UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
AMENDMENT NO. 2
TO
FORM 10-SB
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
PlayStar Corporation
(Name of Small Business Issuer in Its Charter)
Delaware 51-0378588
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
c/o 372 Richmond Street West, Suite 212, Toronto, Ontario, Canada M5V 1X6
(Address of Principal Executive Offices) (Zip Code)
(416) 408-2100
Issuer's Telephone Number
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.0001 Per Share
(Title of Class)
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TABLE OF CONTENTS
PART I....................................................................1
Item 1. Description of Business........................................1
Item 2. Management's Discussion and Analysis or Plan of Operation......6
Item 3..Description of Property........................................9
Item 4. Security Ownership of Certain Beneficial Owners and Management.9
Item 5. Directors, Executive Officers, Promoters and Control Persons...11
Item 6. Executive Compensation.........................................11
Item 7. Certain Relationships and Related Transactions.................12
Item 8. Description of Securities......................................13
PART II...................................................................15
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters....................15
Item 2. Legal Proceedings..............................................15
Item 3. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.........................15
Item 4. Recent Sales of Unregistered Securities........................16
Item 5. Indemnification of Directors and Officers......................17
PART F/S..................................................................19
PART III..................................................................20
Item 1. Index to Exhibits..............................................20
SIGNATURES................................................................21
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PART I
Item 1. Description of Business.
Introduction
PlayStar Corporation ("PlayStar Delaware") is a holding company, which,
through its wholly-owned subsidiaries, PlayStar Limited and Antigua Casino &
Sportsbook Limited, an Antigua Corporation ("Antigua Casino," and together with
PlayStar Limited, the "Subsidiaries"), intends to operate, promote and
commercialize interactive, software-based games of chance which will be offered
as an on-line service accessible world-wide on the Internet. PlayStar Delaware
was incorporated in the State of Delaware on October 3, 1996 under the name
Global Games Corporation. On October 9, 1996, PlayStar Delaware acquired all of
the issued and outstanding shares of common stock of PlayStar Limited,
incorporated on October 9, 1996. The current address of PlayStar Delaware is c/o
372 Richmond Street West, Suite 212, Toronto, Ontario, Canada M5V 1X6.
PlayStar Delaware, PlayStar Limited and Antigua Casino are sometimes
collectively referred to herein as "PlayStar."
Subsequent Events
The Board of Directors of PlayStar Delaware has unanimously approved, and
the holders of more than 66-2/3% of the outstanding shares of PlayStar
Delaware's Common Stock have approved, a corporate reorganization (the
"Reorganization") pursuant to which PlayStar Delaware will become an Antigua
corporation ("PlayStar Antigua"). After the consummation of the Reorganization,
PlayStar Antigua will continue to conduct the business in which PlayStar
Delaware is now engaged. The relative voting rights of PlayStar Antigua will not
change as a result of the Reorganization. A Registration Statement on Form S-4
relating to this transaction was filed by PlayStar Wyoming Holding Corp., a
wholly-owned subsidiary of PlayStar Delaware, on April 21, 1998 with the
Securities and Exchange Commission (the "Commission").
PlayStar Limited and Antigua Casino
PlayStar Limited has purchased and intends to license, promote and
commercialize an on-line casino system offering casino operators interactive,
software-based games of chance accessible world-wide through the Internet. These
products are being tested at www.antigua.org.
Antigua Casino's Articles of Incorporation enable it to operate an
Internet-based casino. Using the technology developed by PlayStar Limited and
licensed to it, Antigua Casino's casino service will allow patrons to play
interactive games in real time either in "free" mode or in "live" mode. In
"live" mode, patrons will wager with real money in various forms, including
electronic money or "e-cash," credit cards, wire-transfers, money-orders and
personal account debits. Antigua Casino will initially offer a selection of
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casino-style games, including, but not limited to, blackjack, draw poker,
baccarat, roulette and three different slot machines.
In December 1997, PlayStar Limited, on behalf of Antigua Casino, applied
to the government of Antigua for an electronic casino gaming license. On January
28, 1998, the Antigua government granted approval for the issuance of the
license to Antigua Casino. Antigua Casino intends to establish its operations
base and begin operation of its on-line casino during the first six months of
1998.
PlayStar Limited's games are designed to be entertaining and captivating.
Moreover, the games have been adapted to the idiosyncrasies of the Internet. For
example, at times, due to "noise" on telephone lines or other unpredictable
technical glitches, connections between computers may terminate. To respond to
such problems, PlayStar Limited's software keeps track of the precise status of
the game. If a game is interrupted, the patron needs only to return to the
casino website and the game will be restored to the moment the disconnection
occurred.
PlayStar Limited began testing its games on March 31, 1997. PlayStar
Limited's client/server systems have performed as expected during this testing,
and PlayStar Limited believes that its systems require only minor improvements.
The number of visitors to the casino site and the total amount "wagered" during
the testing period, however, has greatly exceeded PlayStar's expectations.
Moreover, these visitors have provided PlayStar Limited with valuable comments
and feedback, which have been incorporated by PlayStar Limited to improve its
products.
Antigua Casino does not plan to require patrons to maintain a minimum
account balance or place any restrictions on amounts accumulated through
winnings. Antigua Casino does plan, however, to establish a maximum bet limit
for new customers. Antigua Casino may, at its discretion, grant custom wagering
and account options to its regular customers based upon their established
profiles. At the present time, Antigua Casino does not intend to extend credit
services to its patrons.
Antigua Casino intends to attract patrons to its service by providing
quality content through innovative use of animation and graphic design. The
Antigua Casino website has been designed with simplicity and effectiveness in
mind. Patrons are able to browse the website and try any game in "free" mode.
When a patron decides to open an account, the relevant financial information
will be processed. Once an account is open, patrons may elect to play any of
Antigua Casino games in "live" mode and wager against the patrons' accounts.
Antigua Casino will also allow patrons to review their accounts and cash-out at
any time.
Antigua Casino intends to accept several forms of payment to process
customer financial transactions, including e-cash, credit cards, wire-transfers,
money-orders and personal account debits. Antigua Casino will license certain
software which will permit Antigua Casino to authenticate and process credit
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card and other financial transactions which occur over the Internet. Antigua
Casino intends to work closely with international banking institutions that have
experience providing electronic and Internet payment clearing services. Antigua
Casino is also currently negotiating with several banks to establish check, wire
transfer and third-party funds transfer services.
Customers and Marketing
Antigua Casino's target market is individuals located throughout the world
who are current on-line users and at least 18 years of age. According to the
Internet Society, there are currently 60 to 80 million such people world-wide
who regularly access the Internet. Moreover, Internet use is expected to grow by
as much as 80% each year.
Antigua Casino plans to protect all customer data and information with
high-level security systems and password encryption software. Patrons will be
issued both an account identification number and a PIN number. Any wagering or
patron functions, such as an account review or a cash-out, will require the
correct identification numbers. Antigua Casino will not require identification
numbers to browse its website or play games in "free" mode.
In order to create an awareness of Antigua Casino's existence among
individuals in the target market, Antigua Casino intends to focus its marketing
efforts primarily on traditional media advertising, public relations programs,
on-line promotions, business development, third-party relationships and social
programs. While Antigua Casino is not currently conducting any marketing
programs, Antigua Casino is preparing a detailed marketing and advertising plan
which will commence upon the launch of the on-line casino. To ensure the
creation of an effective advertising program, Antigua Casino is currently
negotiating with an established marketing communications firm and a media buying
company to oversee Antigua Casino's promotional efforts and advertising needs.
Antigua Casino does not currently intend to limit its marketing and
advertising program to particular jurisdictions. However, Antigua Casino may
exclude the United States or any other jurisdiction from its promotional efforts
if such efforts or activities are determined to be prohibited by applicable law.
See "Regulation."
Research and Development
Since PlayStar Delaware's inception in October 1996 through March 30,
1998, the Subsidiaries have expended approximately $785,000 on research and
development activities. Effective April 1, 1998, PlayStar Limited and Dreamplay
Research Corp. ("Dreamplay") entered into an agreement (the "Dreamplay
Agreement") pursuant to which PlayStar Limited retained Dreamplay to provide
PlayStar Limited's gaming software. Pursuant to the terms of the Dreamplay
Agreement, Dreamplay has assigned to PlayStar Limited all right, title and
interest in the software designed and developed for PlayStar Limited. Through
March 30, 1998, PlayStar Limited has paid Dreamplay approximately $785,000 for
the provision and installation of gaming software.
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PlayStar Limited intends to continue the development of additional casino
games, including, but not limited to, Caribbean poker, pai gow, sic bo, craps
and two-up. Additionally, PlayStar Limited believes that other games, more
interactive in nature, will become highly popular in the gaming community in the
future.
Employees
As of May 1, 1998, PlayStar had two full-time employees who serve as
PlayStar Delaware's President and its Chairman, Chief Executive Officer,
Treasurer and Secretary, respectively. From time to time, PlayStar also retains
consultants and consulting firms which provide PlayStar Delaware with certain
expertise in financing, developing, marketing and software and
telecommunications technologies.
Properties
Antigua Casino occupies approximately 1,200 square feet on the top floor
of the Dollar Building, Nevis Street, St. John's, Antigua pursuant to a lease
which expires on March 31, 1999. The monthly payments under the lease are
approximately $1,480. Except for the foregoing, neither PlayStar Delaware nor
the Subsidiaries presently own or lease any property or real estate.
Competition
A significant number of companies, organizations and individuals are
currently offering or purporting to offer casino gambling services on the
Internet similar to those of Antigua Casino. PlayStar's primary competition
includes, but is not limited to, CryptoLogic Inc., Venturetech Inc., Internet
Casinos Ltd., Interactive Gaming and Communications Corp. (formerly Sports
International - USA), Wager Net Inc., Casinos of the South Pacific, World Wide
Web Casinos and Virtual Vegas. PlayStar is aware of several firms currently
accepting wagers on various sporting events with financial transactions being
administered from off-shore accounts. Additionally, several organizations
currently offer lottery tickets for sale on the Internet for international
lotteries.
Most Internet markets, including the gaming segment, are relatively
accessible to a wide number of entities and individuals. PlayStar believes,
however, that there are substantial market barriers facing potential providers,
including technology, commerce, regulation, management and reputation. First,
providers must utilize sophisticated systems to manage casino operations,
process financial transactions, encrypt information and provide an attractive
user interface. Providers must also develop relationships with financial
institutions to process gaming transactions. Additionally, providers should
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obtain a casino license from an established regulatory agency before offering
Internet gaming services to the public. Providers must also assemble a team of
software, hardware, telecommunications, marketing, management and gaming
specialists to develop the casino's operations. Finally, due to the sensitive
nature of the casino business, providers must develop and maintain an impeccable
reputation in order to attract and retain customers. PlayStar believes that
these market barriers will ultimately preclude the vast majority of prospective
providers from maintaining successful Internet operations. Management believes
that the Subsidiaries have largely overcome these barriers, and that, as a
result, Antigua Casino will have a competitive advantage over other prospective
providers.
Patents, Copyrights and Trade Secrets
As of the date hereof, neither PlayStar nor either of its Subsidiaries
owns or otherwise controls any registered patents, copyrights or trademarks.
PlayStar and the Subsidiaries will attempt to protect their proprietary
technology by relying on trade secret laws and non-disclosure and
confidentiality agreements with their employees and consultants who have access
to their proprietary technology.
Regulation
Antigua Casino must adhere to the legal requirements of each jurisdiction
in which it operates or offers its services or is deemed to operate or offer its
services. Antigua Casino is one of the few Internet-based casinos to be licensed
by an established, first-world casino regulatory agency. While many
jurisdictions have no Internet casino licensing requirements, in January 1998,
Antigua Casino was granted a license to operate its Internet casino by the
Antigua government, under the "Virtual Casino Wagering and Sports Book Wagering
Regulations" promulgated under Section 27 of the Antigua Free Trade and
Processing Zone Act, 1994.
In the United States, the ownership and operation of land-based gaming
facilities has traditionally been regulated on a state by state basis, although
the vast majority of states have legalized some form of gaming activities. It
should also be noted that certain of Antigua Casino's competitors have been the
subject of criminal complaints at the state level. For example, in September
1997, the Minnesota Court of Appeals considered a consumer protection complaint
and concluded that an Internet gambling service with operations located outside
of Minnesota was subject to personal jurisdiction in Minnesota because the
company conducted commercial activities in the state over the Internet. See
Minnesota v. Granite Gate Resorts, Inc., 568 N.W.2d 715 (1997).
On October 27, 1997, the Senate Judiciary Committee approved a bill
(S-474) introduced by Senator John Kyl of Arizona, which would prohibit gaming
on the Internet in the United States (the "Bill"). If passed as law, the Bill
would classify gaming over the Internet as a federal offense. While the Bill
would allow intrastate wagering via the Internet, the Bill would prohibits
interstate bets. Individuals convicted of operating an Internet gaming business
in the United States could be punished by up to four years in jail and a fine
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equal to the greater of $20,000 or the aggregate amount of bets received by the
operator. Under the Bill, Internet gaming would be a federal crime even if the
states in which bets are placed had legalized the practice. The Bill also would
require the Secretary of State and the Secretary of the Treasury to seek an
international agreement to enforce the law. On February 4, 1998, the House Crime
Subcommittee held a hearing to discuss issues related to Internet gaming and the
House version of the Bill. The House version of the Bill would permit Internet
gaming if such activities are legal in the bettor's jurisdiction and in the
jurisdiction in which the server is located. If the Bill becomes law, it could
have a significant effect on Antigua Casino's operations. Antigua Casino might
be forced to cease all marketing and promotional activities in the United States
to ensure that no solicitation of United States citizens occurs. Since the Bill
also would prohibit United States citizens from gaming on the Internet, Antigua
Casino may be expected to lose a significant portion of its customer base if the
Bill becomes law.
In the future, Antigua Casino may seek to offer wagering services on the
Internet. The use of the Internet for such services may violate the United
States federal wire statute, and the use of the Internet for gaming services may
violate applicable state statutes. Due to the relatively recent existence of
wagering over the Internet, the laws dealing with this application are not well
developed. However, on March 4, 1998, the United States Attorney for the
Southern District of New York indicted 14 owners and managers of six Internet
sports betting companies headquartered in the Caribbean and Central America. All
of the individuals were charged with conspiracy to transmit bets and wagers on
sporting events via the Internet in violation of the Federal wire statute. The
indictments were made in spite of the fact that the companies operated by the
defendants were licensed to conduct gaming operations, including one which was
licensed by the Government of Antigua. Although management believes that Antigua
Casino is in compliance with all applicable existing regulations in those
countries in which Antigua Casino intends to offer wagering services, there can
be no assurance that the United States federal or state authorities will not try
to assert jurisdiction against PlayStar if Antigua Casino seeks to offer such
services in the United States.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The information contained in this Item 2, Management's Discussion and
Analysis or Plan of Operation, contains "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Actual results may materially differ from those
projected in the forward looking statements as a result of certain risks and
uncertainties set forth in this report. Although management believes that the
assumptions made and expectations reflected in the forward looking statements
are reasonable, there is no assurance that the underlying assumptions will, in
fact, prove to be correct or that actual future results will not be different
from the expectations expressed in this Registration Statement.
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PlayStar Delaware/PlayStar Antigua
PlayStar Delaware is a holding company which, through its subsidiaries,
PlayStar Limited and Antigua Casino, intends to operate, promote and
commercialize an on-line gaming service which will offer interactive,
software-based games of chance. Antigua Casino will conduct PlayStar's Internet
gaming business, and PlayStar Limited will license gaming technology to Antigua
Casino's Internet gaming business.
PlayStar Delaware was incorporated in the State of Delaware on October 3,
1996. During the succeeding months, PlayStar Dealware raised an aggregate of
$1,000,000 in capital through three private placements completed pursuant to
Rule 504 promulgated under the Securities Act. On January 19, 1998, PlayStar
Delaware raised an additional $1,004,637 through two additional private
placements completed pursuant to Section 4(2) of the Securities Act and
Regulations D and S promulgated thereunder. See Part II, Item 4 "Recent Sales of
Unregistered Securities." This financing has been sufficient to satisfy
PlayStar's cash requirements through April 15, 1998. From these proceeds, the
Subsidiaries paid approximately $785,000 for products provided by Dreamplay and
approximately $375,000 for legal, accounting, public relations and
administrative services. PlayStar estimates, however, that the total amount of
capital required to proceed with current operations and to bring the
Subsidiaries' products and services to market will be approximately $2,000,000,
including approximately $175,000 for research and development, approximately
$850,000 for advertising, marketing and promotional efforts, and approximately
$975,000 for working capital. As PlayStar had only $200,000 on hand as of March
30, 1998, management intends to raise additional capital through additional
sales of unregistered shares of its Common Stock conducted under exemptions
provided by the Securities Act or by the rules of the Commission in order to
meet PlayStar's capital requirements.
PlayStar Limited
PlayStar Limited's initial efforts for its first twelve months centered on
the purchase of on-line gaming and financial transaction processing software.
During this period, PlayStar Limited developed its software games and system
test site. PlayStar Limited's casino management system recently entered the
final stages of development, and PlayStar Limited has begun beta testing of the
system. PlayStar Limited intends to license its gaming technology to Antigua
Casino which will then operate the electronic casino.
Antigua Casino
In December 1997, PlayStar Limited, on behalf of Antigua Casino, applied
to the government of Antigua for an electronic casino gaming license. On January
28, 1998, the Antigua government granted approval for the issuance of the
license to Antigua Casino. Antigua Casino intends to establish its operations
base and begin operation of its on-line casino during the first six months of
1998.
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The launch of the on-line casino will be a critical factor for Antigua
Casino's success. Accordingly, PlayStar's management plans to announce the
opening of the casino through selected world media, press conferences and an
advertising campaign. Management is currently negotiating with an established
marketing communications firm and media buying company to oversee Antigua
Casino's promotional efforts and advertising needs.
During the next twelve months, Antigua Casino intends to acquire and lease
computer and telecommunications equipment to facilitate its computer operations
center. The estimated cost of this equipment will be approximately $1,200,000.
Dreamplay has bought approximately $300,000 worth of hardware/software, which it
will provide to Antigua Casino and install into the casino as part of its
agreement with PlayStar Limited.
Finally, since Antigua Casino's revenues depend on customer gaming
activities, PlayStar's management will endeavor to develop a loyal customer
base. Antigua Casino marketing will be directed to establish PlayStar and its
PlayStar-brand products as the mark of integrity, quality and innovation in both
the Internet gaming and interactive entertainment markets. Ultimately,
PlayStar's management foresees that such efforts will establish the "PlayStar"
name as a premier brand in on-line gaming.
Year 2000 Compliance
PlayStar believes that it is year 2000 compliant, and does not currently
anticipate any disruption in its operations as the result of any failure by
PlayStar to be in compliance. PlayStar does not currently have any information
concerning the year 2000 compliance status of its suppliers and customers.
New Accounting Pronouncements
In March 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." This Statement establishes standards for computing and presenting
earnings per share ("EPS") and applies to all entities with publicly-held common
shares or potential common shares. This Statement replaces the presentation of
primary EPS and fully-diluted EPS with a presentation of basic EPS and diluted
EPS, respectively. Basic EPS excludes dilution and is computed by dividing
earnings available to common stockholders by the weighted-average number of
common shares outstanding for the period. Similar to fully diluted EPS, diluted
EPS reflects the potential dilution of securities that could share in the
earnings. This Statement is not expected to have a material effect on PlayStar's
reported EPS amounts. The Statement is effective for PlayStar's financial
statements for the quarter ending December 31, 1997.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which is effective for fiscal years beginning after December 15, 1997.
This Statement establishes standards for reporting and display of comprehensive
income and its components in financial statements. The Statement is effective
for PlayStar's financial statements for the year ending June 30, 1999.
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In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which is effective for fiscal years
beginning after December 15, 1997. This Statement establishes standards for the
way a public business enterprise reports certain information about operating
segments, and discloses enterprise-wide information about its products and
services, activities in different geographic areas, and its reliance on major
customers. The Statement is effective for PlayStar's financial statements for
the year ending June 30, 1999.
Item 3. Description of Property.
Antigua Casino occupies approximately 1,200 square feet on the top floor
of the Dollar Building, Nevis Street, St. John's, Antigua pursuant to a lease
which expires on March 31, 1999. The monthly payments under the lease are
approximately $1,480. Except for the foregoing, neither Playstar Delaware nor
the Subsidiaries presently own or lease any property or real estate. Neither
PlayStar Delaware nor the Subsidiaries have policies regarding investments in
real estate, securities, or other forms of property.
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth information with respect to the beneficial
ownership of PlayStar Delaware's Common Stock as of April 15, 1998 by (i) each
director of PlayStar Delaware, (ii) each executive officer of PlayStar Delaware
and each executive officer named in the Compensation Table below, (iii) all
directors and officers of PlayStar Delaware as a group and (iv) each person
known by PlayStar Delaware to be the beneficial owner of more than five percent
of the Common Stock of PlayStar Delaware.
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Beneficial Current Percent
Ownership of of Class(1)
Name and Address Common Stock
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Julius Patta, President 4,330,500 (2) 23.89%
P.O. Box W 612
Woods Centre
Antigua BW1
West Indies
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William F.E. Tucker -- Chairman and 3,362,500 (3) 18.55%
Chief Executive Officer, Treasurer
and Secretary
West Dunes
44 South Road
Paget PG 04
Bermuda
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Trust f/b/o Allan Bramson, Evan 3,694,500 (4) 20.38%
Bramson and
Joanne Bramson
c/o Hemery Trustees Limited
31 Broad Street
St. Helier
Jersey Channel Islands JE4 8XN
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- ---------------------------------------------------------------------
Trust f/b/o Irving Litvack, Michael 3,353,100 (5) 18.50%
Leonard Litvack, Lori Lee Litvack,
Kari Lynn Freesman, Jeffrey Eliot
Litvack, Andrew David Litvack and
Dora Litvack
c/o Powerstock Limited
31 Broad Street
St. Helier
Jersey, Channel Islands JE4 8XN
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All directors and executive 7,693,000 (6) 42.44%
officers as a group
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(1)Based upon 18,128,744 issued and outstanding shares of PlayStar Delaware's
Common Stock and, with respect to those persons holding warrants or options
to purchase Common Stock excercisable within sixty (60) days, the number of
shares of Common Stock that are issuable upon the exercise thereof.
(2)Includes options to purchase 1,250,000 shares of PlayStar Delaware Common
Stock exercisable within 60 days.
(3)Includes options to purchase 250,000 shares of PlayStar Delaware Common
Stock exercisable within 60 days.
(4)Includes options to purchase 700,000 shares of PlayStar Delaware Common
Stock exercisable within 60 days.
(5)Includes options to purchase 250,000 shares of PlayStar Delaware Common
Stock exercisable within 60 days.
(6)Includes options to purchase 1,500,000 shares of PlayStar Delaware Common
Stock exercisable within 60 days.
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Item 5. Directors, Executive Officers, Promoters and Control Persons.
The following table sets forth information regarding the directors and
executive officers of PlayStar Delaware as of May 1, 1998.
Name Age Position
William F.E. Tucker........... 65 Chairman, Chief Executive
Officer, Secretary and
Treasurer
Julius Patta.................. 31 President
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Julius Patta has served as President of PlayStar Delaware since its
inception. From inception until April 1, 1998, he also served as Chief Executive
Officer, Chief Financial Officer and Treasurer of PlayStar Delaware. Mr. Patta
has fourteen years of international business, finance, games software and
telecommunications technology experience. From April 1996 until September 1996,
Mr. Patta was Vice President of Netron Interactive, a division of Netron, Inc.
("Netron"), a Canadian software company. While with Netron Interactive, Mr.
Patta managed corporate sales, third-party relationships, staff, production
development and key projects. From June 1994 until March 1996, Mr. Patta was
Vice President, Research and Development of Netron where he managed product
planning, product development, staff, public relations and strategic customer
sales. From January 1992 until May 1994, Mr. Patta was Vice President,
Consulting Services of Netron where he managed business development and sales,
third-party partnering, contract negotiations and key projects. Prior to joining
Netron, Mr. Patta was the owner and principal consultant of CASE Consulting
Services, which provided high-end information systems services.
William F.E. Tucker has served as Chairman and Chief Executive Officer,
Treasurer and Secretary of PlayStar since April 1, 1998. Since 1992, Mr. Tucker
has been a private investor. From 1974 to 1992, Mr. Tucker was a principal of
Malabar Ltd., the largest Canadian supplier of manufacturing and rental services
to the North American theater industry.
Item 6. Executive Compensation.
The following table discloses the executive compensation paid to Julius
Patta, the President of PlayStar Delaware from its inception (October 9, 1996)
through June 30, 1997. No other executive officer's compensation exceeded
$100,000 during the periods covered below.
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Summary Compensation Table
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Long-Term
Annual Compensation Compensation
Awards
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Other Securities
Name and Fiscal Annual Underlying All
Principal Year Salary Bonus Compensation Options Other
Position Compensation
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Julius Patta 1998 -0- -0- -0- -0- -0-
President 1997 -0- -0- -0- 1,250,000 -0-
- -------------------------------------------------------------------------
The following table contains information concerning the grant of stock
options to PlayStar Delaware's executive officer named in the Summary
Compensation Table during the fiscal year ended June 30, 1997.
----------------------------------------------------------
Number of Percent of
Securities Total
Underlying Options
Options Granted to Exercise or Expiration
Name Granted Employees Base Price Date
in per Share
Fiscal Year
----------------------------------------------------------
----------------------------------------------------------
Julius Patta - 1,250,000 100% $0.05 October
President 9, 2001
----------------------------------------------------------
----------------------------------------------------------
Total........ 1,250,000 100% $0.05 October
9, 2001
----------------------------------------------------------
No stock options have been exercised by Mr. Patta to date.
Directors of PlayStar do not receive any stated salary for their services
as directors or members of committees of the Board of Directors, but by
resolution of the Board a fixed fee and expenses of attendance may be allowed
for attendance at each meeting. Directors of PlayStar may also serve PlayStar in
other capacities as an officer, agent or otherwise, and may receive compensation
for their services in such other capacity.
PlayStar is not a party to any employment or consulting agreements between
PlayStar Delaware and any executive officer.
Item 7. Certain Relationships and Related Transactions.
On October 9, 1996, PlayStar Delaware issued 12,000,000 unregistered
shares of Common Stock to the stockholders of PlayStar Limited, in exchange for
all of the issued and outstanding shares of PlayStar Limited. Certain of the
beneficial owners of PlayStar Delaware were stockholders of PlayStar Limited,
and therefore received shares of Common Stock of PlayStar Delaware in this
transaction. These beneficial owners include Julius Patta who received 3,000,000
shares through his beneficial ownership of Hemery Nominees Limited, Trust f/b/o
Allan Bramson, Evan Bramson and Joanne Bramson which received 3,000,000 shares
through its beneficial ownership of Hemery Trustees Limited, William F.E. Tucker
who received 3,000,000 shares through his beneficial ownership of Powerstock
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Consultants Limited and Trust f/b/o Irving Litvack, Michael Leonard Litvack,
Lori Lee Litvack, Kari Lynn Freesman, Jeffrey Eliot Litvack, Andrew David
Litvack and Dora Litvack which received 3,000,000 shares through its beneficial
ownership of Powerstock Limited in the transaction.
PlayStar Limited was a party to a certain Agreement dated April 16, 1997
with Dreamplay (the "Original Dreamplay Agreement"), an entity which is 100%
owned by Mr. Patta, the Company's President, and is a party to an Agreement with
Dreamplay dated April 1, 1998 which superseded the Original Dreamplay Agreement.
The Agreements with Dreamplay were approved by PlayStar Limited's disinterested
directors and were made in the ordinary course of business. PlayStar Limited's
management believes that the Agreements contained or contain substantially the
same terms as those prevailing at the time for comparable agreements and
transactions with other technology development companies. From inception through
December 31, 1997, Playstar Limited has paid Dreamplay an aggregate of $785,000
under the Agreements with Dreamplay.
Item 8. Description of Securities.
PlayStar Delaware's authorized capital stock consists of 30,000,000 shares
of Common Stock, par value $0.0001 per share. As of April 15, 1998, there were
issued and outstanding 17,781,744 shares of PlayStar Delaware's Common Stock. On
April 15, 1998, there were 56 holders of record of PlayStar Delaware's Common
Stock.
Each stockholder of PlayStar Delaware is entitled to one vote for each
share of Common Stock entitled to vote held by such stockholder. All elections
for directors are decided by plurality vote; all other questions are decided by
majority vote except as may otherwise be provided by PlayStar Delaware's
Certificate of Incorporation or by the Delaware General Corporation Law.
The holders of PlayStar Delaware's Common Stock are not entitled to
cumulative voting rights with respect to the election of directors, and as a
consequence, minority stockholders will not be able to elect directors on the
basis of their votes alone. Holders of PlayStar Delaware's Common Stock are
entitled to receive ratably such dividends as may be declared by the Board of
Directors out of funds legally available therefor. See Part II. In the event of
a liquidation, dissolution or winding up of the Company, holders of PlayStar
Delaware's Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities. Holders of PlayStar Delaware's Common Stock have
no preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
Common Stock. All outstanding shares of PlayStar Delaware's Common Stock are
fully paid and non-assessable.
-13-
<PAGE>
Section 203 of the Delaware General Corporate Law ("Section 203") provides
that, subject to certain exceptions specified therein, a Delaware corporation
shall not engage in any business combination, including any merger or
consolidation with, or any transaction which results in the acquisition of
additional shares of the corporation by, an "interested stockholder" for a
three-year period following the time at which the stockholder became an
"interested stockholder" unless (i) prior to such time, the board of directors
of the corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an "interested stockholder," (ii)
upon consummation of the transaction which resulted in the stockholder becoming
an "interested stockholder," the "interested stockholder" owned at least 85% of
the voting stock of the corporation outstanding at the time that the transaction
commenced (excluding certain shares), or (iii) at or subsequent to such time,
the business combination is approved by the board of directors of the
corporation and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the "interested stockholder."
Except as otherwise specified in Section 203, an "interested stockholder" is
defined to include any person that (i) is the owner of 15% or more of the
outstanding voting stock of the corporation, or (ii) is an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation at any time within three years immediately prior
to the date on which it is sought to be determined whether such person is an
"interested stockholder" and the affiliates and associates of any such person.
Neither PlayStar Delaware's Certificate of Incorporation nor its By-laws
presently exclude PlayStar Delaware from the restrictions imposed by Section
203.
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<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters.
On March 19, 1997 the Common Stock of PlayStar Delaware was approved for
trading on the OTCBB. The following table sets forth, for the periods indicated,
the range of the high and low bid quotations (as reported by NASDAQ). The bid
quotations set forth below, reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not reflect actual transactions:
High Low
Fiscal Year Ended June 30, 1997
Third Quarter (from March 19, 1997) $2.50 $0.25
Fourth Quarter.................. $2.50 $1.00
Fiscal Year Ended June 30, 1998
First Quarter................... $2.9375 $1.00
Second Quarter.................. $3.125 $0.38
Third Quarter .................. $1.01 $0.42
Fourth Quarter (through April 15,
1998) $0.70 $0.61
On April 15, 1998, the last reported sales price of the PlayStar Delaware
Common Stock, as reported by the OTCBB was $0.62. As of April 15, 1998, there
were 56 holders of record of PlayStar Delaware's Common Stock. PlayStar has not
declared or paid any cash dividends on its Common Stock since its inception, and
PlayStar's Board of Directors currently intends to retain all earnings for use
in the business for the foreseeable future. Any future payment of dividends will
depend upon PlayStar's results of operations, financial condition, cash
requirements and other factors deemed relevant by PlayStar's Board of Directors.
Item 2. Legal Proceedings.
Neither PlayStar Delaware nor the Subsidiaries are party to any legal
proceeding.
Item 3. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Not applicable.
-15-
<PAGE>
Item 4. Recent Sales of Unregistered Securities.
On October 9, 1996, PlayStar Delaware issued 12,000,000 unregistered
shares of its Common Stock to the shareholders of PlayStar Limited in exchange
for all of the issued and outstanding shares of PlayStar Limited. These
shareholders include Hemery Nominees Limited, which received 3,000,000 shares
beneficially owned by Julius Patta; Hemery Trustees Limited, which received
3,000,000 shares beneficially owned by Trust f/b/o Allan Bramson, Evan Bramson
and Joanne Bramson; Powerstock Consultants Limited, which received 3,000,000
shares beneficially owned by William Tucker; and Powerstock Limited, which
received 3,000,000 shares in the transaction beneficially owned by Trust f/b/o
Irving Litvack, Michael Leonard Litvack, Lori Lee Litvack, Kari Lynn Freesman,
Jeffrey Eliot Litvack, Andrew David Litvack and Dora Litvack. The issuance of
shares was exempt from registration under the provisions of Section 4(2) of the
Securities Act of 1933 in that the exchange of the shares did not involve a
public offering.
On October 9, 1996, PlayStar Delaware also adopted a stock option plan
authorizing the grant of options to purchase an additional 10,000,000 shares of
its Common Stock. As of April 25, 1997, 4,100,000 options have been granted. The
issuance of the options and any shares issuable upon exercise of such options
are exempt from registration pursuant to Rule 701 promulgated under the
Securities Act of 1933.
On October 22, 1996, PlayStar Delaware commenced an offering of 1,750,000
unregistered shares of its Common Stock (the "October 22, 1996 Offering"). This
offering was made to five persons and was fully subscribed and closed on October
24, 1996. These shares were sold at a price of $0.10 per share, for a total
offering price of $175,000. On January 21, 1997, PlayStar Delaware and one of
the purchasers, Hemery Trustees Limited, agreed to rescind 962,500 of these
shares. The offering was not underwritten, and there were no underwriting
discounts or commissions. This sale was exempt from registration in reliance
upon Rule 504 promulgated under the Securities Act of 1933. The aggregate
offering price did not exceed $1,000,000, and the offering was otherwise in
compliance with Rules 501 and 502 promulgated under the Securities Act of 1933.
These securities were sold to a total of five private investors.
On October 25, 1996, PlayStar Delaware commenced an offering of 2,062,500
unregistered shares of its Common Stock (the "October 25, 1996 Offering"). This
offering was made to twenty-two persons and was fully subscribed and closed on
November 29, 1996. These shares were sold at a price of $0.40 per share, for a
total offering price of $825,000. These shares were subject to a lock-up
agreement until March 15, 1997. The offering was not underwritten, and there
were no underwriting discounts or commissions. This sale was exempt from
registration in reliance upon Rule 504 promulgated under the Securities Act of
1933. The aggregate offering price of the October 25, 1996 Offering, together
with the October 22, 1996 Offering, did not exceed $1,000,000, and the offering
was otherwise in compliance with Rules 501 and 502 promulgated under the
Securities Act of 1933. These securities were sold to a total of twenty-two
private investors. On January 13, 1997, PlayStar Delaware instructed its
transfer agent to remove from the March 15, 1997 lock-up thirty percent (30%) of
such Common Stock.
-16-
<PAGE>
On January 22, 1997, PlayStar Delaware commenced an offering of 962,500
unregistered shares of its Common Stock (the "January 22, 1997 Offering"). This
offering was made to two persons and was fully subscribed and closed on January
22, 1997. These shares were sold at a price of $0.10 per share, for a total
offering price of $96,250. The offering was not underwritten, and there were no
underwriting discounts or commissions. This sale was exempt from registration in
reliance upon Rule 504 promulgated under the Securities Act of 1933. The
aggregate offering price of the January 22, 1997 Offering, together with the
October 22, 1996 Offering and the October 25, 1996 Offering, did not exceed
$1,000,000, and the offering was otherwise in compliance with Rules 501 and 502
promulgated under the Securities Act of 1933. These securities were sold to a
total of two private investors.
On January 19, 1998, PlayStar Delaware closed an offering to two investors
of 1,250,000 shares of PlayStar Delaware's Common Stock at a price of $.40 per
share, resulting in gross proceeds of $500,000. The shares were issued in
reliance on an exemption from registration pursuant to Section 4(2) of the
Securities Act of 1933 and Regulation D promulgated under the Securities Act of
1933. No underwriter or placement agent was retained in connection with the
offering and no fees or commissions were paid in connection therewith.
On January 19, 1998, PlayStar Delaware closed an offering to 12 foreign
investors of 1,009,274 shares of PlayStar Delaware's Common Stock at a price of
$0.50 per share, resulting in gross proceeds of $504,637. The shares were issued
in reliance on an exemption from registration pursuant to Regulation S
promulgated under the Securities Act of 1933. No underwriter or placement agent
was retained in connection with the offering and no fees or commissions were
paid in connection therewith.
Item 5. Indemnification of Directors and Officers.
PlayStar Delaware's By-Laws require it to indemnify to the fullest extent
permitted by law each person that PlayStar Delaware is empowered by law to
indemnify. PlayStar Delaware's Certificate of Incorporation requires it to
indemnify to the fullest extent permitted by Sections 102(b)(7) and 145 of the
Delaware General Corporation Law, as amended from time to time, each person that
such Sections grant the corporation the power to indemnify.
Section 145 of the Delaware General Corporation Law permits a corporation,
under specified circumstances, to indemnify its directors, officers, employees
or agents against expenses (including attorney's fees), judgments, fines and
amounts paid in settlements actually and reasonably incurred by them in
connection with any action, suit, or proceeding brought by third parties by
reason of the fact that they were or are directors, officers, employees or
agents of the corporation, if such directors, officers, employees or agents
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e. one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
-17-
<PAGE>
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.
PlayStar Delaware's Certificate of Incorporation and By-Laws also contain
provisions stating that no director shall be liable to PlayStar Delaware or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except with respect to (1) a breach of the director's duty of loyalty
to the corporation or its stockholders, (2) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation Law (for
unlawful payment of dividends, or unlawful stock purchases or redemptions) or
(4) a transaction from which the director derived an improper personal benefit.
The intention of the foregoing provisions is to eliminate the liability of
PlayStar Delaware's directors to PlayStar Delaware or its stockholders to the
fullest extent permitted by Section 102(b)(7) of the Delaware General
Corporation Law, as amended from time to time.
-18-
<PAGE>
PART F/S
INDEX TO FINANCIAL STATEMENTS
Page
Audited Consolidated Financial Statements as of June 30, 1997 F-1
Independent Auditors' Report F-2
Consolidated Balance Sheet as of June 30, 1997 F-2
Consolidated Statement of Loss for the Period from F-4
Inception, October 3, 1996 to June 30, 1997
Consolidated Statement of Accumulated Deficit for the F-5
Period from Inception, October 3, 1996 to June 30, 1997
Consolidated Statement of Shareholders' Equity for the F-6
Period from Inception, October 3, 1996 to June 30, 1997
Consolidated Statement of Cash Flows for the Period from F-7
Inception, October 3, 1996 to June 30, 1997
Notes to Consolidated Financial Statements for the Period F-8
from Inception, October 3, 1996 to June 30, 1997
-19-
<PAGE>
PART III
Item 1. Index to Exhibits.
Exhibit Description of Exhibit
Number
2.1 Certificate of Incorporation.
2.2 By-Laws.
3.1 Specimen Form of Stock Certificate.
6.1 Consulting Agreement dated April 1, 1998 by and between PlayStar Limited
and Dreamplay Research Corp.
6.2 Fee Schedule to Consulting Agreement.
12.1 Subsidiaries of PlayStar Corporation.
12.2 Stock Option Plan.
23.1 Consent of Fruitman Kates.
27.1 Financial Data Schedule (filed electronically herewith).
-20-
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934,
the registrant caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
PLAYSTAR CORPORATION
Date: May 12, 1998
By:/s/ William F.E. Tucker
William F.E. Tucker
Chairman and Chief Executive
Officer, Treasurer and Secretary
By:/s/ Julius Patta
Julius Patta
President
-21-
<PAGE>
PLAYSTAR CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
-F-1-
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of PLAYSTAR CORPORATION
We have audited the consolidated balance sheet of PLAYSTAR CORPORATION and
subsidiary (a Development Stage Company), as at June 30, 1997 and the
related consolidated statements of income, accumulated deficit,
shareholders' equity and cash flows for the period from inception October 3,
1996 to June 30, 1997. These consolidated financial statements are the
responsibility of PlayStar Delaware's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audit in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the consolidated 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 our audits provide a reasonable basis for our opinion.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of PLAYSTAR CORPORATION and
subsidiary, as at June 30, 1997 and the results of their operations and
their cash flows for the period from inception October 3, 1996 to June 30,
1997, in conformity with generally accepted accounting principles in the
United States.
The previous report, dated September 1, 1997, has been amended and the notes
to the financial statements have been revised to comply with the Securities and
Exchange Commission requirements.
Toronto, Canada FRUITMAN KATES
September 1, 1997 CHARTERED ACCOUNTANTS
March 18, 1998
-F-2-
<PAGE>
CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 1997
(U.S.$)
ASSETS
CURRENT
Cash and cash equivalents $109,138
Accounts receivable 166
Prepaid expenses 1,694 $110,998
------- --------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $56,045
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Authorized
30,000,000 common shares at stated value $.0001 per share
Issued and outstanding
15,812,500 common shares $ 1,581
ADDITIONAL PAID-IN CAPITAL 836,604
DEFICIT, accumulated during the
development stage (783,232) 54,953
110,998
The accompanying notes to financial statements are an integral
part of these statements
-F-3-
<PAGE>
CONSOLIDATED STATEMENT OF LOSS
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996, TO JUNE 30, 1997
(U.S.$)
REVENUE
Interest income $ 3,022
EXPENSES
Development costs $754,527
General and administrative 13,856
Professional fees 14,415
Incorporation costs 3,456 786,254
------ -------
NET LOSS $(783,232)
LOSS PER SHARE $ (0.05)
---------
WEIGHTED AVERAGE NUMBER OF SHARES 15,812,500
The accompanying notes to financial statements are an integral
part of these statements
-F-4-
<PAGE>
CONSOLIDATED STATEMENT OF ACCUMULATED DEFICIT
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996, TO JUNE 30, 1997
(U.S.$)
RETAINED EARNINGS, beginning of period $ NIL
NET LOSS 783,232
-------
ACCUMULATED DEFICIT, end of period $783,232
The accompanying notes to financial statements are an integral
part of these statements
-F-5-
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996, TO JUNE 30, 1997
(U.S.$)
Additional
Common paid-in Accumulated
stock shares Amount capital deficit
October 3, 1996 - $ - $ - $ -
Common stock issued in
exchange for all of the
issued and outstanding
shares of PlayStar Limited
in October, 1996 12,000,000 1,200 - -
Issuance of stock for
$175,000 U.S. in October,
1996 and January 1997
in connection with a private
placement offering; $175,000
for services rendered
net of issue costs of
$74,825) 1,750,000 175 100,000 -
Issuance of stock for
$825,000 U.S. in November,
1996, in connection
with a private placement
offering; (net of issue
costs of $88,190) 2,062,500 206 736,604 -
NET LOSS, June 30, 1997 - - - (783,232)
--------- ------- --------- --------
15,812,500 $1,581 $836,604 $(783,232)
---------- ------ -------- ---------
The accompanying notes to financial statements are an integral
part of these statements
-F-6-
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996, TO JUNE 30, 1997
(U.S.$)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(783,232)
Adjustments to reconcile net loss to net
cash provided by operating activities -
Development costs paid through issuance of stock 175,000
Changes in operating assets and liabilities
- accounts receivable (166)
- prepaid expenses (1,694)
- accounts payable 56,045
-------
Net cash used in operating activities (554,047)
--------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common shares (net of issue costs) 663,185
Net cash provided from financing activities 663,185
-------
NET INCREASE IN CASH AND CASH EQUIVALENTS 109,138
CASH AND CASH EQUIVALENTS, beginning of period -
-------
CASH AND CASH EQUIVALENTS, end of period $109,138
--------
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
PlayStar Delaware paid for development costs in the amount of $175,000 through
the issuance of common shares.
For the purposes of presentation in the statement of cash flows, cash and
marketable securities with original maturities of less than three months, have
been classified as cash and cash equivalents.
The carrying value of these items approximates fair value.
The accompanying notes to financial statements are an integral
part of these statements
-F-7-
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996, TO JUNE 30, 1997
(U.S.$)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with generally
accepted accounting principles in the United States.
a) NATURE OF OPERATIONS AND PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of PlayStar
Corporation ("PlayStar Delaware") and its wholly owned subsidiary,
PlayStar Limited. All intercompany accounts and transactions have been
eliminated on consolidation.
PlayStar Delaware's wholly-owned subsidiary has been in the development
stage since it was acquired on October 9, 1996.
PlayStar Delaware, through its subsidiary, designs, develops and intends
to operate, promote and commercialize an on-line gaming service operating
interactive, software-based games of chance, accessible world-wide through
the Internet.
PlayStar Delaware's fiscal year end is June 30th.
b) DEVELOPMENT COSTS
Development costs associated with the design, development, operation,
promotion and commercialization are changed to expense in the period
incurred.
c) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
d) CASH EQUIVALENTS
PlayStar Delaware considers highly liquid investments with original
maturities of three months or less to be cash equivalents.
e) EARNINGS PER SHARE
Based on the weighted average number of shares, stock options have not
been included, as they would be considered anti-dilutive.
-F-8-
<PAGE>
2. BUSINESS ACQUISITIONS
PLAYSTAR LIMITED
On October 9, 1996, PlayStar Delaware acquired 100% of the issued and
outstanding common shares of PlayStar Limited, in exchange for 12,000,000 common
shares of PlayStar Delaware.
The business combination has been accounted for as an "as if pooling of
interests", since both, PlayStar Delaware and PlayStar Limited, are entities
under common control. Accordingly, the assets and liabilities of the combining
companies are recorded at their historical cost and results of operations
include both entities from inception.
3. STOCK OPTION PLANS
On October 9, 1996, PlayStar Delaware adopted a stock option plan
authorizing the granting of options to purchase an additional 10,000,000 common
shares.
A total of 4,100,000 options have been granted during the period. Two of
PlayStar Delaware's executive officers were granted stock options totaling
1,570,000 shares, exercisable at $0.05/share until October 9, 2001. No stock
options have been exercised to-date.
PlayStar Delaware adopted SFAS No. 123, "Accounting for Stock-Based
Compensation". The pronouncement requires entities to recognize as compensation
expense over the vesting period the fair value of stock-based awards on the date
of grant. Alternatively, SFAS No. 123 allows entities to continue to apply the
provisions of APB No. 25 and provide pro forma net income and pro forma income
(loss) per share disclosures for employee stock option grants made from 1995
forward as if the fair-valued-based method, defined in SFAS No. 123, had been
applied.
PlayStar Delaware has elected to adopt the disclosure-only provisions of
SFAS No. 123, and as described above, will continue to apply APB No. 25 to
account for stock options. Had compensation expense been determined as provided
in SFAS No. 123, the pro forma effect would have been:
Net loss - as reported $(783,232)
Net loss - pro forma $(861,732)
Loss per share - as reported $(0.05)
Loss per share - pro forma $(0.05)
4. INCOME TAXES
Deferred tax liabilities and assets are determined based on the difference
between financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which differences are expected to
reverse.
PlayStar Delaware has net operating loss carry-forwards of approximately
$783,000, which expire through the year 2012. The future tax benefit has been
fully reserved by the use of valuation allowances.
-F-9-
<PAGE>
EXHIBIT 2.1
CERTIFICATE OF INCORPORATION
OF
GLOBAL GAMES CORPORATION
The undersigned, being of legal age, in order to form a corporation under
and pursuant to the laws of the State of Delaware, does hereby set forth as
follows:
FIRST: The name of the corporation is:
GLOBAL GAMES CORPORATION
SECOND: The address of the initial registered and principal office of this
corporation in this state is c/o United Corporate Services, Inc., 15 East North
Street, in the City of Dover, County of Kent, State of Delaware 19901 and the
name of the registered agent at said address is United Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized
under the corporation laws of the state of Delaware.
FOURTH: The corporation shall be authorized to issue the
following shares:
Class Number of Shares Par Value
COMMON 30,000,000 $.0001
FIFTH: The name and address of the incorporator are as
follows:
NAME ADDRESS
Ray A. Barr 10 Bank Street
White Plains, New York 10606
-1-
<PAGE>
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for further
definition, limitation and regulation of the powers of the corporation and of
its directors and stockholders:
(1) The number of directors of the corporation shall be such as from time
to time shall be fixed by, or in the manner provided in the by-laws. Election of
directors need not be by ballot unless the By-Laws so provide.
(2) The Board of Directors shall have power without the assent or vote of
the stockholders:
(a) To make, alter, amend, change, add to or repeal the By-Laws of
the corporation; to fix and vary the amount to be reserved for any proper
purpose; to authorize and cause to be executed mortgages and liens upon
all or any part of the property of the corporation; to determine the use
and disposition of any surplus or net profits; and to fix the times for
the declaration and payment of dividends.
(b) To determine from time to time whether, and to what times and
places, and under what conditions the accounts and books of the
corporation (other than the stock ledger) or any of them, shall be open to
the inspection of the stockholders.
(3) The directors in their discretion may submit any contract or act for
approval or ratification at any annual meeting of the stockholders, at any
meeting of the stockholders called for the purpose of considering any such act
or contract, or through a written consent in lieu of a meeting in accordance
with the requirements of the General Corporation Law of Delaware as amended from
time to time, and any contract or act that shall be so approved or be so
ratified by the vote of the holders of a majority of the stock of the
corporation which is represented in person or by proxy at such meeting, (or by
written consent whether received directly or through a proxy) and entitled to
vote thereon (provided that a lawful quorum of stockholders be there represented
in person or by proxy) shall be as valid and as binding upon the corporation and
upon all the stockholders as though it had been approved, ratified, or consented
to by every stockholder of the corporation, whether or not the contract or act
would otherwise be open to legal attack because of directors' interest, or for
any other reason.
(4) In addition to the powers and authorities herein before or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the corporation; subject, nevertheless, to the provisions of the statutes of
Delaware, of this certificate, and to any by-laws from time to time made by the
stockholders; provided, however, that no by-laws so made shall invalidate any
prior act of the directors which would have been valid if such by-law had not
been made.
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<PAGE>
SEVENTH: No director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except with respect to (1) a breach of the director's duty of loyalty to the
corporation or its stockholders, (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation Law or (4) a
transaction from which the director derived an improper personal benefit, it
being the intention of the foregoing provision to eliminate the liability of the
corporation's directors to the corporation or its stockholders to the fullest
extent permitted by Section 102(b)(7) of the Delaware General Corporation Law,
as amended from time to time. The corporation shall indemnify to the fullest
extent permitted by Sections 102(b)(7) and 145 of the Delaware General
Corporation Law, as amended from time to time, each person that such Sections
grant the corporation the power to indemnify.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware, may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
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any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
NINTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
IN WITNESS WHEREOF, the undersigned hereby executes this document and
affirms that the facts set forth herein are true under the penalties of perjury
this second day of October, 1996.
s/ RAY A. BARR
Ray A. Barr, Incorporator
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CERTIFICATE OF AMENDMENT
OF
GLOBAL GAMES CORPORATION
The undersigned, being the Sole Incorporator of the corporation, hereby
certifies as follows:
FIRST: The name of the corporation is:
GLOBAL GAMES CORPORATION
SECOND: The corporation hereby amends its Certificate of
incorporation as follows:
Paragraph FIRST of the Certificate of Incorporation, relating to the
corporate title of the corporation, is hereby amended to read as follows:
"FIRST: The name of the corporation is:
PlayStar Corporation"
THIRD: This Certificate of Amendment has been duly adopted
in accordance with the provisions of Section 241 of the General
Corporation Law of the State of Delaware.
FOURTH: The corporation has not received any payment for
any of its stock.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the statements
made herein are true under the penalties of perjury, this seventh day of
October, 1996.
s/ RAY A. BARR
Ray A. Barr, Sole Incorporator
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EXHIBIT 2.2
BY-LAWS
OF
GLOBAL GAMES CORPORATION
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. - The registered office shall be established
and maintained at c/o United Corporate Services, Inc., 15 East North Street,
Dover, Delaware 19901 and United Corporate Services, Inc. shall be the
registered agent of this corporation in charge thereof.
SECTION 2. OTHER OFFICES. - The corporation may have other offices, either
within or without the State of Delaware, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. - Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Delaware, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of meeting.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
they may transact such other corporate business as shall be stated in the notice
of the meeting.
SECTION 2. OTHER MEETINGS. - Meetings of stockholders for any purpose other
than the election of directors may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting.
SECTION 3. VOTING. - Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation and in accordance with the
provisions of these By-Laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such stockholder, but no
proxy shall be voted after three years from its date unless such proxy provides
for a longer period. Upon the demand of any stockholder, the vote for directors
and the vote upon any question before the meeting, shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
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shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 4. QUORUM . - Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote the meeting.
SECTION 5. SPECIAL MEETINGS. - Special meetings of the stockholders
for any purpose or purposes may be called by the President or Secretary,
or by resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. - Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat at his
address as it appears on the records of the corporation, not less than ten nor
more than sixty days before the date of the meeting. No business other than that
stated in the notice shall be transacted at any meeting without the unanimous
consent of all the stockholders entitled to vote thereat.
SECTION 7. ACTION WITHOUT MEETING. - Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
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voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. - The number of directors shall be two (2). The
directors shall be elected at the annual meeting of the stockholders and each
director shall be elected to serve until his successor shall be elected and
shall qualify. A director need not be a stockholder.
SECTION 2. RESIGNATIONS. - Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES - If the office of any director, member of a committee
or other officer becomes vacant, the remaining directors in office, though less
than a quorum by a majority vote, may appoint any qualified person to fill such
vacancy, who shall hold office for the unexpired term and until his successor
shall be duly chosen.
SECTION 4. REMOVAL. - Any director or directors may be removed either for
or without cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE OF NUMBER. - The number of directors may be increased
by amendment of these By-Laws by the affirmative vote of a majority of the
directors, though less than a quorum, or, by the affirmative vote of a majority
in interest of the stockholders, at the annual meeting or at a special meeting
called for that purpose, and by like vote the additional directors may be chosen
at such meeting to hold office until the next annual election and until their
successors are elected and qualify.
SECTION 6. POWERS. - The Board of Directors shall exercise all of the
powers of the corporation except such as are by law, or by the Certificate of
Incorporation of the corporation or by these By-Laws conferred upon or reserved
to the stockholders.
SECTION 7. COMMITTEES. - The Board of Directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more of the directors of the
corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
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meeting of the committee. In the absence or disqualification of any member or
such committee or committees, the member or members thereof present at any such
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board
of Directors, or in these By-Laws, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it but no such committee shall have the
power of authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
By-Laws of the corporation; and unless the resolution, these By-Laws, or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
SECTION 8. MEETINGS. - The newly elected Board of Directors may hold their
first meeting for the purpose of organization and the transaction of business,
if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent, in
writing, of all the directors.
Unless restricted by the incorporation document or elsewhere in these
By-laws, members of the Board of Directors or any committee designated by such
Board may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at such meeting.
Regular meetings of the Board of Directors may be scheduled by a resolution
adopted by the Board. The Chairman of the Board or the President or Secretary
may call, and if requested by any two directors, must call a special meeting of
the Board and give five days' notice by mail, or two days' notice personally or
by telegraph or cable to each director. The Board of Directors may hold an
annual meeting, without notice, immediately after the annual meeting of
shareholders.
SECTION 9. QUORUM. - A majority of the directors shall constitute a quorum
for the transaction of business. If at any meeting of the board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
from time to time until a quorum is obtained, and no further notice thereof need
be given other than by announcement at the meeting which shall be so adjourned.
SECTION 10. COMPENSATION. - Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the board a fixed fee and expenses of attendance may be allowed for
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attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
SECTION 11. ACTION WITHOUT MEETING. - Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting, if prior to such action a written consent
thereto is signed by all members of the board, or of such committee as the case
may be, and such written consent is filed with the minutes of proceedings of the
board or committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. - The officers of the corporation shall be a
President, a Treasurer, and a Secretary, all of whom shall be elected by the
Board of Directors and who shall hold office until their successors are elected
and qualified. In addition, the Board of Directors may elect a Chairman, one or
more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as
they may deem proper. None of the officers of the corporation need be directors.
The officers shall be elected at the first meeting of the Board of Directors
after each annual meeting. More than two offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. - The Board of Directors may appoint
such other officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. - The Chairman of the Board of Directors, if one be
elected, shall preside at all meetings of the Board of Directors and he shall
have and perform such other duties as from time to time may be assigned to him
by the Board of Directors.
SECTION 4. PRESIDENT. - The President shall be the chief executive officer
of the corporation and shall have the general powers and duties of supervision
and management usually vested in the office of President of a corporation. He
shall preside at all meetings of the stockholders if present thereat, and in the
absence or non-election of the Chairman of the Board of Directors, at all
meetings of the Board of Directors, and shall have general supervision,
direction and control of the business of the corporation. Except as the Board of
Directors shall authorize the execution thereof in some other manner, he shall
execute bonds, mortgages and other contracts in behalf of the corporation, and
shall cause the seal to be affixed to any instrument requiring it and when so
affixed the seal shall be attested by the signature of the Secretary or the
Treasurer or Assistant Secretary or an Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. - Each Vice-President shall have such powers and
shall perform such duties as shall be assigned to him by the directors.
SECTION 6. TREASURER. - The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
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receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be ordered
by the Board of Directors, or the President, taking proper vouchers for such
disbursements. He shall render to the President and Board of Directors at the
regular meetings of the Board of Directors, or whenever they may request it, an
account of all his transactions as Treasurer and of the financial condition of
the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the board shall prescribe.
SECTION 7. SECRETARY. - The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by the law or by these By-Laws, and in case of his absence or refusal
or neglect so to do, any such notice may be given by any person thereunto
directed by the President, or by the directors, or stockholders, upon whose
requisition the meeting is called as provided in these By-Laws. He shall record
all the proceedings of the meetings of the corporation and of the directors in a
book to be kept for that purpose, and shall perform such other duties as may be
assigned to him by the directors or the President. He shall have the custody of
the seal of the corporation and shall affix the same to all instruments
requiring it, when authorized by the directors or the President, and attest the
same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. - Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by-the directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK. - A certificate of stock, signed by the
Chairman or Vice-Chairman of the Board of Directors, if they be elected,
President or Vice-President, and the Treasurer or an Assistant Treasurer, or
Secretary or Assistant Secretary, shall be issued to each stockholder certifying
the number of shares owned by him in the corporation. When such certificates are
countersigned (1) by a transfer agent other than the corporation or its
employee, or, (2) by a registrar other than the corporation or its employee, the
signatures of such officers may be facsimiles.
SECTION 6. SEAL. - The corporate seal shall be circular in form and shall
contain the name of the corporation, the year of its creation and the words
"Corporate Seal, Delaware, 1996." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
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SECTION 7. FISCAL YEAR. - The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS. - All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by
these By-Laws to be given, personal notice is not meant unless expressly so
stated, and any notice so required shall be deemed to be sufficient if given by
depositing the same in the United States mail, postage, prepaid, addressed to
the person entitled thereto at his address as it appears on the records of the
corporation, and such notice shall be deemed to have been given on the day of
such mailing. Stockholders not entitled to vote shall not be entitled to receive
notice of any meetings except as otherwise provided by Statute.
Whenever any notice whatever is required to be given under the provisions
of any law, or under the provisions of the Certificate of Incorporation of the
corporation of these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and By-Laws may be made at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal of By-Law or By-Laws to be made be
contained in the notice of such special meeting, by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat, or by
the affirmative vote of a majority of the Board of Directors, at any regular
meeting of the Board of Directors, or at any special meeting of the Board of
Directors, if notice of the proposed alteration or repeal of By-Law or By-Laws
to be made, be contained in the notice of such special meeting.
ARTICLE VII
INDEMNIFICATION
No director shall be liable to the corporation or any of its stockholders
for monetary damages for breach of fiduciary duty as a director, except with
respect to (1) a breach of the director's duty of loyalty to the corporation or
its stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) liability which may be
specifically defined by law or (4) a transaction from which the director derived
an improper personal benefit, it being the intention of the foregoing provision
to eliminate the liability of the corporation's directors to the corporation or
its stockholders to the fullest extent permitted by law. The corporation shall
indemnify to the fullest extent permitted by law each person that such law
grants the corporation the power to indemnify.
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EXHIBIT 3.1
[SPECIMEN FORM OF STOCK CERTIFICATE]
<PAGE>
EXHIBIT 6.1
THIS AGREEMENT made as of the 1st day of April, 1998,
B E T W E E N :
DREAMPLAY RESEARCH CORP.
an Ontario corporation;
(hereinafter called "Dreamplay")
OF THE FIRST PART
- and -
PLAYSTAR LIMITED
a Jersey, Channel Islands corporation;
(hereinafter called the "Company")
OF THE SECOND PART
WITNESSES THAT:
WHEREAS Dreamplay is engaged, among other things, in the
business of developing and selling computer software;
AND WHEREAS pursuant to an Agreement dated April 16, 1997 (the "April 1997
Agreement"), Dreamplay had previously developed computer software for the
Company, which software was the sole and exclusive property of the Company;
AND WHEREAS Dreamplay and the Company have agreed that as of and from the
date hereof, software created by Dreamplay related to internet gaming shall be
the sole and exclusive property of Dreamplay;
AND WHEREAS the Company desires to acquire from Dreamplay all rights in
and to such software created by Dreamplay for the Company, subject to the terms
and conditions hereinafter set forth;
AND WHEREAS Dreamplay is desirous of conveying such software to the
Company;
NOW THEREFORE, in consideration of the promises and the mutual conditions,
covenants and agreements hereinafter set forth, the parties hereby covenant and
agree as follows:
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ARTICLE ONE
1.01 Exclusive Purchase
In reliance on Dreamplay's representations and warranties contained in
paragraph 2.01 below, the Company agrees to purchase Internet Gaming
Software (as defined in paragraph 2.01). from Dreamplay and Dreamplay
agrees to create Internet Gaming Software in consultation with the
Company. The Company agrees that it shall not purchase Internet Gaming
Software from any other person or company.
ARTICLE TWO
2.01 Representations and Warranties
Dreamplay represents and warrants that it has the technical ability and
expertise and that it is qualified and able to create software having
internet gaming application, and related or ancillary products
(collectively, "Internet Gaming Software"), including but not limited to
the following:
(a) Web Site hosting and Internet access; (b) Web Site design and
development; (c) Online Casino Games Development; (d) Electronic Casino
Management System; (e) Operations Consulting; and (f) Game Client Logic
and Design.
Dreamplay acknowledges that the Company is relying on Dreamplay for its
expertise in the design of Internet Gaming Software, and its technical
ability to create Internet Gaming Software. Dreamplay agrees to dedicate
such resources as are reasonably necessary to create Internet Gaming
Software in consultation with the Company.
2.02 Reporting
Dreamplay shall submit to the Company written reports on a monthly basis
on a date to be agreed upon by the parties hereto on the status of
Dreamplay's Internet Gaming Software development. In addition to the
aforementioned written reports, Dreamplay shall verbally inform the
Company of Dreamplay's activities and progress and of any new Internet
Gaming Software developments and Dreamplay shall regularly consult with
the Company as often as is necessary and prudent to do so.
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2.03 Covenants
(a) Dreamplay agrees to transfer and assign to the Company, and the Company
agrees to acquire from Dreamplay, Dreamplay's entire right, title and
interest, including all copyright ownership in the Internet Gaming
Software, as and when developed from time to time and subject to payment
therefor as herein provided, including but not limited to all source and
object code, audiovisual effects created by program code and any
documentation and notes associated therewith. Dreamplay hereby waives all
moral rights or claims that Dreamplay may now or hereafter have with
respect to the Internet Gaming Software that is sold by Dreamplay to the
Company hereunder.
(b) Dreamplay agrees to deliver and install the Internet Gaming Software
acquired by the Company hereunder to or to the order of the Company.
ARTICLE THREE
CONSIDERATION
3.01 Purchase Price
Dreamplay shall render to the Company, on a quarterly basis, an invoice
for all Internet Gaming Software transferred or to be transferred by
Dreamplay to the Company hereunder, in amounts to be agreed upon by the
parties by separate letter. Payment shall be due and payable to Dreamplay
in accordance with the terms noted on each invoice. Payments made by the
Company to Dreamplay hereunder shall be applied to the purchase price of
the Internet Gaming Software.
ARTICLE FOUR
REIMBURSEMENT OF EXPENSES
4.01 Dreamplay to Keep Records
Dreamplay shall keep and maintain detailed and timely records and receipts
of all direct out-of-pocket operating expenses incurred in developing the
Internet Gaming Software and shall submit the same to the Company no later
than 15 calendar days after the end of each month.
4.02 Reimbursements
The Company agrees to pay or reimburse Dreamplay for all reasonable
out-of-pocket operating expenses incurred in developing the Internet
Gaming Software.
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ARTICLE FIVE
OTHER RIGHTS AND OBLIGATIONS
5.01 Confidentiality
Dreamplay is and shall remain obligated to maintain confidentiality and
hereby agrees not to disclose any aspects of the Company's operations, its
business activities, financial condition and its technical information to
third parties either verbally or otherwise without the prior written
consent of the Company. In this regard, any and all data generated or
acquired by Dreamplay as it develops the Internet Gaming Software shall be
transferred by Dreamplay to the Company and which shall thereupon be the
sole and exclusive property of the Company. Dreamplay agrees not to
divulge or indicate any of the said information to third parties.
5.02 Protection of Intellectual Property
Each party shall not infringe the other party's patents, trademarks,
copyrights or other intellectual property and shall not knowingly benefit
from or abet any third party's infringement thereof. Except to the extent
necessary for the parties to carry out their obligations under this
Agreement, nothing in this Agreement is intended to grant or confer to
either party by the other party any license or other right to use or
permit third parties to use such party's proprietary technology, software
or patents, or any other intellectual property.
5.03 Exclusivity and Proprietary Rights
Any and all software (including, without limitation, the Internet Gaming
Software) designed and developed by Dreamplay shall be the sole and
exclusive property of Dreamplay until transferred by Dreamplay to the
Company and until payment therefore is made by the Company to Dreamplay.
The Company shall not and will not receive by this Agreement, or otherwise
acquire, any interest therein whatsoever until such transfer and payment.
Dreamplay shall have the right to hold in its name all copyright
registrations or other registrations as may be appropriate until such
transfer and payment.
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5.04 Non-Competition
For the term of this Agreement, as extended from time to time, and for the
period of six months commencing thereafter, Dreamplay agrees that it will
not, directly or indirectly, as sole proprietor, shareholder, director,
employee, principal or partner, solicit the employees of the Company, the
clients of the Company or carry on any activity similar to that carried on
by them hereunder in competition with the business carried on by the
Company as of the date hereof, without the prior written consent of the
Company.
ARTICLE SIX
TERM, TERMINATION AND RENEWAL
6.01 Term
This Agreement shall be effective as of April 1, 1998 and shall continue
until December 1, 1999. This Agreement may be renewed for one (1) year
terms by the mutual agreement of the parties hereto. For greater
certainty, this Agreement supersedes the agreement dated April 16, 1997,
between the parties relating to Dreamplay's development of software for
the Company.
6.02 Termination
This Agreement may be terminated by either party, without cause, upon
sixty (60) days' written notice to the other party.
ARTICLE SEVEN
PAYMENTS AND NOTICES
7.01 Address for Notice
All payments and notices shall be made by personal delivery or by mailing
the same, postage prepaid:
(a) to Dreamplay at: 50 Wellington Street East
Top Floor
Toronto, Ontario, M5E 1C8
Canada
(b) to the Company at: PO Box 551, 31 Broad Street
St Helier, Jersey JE4 8XN
Channel Islands
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or at such other address as either party may by notice specify, and if so
mailed, shall be conclusively deemed to have been given and received on
the fifth business day after the mailing thereof.
ARTICLE EIGHT
MISCELLANEOUS PROVISIONS
8.01 Governing Law
This Agreement shall be construed and interpreted according to the laws of
the province of Ontario.
8.02 Headings
The heading in this Agreement are included for convenience only and shall
not be used in construing or interpreting this Agreement.
8.03 Enurement
The terms and conditions hereof shall be binding upon and shall inure to
the benefit of the heirs, administrators, successors and assigns of the
parties hereto.
8.04 Assignment
This Agreement shall not be assignable by either party without the prior
written consent of the other party which may not be withheld unreasonably.
8.05 Time
Time shall be of the essence herein.
8.06 Currency
Unless otherwise indicated, all amounts noted herein are expressed in US
Dollars.
8.07 Further Assurances
All of the parties hereto shall, at any time and from time to time,
execute and deliver all further documents and assurances and do all things
necessary or reasonably desirable to carry out the true intent and meaning
of this Agreement, and to give effect to the terms hereof.
-6-
<PAGE>
8.08 Waiver
No failure or delay by any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any
waiver in one instance be deemed to be a continuing waiver in any other
instance.
8.09 Contravention
Any provision or provisions of this Agreement or of the terms and
conditions which in any way contravenes the law of any state, province or
country in which this Agreement is effective, shall in such state,
province or country, to the extent of such contravention of law, be deemed
severable and shall not affect any other provision or provision hereof.
8.10 Counterparts
This Agreement may be executed in counterparts.
IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first above written.
) PlayStar Limited
)
- --------------------- )
Witness )
) Per: ______________________
) Director
) Dreamplay Research Corp.
)
- --------------------- )
Witness )
) Per: ______________________
) Julius Patta, President,Director
-7-
<PAGE>
EXHIBIT 6.2
Dreamplay Research Corp.
April 1, 1998 Fee Schedule
PlayStar project: website, software, hardware, expenses,
training, additional consulting
Product prices are listed below. Travel, entertainment, out-of-pocket and other
pre-approved expenses will be invoiced directly. All prices are quoted in US
dollars.
Product Price Delivery
PlayStar Website Prototype (Dec 5 1996) $40,000 1996/12/04
PlayStar Website SystemTest (March 30 1997) $60,000 1997/03/30
PlayStar Website FinalBeta (March 30 1998) $80,000 1998/03/30
PlayStar Website (July 4 1998) $70,000 pending
PlayStar Casino System:
Casino Games
Blackjack
Poker
FruitMaster Slot Machine
FruitMaster II Slot Machine
SuperMaster Slot Machine
American Roulette
French Roulette
Baccarat
Total $250,000 as above
Backoffice Systems
PitBoss
CasinoCash
Player account management system (PAMS)
Casino control system (CCS)
Monitor
Broker
Report Manager
Reports
-1-
<PAGE>
Encryption/Decryption
Support site
Archive/Restore
Backup/Restore
Total $400,000 as above
External (3rd party software) estimates:
Firewall licenses (Solaris) $30,000 installed
Virtual Private Network (Solaris) $15,000 pending
Database licenses (Sybase) $75,000 installed
Server licenses (Netscape) $30,000 installed
Server licenses (Apache) free installed
Domain(s) registration-annually $ 2,500 registered
SSl3 security libraries $30,000 pending
Total $222,500
Hardware estimates:
Mirrored configuration (x2)
Sun Enterprise Server
RAID
Tape Library
UPS
Total $600,000 50% installed
Firewall server $15,000 installed
Admin server $15,000 pending
Admin printer $5,000 delivered
Admin workstations (6) $40,000 pending
Total $675,000
Training services
Operations ($1500 per person) $6,000 pending
Customer support ($3000 per person)$18,000 pending
Total $24,000
Project Total $2,421,500
-2-
<PAGE>
The project total includes configuration and installation costs (exclusive of
travel and out-of-pocket expenses), as well as first year web hosting and
technical support. After the first year of operations web hosting will be billed
at market rates, and support will be provided at 15% of the project total.
Any additional consulting will be invoiced at $6000 per week for management
services and $5000 per week for technical services.
Billing will be finalized upon successful launch of PlayStar operations.
-3-
<PAGE>
EXHIBIT 12.1
SUBSIDIARIES OF PLAYSTAR CORPORATION
Name of Corporation Place of Percentage of
Incorporation Shares Held
PlayStar Limited Jersey, Channel 100%
Islands
Antigua Casino & Sportsbook Antigua, West-Indies 100%
Limited
<PAGE>
EXHIBIT 12.2
PLAYSTAR CORPORATION
a Delaware Corporation
(the "Company")
1996 STOCK OPTION PLAN
(As adopted by the Board and Shareholders on the
9th day of October, 1996)
1. Purposes
The Company's 1996 Stock Option Plan (the "Plan") is intended to attract
and retain the best available personnel for positions of substantial
responsibility with the Company and its subsidiaries, if any, and to provide
additional incentive to such persons to exert their maximum efforts toward the
success of the Company. The Plan is also intended to provide and encourage stock
ownership by officers, employee Board and employees of, and consultants to, the
Company and to afford such persons the right to increase their proprietary
interest in the Company. The above aims will be effectuated through the granting
of certain options ("Options") to purchase shares of the Company's common stock,
par value $.0001 per share (the "Common Stock"). Under the Plan, the Company may
grant "incentive stock options" ("ISOs") within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), or Options which are
not intended to be ISOs ("Non-Qualified Options"). The Company makes no warranty
as to the qualification of any Options as ISOs.
2. Administration of the Plan.
The Plan shall be administered by the Board of the Company (the "Board").
Within the limits of the express provisions of the Plan, the Board shall have
the authority, in its discretion, to take the following actions under the Plan:
(a) to determine the individuals to whom, and the time or times at which,
Options shall be granted, the number of shares of Common Stock to be subject to
each of the Options and whether such Options shall be ISOs or Non-Qualified
Options;
(b) to interpret the Plan;
(c) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(d) to determine the terms and provisions of the respective stock option
agreements granting Options, including the date or dates upon which Options
shall become exercisable, which terms need not be identical;
-1-
<PAGE>
(e) to accelerate the vesting of any outstanding Options;
and
(f) to make all other determinations and take all other actions necessary
or advisable for the administration of the Plan.
In making such determinations, the Board may take into account the nature
of the services rendered by such individuals, and such other factors as the
Board, in its discretion, shall deem relevant. An individual to whom an Option
has been granted under the Plan is referred to herein as an "Optionee". The
Board's determinations on the matters referred to in this Section 2 shall be
conclusive.
3. Shares Subject to the Plan.
(a) The total number of shares of Common Stock for which Options may be
granted under the Plan shall be 10,000,000.
(b) The Company shall at all times while the Plan is in force reserve such
number of shares of Common Stock as will be sufficient to satisfy the
requirements of outstanding Options. The shares of Common Stock to be issued
upon exercise of Options shall be authorized and unissued or reacquired shares
of Common Stock.
(c) The shares of Common Stock relating to the unexercised portion of any
expired, terminated or canceled Option shall thereafter be available for the
grant of new Options under the Plan.
4. Eligibility.
(a) Options may be granted under the Plan only to officers and employees
of, and consultants to, the Company or any "subsidiary corporation" of the
Company within the meaning of Section 424 (f) of the Code (a "Subsidiary"). The
term "Company" when used in the context of an Optionee's employment, shall be
deemed to include the Company and its Subsidiaries.
(b) Nothing contained in the Plan shall be construed to limit the right of
the Company to grant stock options otherwise than under the Plan for proper
corporate purposes.
5. Terms of Options.
The terms of each Option granted under the Plan shall be determined by the
Board consistent with the provisions of the Plan, including the following:
(a) The purchase price of the shares of Common Stock subject to each
Option shall be fixed by the Board, in its discretion, at the time such Option
<PAGE>
-2-
is granted; provided, however, that in no event shall such purchase price be
less than the Fair Market Value (as defined in paragraph (g) of this Section 5)
of the shares of Common Stock as of the date such Option is granted.
(b) The dates on which each Option (or portion thereof) shall be
exercisable shall be fixed by the Board, in its discretion, at the time such
Option is granted.
(c) The expiration of each Option shall be fixed by the Board, in its
discretion, at the time such Option is granted; provided, however, that no
Option shall be exercisable after the expiration of five (5) years from the date
of its grant and each Option shall be subject to earlier termination as
determined by the Board, in its discretion, at the time such Option is granted.
(d) Options shall be exercised by the delivery, to the Company at its
principal office or at such other address as may be established by the Board
(Attention: Corporate Secretary), of written notice of the number of shares of
Common Stock with respect to which the Option is being exercised accompanied by
payment in full of the purchase price of such shares. Unless otherwise
determined by the Board at the time of grant, payment for such shares may be
made (i) in cash, (ii) by certified check or bank cashier's check payable to the
order of the Company, (iii) at the discretion of the Board, by simultaneously
exercising Options and selling the shares of Common Stock acquired thereby,
pursuant to a brokerage or similar arrangement approved by the Board, and using
the proceeds as payment of such purchase price, or (iv) by any combination of
the methods of payment described in (i) through (iii) above. The Common Stock
purchased shall thereupon be promptly delivered; provided, however, that the
Company may, in its discretion, require that an Optionee pay to the Company or
any Subsidiary, at the time of exercise, such amount as the Company deems
necessary to satisfy any obligation to withhold federal, state or local income
or other taxes incurred by reason of the exercise or transfer of shares
thereupon.
(e) An Optionee shall not have any of the rights of a holder of the Common
Stock with respect to the shares of Common Stock subject to an Option until such
shares are issued to such Optionee upon the exercise of such Option.
(f) An option shall not be transferable, except by will or the laws of
descent and distribution, and during the lifetime of an Optionee, may be
exercised only by the Optionee. No Option granted under the Plan shall be
subject to execution, attachment or other process.
(g) For the purposes of the Plan, the Fair Market Value of the Common
Stock as of any date shall be as determined in good faith by the Board and such
determination shall be binding upon the Company and upon the Optionee. The Board
may make such determination (i) if the Common Stock is not then listed and
traded upon a recognized securities exchange, upon the basis of the mean between
the lowest bid and highest asked quotations on the relevant date (as reported by
a recognized stock quotation service) or, if there are no such bid and asked
quotations on the relevant date, then upon the basis of the mean between the
lowest bid and highest asked quotations on the date nearest the relevant date or
(ii) in case the Common Stock is quoted on the National Association of
-3-
<PAGE>
Securities Dealers Automated Quotation System National Market System
("NASDAQ-NMS") or listed on one or more national securities exchanges, the Fair
Market Value of the Common Stock as of any date shall be deemed to be the mean
between the highest and lowest sale prices of the Common Stock reported on the
NASDAQ-NMS or the principal national securities exchange on which the Common
Stock is listed and traded on the immediately preceding date, or, if there is no
such sale on that date, then on the last preceding date, on which such a sale
was reported.
6. Special Provisions Applicable to ISOs.
The following special provisions shall be applicable to ISOs granted under
the Plan.
(a) No ISOs shall be granted under the Plan after ten (10) years from the
earlier of (i) the date the Plan is adopted, or (ii) the date the Plan is
approved by the Company's shareholders as provided in Section 9 hereof.
(b) If an ISO is granted to a person who owns, directly or indirectly
(within the meaning of Section 424(d) of the Code), stock possessing more than
10% of the total combined voting power of all classes of stock of the Company,
(i) the purchase price of the shares subject to the Option shall not be less
than 110% of the Fair Market Value of such shares as of the date such Option is
granted and (ii) such Option cannot be exercised more than five (5) years after
the date it is granted.
(c) If the aggregate Fair Market Value of the Common Stock with respect to
which ISOs are exercisable for the first time by any Optionee during a calendar
year exceeds $100,000, such ISOs shall be treated, to the extent of such excess,
as Non-Qualified Options. For purposes of the preceding sentence, the Fair
Market Value of the Common Stock shall be determined at the time the ISOs
covering such shares were granted.
7. Adjustment upon Changes in Capitalization.
(a) In the event that the outstanding shares of Common Stock are changed
by reason of reorganization, reclassification, stock split, combination or
exchange of shares and the like, or dividends payable in shares of Common Stock,
an appropriate adjustment shall be made by the Board in the aggregate number of
shares of Common Stock available under the Plan and in the number of shares of
Common Stock and price per share of Common Stock subject to outstanding Options.
If the Company shall be sold, reorganized, consolidated, taken private, or
merged with another corporation, or if all or substantially all of the assets of
the Company shall be sold or exchanged (a "Corporate Event"), an Optionee shall
at the time of issuance of the stock under such Corporate Event be entitled to
receive upon the exercise of his Option the same number and kind of shares of
stock or the same amount of property, cash or securities as he would have been
entitled to receive upon the occurrence of any such Corporate Event as if he had
been, immediately prior to such event, the holder of the number of shares of
-4-
<PAGE>
Common Stock covered by his Option, provided, however, that the Board may, in
its discretion, (i) accelerate the exercisability of outstanding Options, and
shorten the term thereof, to any date prior to the occurrence of such Corporate
Event, or (ii) provide for the cancellation of outstanding Options in exchange
for cash equal to the aggregate in-the-money value of such Options at the time
of such Corporate Event, as determined in its discretion.
(b) Any adjustment under this Section 7 in the number of shares of Common
Stock subject to Options shall apply proportionately to only the unexercised
portion of any Option granted hereunder. If fractions of a share would result
from any such adjustment, the adjustment shall be revised to the next lower
whole number of shares.
8. Termination, Modification and Amendment.
(a) The Plan (but not Options previously granted under the Plan) shall
terminate ten (10) years from the date of its adoption by the Board, and no
Option shall be granted after termination of the Plan.
(b) The Plan may at any time be terminated or, from time to time, be
modified or amended by the Board; provided, however, that the Board shall not,
without approval by the affirmative vote of the holders of a majority of the
shares of the capital stock of the Company present in person or by proxy and
entitled to vote at a meeting duly held in accordance with Delaware law, (i)
increase (except as provided by Section 7) the maximum number of shares of
Common Stock as to which Options may be granted under the Plan, (ii) reduce the
minimum purchase price at which Options may be granted under the Plan, or (iii)
change the class of persons eligible to receive Options under the Plan.
(c) No termination, modification or amendment of the Plan shall adversely
affect the rights conferred by any outstanding Options without the consent of
the affected Optionee.
9. Effectiveness of the Plan.
The Plan shall become effective upon adoption by the Board of the Company,
subject to the approval by the shareholders of the Company. Options may be
granted under the Plan prior to receipt of such approval, provided that, in the
event such approval is not obtained, the Plan and all Options granted under the
Plan shall be null and void and of no force and effect.
10. Not a Contract of Employment.
Nothing contained in this Plan or in any stock option agreement executed
pursuant hereto shall be deemed to confer upon any Optionee any right to remain
in the employ of the Company or any Subsidiary.
-5-
<PAGE>
11. Governing Law.
The Plan shall be governed by the laws of the State of Delaware without
reference to principles of conflict of laws thereof.
12. Withholding.
As a condition to the exercise of any Option, the Board may require that
an Optionee satisfy, through withholding from other compensation or otherwise,
the full amount of federal, state and local income taxes required to be withheld
in connection with such exercise.
13. No Obligation to Exercise Option.
Granting of an Option shall impose no obligation on the Optionee to
exercise such Option.
14. Use of Proceeds.
The proceeds received from sale of Common Stock pursuant to the Plan shall
be used for general corporate purposes.
15. Compliance with Law.
Appropriate legends may be placed on the stock certificates evidencing
shares issued upon exercise of Options to reflect such transfer restrictions.
-6-
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
PlayStar Corporation
We consent to the inclusion in this Amendment No. 2 to Form 10-SB of our
report dated September 1, 1997 and March 18, 1998, on our audit of the financial
statements of PlayStar Corporation.
/s/ FRUITMAN KATES
FRUITMAN KATES
Toronto, Ontario
May 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
AUDITED JUNE 30, 1997 FINANCIAL STATEMENTS OF PLAYSTAR CORPORATION AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> OCT-03-1996
<PERIOD-END> JUN-30-1997
<CASH> 109138
<SECURITIES> 0
<RECEIVABLES> 166
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 110998
<PP&E> 1694
<DEPRECIATION> 0
<TOTAL-ASSETS> 110998
<CURRENT-LIABILITIES> 56045
<BONDS> 0
0
0
<COMMON> 1581
<OTHER-SE> 53372
<TOTAL-LIABILITY-AND-EQUITY> 110998
<SALES> 0
<TOTAL-REVENUES> 3022
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 786254
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (783232)
<INCOME-TAX> 0
<INCOME-CONTINUING> (783232)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (783232)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
