareholder of MTC, will receive
193,096 shares and Anne Seidenfeld, his mother, and a shareholder of MTC will
receive 48,530 shares. Mr. Seidenfeld and Mrs. Seidenfeld have agreed not to
sell more than 25% of their holdings in a quarterly period.
DESCRIPTION OF SECURITIES
Description of Common Stock
The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, $.001 par value per share, of which 400,000 were
issued and outstanding at June 30, 1998. In connection with this offering
940,000 additional shares will be issued.
Dividends
Holders of the Common Stock are entitled to receive dividends when
and as declared by the Company's Board of Directors out of funds available
therefore. Any such dividends may be paid in cash, property or shares of the
Common Stock. The Company has not paid any dividends since its inception and
presently anticipates that all earnings, if any, will be retained for
development and expansion of the Company's business, and that no dividends on
the Common Stock will be declared in the foreseeable future. Any future
dividends will be subject to the discretion of the Company's Board of
Directors and would depend upon, among other things, future earnings, the
operating and financial condition of the Company, its capital requirements,
and general business conditions.
Voting Rights
Each holder of Common Stock is entitled to one vote per share on
all matters, including the election of directors, submitted to a vote of such
class. Holders of Common Stock do not have cumulative voting rights.
24
The absence of cumulative voting means that the holders of more than 50% of
the shares voting for the election of directors can elect all directors if
they choose to do so. In such event, the holders of the remaining shares of
the Common Stock will not be entitled to elect any director. The Board of
Directors shall be elected each year to a one year term. A majority of the
shares entitled to vote, represented in person or by proxy, constitutes a
quorum at a meeting of shareholders.
Miscellaneous Rights and Provisions
Shares of the Common Stock have no preemptive or conversion rights,
no redemption or sinking funds provisions and are not liable to further call
or assessment. The outstanding shares of the Common Stock are, and any
shares sold pursuant to this offering will be, fully paid and non-assessable.
Each share of the Common Stock is entitled to share ratably in any assets
available for distribution to holders of its equity securities upon
liquidation of the Company.
LEGAL MATTERS
Gerald A. Kaufman, Esq. of 33 Walt Whitman Road, Huntington
Station, New York 11746, has acted as counsel to the Company in connection
with this offering and has passed on the validity of issuance of the
securities offered hereby.
EXPERTS
The financial statements of the Company included in this Prospectus
have been included herein in reliance upon the report of Greenberg & Company
LLC, independent certified public accountants and upon the authority of said
expert in accounting and auditing. The financial statements of Omni have
been included herein in reliance upon the report of Krissel & Company
independent certified public accountants and upon the authority of said
expert in accounting and auditing.
25
LITIGATION
There are no material legal proceedings of any nature pending
against the Company and to the Company's knowledge, no such proceedings are
contemplated. The Company is not a party to any litigation.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware law provides, under certain circumstances, for the
indemnification of officers and directors. The Company's Certificate of
Incorporation provides for indemnification of such individuals to the full
extent permitted under Delaware law. The Company intends to procure
officer's and director's liability insurance for certain purposes, including,
among other things, civil liabilities under the Securities Act of 1933.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to any charter provision, by-law,
contract, arrangements, statute or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by the controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the act and will be governed
by the final adjudication of such issue.
REPORTS TO SHAREHOLDERS
The Company intends to furnish its shareholders with annual reports
containing audited financial statements. Such reports shall be issued to
shareholders subsequent to the June 30th close of the Company's fiscal year.
STOCK TRANSFER AGENT
The Company has appointed Jersey Transfer and Trust Company,
Verona, New Jersey, as its Stock Transfer Agent.
26
REGISTRATION STATEMENT
The Company has filed with the Securities and Exchange Commission
(the "Commission") 450 Fifth Street, N.W., Washington, D.C. 20549 a
Registration Statement under the Securities Act of 1933 relating to the
Shares offered hereby. The Prospectus, which is part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement. For further information with respect to the Company and its
Common stock reference is hereby made to such registration statement and the
exhibits thereto. The Registration Statement may be inspected without charge
at the new York Regional Office and copies of the Registration Statement,
together with exhibits thereto, may be obtained from the Commission at its
principal office in Washington, D.C. upon payment of the charges prescribed
by the Commission. Each statement made in this Prospectus referring to a
document filed as an exhibit to the Registration Statement is qualified by
reference to the exhibit for a complete statement of its terms and
provisions.
27
CORAL DEVELOPMENT CORP.
FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT 1
BALANCE SHEETS 2
STATEMENT OF STOCKHOLDER'S EQUITY 3
STATEMENTS OF OPERATIONS 4
STATEMENTS OF CASH FLOWS 5
NOTES TO THE FINANCIAL STATEMENTS 6-7
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Stockholders
CORAL DEVELOPMENT CORP.
Brooklyn, New York
We have audited the accompanying balance sheets of CORAL
DEVELOPMENT CORP. (A Development Stage Enterprise) as of June 30,
1998 and 1997 and the related statements of stockholder's equity,
operations and cash flows for the period ended June 30, 1998 and
1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based upon 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
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above presents
fairly, in all material respects, the financial position of CORAL
DEVELOPMENT CORP. (A Development Stage Enterprise) as of June 30,
1998 and 1997, and the statement of its operations and cash flows
for the periods then ended, in conformity with generally accepted
accounting principles.
GREENBERG & COMPANY LLC
Springfield, New Jersey
August 6, 1998
Page 1 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
June 30,
1998 1997
ASSETS
ASSETS
Current assets - cash $ 1,299 $ 3,515
Deferred registration costs 26,007 25,907
Organization Expense 300 300
TOTAL ASSETS $27,606 $29,722
LIABILITIES AND STOCKHOLDER'S EQUITY
Due to parent company $ 6,701 $ -0-
TOTAL LIABILITIES 6,701 $ -0-
STOCKHOLDER'S EQUITY
Common stock par value $.001
20,000,000 shares authorized
403,000 shares issued and outstanding 403 403
Additional paid in capital 29,897 29,897
(Deficit) accumulated during the
development stage (9,395) (578)
TOTAL STOCKHOLDER'S EQUITY 20,905 29,722
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $27,606 $29,722
The accompanying notes are an integral part of this financial statement.
Page 2 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE PERIOD NOVEMBER 19, 1996 (INCEPTION) TO JUNE 30, 1998
(Deficit)
Common Accumulated Total
Stock Additional During the Stock-
# of $.001 par Paid in Development holder's
Shares Value Capital Stage Equity
Initial investment
in capital stock 403,000 $403 $29,897 $ -0- $30,300
Balance -
December 16, 1996 403,000 403 29,897 -0- 30,300
Net (Loss) for the
period (578) (578)
Balance -
June 30, 1997 403,000 403 29,897 (578) 29,722
Net (Loss) for the
year ended
June 30, 1998 (8,817) (8,817)
BALANCE -
JUNE 30, 1998 403,000 $403 $29,897 $(9,395) $20,905
The accompanying notes are an integral part of this financial statement.
Page 3 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
Period from
For the Year Ended December 17, 1996
June 30, 1998 to June 30, 1997
General and administrative
expenses $(8,817) $ (578)
Net (Loss) for the period $(8,817) $ (578)
Net (Loss) per share $ (0.02) $ (0.00)
Weighted average common shares
outstanding 403,000 403,000
Cumulative amounts from inception:
General and administrative
expenses $ 9,395
Net (Loss) $(9,395)
Net (Loss) per share $ (0.02)
The accompanying notes are an integral part of this financial statement.
Page 4 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
Cumulative
For The Period From Amounts
Year Ended 12/17/96 From
6/30/98 to 6/30/97 Inception
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $(8,817) $ (578) $ (9,395)
Changes In Assets
(Increase) in Organization Expense -0- -0- (300)
Net Cash (Used In) Operating
Activities (8,817) (578) (9,695)
CASH FLOWS FROM INVESTING ACTIVITIES -0- -0- -0-
CASH FLOWS FROM FINANCING ACTIVITIES
Loan from Parent Company 6,701 -0- 6,701
Common Stock Issuance -0- -0- 30,300
(Increase) in Deferred Registration
Costs (100) (25,907) (26,007)
Net Cash Provided By (Used In)
Financing Activities 6,601 (25,907) 10,994
Net Increase (Decrease) in Cash (2,216) (26,485) 1,299
Cash, Beginning of Period 3,515 30,000 -0-
CASH, END OF PERIOD $ 1,299 $ 3,515 $ 1,299
Supplemental Disclosures of
Cash Flow Information
Cash Paid During Period for:
Income Taxes $ -0- $ -0- $ -0-
Interest $ -0- $ -0- $ -0-
The accompanying notes are an integral part of this financial statement.
Page 5 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
Coral Development Corp. (CDC) is a Delaware corporation. CDC
is in the development stage and has not begun any formal
operations. CDC's office is located in New York. The
principal purpose of CDC is to find and merge with an
operating company. The Company's fiscal year end is June 30.
On December 10, 1996 Modern Technology Corp., the parent
company of Coral Development Corp., purchased 403,000 shares
of the company for $30,300. The shares of the Company were
registered on June 6, 1997 with the Securities and Exchange
Commission. The intention of Modern Technology Corp. is to
distribute those shares to Modern Technology Corp.'s
stockholders in the form of a dividend.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING POLICIES
Coral Development Corp.'s accounting policies conform to
generally accepted accounting principles. Significant
policies followed are described below.
ESTIMATES IN FINANCIAL STATEMENTS
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
NOTE 3: INCOME TAXES
The Company follows Statement of Financial Accounting
Standards No. 109 (FAS 109), "Accounting for Income Taxes."
FAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been
recognized in the Company's financial statements or tax
returns. The Company has net operating loss carry forwards of
approximately $10,000 available to reduce any future income
taxes. The tax benefit of these losses, approximately $3,500,
has been offset by a valuation allowance due to the
uncertainty of its realization.
Page 6 of 7
CORAL DEVELOPMENT CORP.
(A WHOLLY OWNED SUBSIDIARY)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
NOTE 4: DEFERRED REGISTRATION COSTS
As of June 30, 1998, the Company has incurred deferred
registration costs of $26,007 relating to expenses incurred in
connection with the Proposed Distribution (see Note 1). Upon
consummation of this Proposed Distribution, the deferred
registration costs will be charged to equity. Should the
Proposed Distribution prove to be unsuccessful, these deferred
costs, as well as additional expenses to be incurred, will be
charged to operations.
NOTE 5: SUBSEQUENT EVENT
On July 22, 1998, the Company signed an Agreement and Plan of
Reorganization with Omnicomm Systems, Inc. (Omnicomm). The
agreement calls for Omnicomm to be merged into the Company.
Omnicomm is a privately held company engaged in the computer
software industry. The transaction is contingent upon
receiving shareholder approval from both companies and also
subject to the conditions of Rule 419 of the Securities Act of
1933 and approval by the Securities and Exchange Commission of
a post-effective amendment to the registration statement.
Page 7 of 7
OmniComm Systems, Inc.
Financial Statements
December 31, 1997
T A B L E O F C O N T E N T S
INDEPENDENT AUDITORS' REPORT........................... 2
BALANCE SHEET.......................................... 3
STATEMENTS OF INCOME AND RETAINED DEFICIT.............. 4
STATEMENT OF CASH FLOWS................................ 5
NOTES TO FINANCIAL STATEMENTS.......................... 6-7
To the Board of Directors
OmniComm Systems, Inc.
Miami, Florida
We have audited the accompanying balance sheet of OmniComm Systems,
Inc. (the Company) as of December 31, 1997 and the related
statements of income and retained deficit and cash flows from
inception (February 28, 1997) to the year then ended. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We have conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
OmniComm Systems, Inc. as of December 31, 1997, and the results of
its operations and its cash flows from inception (February 28,
1997) to the year then ended in conformity with generally accepted
accounting principles.
Krissel & Company
Miami, Florida
September 16, 1998
-2-
OmniComm Systems, Inc.
Balance Sheet
as of December 31, 1997
ASSETS
CURRENT ASSETS
Cash in Bank $ 16,077
Account Receivable 26,086
TOTAL CURRENT ASSETS 42,163
PROPERTY AND EQUIPMENT - Net of Accumulated
Depreciation of $1,056 - Note 1 6,389
OTHER - Primarily Stockholders' Loans 11,373
$ 59,925
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable and Accrued Expense $ 20,945
Note Payable - Note 2 50,000
TOTAL CURRENT LIABILITIES 70,945
STOCKHOLDERS' DEFICIT
Common Stock - 10 Million Shares Authorized,
1,875,000 Issued and Outstanding at No Par
Value 187
Accumulated Deficit (11,207)
TOTAL STOCKHOLDERS' DEFICIT (11,020)
$ 59,925
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THESE FINANCIAL STATEMENTS.
-3-
OmniComm Systems, Inc.
Statement of Income and Retained Deficit
From Inception (February 28, 1997) to December 31, 1997
REVENUES - SALES $210,373
COSTS AND EXPENSES
Cost of Goods Sold 149,248
Depreciation and Amortization 1,128
Interest 5,520
Selling General and Administrative 47,157
203,053
NET INCOME 7,320
BEGINNING ACCUMULATED EARNINGS -0-
LESS DIVIDEND DISTRIBUTIONS 18,527
ENDING ACCUMULATED DEFICIT $(11,207)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THESE FINANCIAL STATEMENTS.
-4-
OmniComm Systems, Inc.
Statement of Cash Flows
From Inception (February 28, 1997) to December 31, 1997
OPERATING ACTIVITIES
Net Income $ 7,320
Adjustments to Reconcile Net Income
To Cash Provided (Used) by Operating
Activities:
Depreciation and Amortization 1,128
Change in Operating Assets and Liabilities:
Increase in Accounts Receivable (26,086)
Increase in Accounts Payable
and Accrued Expense 20,945
(4,013)
NET CASH PROVIDED BY OPERATIONS 3,307
INVESTING ACTIVITIES
Additions to Property and Equipment and
Organization Costs (7,984)
FINANCING ACTIVITIES
Net Proceeds from Note Payable 50,000
Dividend Paid (18,527)
Loans to Stockholders (10,906)
Proceeds from Common Stock Issuance 187
NET INCREASE IN CASH FROM FINANCING ACTIVITIES 20,754
INCREASE IN CASH 16,077
CASH AT BEGINNING OF YEAR -0-
CASH AT END OF YEAR $ 16,077
SUPPLEMENTARY CASH FLOW DISCLOSURE:
Interest Paid $ 5,020
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THESE FINANCIAL STATEMENTS
-5-
OmniComm Systems, Inc.
Notes To Financial Statements
December 31, 1997
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
OmniComm Systems, Inc. (the Company) formerly The Premisys
Group, Inc. was incorporated in Florida in February 1997.
The Company is a computer systems integrator providing
services and hardware sales for the installation of local
and wide area networks.
PROPERTY AND EQUIPMENT
Property and Equipment are stated at cost. Major renewals
and improvements are charged to the fixed asset accounts
while replacements, maintenance, and repairs which do not
improve or extend the lives of the respective assets are
expensed in the period incurred. Depreciation for both
financial statement presentation and income tax purposes
is provided using the modified accelerated cost recovery
system over the following estimated useful lives:
Office and Equipment 5 to 7 Years
REVENUE RECOGNITION
Revenue is recognized from sales when a product is
shipped. Revenues from services are billed upon
completion of a job.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Company has had no experience with bad debts and has
not established a policy for write offs. No provision for
bad debts were reflected in 1997.
-6-
OmniComm Systems, Inc.
Notes to Financial Statements
December 31, 1997
NOTE 1 CONTINUED -
INCOME TAXES
The Company has elected to be taxed under the provisions
of subchapter S of the Internal Revenue Service Code.
Under these provisions, stockholders' include respective
profits and losses on their individual income tax returns.
NOTE 2 - NOTE PAYABLE
The note payable dated July 15, 1997 is an unsecured
demand note and accrues interest at 2% per month on the
unpaid balance.
NOTE 3 - RELATED PARTY TRANSACTIONS
The following transactions occurred between the Company
and its Shareholders:
* The Company paid rent of $22,500 to a shareholder
for office facilities. The month to month lease
began April 1, 1997.
* Distributions in the amount of $18,527 were made by
the Company to the Shareholders in 1997.
* The Shareholders owed the Company $10,906 at year
end.
-7-
OmniComm Systems, Inc.
Balance Sheet
as of June 30, 1998
ASSETS
CURRENT ASSETS
Cash in Bank $ 37,105
Account Receivable 89,313
Investment - Note 3 75,000
TOTAL CURRENT ASSETS 201,418
PROPERTY AND EQUIPMENT - Net of Accumulated
Depreciation of $2,506 - Note 1 6,906
OTHER 3,881
$212,205
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Expense $ 52,080
STOCKHOLDERS' DEFICIT
Common Stock - 10 Million Shares Authorized,
2,500,000 Issued and Outstanding at No Par
Value 250
Retained Earnings 159,875
TOTAL STOCKHOLDERS' EQUITY 160,125
$212,205
Unaudited
The accompanying notes are an integral part of these financial
statements.
OmniComm Systems, Inc.
Statement of Income and Retained Earnings
For the Six Months Ended June 30, 1998
REVENUES - SALES $768,004
COSTS AND EXPENSES
Cost of Goods Sold 453,072
Depreciation and Amortization 1,504
Interest 1,844
Selling General and Administrative 140,502
596,922
NET INCOME 171,082
BEGINNING RETAINED DEFICIT (11,207)
ENDING RETAINED EARNINGS $159,875
Unaudited
The accompanying notes are an integral part of these financial
statements.
OmniComm Systems, Inc.
Statement of Cash Flows
For the Six Months ended June 30, 1998
OPERATING ACTIVITIES
Net Income $171,082
Adjustments to Reconcile Net Income
To Cash Provided (Used) by Operating
Activities:
Depreciation and Amortization 1,504
Change in Operating Assets and Liabilities:
Increase in Accounts Receivable (63,227)
Increase in Accounts Payable
and Accrued Expense 31,135
(30,588)
NET CASH PROVIDED BY OPERATIONS 140,494
INVESTING ACTIVITIES
Payment for purchase of investment (75,000)
Additions to Property and Equipment (1,967)
NET CASH USED BY INVESTING ACTIVITIES (76,967)
FINANCING ACTIVITIES
Payment of note payable (50,000)
Payment of stockholder's loan 7,438)
Proceeds from Common Stock Issuance 63
NET CASH USED BY FINANCING ACTIVITIES (42,499)
INCREASE IN CASH 21,028
CASH AT BEGINNING OF YEAR 16,077
CASH AT END OF YEAR $ 37,105
SUPPLEMENTARY CASH FLOW DISCLOSURE:
Interest Paid $ 1,844
Unaudited
The accompanying notes are an integral part of these financial
statements.
OmniComm Systems, Inc.
Notes To Financial Statements
June 30, 1998
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
OmniComm Systems, Inc. "the Company" formerly The Premisys
Group, Inc. was incorporated in Florida in February 1997.
The Company is a computer systems integrator providing
services and hardware sales for the installation of local
and wide area networks.
PROPERTY AND EQUIPMENT
Property and Equipment are stated at cost. Major renewals
and improvements are charged to the fixed asset accounts
while replacements, maintenance, and repairs which do not
improve or extend the lives of the respective assets are
expensed in the period incurred. Depreciation for both
financial statement presentation and income tax purposes
is provided using the modified accelerated cost recovery
system over the following estimated useful lives:
Office and Equipment 5 to 7 Years
REVENUE RECOGNITION
Revenue is recognized from sales when a product is
shipped. Revenues from services are billed upon
completion of a job.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Company has had no experience with bad debts and has
not established a policy for write offs. No provision for
bad debts were reflected as of June 30, 1998.
INCOME TAXES
The Company has elected to be taxed under the provisions
of subchapter S of the Internal Revenue Service Code. The
Company revoked the status effective December 31, 1997 and
is now taxed as a C corporation under the Internal Revenue
Code.
OmniComm Systems, Inc.
Notes to Financial Statements
June 30, 1998
NOTE 2 - RELATED PARTY TRANSACTIONS
The following transactions occurred between the Company
and its Shareholders:
* A shareholder owed the Company $3,468 at the end of
the period.
NOTE 3 - PROPOSED ACQUISITION
On June 26, 1998 the Company entered into a merger
agreement to acquire all of the issued and outstanding
shares of Education Navigator, Inc., a Florida corporation
(EdNav). The Company will exchange all of the issued and
outstanding shares EdNav for 441,200 shares of the
Company. In addition, the Company has agreed to pay over
a period of time additional monetary consideration of
$600,000 for all of the issued and outstanding shares of
EdNav. On June 26, 1998 the Company paid $75,000 to the
shareholders of Education Navigator, Inc. EdNav develops
dynamic data base applications for the Internet. The
Company expects to finalize the transaction during the
third calendar quarter of 1998.
NOTE 4 - SUBSEQUENT EVENTS
The merger agreement by and between the Company and
Education Navigator, Inc. (See Note 3, above) was
effective July 17, 1998.
TABLE OF CONTENTS
Prospectus Summary.............. 3 403,000 Shares
High Risk Factors............... 7
Use of Proceeds................. 14 CORAL DEVELOPMENT CORP.
Capitalization.................. 14
Dividend Policy................. 14
Dilution........................ 14 PROSPECTUS
Management Discussion........... 15
Proposed Business............... 17 October , 1998
Management...................... 22
Principal Shareholders.......... 23
Certain Transactions............ 24
Description of Securities....... 24
Legal Matters................... 25
Experts......................... 25
Litigation...................... 26
Indemnification................. 26
Reports to Shareholders......... 26
Stock Transfer Agent............ 26
Registration Statement.......... 27
Financial Statements............ F-1
No dealer, salesman or other person
has been authorized in connection
with this offering to give any information
or to make any representations other
than as contained in this Prospectus
and, if given, or made, such information
or representation must not be relied on
as having been authorized by the
Company or the Underwriter. This
Prospectus does not constitute an
offer to sell or the solicitation of an
offer to buy any securities covered by
this Prospectus in any state or other
jurisdiction to any person to whom it
is unlawful to make such an offer or
solicitation.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of Delaware provides for
broad indemnification of officers and directors and Section 326 of the
General Corporation Law of Delaware states as follows:
When an officer, director or stockholder shall pay any debt of a
corporation for which he is made liable by the provisions of this chapter, he
may recover the amount so paid in an action against the corporation for money
paid for its use, and in such action only the property of the corporation
shall be liable to be taken and not the property of any stockholder.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person in connection with the securities being registered),
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 25. Other Expenses of Issuance and Distribution
Securities and Exchange Commission Registration Fee .. $ 100.00
Printing and Engraving................................ $ 1,000.00
Fees of Escrow and Transfer Agent..................... $ 3,250.00
Legal Fees and Expenses............................... $12,500.00
Accountant's Fees and Expenses........................ $ 6,000.00
Miscellaneous......................................... $ 650.00
$23,500.00
ITEM 26. Recent Sales of Unregistered Securities
In December, 1996, the Company issued 403,000 shares of Common
Stock to which this Registration Statement relates for a total cash price of
$30,300. The above shares were issued in a private transaction and were not
registered under the Securities Act of 1933. The shares were issued pursuant
to an exemption contained in Section 4(2) of the Securities Act of 1933. No
Underwriter participated in the above transaction.
II-1
ITEM 27. Exhibits and Financial Statement Schedules
1.04 Copy of Escrow Agreement
*1.05 Reconfirmation Letter
3.01 Certificate of Incorporation
3.02 By-Laws
5.01 Opinion of Gerald A. Kaufman, Esq.
*10.01 Agreement of Acquisition with OmniComm
28.01 Consent of Gerald A. Kaufman - Contained in Exhibit 5.01
*28.02 Consent of Greenberg & Company LLC
*28.03 Consent of Krissel & Company
*Filed with this Amendment
ITEM 28. Undertakings
The undersigned registrant hereby undertakes:
A. To file, during any period in which offers or sales are being
made, a post-effective amendment of this registration statement:
(i) To include any Prospectus required by Section 10(a) (3) of the
Securities Act of 1933.
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the registration statement (or most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
B. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
C. To remove from registration by means of post-effective
amendment any of the securities registered which remain unsold at the
termination of the offering.
D. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to any charter provisions, by-
laws, contract, arrangements, statute or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the act and is
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant of expenses incurred or paid by a director, officer or controlling
II-2
person of the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final judication of such issue.
E. Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant hereby undertakes
to file with the Securities and Exchange Commission such supplementary and
periodic information, documents and reports as may be prescribed by any rule
or regulation of the commission heretofore or hereafter duly adopted pursuant
to authority conferred in that Section.
II-3
CONSENT OF COUNSEL
The undersigned hereby consents to the use of his name in the
Prospectus constituting a part of this Registration Statement under the
caption "Legal Matters" as counsel to the registrant.
s/ Gerald A. Kaufman
Gerald A. Kaufman, Esq.
May 7, 1997
Huntington Station, New York
II-4
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Registration Statement of our
report dated August 6, 1998 relating to the financial statements of Coral
Development Corp. and to the reference to our Firm under the caption
"Experts" in this Prospectus.
Greenberg & Company, LLC
Certified Public Accountants
Springfield, NJ
October 7, 1998
II-5
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this registration statement on Form SB-2 of Coral
Development Corp. for the year ended June 30, 1998 of our report dated
September 16, 1998 on OmniComm Systems, Inc. from inception (February 28,
1997) to December 31, 1997.
Krissel & Company
Miami, Florida
September 16, 1998
II-6
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
the Registrant certified that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and authorized this
Registration Statement or amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and State of
New York on the 8th day of October, 1998.
CORAL DEVELOPMENT CORP.
By: s/ Arthur Seidenfeld
Arthur Seidenfeld, President
In accordance with the requirements of the Securities Act of 1933,
this Registration Statement or amendment has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE
President and Director
s/ Arthur Seidenfeld (Principal Executive, Accounting
Arthur Seidenfeld and Financial Officer) October 8, 1998
Director October 8, 1998
s/ Anne Seidenfeld
Anne Seidenfeld
II-7
CONSENT OF RANDALL G. SMITH WHO IS ABOUT TO BECOME A DIRECTOR
The undersigned hereby consents to the reference to me under the
heading "Management" in the Prospectus constituting part of the post-
effective registration statement on Form SB-2 of Coral Development Corp.
RANDALL G. SMITH
Miami, Florida
October 7, 1998
CONSENT OF PETER S. KNEZEVICH WHO IS ABOUT TO BECOME A DIRECTOR.
The undersigned hereby consents to the reference to me under the
heading "Management" in the Prospectus constituting part of the post-
effective registration statement on Form SB-2 of Coral Development Corp.
PETER S. KNEZEVICH
Miami, Florida
October 7, 1998
II-8
As filed with the Securities and Exchange Commission on
Registration statement No. 333-6410
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 1
Form SB-2
Registration Statement
Under
The Securities Act of 1933
CORAL DEVELOPMENT CORP.
(Name of small business issuer in its charter)
EXHIBITS
to
Post-Effective Amendment #1
Exhibit 1.05
CORAL DEVELOPMENT CORP.
240 Clarkson Avenue
Brooklyn, New York
November , 1998
Dear Shareholder:
We refer you to your investment in our company and the Prospectus
dated June 5, 1998. In accordance with Rule 419 of the Securities Act of
1933, as amended, and pursuant to the offering made by the Company the shares
distributed to you were placed in an escrow account. The shares were to be
held in escrow until an acquisition meeting certain criteria took place or 18
months from the date of the Prospectus, whichever would come first.
On July 22, 1998 the Company signed an agreement to acquire all the
outstanding shares of Omnicomm Systems, Inc. ("OmniComm") for 940,000 shares
of your Company (which number of shares may be increased in the event certain
earnings levels are attained). As a result, the Company is requesting a
reconfirmation of your investment in order that the acquisition may occur.
In order for the acquisition to be consummated shareholders representing at
least 80% of the public shareholders (403,000 shares) must reconfirm.
If the requisite 80% reconfirms, then the acquisition will proceed.
An indication of reconfirmation will also be considered to be a shareholder's
consent to amend the Company's Certificate of Incorporation to change the
name of the Company from Coral Development Corp. to OmniComm Systems, Inc.
Those shareholders who do not reconfirm their investment will not receive any
shares. If less than the requisite number of shareholders reconfirm, all
shares will be distributed back to Modern Technology Corp. and no shares will
be issued.
Information concerning the acquisition of OmniComm, the business of
OmniComm and the new management of the Company after the acquisition, as well
as financial statements of OmniComm are set forth in the accompanying
Prospectus dated November , 1998. The Prospectus also sets forth
information concerning Rule 419 and the reconfirmation procedures.
Procedures
We are required to send you the Prospectus dated November , 1998
within five business days of its effective date by first class mail and you
are to be given at least 20 business days (November , 1998) and not more
than the earlier of December 5, 1998 or 45 business days (December , 1998)
from the date of the Prospectus to indicate or not your reconfirmation. In
order to reconfirm you must affirmatively indicate so. If you do not
respond, your lack of response will be taken as a negative indication.
After you have read and reviewed the enclosed Prospectus dated
November , 1998 and considered the nature and consequences of this letter,
please check the appropriate blank on the Memorandum attached to this letter,
stating that you do or do not wish to reconfirm your investment, sign and
date the Memorandum in the space provided and return the Memorandum in the
enclosed self-addressed stamped envelope. You may fax your response to
(718)469-3292 and follow with the original letter by mail. Please return no
later than December 5, 1998.
If you need further information, please do not hesitater to call me
at (718)469-3132.
Very truly yours,
Arthur Seidenfeld
President
Reconfirmation Memorandum
I have read and reviewed the Prospectus dated November , 1998
with respect to the acquisition of OmniComm and indicate below my indication
as follows:
Check One:
I hereby confirm my investment in Coral Development Corp.
and consent to the acquisition of OmniComm as well as the
amendment to the Certificate of Incorporation.
I do not confirm my investment. I request that my
investment in Coral Development Corp. be terminated.
Shareholder (as originally invested)
Dated: , 1998
Shareholder
Tax ID Number or Social Security Number
Exhibit 10.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the"AAgreement") is made as
of July 22, 1998 by and among OmniComm Systems, Inc., a Florida corporation
(the "Seller" or "OmniComm"), Coral Development Corp. a Delaware corporation
(the "Buyer" or "Coral"), Arthur Seidenfeld and Anne Seidenfeld (collectively
the "Coral Shareholders"), and Randall Smith, Lawton Jackson, Peter
Knezevich, Cliff Middleton, and Hugh McCallum (collectively "OmniComm
Shareholders").
RECITALS:
Whereas, the parties desire that Seller be merged into Buyer (the
"Merger"), with Buyer being the surviving corporation, all as more
particularly set forth herein;
Whereas, the board of directors of each of the parties to this Agreement
has determined that the proposed transaction is advisable and for the general
welfare and advantage of their respective corporations and shareholders and
have recommended to their respective shareholders that the proposed
transaction be consummated;
Whereas, the parties intend that the terms and conditions of this
Agreement comply with Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations corresponding thereto,
such that this reorganization shall qualify as a tax-free "reorganization";
Whereas, the parties intend that as a result of this Agreement, no gain
or loss shall be recognized by Buyer, the Seller, or the OmniComm
Shareholders upon the transfer of the Seller's shares in exchange for the
Buyer's shares held by the OmniComm Shareholders and the basis of shall be
the same as the Seller's share exchanged therefore; and,
Whereas, the Merger shall be consummated pursuant to and in accordance
with the terms and conditions set forth in this Agreement and the Buyer shall
acquire 100% of the Seller's shares.
Now, Therefore, in consideration of the premises and the mutual
covenants set forth in this Agreement, the parties agree as follows:
SECTION 1
Plan of Merger
1.1 Plan of Merger. The Plan of Merger, attached hereto as Exhibit 1.1,
is incorporated by reference.
SECTION 2
Closing Dates: Delivery
2.1 Closing Dates. The closing of the transactions contemplated
hereunder shall take place within ten (10) days of receiving shareholder
approval as set forth in Section 9 herein and shall be held at the offices of
OmniComm (the "Closing") or at such other time and place upon which Coral and
OmniComm shall agree.
1
SECTION 3
Representations and Warranties of Coral
3.1 Organization and Standing; Articles and By-Laws. Coral is a
corporation duly organized and existing under, and by virtue of, the laws of
the State of Delaware and is in good standing under such laws. Coral has the
requisite corporate power and authority to own and operate its properties and
assets, and to carry on its business as presently qualified to do business as
a foreign corporation in any jurisdiction, and the failure to be so qualified
will not have a materially adverse affect on the Company's business as now
conducted or as now proposed to be conducted. Coral has furnished to OmniComm
certified copies of its Articles of Incorporation, By-Laws, and a certified
copy of a certificate of good standing or its equivalent from the Secretary
of State of Delaware. Said copies are true, correct and complete and contain
all amendments through the Closing Date.
3.2 Corporate Power. Coral will have at the Closing Date all requisite
legal and corporate power and authority to execute and deliver this
Agreement, to issue and exchange the Shares hereunder and perform its
obligations under the terms of this Agreement.
3.3 Subsidiaries. Coral has no subsidiaries or affiliated companies and
does not otherwise own or control, directly or indirectly, any equity
interest in any corporation, association or business entity.
3.4 Capitalization. The authorized capital stock of Coral consists of
20,000,000 shares of Common Stock, par value $.001 per share of which 403,000
shares are issued and outstanding prior to the Closing Date; all of which are
held in a Rule 419 escrow account to be released upon consummation of this
transaction. Coral's initial public offer and sale of its stock met the
prospectus delivery requirement of the Securities Act of 1933. The issued and
outstanding shares have been duly authorized and validly issued, and are
fully paid and nonassessable. All outstanding securities of Coral were issued
in compliance with applicable federal and state securities laws. There are no
options, warrants or other rights to purchase any of Coral's authorized and
unissued capital stock. The holders of record of the presently issued and
outstanding shares of common stock are set forth on the Certified
Shareholder=s List attached hereto as Exhibit 3.4.
3.5 Authorization. All corporate action on the part of Coral and its
directors necessary for the authorization, execution, delivery and
performance of this Agreement by Coral, the authorization, sale, issuance and
delivery of the common stock and the performance of all Coral= obligations
hereunder has been taken or will be taken prior to the Closing. This
Agreement, when executed and delivered by Coral, will be enforceable in
accordance with its terms. The common stock, when issued in compliance with
the provisions of this Agreement, will be validly issued, fully paid and
nonassessable; and, the common stock will be free of any liens or
encumbrances; provided, however, that the common stock issued to the OmniComm
Shareholders will be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein. The common stock is not subject
to any preemptive rights or rights of first refusal.
2
3.6 Financial Statements. Coral has delivered to OmniComm its audited
balance sheet and statement of operations and statement of stockholders
equity as of and for the period ended June 30, 1997, and its unaudited
balance sheet and statement of operations and statement of stockholders
equity for the nine month period ended March 31, 1998 (collectively the
"Financial Statements"). The Financial Statements are complete and correct in
all material respects and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated. The Financial Statements accurately set out and describe
the financial condition and operating results of Coral as of the dates, and
for the periods, indicated therein.
3.7 Absence of Changes. Since March 31, 1998 (date of latest balance
sheet): (a) Coral has not entered into any transaction; (b) there has been no
materially adverse change in the condition (financial or otherwise),
business, property, assets or liabilities of Coral; and, (c) to the best
knowledge of Coral, there has been no other event or condition of any
character pertaining to Coral which would materially and adversely affect the
assets or business of Coral.
3.8 Material Liabilities. The Company has no liabilities or
obligations, absolute or contingent (individually or in the aggregate).
3.9 Compliance with Other Instruments, None Burdensome, etc. Coral is
not in violation of any term of its Articles of Incorporation or by-laws.
3.10 Litigation, etc. There are no actions, suits, proceedings or an
investigation by any agency of any state, the federal government, or
individual or entity, nor, to the best of Coral's knowledge, is there any
reasonable basis therefor or threat thereof.
3.11 Employees. Coral has no employees.
3.12 Certain Transactions. Coral is not indebted, directly or
indirectly, to any of its officers, directors or shareholders or to their
respective spouses or children, in any amount whatsoever; none of said
officers, directors or, to the best of the Coral's knowledge, shareholders,
or any members of their immediate families, are indebted to the Coral. Coral
is not guarantor or indemnitor of any indebtedness of any other person, firm
or corporation.
3.13 Material Contracts and Obligations. Coral is not a party to nor is
bound by any agreements, contracts, indebtedness, liabilities and other
obligations.
3.14 Governmental Consent, etc. No consent, approval or authorization
of (or designation, declaration of filing with) any governmental authority on
the part of Coral is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the common
stock, or the consummation of any other transaction contemplated hereby,
except (a) filing of the Certificate of Merger and Exchange in the office of
the Secretary of State of Delaware and Florida (b) qualification (or taking
3
such action as may be necessary to secure an exemption from qualification, if
available) of the exchange and merger offer under applicable state
corporation or securities laws, which filings and qualifications, if
required, will be accomplished in a timely manner, and (c) the Securities and
Exchange Commission pursuant to Rule 419 of the Securities Act of 1933.
3.15 Offering. The offer and issuance of the Buyer's shares in exchange
for the Seller's shares held by the OmniComm Shareholders in conformity with
the terms of this Agreement constitutes a transaction exempt from the
registration requirements of Section 5 of the Securities Act of 1993, as
amended (the "Securities Act").
3.16 Brokers or Finders; Other Offers. Coral has not incurred, and will
not incur, directly or indirectly, as a result of any action taken by it, any
liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement.
3.17 Tax Matters. Coral: (i) has timely filed all tax returns that are
required to have been filed by it with all appropriate federal, state, county
and local governmental agencies (and all such returns fairly reflect the
Company's operations for tax purposes); (ii) has timely paid all taxes owed
by for which it is obligated to withhold from amounts owing to any employee
(including without limitation social security taxes), creditor or third party
(other than taxes the validity of which are being contested in good faith by
appropriate proceedings); and (iii) has not waived any statute of limitations
with respect to taxes or agreed to any extension of time with respect to a
tax assessment or deficiency.
3.18 Minute Books. The minute book of Coral provided to OmniComm
contains a complete summary of all meetings of directors and stockholders
since the time of incorporation and reflects all transactions referred to in
such minutes accurately in all material respects.
3.19 Disclosure. This Agreement, the Exhibits hereto, and all the
filings made pursuant to the Securities Act of 1933 and the Securities
Exchange Act of 1934, when taken as a whole, do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
3.20 Commission Approval. Notwithstanding the foregoing, the transaction
contemplated herein is subject to the conditions of Rule 419 of the
Securities Act of 1933 and approval by the Securities and Exchange Commission
of a post-effective amendment to the registration statement.
SECTION 4
Representations and Warranties of OmniComm
4.1 Organization and Standing; Articles and By-Laws. The Seller is a
corporation duly organized and existing under, and by virtue of, the laws of
the State of Florida and is good standing under such laws. OmniComm has the
requisite corporate power and authority to own and operate its properties and
4
assets, and to carry on its business as presently qualified to do business as
a foreign corporation in any jurisdiction, and the failure to be so qualified
will not have a materially adverse affect on OmniComm's business as now
conducted or as now proposed to be conducted. OmniComm has furnished to Coral
or its special counsel copies of its Articles of Incorporation and By-Laws,
as amended. Said copies are true, correct and complete and contain all
amendments through the Closing Date.
4.2 Corporate Power. OmniComm will have at the Closing Date all
requisite legal and corporate power and authority to execute and deliver this
Agreement, to issue and exchange the Shares hereunder and perform its
obligations under the terms of this Agreement.
4.3 Subsidiaries. OmniComm has a wholly owned subsidiary, OmniCommerce
Systems, Inc., a Florida corporation, and does not otherwise own or control,
directly or indirectly, any equity interest in any other corporation,
association or business entity.
4.4 Capitalization. The authorized capital stock of OmniComm is
10,000,000 shares of common stock, no par value, and 2,000,000 shares of
preferred stock, no par value, of which 2,941,200 common shares are issued
and outstanding, as of the Closing. The issued and outstanding shares have
been duly authorized and validly issued, and are fully paid and
nonassessable. All outstanding securities of OmniComm were issued in
compliance with applicable federal and state securities laws. The holders of
record of the presently issued and outstanding shares of common stock are set
forth on the Certified Shareholder's List attached hereto as Exhibit 4.4.
There are no options, warrants or other rights to purchase any of OmniComm=s
authorized and unissued capital stock except as set forth on Exhibit 4.4.
4.5 Authorization. All corporate action on the part of OmniComm and its
directors necessary for the authorization, execution, delivery and
performance of this Agreement by OmniComm, the authorization, sale, issuance
and delivery of the common stock and the performance of all OmniComm's
obligations hereunder has been taken or will be taken prior to the Closing.
This Agreement, when executed and delivered by OmniComm, will be enforceable
in accordance with its terms. The common stock, when issued in compliance
with the provisions of this Agreement, will be validly issued, fully paid and
nonassessable; and, the common stock will be free of any liens or
encumbrances; provided, however, that the common stock issued to the
shareholders of the OmniComm by Coral will be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein. The
common stock is not subject to any preemptive rights or rights of first
refusal.
4.6 Financial Statements. OmniComm has delivered to Coral its
unaudited balance sheet and statements of operations and statements of
stockholders equity as of and for the period ended December 31, 1997 and its
unaudited balance sheet and statements of operations and statements of
stockholders equity as of and for the period ended June 30, 1998.
(collectively the "Financial Statements"). The Financial Statements are
complete and correct in all material respects and have been prepared in
5
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated, except that they do not
contain footnotes. The Financial Statements accurately set out and
describethe financial condition and operating results of the Company as of
the dates, and for the periods, indicated therein. OmniComm shall provide to
Coral as soon as practicable, however no later than August 15, 1998,
subsequent to the execution of this Agreement, audited Financial Statements
for the period ending December 31, 1997. In the event there is a material
discrepancy (10%) between the unaudited and audited Financial Statement for
the period ended December 31, 1997 and June 30, 1998, the number of shares to
be received by the OmniComm Shareholders shall be adjusted proportionately
downward.
4.7 Absence of Changes. Since June 30, 1998 (date of latest balance
sheet): (a) OmniComm has not entered into any transaction; (b) there has been
no materially adverse change in the condition (financial or otherwise),
business, property, assets or liabilities of OmniComm; and, and (c) to the
best knowledge of OmniComm, there has been no other event or condition of any
character pertaining to and materially and adversely affecting the assets or
business of the Company.
4.8 Material Liabilities. The Company has no material liabilities or
obligations, absolute or contingent (individually or in the aggregate) except
as set forth on Exhibit 4.8, attached hereto.
4.9 Compliance with Other Instruments, None Burdensome, etc. OmniComm
is not in violation of any term of its Articles of Incorporation or By-Laws,
or, in any material respect, of any term or provision of any material
mortgage, indebtedness, indenture, contract, agreement, instrument, judgment
or decree, and to the best of its knowledge is not in violation of any order,
statute, rule or regulation applicable to OmniComm. The execution, delivery
and performance of and compliance with this Agreement has not resulted and
will not result in any violation of, or conflict with, or constitute a
default under, OmniComm= Articles or By-laws or any of its agreements or
result in the creation of, any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of OmniComm; and there is no such
violation or default which materially and adversely affects the business of
the Company or any of its properties or assets.
4.10 Litigation, etc. There are no actions, suits, proceedings or an
investigation by any agency of any state, the federal government, or
individual or entity, nor, to the best of OmniComm= knowledge, is there any
reasonable basis therefor or threat thereof.
4.11 Employees. OmniComm and its wholly owned subsidiary,
OmniCommerce, have 7 employees.
4.12 Certain Transactions. Except as set forth on Exhibit 4.12,
attached hereto, OmniComm is not indebted, directly or indirectly, to any of
its officers, directors or shareholders or to their respective spouses or
children, in any amount whatsoever; none of said officers, directors or, to
the best of the Company's knowledge, shareholders, or any members of their
immediate families, are indebted to OmniComm. The Company is not guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
6
4.13 Material Contracts and Obligations. Attached hereto as Exhibit
4.13 is a list of all agreements, contracts, indebtedness, liabilities and
other obligations to which OmniComm is a party or by which it is bound.
Copies of such agreements and contracts and documentation evidencing such
liabilities and other obligations have been made available for inspection
OmniComm and their counsel. All of such agreements and contracts are valid,
binding and in full force and effect in all material respects, assuming due
execution by the other parties to such agreements and contracts.
4.14 Governmental Consent, etc. No consent, approval or authorization
of (or designation, declaration of filing with) any governmental authority on
the part of OmniComm is required in connection with the valid execution and
delivery of this Agreement or the consummation of any other transaction
contemplated hereby, except (a) filing of the Certificate of Merger and
Exchange in the office of the Secretary of State of the State of Florida and
Delaware (b) qualification (or taking such action as may be necessary to
secure an exemption from qualification, if available) of the exchange and
merger offer under applicable state corporation or securities laws, which
filings and qualifications, if required, will be accomplished in a timely
manner.
4.15 Brokers or Finders; Other Offers. OmniComm has not incurred, and
will not incur, directly or indirectly, as a result of any action taken by
it, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement.
4.16 Tax Matters. The Seller, except for its 1997 Federal Tax return
which is on extension: (i) has timely filed all tax returns that are required
to have been filed by it with all appropriate federal, state, county and
local governmental agencies (and all such returns fairly reflect the
Company's operations for tax purposes); (ii) has timely paid all taxes owed
by for which it is obligated to withhold from amounts owing to any employee
(including without limitation social security taxes), creditor or third party
(other than taxes the validity of which are being contested in good faith by
appropriate proceedings); and (iii) has not waived any statute of limitations
with respect to taxes or agreed to any extension of time with respect to a
tax assessment or deficiency. The assessment of any additional taxes for
periods for which returns have been filed is not expected to exceed the
recorded liability therefor, and, to the best of OmniComm's knowledge, there
are no material unresolved questions or claims concerning the OmniComm's tax
liability. OmniComm's tax returns have not been reviewed or audited by any
federal, state, local or county taxing authority. There is no pending dispute
with any taxing authority relating to any of said returns which, if
determined adversely to OmniComm, would result in the assertion by any taxing
authority of any valid deficiency in any material amount for taxes.
4.17 Minute Books. The minute book of OmniComm provided to Coral
contains a complete summary of all meetings of directors and stockholders
since the time of incorporation and reflect all transactions referred to in
such minutes accurately in all material respects.
7
4.18 Disclosure. This Agreement with the Exhibits hereto, when taken as
a whole, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances under which
they were made.
SECTION 5
Representations and Warranties of Coral Shareholders
5.1 Involvement in Certain Legal Proceedings. The
Coral Shareholders individually have not been the subject of any order,
judgment, decree, or investigation, not subsequently reversed, suspended or
vacated, of any court or agency, federal or state, permanently or temporarily
enjoining the individual from, or otherwise limiting, the individual from
engaging in any type of business practice or engaging in any activity in
connection with the purchase or sale of any security or commodity or in
connection with any violation of Federal or State securities laws. Further,
the Coral Shareholders individually have not been found by a court of
competent jurisdiction in a civil action or by the Securities and Exchange
Commission to have violated any Federal or State securities laws, and the
judgement in such civil action or finding by the Commission has not been
subsequently reversed suspended or vacated.
5.2 Security Ownership. The Coral Shareholders individually and as a
group beneficially own either directly or indirectly the number of shares set
forth in the Buyers Form 10-K filed September 29, 1997 for the period ending
June 30, 1997.
SECTION 6
Representations and Warranties of OmniComm Shareholders
6.1 Involvement in Certain Legal Proceedings. The
OmniComm Shareholders individually have not been the subject of any order,
judgment, decree, or investigation, not subsequently reversed, suspended or
vacated, of any court or agency, federal or state, permanently or temporarily
enjoining the individual from, or otherwise limiting, the individual from
engaging in any type of business practice or engaging in any activity in
connection with the purchase or sale of any security or commodity or in
connection with any violation of Federal or State securities laws. Further,
the OmniComm Shareholders individually have not been found by a court of
competent jurisdiction in a civil action or by the Securities and Exchange
Commission to have violated any Federal or State securities laws, and the
judgement in such civil action or finding by the Commission has not been
subsequently reversed suspended or vacated.
6.2 Capital Stock. The capital stock beneficially owned by the OmniComm
Shareholders is free of any liens or encumbrances of any kind.
8
Section 7
Coral's Conditions to Closing
Coral's obligation to issue the common shares at the Closing Date is, at
the option of Coral, subject to the fulfillment as of the Closing Date of the
following conditions:
7.1 Representations. The representations in Section 4 and Section 6
hereof shall be true and correct when made, and shall be true and correct on
the Closing Date.
7.2 Certificate of Amendment and Merger. The Certificate of Amendment
and Merger shall have been filed with the Secretary of State for Florida and
Delaware.
7.3 Legal Matters. All material matters of a legal nature which pertain
to this Agreement, and the transactions contemplated hereby, shall have been
reasonably approved by counsel to Coral.
7.4 Suitability Questionnaire. The OmniComm Shareholders will have
executed and delivered to Coral a Suitability Questionnaire, acceptable to
counsel for Coral.
7.5 Items to be Delivered at Closing. At Closing, Seller shall have
tendered for delivery to Buyer the following:
7.5.1 Delivery of Shares for Cancellation: Stock certificates
representing all of the issued and outstanding securities of Seller duly
endorsed in blank or accompanied by duly exercised stock powers, which shall
be subsequently cancelled.
7.5.2 Officers and Directors Certificate: A certificate
representing that the representations and warranties in Section 4 are true
and correct on the date of Closing.
7.5.3 OmniComm Shareholders Certificate: A certificate representing
that the representations and warranties in Section 6 are true and correct on
the date of Closing.
7.5.4 Good Standing Certificate. A certificate of the Florida
Secretary of State, dated within ten (10) days of the closing, showing that
Seller is in good standing.
7.5.5 Opinion of Counsel. The Buyer shall
have received from Seller's counsel, an opinion dated the Closing Date, in
form and substance satisfactory to the Seller and its counsel, to the effect
that:
(a) OmniComm is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and
OmniComm has the requisite corporate power and authority to conduct its
business.
9
(b) OmniComm is not presently required to be qualified to do
business as a foreign corporation in any state or jurisdiction of the United
States.
OmniComm has the requisite corporate
power and authority to execute, deliver and perform this Agreement. The
Agreement has been duly and validly authorized by OmniComm, duly executed and
delivered by an authorized officer of OmniComm and constitutes a legal, valid
and binding obligation of OmniComm.
(d) The capitalization of OmniComm is as follows:
(i) Capital Stock. 10,000,000 shares of common stock and
2,000,000 shares of preferred stock, of which 2,941,200 common shares and no
preferred shares have been duly authorized, issued and delivered and are
validly outstanding, fully paid and nonassessable and were issued in
compliance with all applicable federal and state securities laws.
(ii) There are no preemptive rights or, to the best of
counsel's knowledge, options, warrants, conversion privileges or other rights
(or agreements for any such rights) outstanding to purchase or otherwise
obtain any of the Company's securities except as set forth on Exhibit 4.4.
(e) The certificates representing shares of common stock are
in due and proper form and have been duly and validly executed by the
officers of OmniComm named thereon.
7.6 Commission Approval. Notwithstanding the foregoing, the
transactions contemplated herein are subject to the conditions of Rule 419 of
the Securities Act of 1933 and approval by the Securities and Exchange
Commission of a post-effective amendment to the registration statement.
Section 8
OmniComm's Conditions to Closing
OmniComm's obligation to close on the Closing Date is subject to the
fulfillment following conditions:
8.1 Representations. The representations made in Section 3 and Section
5 hereof shall be true and correct when made, and shall be true and correct
on the Closing Date.
8.2 Certificate of Amendment and Merger. The Certificate of Amendment
and Merger shall have been filed with the Secretary of State of Florida and
Delaware.
8.3 Legal Matters. All material matters of a legal nature which pertain
to this Agreement, and the transactions contemplated hereby, shall have been
reasonably approved by counsel to OmniComm.
8.4 Items to be Delivered at Closing. At Closing, Buyer shall have
tendered for delivery to Seller the following:
10
8.4.1 Delivery of Shares: Stock certificates representing 940,000
common shares of Coral which shall be not less than 70% of the issued and
outstanding common shares of Coral. Each certificate shall have affixed a
restrictive legend stating as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
8.4.2 Officers and Directors Certificate: A certificate
representing that the representations and warranties in Section 3 are true
and correct on the date of Closing.
8.4.3 Coral Shareholders Certificate: A certificate representing
that the representations and warranties in Section 5 are true and correct on
the date of Closing.
8.4.4 Lock-Up Agreement. The Lock-Up Agreement attached hereto as
Exhibit 8.4.4 shall be executed and delivered to the Seller prior to or at
the Closing.
8.4.5 Corporate Authorization: Resolution(s) adopted by the Board
of Coral and/or approved by the shareholders of Coral authorizing or
approving the following:
(a) Change of name of the Buyer to OmniComm Systems, Inc.
(b) Appointing the following individuals as the sole directors
of the Buyer: Randall Smith, Lawton Jackson, and Peter Knezevich.
(c) The resignation of Arthur Seidenfeld and Anne Seidenfeld
as directors and officers of Coral.
(d) The issuance of 940,000 shares of common stock of the
Buyer to be issued as set forth on Exhibit 8.4.5 (f).
8.4.6 Good Standing Certificate. A certificate of the Delaware
Secretary of State, dated within ten (10) days of the closing, showing that
Buyer is in good standing.
8.4.7 Opinion of Counsel. The Seller shall have received from
Buyer=s counsel, an opinion dated the Closing Date, in form and substance
satisfactory to the Seller and its counsel, to the effect that:
(a) Coral is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and Coral has
the requisite corporate power and authority to conduct its business.
(b) Coral is not presently required to be qualified to do
business as a foreign corporation in any state or jurisdiction of the United
States.
11
Coral has the requisite corporate
power and authority to execute, deliver and perform this Agreement. The
Agreement has been duly and validly authorized by Coral, duly executed and
delivered by an authorized officer of Coral and constitutes a legal, valid
and binding obligation of Coral.
(d) The capitalization of Coral is as follows:
(i) Capital Stock. 20,000,000 shares of common stock of
which 403,000 common shares have been duly authorized, issued and delivered
and are validly outstanding, fully paid and nonassessable and were issued in
compliance with all applicable federal and state securities laws.
(ii) There are no preemptive rights or, to the best of
counsel's knowledge, options, warrants, conversion privileges or other rights
(or agreements for any such rights) outstanding to purchase or otherwise
obtain any of the Company's securities.
(e) The certificates representing shares of Common Stock are
in due and proper form and have been duly and validly executed by the
officers of Coral named thereon.
(f) Based in part upon the representation of
the OmniComm Shareholders in the suitability questionnaires, the offer and
sale of the Common Stock pursuant to the terms of this Agreement are exempt
from the registration requirements of Section 5 of the Securities Act by
virtue of Section 4 (2) thereof.
8.5 Commission Approval. Notwithstanding the foregoing, the
transactions contemplated herein are subject to the conditions of Rule 419 of
the Securities Act of 1933 and approval by the Securities and Exchange
Commission of a post-effective amendment to the registration statement.
Section 9
Regulatory Approval
9.1 Securities Exchange Commission Approval. The transactions
contemplated herein are subject to the conditions of Rule 419 of the
Securities Act of 1933 and approval by the Securities and Exchange Commission
of a post-effective amendment to the registration statement. Rule
419(e)(2)(iv) provides for the return of escrowed funds in the event a
consummated acquisition meeting the requirements of Rule 419 does not occur
within 18 months of filing the registration statement or December __, 1998.
In the event the foregoing does not occur, the parties to this transaction
agree to use their best efforts of take the necessary action to finalize the
transaction pursuant to Rule 419.
12
Section 10
Issuance of Additional Shares
10.1 Issuance of Additional Shares. The parties acknowledge and agree
that in the event the surviving corporation generates cumulatively within 2
years $4,000,000 in gross revenues, the options representing an additional
2,687,000 shares of common stock of the Surviving Corporation shall vest in
proportion to the then existing shareholdings of the OmniComm Shareholders.
Section 11
Miscellaneous
11.1 Governing Law. This Agreement shall be governed, construed, and
enforced in all respects by the internal laws of the State of Delaware.
11.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive the closing of the transactions contemplated
hereby.
11.3 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties
hereto.
11.4 Entire Agreement: Amendment. This Agreement and the other
documents delivered pursuant hereto at the Closing constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants
except as specifically set forth herein or therein. Except as expressly
provided herein, neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the party against whom enforcement of any such amendment, waiver, discharge
or termination is sought.
11.5 Notices, etc.
OmniComm Systems, Inc. and OmniComm Shareholders
3250 Mary Street, Suite 307
Coconut Grove, FL 33133
Attn: Peter S. Knezevich
Coral Development Corp and Coral Shareholders
33 Walt Whitman Road
Huntington Station, NY 11746
Attn: Gerald A. Kaufman
13
11.6 Delays or Omissions. Except as expressly provided herein, delay or
omission to exercise any right, power or remedy accruing to a party, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of
any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Agreement, or any waiver on the part of any holder of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative. 11.7 Expenses. All parties
shall bear their own expenses incurred with respect to this Agreement and the
transactions contemplated hereby.
11.8 Counterparts. This Agreement may be executed in
any number of counterparts, each of which may be executed by less than all of
the Purchasers, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument. 11.9 Severability. In the event that any
provision of
this Agreement becomes or is declared by a court of competent jurisdiction to
be illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provision. 11.10 Titles and Subtitles. The
titles and
subtitles used in this Agreement are used for convenience only and are not
considered in constructing or interpreting this Agreement.
11.11 Litigation. In the event of a dispute or disagreement arising
out of or under the terms and conditions of the Agreement including the terms
and conditions herein, the prevailing party shall be entitled to an award of
attorney's fees and costs, including all appellate proceedings. The parties
agree to submit to the jurisdiction and venue of the Courts in Dade County,
Florida and waive any and all jurisdictional defenses.
[REMAINDER OF PAGE LEFT BLANK-SIGNATURE PAGE FOLLOWS]
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The foregoing Agreement is hereby executed as of the date first above
written.
OmniComm Systems, Inc.
By: /s/ Peter S. Knezevich
Name: Peter S. Knezevich
Capacity: Chief Financial Officer
Coral Development Corp.
By: /s/ Arthur Seidenfeld
Name: Arthur Seidenfeld
Capacity:President and Director
Coral Shareholders
/s/ Arthur Seidenfeld
Arthur Seidenfeld
/s/ Anne Seidenfeld
Anne Seidenfeld
OmniComm Shareholders
/s/ Randall G. Smith
Randall G. Smith
/s/ Lawton R. Jackson
Lawton R. Jackson
/s/Peter S. Knezevich
Peter S. Knezevich
/s/Clifton Middleton
Clifton Middleton
/s/ Hugh McCallum
Hugh McCallum
15
Exhibit 1.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Plan" or "Plan of
Merger") dated July ___ , 1998 (the "Closing Date") by and
among OmniComm Systems, Inc., a Florida corporation,
OmniCommerce Systems, Inc., a Florida corporation and
subsidiary of OmniComm Systems, Inc. (the "Subsidiary Corp.")
and (collectively the "Target Corp."), and Coral Development,
Inc., a Delaware corporation (the "Surviving Corp."). (All of
the foregoing entities shall be referred to collectively as
the "Constituent Corporations"). This Plan of Merger is being
effected pursuant and in accordance with s. 607.1101 et seq.
of the Florida Business Corporation Act (the "Act").
1. Articles of Incorporation. The Articles of Incorporation of
Surviving Corp., as in effect immediately before the Effective
Date, shall be the Articles of Incorporation of the Surviving
Corp. until further amended as provided by law.
2. Distribution and Payment to Shareholders of Target
Corporation. Upon the Effective Date, each 3.129 shares of
Target Corp. voting common stock as enumerated in Exhibit 1.1
that shall be issued and outstanding at that time shall,
without more, be converted into and exchanged for 1 share of
voting common stock of the Parent Corp. Each share of
Subsidiary stock that is issued and outstanding on the
Effective Date shall continue as outstanding shares of
Subsidiary's stock.
3. Effect of Merger. On the Effective Date, the separate
existence of Target Corp. shall cease, and Surviving Corp.'s
rights, privileges, immunities, powers, and franchises,
subject to its restrictions, liabilities, disabilities, and
duties, all as more particularly set forth in s. 607.1106 of
the Florida Business Corporation Act (the "Act").
4. Filing with the Florida Secretary of State and Effective
Date. Upon the Closing, as provided herein, Surviving Corp.
shall immediately cause their respective President (or Vice
President) to execute Articles of Merger in the form attached
to this Agreement as Exhibit 4, and upon such execution, the
Plan of Merger shall be deemed incorporated by reference into
the Articles of Merger as if fully set forth in such Articles
and shall become an exhibit to such Articles of Merger.
Thereafter, such Articles of Merger shall be delivered for
filing by Subsidiary to the Florida Secretary of State. In
accordance with s. 607.1105 of the Act, the Articles of Merger
shall specify the "Effective Date," which shall be the date of
filing with the Florida Secretary of State.
16
5. Assignment. If at any time Parent Corp. shall consider or
be advised that any further assignment or assurances in law
are necessary or desirable to vest, perfect, or confirm or
record in Subsidiary the title to any property or rights of
Target, or to otherwise carry out the provisions of this
Agreement, the proper officers and directors of Target as of
the Effective Date shall execute and deliver any and all
proper deeds, assignments, and assurances in law, and do all
things necessary or proper to vest, perfect, or confirm title
to such property or rights in Subsidiary.
6. Satisfaction of Rights of Target Corp. Shareholders. All
shares of Parent Corp.'s stock into which shares of Target
Corp.'s stock shall have been converted and become
exchangeable for under this Plan shall be deemed to have been
paid in full satisfaction of such converted shares.
7. Fractional Shares. Fractional shares of Parent Corp.'s
stock will not be issued.
8. Effect of Merger. On the Effective Date, the separate
existence of Target Corp. shall cease, and Subsidiary Corp.
shall be fully vested in Target Corp.'s rights, privileges,
immunities, powers, and franchises, subject to its
restrictions, liabilities, disabilities, and duties, all as
more particularly set forth in s. 607.1106 of the Act.
9. Supplemental Action. If at any time after the Effective
Date Surviving Corp. shall determine that any further
conveyances, agreements, documents, instruments, and
assurances or any further action is necessary or desirable to
carry out the provisions of this Plan, the appropriate
officers of Surviving Corp. or Target Corp., as the case may
be, whether past or remaining in office, shall execute and
deliver, on the request of Surviving Corp., any and all proper
conveyances, agreements, documents, instruments, and assur-
ances and perform all necessary or proper acts, to vest,
perfect, confirm, or record such title thereto in Surviving
Corp., or to otherwise carry out the provisions of this Plan.
10. Filing with the Florida Secretary of State and Effective
Date. Upon the Closing, as provided in the Agreement of Merger
of which this Plan is a part, Target Corp. and Surviving Corp.
shall cause their respective President, Vice President, or
other duly authorized officer to execute Articles of Merger in
the form attached to this Plan and upon such execution this
Plan shall be deemed incorporated by reference into the
Articles of Merger as if fully set forth in such Articles and
shall become an exhibit to such Articles of Merger.
Thereafter, Surviving Corp. shall deliver such Articles of
Merger for filing to the Florida Secretary of State. In
accordance with s. 607.1105 of the Act, the Articles of Merger
shall specify the "Effective Date," which shall be the filing
date of the Articles of Merger.
17
11. Amendment and Waiver. Any of the terms or conditions of
this Plan may be waived at any time by any one of the
Constituent Corporations which is, or the shareholders of
which are, entitled to the benefit thereof by action taken by
the Board of Directors of such party, or may be amended or
modified in whole or in part at any time before the vote of
the shareholders of the constituent corporations by an
agreement in writing executed in the same manner (but not
necessarily by the same persons), or at any time thereafter as
long as such change is in accordance with s. 607.1103 of the
Act.
12. Termination. At any time before the Effective Date
(whether before or after filing of Articles of Merger), this
Plan may be terminated and the Merger abandoned by mutual
consent of the Boards of Directors of the Constituent
Corporations, notwithstanding favorable action by the
shareholders of the respective Constituent Corporations.
18
