SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-SB
General Form For Registration of Securities of
Small Business Issuers Under Section 12(b)
or 12(g) of the Securities and Exchange Act of 1934
IKON VENTURES, INC.
(Name of Small Business Issuer in Its Charter)
Nevada 76-0270295
(State or other Jurisdiction (IRS Employer Identification No.)
of Incorporation or Organization)
Suite 305, Collier House
163/169 Brompton Road
London, England SW3 1PY
(Address of Principal Executive Offices) (Zip Code)
(171) 591-4435
(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of Class)
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TABLE OF CONTENTS
PART I
Item 1. DESCRIPTION OF BUSINESS..............................................1
History..............................................................1
Forward-Looking Statements...........................................3
Exchange Act Registration............................................4
Proposed Business....................................................4
Pre-Combination Activities......................................5
Combination Suitability Standards...............................6
Form of Acquisition.............................................8
Post-Combination Activities.....................................9
Potential Benefits to Insiders.......................................10
Use of Consultants and Finders.......................................11
State Securities Law Considerations..................................11
No Investment Company Regulation.....................................12
Competition..........................................................12
Employees............................................................13
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS............................13
Results of Operations...........................................13
Liquidity and Capital Resources.................................13
Year 2000 Issues................................................14
Item 3. DESCRIPTION OF PROPERTY.........................................15
Item 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT...............................15
Beneficial Ownership...........................................15
Changes in Control.............................................15
Item 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS................................................16
Directors and Executive Officers...............................16
Prior Experience with Blank Check Companies....................17
Potential Conflicts of Interest................................18
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Item 6. EXECUTIVE COMPENSATION..........................................18
Cash and Other Compensation....................................18
Compensation Pursuant to Plans.................................19
1999 Incentive Program.........................................19
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................21
Item 8. DESCRIPTION OF SECURITIES.......................................21
General.........................................................21
Common Stock....................................................21
Warrants........................................................22
Transfer Agent................................................................22
PART II
Item 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS....................................22
Market Price.......................................................22
Penny Stock Rules..................................................23
Rule 144 Resales...................................................23
Related Stockholder Matters........................................24
Holders of Record..................................................24
Dividends..........................................................24
Item 2. LEGAL PROCEEDINGS..................................................24
Item 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS......................24
Item 4. RECENT SALES OF UNREGISTERED SECURITIES............................25
Item 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS..........................29
PART F/S......................................................................30
1. Financial Statements ..................................................31
PART III
1. Index to Exhibits
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PART I
ITEM 1. BUSINESS
HISTORY
Ikon Ventures, Inc., a Nevada corporation, is the surviving entity in a
merger with its then corporate parent, Northline Industrial Corporation, a Texas
corporation ("NIC"). The background to the merger and related transactions is as
follows:
NIC was incorporated under the laws of the State of Texas on December
28, 1988, and issued 25,000,000 shares of common stock, par value $.0001 per
share (the "NIC Common Stock"), in consideration of the performance of
organizational services in the amount of $2,500.00. Following incorporation, NIC
remained inactive until March 1996 when the then management adopted a business
plan providing for the reincorporation of the company in the State of Nevada and
the establishment and operation of a scheduled charter cargo airline under the
name "Air Epicurean" to transport fresh fish and other food sensitive food
items. On June 24, 1996, NIC completed a limited private offering of 550,000
shares of NIC Common Stock at $0.05 per share, pursuant to Rule 504 ("Rule 504")
of Regulation D, as promulgated by the Securities and Exchange Commission (the
"SEC") pursuant to Section 3 of the Securities Act of 1933, as amended (the
"Act"). On July 19, 1996, NIC caused the incorporation of Air Epicurean, Inc.
("Air Epicurean"), as a wholly owned Nevada corporation for the purpose of
effecting the reincorporation of NIC as a Nevada corporation. In December 1996,
the management of NIC concluded that the previously adopted business plan to
establish air carrier operations was not commercially viable and initiated a
search for a suitable merger candidate.
On March 5, 1997, NIC merged with and into Air Epicurean and Air
Epicurean became the surviving corporation. Pursuant to the merger, each share
of NIC Common Stock issued and outstanding immediately prior thereto was
converted into one share of Air Epicurean common stock, par value $.001 per
share (the "Common Stock"), and the officers and directors of NIC became the
officers and directors of Air Epicurean.
All references below to the "Company" include Air Epicurean and NIC.
On April 24, 1997, the Company effected a ten for one reverse split of
its outstanding shares of Common Stock resulting in there then being 2,555,000
shares of Common Stock issued and outstanding, and the shareholders of the
Company approved a change of corporate name to Ikon Ventures, Inc. that was
effected on May 8, 1997.
On May 12, 1997, the Company's then board of directors authorized in
principle the acquisition of Zeolite Mira s.r.l., an Italian corporation based
in Mira, Italy ("Zeolite Mira"), engaged in the manufacture and sale of
detergents and components thereof. On May 30, 1997, the Company entered into a
series of interrelated agreements (the "Acquisition Agreements") pursuant to
which it agreed to purchase 90% of the capital stock of Zeolite Mira, of which
50% was to be acquired from Birac Holding S.p.A., a Yugoslavian corporation
("Birac"), in exchange for approximately $1,000,000 and 40% was to be acquired
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from Holding Societa Per La Generale Fisica E Chimica Spa In Proprieta Mista
(Holding Institute of General & Physical Chemistry; referred to herein as the
"Institute"), a Yugoslavian corporation controlled by Professor Dusan Vucelic
("Professor Vucelic"), in exchange for 180,000 shares of Common Stock. The
Institute would continue to be the owner of the remaining 10% of Zeolite Mira.
The Acquisition Agreements also provided, among other things, for the following:
(i) loans or lines of credit to be furnished by the Company to Zeolite Mira of
up to $3,000,000 to be used for working capital and of up to $4,000,000 for
capital expenditures, subject to the board of directors of Zeolite Mira
approving budgets and business plans to be provided by Professor Vucelic; (ii)
the purchase by the Company of 100% of the capital stock of Deacon Holding N.V.,
a Netherlands Antilles corporation that owned a 90% interest in certain
detergent related intellectual property rights and technical information
("Deacon"), from the Institute in exchange for 1,020,000 shares of Common Stock;
(ii) the conveyance to Deacon by Professor Vucelic of certain additional
intellectual property rights related to the detergent industry in exchange for
1,275,000 shares of Common Stock; (iii) the placement in escrow of the 2,295,000
shares to be issued to the Institute and the Professor in connection with the
purchase of Deacon and the additional intellectual rights (the "Earn-Out
Shares") to be released based upon the cash flow to be generated by Zeolite Mira
over a period of 10 years but, in any event, at the end of such period; (iv) the
payment to Professor Vucelic of $350,000, and (v) the retention of Professor
Vucelic as president and a director of Zeolite Mira and a director of the
Company for a period of three years.
On June 11, 1997, the Company completed a private placement of
9,500,000 shares of Common Stock at $.10 per share pursuant to Rule 504.
On June 12, 1997, the Company completed all of the transactions
contemplated under the Acquisition Agreements. In connection therewith, Ian
Rice, Professor Vucelic, Brian Copsey Stephen Gross and Kurt Schlapfer were
elected directors of the Company; Mr. Rice was elected as Chairman; Professor
Vucelic was elected as President; Mr. Copsey was elected as Chief Financial
Officer, Kurt Schlapfer was elected as Secretary, and all of the other officers
and directors of the Company resigned. Professor Vucelic resigned as an officer
and director of the Company in May 1998, and Mr. Copsey resigned as an officer
and director of the Company in June 1999.
In September 1997, the Company and the Institute agreed to form a joint
venture to build a plant in Yugoslavia to manufacture powder detergents. In
furtherance of the joint venture, the parties caused the formation of Bexley
Limited, a Yugoslavian corporation ("Bexley"), of which the Company acquired 90%
of the capital stock and the Institute acquired the remaining 10%. The
construction of the plant and the purchase of the related equipment was to be
supervised by the Institute and financed by loans from the Company.
On October 9, 1997, the Company completed a private placement to
accredited investors of 1,600,000 Units of the Company at a purchase price of
$5.00 per Unit, each Unit consisting of one share of Common Stock and one three
year warrant to purchase one-half share of Common Stock at an exercise price
equal to $7.50 per share." The placement was effected pursuant to Regulation 506
of Regulation D.
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On May 13, 1998, the Company's board of directors announced that after
reviewing the performance and capital requirements of the Company's then
subsidiaries, Zeolite Mira, Deacon and Bexley, it had decided to consider all of
the Company's strategic alternatives, including the possible sale or other
disposition of the Company's subsidiaries. Pursuant to that decision, on July
19, 1998, the Company sold all of its interest in Deacon to Professor Vucelic.
As consideration therefore, Professor Vucelic and the Institute returned to the
Company all of the Earn-Out Shares, all of Professor Vucelic's then outstanding
options to purchase shares of Common Stock were canceled and Professor Vucelic
resigned as an officer and director of the Company. He remained, however, as an
officer and director of Zeolite Mira.
On July 30, 1998, the Company entered into an agreement to sell all of
its interest in Bexley and related equipment purchased by the Company for the
plant to be operated by Bexley to Hemslade Trading Limited, an unrelated party,
for an aggregate consideration of $1,082,804. The final installment of the
consideration was received in January 1999.
On March 30, 1999, after obtaining the requisite shareholder approval,
the Company sold all of its 90% interest in the share capital of Zeolite Mira as
follows: (i) 12% to the Institute in consideration of the return of 180,000
shares of Common Stock, and (ii) 78% to CEFT Engineering and Trading AG, an
unrelated Swiss corporation ("CEFT"), as well as all of the Company's right to
outstanding principal and interest payments arising from all loans extended to
Zeolite Mira by the Company, except the loan made in December 1998 in the
outstanding amount of $495,000, in consideration of $350,000. Simultaneously,
Zeolite Mira paid the Company $250,000 as final settlement of the payment
obligations of Zeolite Mira arising under the December 1998 loan.
Since the sale of the Company's interest in Zeolite Mira, the Company
has not had any operating business. The Company does not own or lease any real
estate except for its executive office suite facility, has no employees or
consultants other than its Chairman, Ian Rice, and will have no operations of
its own unless and until it engages in one or more of the activities described
below under this Item 1. The Company is a "blank check" company that intends to
enter into a business combination with one or more as yet unidentified privately
held businesses.
In January 2000, the Company issued an aggregate of 400,000 shares of
Common Stock to Ludgate Communications, Inc. and its assignee in partial payment
of certain public relations services rendered by Ludgate during 1998.
The Company's Common Stock traded on the OTC Bulletin Board under the
symbol "IKON" from May 1997 until January 11, 2000. Since January 13, 2000, the
Company's Common Stock has traded on the National Quotation Bureau's pink sheets
under the symbol "IKON". The closing bid price of the Common Stock on the
National Quotation Bureau's pink sheets was $.01 on January 26, 2000. The
Company intends to apply to have the Common Stock relisted on the OTC Bulletin
Board but there can be no assurance that such application will be granted and,
if granted, that an active market will be established or maintained.
FORWARD-LOOKING STATEMENTS
This Registration Statement includes forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934 (the "Exchange
Act"). These statements are based on management's beliefs and assumptions, and
on information currently available to management. Forward-looking statements
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include statements in which words such as "expect," "anticipate," "intend,"
"plan," "believe," estimate," "consider," or similar expressions are used. For
these statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in Section 21E of the Exchange Act.
Forward-looking statements are not guarantees of future performance.
They reflect management's current view of the Company concerning future events
and are subject to certain risks, uncertainties, and assumptions, including
among others: a general economic downturn; a downturn in the securities markets;
a general lack of interest for any reason in going public by means of
transactions involving public blank check companies; federal or state laws or
regulations having an adverse effect on blank check companies; regulations that
affect trading in the securities of "penny stocks," and other risks and
uncertainties.
Should any of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in this Registration Statement as anticipated, estimated or
expected. Readers should realize that the Company is in the development stage,
with only very limited assets, and that for the Company to succeed requires that
it either originate a successful business (for which it lacks the funds) or
acquire a successful business. The Company's realization of its business plan as
stated herein will depend in the near future principally on the successful
completion of an acquisition of a business, as discussed below.
EXCHANGE ACT REGISTRATION
The Company has voluntarily filed this Registration Statement on Form
10-SB with the SEC in order to register the Company's Common Stock under Section
12 (g) of the Exchange Act. Upon effectiveness of this Registration Statement,
the Company will be required to file quarterly, annual and other reports and
information with the SEC as required by the Exchange Act. Management believes it
is in the shareholders' best interests for the Company to register under the
Exchange Act, in order that the Company's common stock may be eligible for
quotation on the OTC Bulletin Board. Additionally, management believes that
potential combination candidates will find the Company more attractive as a
public blank check company if it is subject to Exchange Act reporting
requirements and files annual and quarterly financial statements with the SEC.
If the Company's duty to file reports under the Exchange Act is suspended, the
Company intends to nonetheless continue filing reports on a voluntary basis.
PROPOSED BUSINESS
The Company intends to enter into a business combination with one or
more as yet unidentified privately held businesses. Management believes that the
Company will be attractive to privately held companies interested in becoming
publicly traded by means of a business combination with the Company, without
offering their own securities to the public. The Company intends to pursue
negotiations with qualified candidates after effectiveness of this Registration
Statement. The Company will not be restricted in its search for business
combination candidates to any particular geographical area, industry or industry
segment, and may enter into a combination with a private business engaged in any
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line of business. Management's discretion is, as a practical matter, unlimited
in the selection of a combination candidate. The Company has not entered into
any agreement, arrangement or understanding of any kind with any person
regarding a business combination. The Company does not intend to enter into any
business combination involving any business or venture with which its officers
or directors are affiliated.
Depending upon the nature of the transaction, all or some of the
current officers and directors of the Company probably will resign their
directorship and officer positions with the Company in connection with the
Company's consummation of a business combination. See "Form of Acquisition"
below. In such event, it is likely that the Company's current management will
not have any control over the conduct of the Company's business following the
Company's completion of a business combination.
It is anticipated that business opportunities will come to the
Company's attention from various sources, including its management, its other
stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. The Company has no
plans, understandings, agreements, or commitments with any individual or entity
to act as a finder of or as a business consultant in regard to any business
opportunities for the Company. There are no plans to use advertisements, notices
or any general solicitation in the search for combination candidates.
PRE-COMBINATION ACTIVITIES. The Company is a "blank check" company,
defined as an inactive company with nominal assets and liabilities. With these
characteristics, management believes that the Company will be attractive to
privately held companies interested in becoming publicly traded by means of a
business combination with the Company, without offering their own securities to
the public. The Company intends to pursue negotiations with qualified candidates
after effectiveness of this Registration Statement.
The term "business combination" (or "combination") means the result of
(i) a statutory merger of a combination candidate into or its consolidation with
the Company or a wholly owned subsidiary of the Company formed for the purpose
of the merger or consolidation, or (ii) the exchange of securities of the
Company for the assets or outstanding equity securities of a privately held
business entity or individual, and similar transactions. A combination may be
structured in one of the foregoing ways or in any other form that will result in
the combined entity being a publicly held corporation. It is unlikely that any
proposed combination will be submitted for the approval of the Company's
shareholders prior to consummation. Pending negotiation and consummation of a
combination, the Company anticipates that it will have no business activities or
sources of revenues and will incur no significant expenses or liabilities other
than expenses related to this Registration Statement, ongoing filings required
by the Exchange Act, the negotiation and consummation of a combination and
maintenance of its executive office suite facility, as well as payment of
consulting fees to its Chairman.
The Company anticipates that the business opportunities presented to it
will (1) be recently organized with no operating history, or a history of losses
attributable to under-capitalization or other factors; (2) be experiencing
financial or operating difficulties; (3) be in need of funds to develop a new
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product or service or to expand into a new market; (4) be relying upon an
untested product or marketing concept; or (5) have a combination of the
foregoing characteristics. Given the above factors, it should be expected that
any acquisition candidate may have a history of losses or low profitability.
The Company will not be restricted in its search for business
combination candidates to any particular geographical area, industry or industry
segment, and may enter into a combination with a private business engaged in any
line of business, including service, finance, mining, manufacturing, real
estate, oil and gas, distribution, transportation, medical, communications, high
technology, biotechnology or any other. Management's discretion is , as a
practical matter, unlimited in the selection of a combination candidate.
Management of the Company will seek combination candidates in the United States
and other countries, as available time permits, through existing associations
and by word of mouth.
The Company has not entered into any agreement or understanding of any
kind with any person regarding a business combination. There is no assurance
that the Company will be successful in locating a suitable combination candidate
or in concluding a business combination on terms acceptable to the Company. The
Company's Board of directors has not established a time limitation by which it
must consummate a suitable combination; however, if the Company is unable to
consummate a suitable combination within a reasonable period, such period to be
determined at the discretion of the Company's Board of Directors, the Board of
Directors will probably recommend its liquidation and dissolution. It is
anticipated that the Company will not be able to diversify, but will essentially
be limited to one such venture because of the Company's lack of capital. This
lack of diversification will not permit the Company to offset potential losses
from one acquisition against profits from another, and should be considered an
adverse factor affecting any decision to purchase the Company's securities.
The Company's management has the authority and discretion to effect
transactions having a potentially adverse impact upon the Company's shareholders
and to complete a combination without submitting any proposal to the
stockholders for their prior approval. The Company's shareholders should not
anticipate that they will have any meaningful opportunity to consider or vote
upon any candidate selected by the Company's management for acquisition.
However, it is anticipated that the Company's shareholders will, prior to
completion of any combination, be given information about the candidate
company's business, financial condition, management and other information
required by ITEMS 6(a), (d), (e), 7 and 8 of Schedule 14A of Regulation 14A
under the Exchange Act.
COMBINATION SUITABILITY STANDARDS. The analysis of candidate companies
will be undertaken by or under the supervision of the Company's Chairman, who is
not a professional business analyst.
To a large extent, a decision to participate in a specific combination
may be made upon management's analysis of the quality of the candidate company's
management and personnel, the anticipated acceptability of new products or
marketing concepts, the merit of technological changes, the perceived benefit
the candidate will derive from becoming a publicly held entity, and numerous
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other factors that are difficult, if not impossible, to objectively quantify or
analyze. In many instances, it is anticipated that the historical operations of
a specific candidate may not necessarily be indicative of the potential for the
future because of the possible need to shift marketing approaches substantially,
expand significantly, change product emphasis, change or substantially augment
management, or make other changes. The Company will be dependent upon the owners
and management of a candidate to identify any such problems that may exist and
to implement, or be primarily responsible for the implementation of, required
changes. Because the Company may participate in a business combination with a
newly organized candidate or with a candidate that is entering a new phase of
growth, it should be emphasized that the Company will incur further risks,
because management in many instances will not have proved its abilities or
effectiveness, the eventual market for the candidate's products or services will
likely not be established and the candidate may not be profitable when acquired.
Otherwise, the Company anticipates that it may consider, among other
things, the following factors:
1. Potential for growth and profitability, indicated by new
technology, anticipated market expansion, or new products;
2. The Company's perception of how any particular candidate will
be received by the investment community and by the Company's
stockholders;
3. Whether, following the business combination, the financial
condition of the candidate would be, or would have a
significant prospect in the foreseeable future of becoming
sufficient to enable the securities of The Company to qualify
for listing on an exchange or on Nasdaq, so as to permit the
trading of such securities to be exempt from the requirements
of the federal "penny stock" rules adopted by the Commission.
4. Capital requirements and anticipated availability of required
funds, to be provided by the Company or from operations,
through the sale of additional securities, through joint
ventures or similar arrangements, or from other sources;
5. The extent to which the candidate can be advanced;
6. Competitive position as compared to other companies of similar
size and experience within the industry segment as well as
within the industry as a whole;
7. Strength and diversity of existing management, or management
prospects that are scheduled for recruitment;
8. The cost of participation by the Company as compared to the
perceived tangible and intangible values and potential; and
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9. The accessibility of required management expertise, personnel,
raw materials, services, professional assistance, and other
required items.
No one of the factors described above will be controlling in the
selection of a candidate. Potentially available candidates may occur in many
different industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex. It should be recognized that,
because of the Company's limited capital available for investigation and
management's limited experience in business analysis, the Company may not
discover or adequately evaluate adverse facts about the opportunity to be
acquired. The Company cannot predict when it may participate in a business
combination. It expects, however, that the analysis of specific proposals and
the selection of a candidate may take several months or more.
Management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company to be
attractive. These include acquisition candidates desiring to create a public
market for their shares in order to enhance liquidity for current shareholders,
acquisition candidates that have long-term plans for raising capital through the
public sale of securities and believe that the possible prior existence of a
public market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through issuance of
securities rather than for cash, and believe that the possibility of development
of a public market for their securities will be of assistance in that process.
Acquisition candidates that have a need for an immediate cash infusion are not
likely to find a potential business combination with the Company to be an
attractive alternative.
Prior to consummation of any combination (other than a mere sale by the
Company insiders of a controlling interest in the Company's common stock) the
Company intends to require that the combination candidate provide the Company
with the financial statements required by ITEM 310 of Regulation S-B, including
at the least an audited balance sheet as of the most recent fiscal year end and
statements of operations, changes in stockholders' equity and cash flows for the
two most recent fiscal years, audited by certified public accountants acceptable
to the Company's management, and the necessary unaudited interim financial
statements. Such financial statements must be adequate to satisfy the Company's
reporting obligations under Section 15(d) or 13 of the Exchange Act. If the
required audited financial statements are not available at the time of closing,
the Company must reasonably believe that the audit can be obtained in less than
60 days. This requirement to provide audited financial statements may
significantly narrow the pool of potential combination candidate available,
since most private companies are not already audited. Some private companies
will either not be able to obtain an audit or will find the audit process too
expensive. In addition, some private companies on closer examination may find
the entire process of being a reporting company after a combination with the
Company too burdensome and expensive in light of the perceived potential
benefits from a combination.
FORM OF ACQUISITION. It is impossible to predict the manner in which
the Company may participate in a business opportunity. Specific business
opportunities will be reviewed as well as the respective needs and desires of
the Company and the promoters of the opportunity and, upon the basis of that
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review and the relative negotiating strength of the Company and such promoters,
the legal structure or method deemed by management to be suitable will be
selected. Such structure may include, but is not limited to, leases, purchase
and sale agreements, licenses, joint ventures and other contractual
arrangements. The Company may act directly or indirectly through an interest in
a partnership, corporation or other form of organization. Implementing such
structure may require the merger, consolidation or reorganization of the Company
with other corporations or forms of business organization, and although it is
likely, there is no assurance that the Company would be the surviving entity. In
addition, the present management and stockholders of the Company most likely
will not have control of a majority of the voting shares of the Company
following a reorganization transaction. As part of such a transaction, the
Company's existing directors may resign and new directors may be appointed
without any vote or opportunity for approval by the Company's shareholders.
It is likely that the Company will acquire its participation in a
business opportunity through the issuance of Common Stock or other securities of
the Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under the
Internal Revenue Code of 1986, depends upon the issuance to the stockholders of
the acquired company of a controlling interest (i.e. 80% or more) of the common
stock of the combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions rather than
other "tax free" provisions provided under the Internal Revenue Code, the
Company's current stockholders would retain in the aggregate 20% or less of the
total issued and outstanding shares. This could result in substantial additional
dilution in the equity of those who were stockholders of the Company prior to
such reorganization. Any such issuance of additional shares might also be done
simultaneously with a sale or transfer of shares representing a controlling
interest in the Company by the current officers, directors and principal
shareholders.
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, the Company
may agree to register such securities either at the time the transaction is
consummated, or under certain conditions or at specified times thereafter. The
issuance of substantial additional securities and their potential sale into any
trading market that might develop in the Company's securities may have a
depressive effect upon such market.
The Company will participate in a business opportunity only after the
negotiation and executive of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions that
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its
officers and principal shareholders, will enter into a letter of intent with the
management, principals or owners of a prospective business opportunity prior to
signing a binding agreement. Such a letter of intent will set forth the terms of
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the proposed acquisition but will not bind any of the parities to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither the Company nor any of the
other parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the acquisition
as described in the preceding paragraph is executed. Even after a definitive
agreement is executed, it is possible that the acquisition would not be
consummated should any party elect to exercise any right provided in the
agreement to terminate it on specified grounds.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision is made not to participate in a specific business
opportunity, the costs therefore incurred in the related investigation would not
be recoverable. Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are provided, the
inability of the Company to pay until an indeterminate future time may make it
impossible to procure goods and services.
POST-COMBINATION ACTIVITIES. Management anticipates that, following
consummation of a combination, control of the Company will change as a result of
the issuance of additional Common Stock to the shareholders of the business
acquired in the combination. Once ownership control has changed, it is likely
that the new controlling shareholders will call a meeting for the purpose of
replacing the incumbent directors of the Company with candidates of their own,
and that the new directors will then replace the incumbent officers with their
own nominees. Rule 14f-1 under the Exchange Act requires that, if in connection
with a business combination or sale of control of the Company there should arise
any arrangement or understanding for a change in a majority of the Company's
directors and the change in the board of directors is not approved in advance by
the Company's shareholders at a shareholder meeting, then none of the new
directors may take office until at least ten (10) days after an information
statement has been filed with the Commission and sent to the Company's
shareholders. The information statement furnished must as a practical matter
include the information required by ITEMs 6(a), (d) and (e), 7 and 8 of Schedule
14A of Regulation 14A in a proxy statement.
Following consummation of a combination, management anticipates that
the Company will file a current report on Form 8-K with the Commission which
discloses among other things the date and manner of the combination, material
terms of the definitive agreement, the assets and consideration involved, the
identity of the person or persons from whom the assets or other property was
acquired, changes in management and biographies of the new directors and
executive officers, identity of principal shareholders following the
combination, and contains the required financial statements. The Form 8-K report
also will be required to include all information as the business acquired called
for by ITEM 101 of Regulation S-B.
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POTENTIAL BENEFITS TO INSIDERS
In connection with a business combination the Company may require that
a company being acquired repay all advances, if any, made to the Company by the
Company shareholders and management or any accrued fees or expense
reimbursements, at or prior to closing of a combination. Otherwise, there are no
conditions that any combination or combination candidate must meet, such as
buying stock from the Company's officers, directors or principal shareholders
("insiders") or paying compensation to any of the Company's insiders, or their
respective affiliates.
USE OF CONSULTANTS AND FINDERS
Although there are no current plans to do so, the Company's management
might hire and pay an outside consultant to assist in the investigation and
selection of candidates, and might pay a finder's fee to a person who introduces
a candidate with which the Company completes a combination. Since the Company
has no current plans to use any outside consultants or finders to assist in the
investigation and selection of candidates, no policies have been adopted
regarding use of consultants or finders, the criteria to be used in selecting
such consultants or finders, the services to be provided, the term of service,
or the structure or amount of fees that may be paid to them. However, because of
the limited resources of the Company, it is likely that any such fee the Company
agrees to pay would be paid in stock and not in cash. The Company has had no
discussions, and has entered into no arrangements or understandings, with any
consultant or finder. The Company's officers and directors have not in the past
used any particular consultant or finder on a regular basis and have no plan to
either use any consultant or recommend that any particular consultant be engaged
by the Company on any basis.
It is possible that compensation in the form of common stock, options,
warrants or other securities of the Company, cash or any combination thereof,
may be paid to outside consultants or finders. No securities of the Company will
be paid to officers, directors or promoters of the Company nor any of their
respective affiliates as a finder's fee. Any payments of cash to a consultant or
finder would be made by the business acquired or persons affiliated or
associated with it, and not by the Company. It is possible that the payment of
such compensation may become a factor in any negotiations for the Company's
acquisition of a business opportunity. Any such negotiations and compensation
may present conflicts of interests between the interests of persons seeking
compensation and those of the Company's shareholders, and there is no assurance
that any such conflicts will be resolved in favor of the Company's shareholders.
STATE SECURITIES LAWS CONSIDERATIONS
Section 18 of the Securities Act of 1933, as amended in 1996 (the
"Act"), provides that no law, rule, regulation, order or administrative action
of any state may require registration or qualification of securities or
securities transactions that involve the sale of a "covered security." The term
"covered security" is defined in Section 18 to include among other things
transactions by "any person not an issuer, underwriter or dealer," (in other
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words, secondary transactions in securities already outstanding) that are
exempted from registration by Section 4(1) of the Act, provided the issuer of
the security is a "reporting company," meaning that it files reports with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act.
Section 18 as amended preserves the authority of the states to require
certain limited notice filings by issuers and to collect fees as to certain
categories of covered securities, specifically including Section 4(1) secondary
transactions in the securities of reporting companies. Section 18 expressly
provides, however, that a state may not "directory or indirectly prohibit,
limit, or impose conditions based on the merits of such offering or issuer, upon
the offer or sale of any (covered) security. This provision prohibits states
from requiring registration or qualification of securities of an Exchange Act
reporting company which is current in its filings with the SEC.
The states generally are free to enact legislation or adopt rules that
prohibit secondary trading in the securities of "blank check" companies like the
Company. Section 18, however, of the Act preempts state law as to covered
securities of reporting company. Thus, while the states may require certain
limited notice filings and payment of filing fees by the Company as a
precondition to secondary trading of its shares in those states, they cannot, so
long as the Company is a reporting issuer, prohibit, limit or condition trading
in the Company's securities based on the fact that the Company is or ever was a
blank check company. The Company will comply with such state limited notice
filings as may be necessary in regard to secondary trading. At this time, the
Company's stock is not actively traded in any market, and an active market in
its common stock is not expected to arise, if ever, until after completion of a
business combination.
NO INVESTMENT COMPANY ACT REGULATION
Prior to completing a combination, the Company will not engage in the
business of investing or reinvesting in, or owning, holding or trading in
securities, or otherwise engaging in activities which would cause it to be
classified as an "investment company" under the Investment Company Act of 1940.
To avoid becoming an investment company, not more than 40% of the value of the
Company's assets (excluding government securities and cash and cash equivalents)
may consist of "investment securities," which is defined to include all
securities other than U.S. government securities and securities of
majority-owned subsidiaries. Because the Company will not own less than a
majority of any assets or business acquired, it will not be regulated as an
investment company. The Company will not pursue any combination unless it will
result in the Company owning at least a majority interest in the business
acquired.
COMPETITION
The Company will be in direct competition with many entities in its
efforts to locate suitable business opportunities. Included in the competition
will be business development companies, venture capital partnerships and
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corporations, small business investment companies, venture capital affiliates of
industrial and financial companies, broker-dealers and investment bankers,
management and management consultant firms and private individual investors.
Most of these entities will possess greater financial resources and will be able
to assume greater risks than those which the Company, with its limited capital,
could consider. Many of these competing entities will also possess significantly
greater experience and contacts than the Company's management. Moreover, The
Company also will be competing with numerous other blank check companies for
such opportunities.
EMPLOYEES
The Company does not have any employees and it is not expected to have
any employees except as a result of completing a combination. The Company's
Chairman, Ian Rice, provides consulting services to the Company pursuant to a
Consulting Agreement, dated as of July 1, 1997, as amended on October 10, 1997
(the "Consulting Agreement"), between the Company and Sigma Limited S. A., a
Swiss corporation ("Sigma"). The Consulting Agreement is for a period of three
years, requires Mr. Rice to devote so much of his business time and attention as
the Company may reasonably request from time to time and provides for the
payment of an annual fee of $147,000. In January 2000, Sigma agreed that if the
Company has insufficient funds to pay the required fee, the Company may defer
payment thereof until completion of a combination at which time all of the
accrued fee shall be due and payable.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The Company's plan of operation over the next twelve months is set
forth above under ITEM 1 (Description of Business). That plan of operation has
been adopted in order to attempt to create value for the Company's shareholders.
RESULTS OF OPERATIONS
The Company has been inactive since April 1999, when it disposed of all
of its then operations. Accordingly, management believes that comparison between
the results of operation for the current period and prior periods would not be
meaningful.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1999, the Company's principal sources of liquidity
consisted of cash of $130,000 and as of the date of this Registration Statement
the Company has approximately $30,000 in cash and no material liabilities except
for legal fees and expenses incurred and to be incurred in connection with the
preparation of this Registration Statement. The Company has no commitments for
any capital expenditure and foresees none. However, the Company will incur
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routine fees and expenses incident to its reporting duties as a public company,
and it will incur fees and expenses in the event it makes or attempts to make an
acquisition. The Company expects no significant operating costs other than
professional fees payable to attorneys and accountants and monthly rental
payments of approximately $1,500 for its executive office suite. In addition,
the Company is obligated to pay a monthly fee of $12,250 to Sigma Limited S.A.
for the consulting service, although Sigma has agreed that the Company may defer
payment of such fee until the completion of a combination transaction by the
Company.
The Company does not anticipate that funding will be necessary in order
to complete a proposed combination, except possibly for fees and costs of the
Company's professional advisers. Accordingly, there are no plans to raise
capital to finance any business combination, nor does management believe that
any combination candidate will expect cash from the Company. The Company hopes
to require the candidate companies to deposit with the Company an advance that
the Company can use to defray professional fees and costs and travel, lodging
and other due diligence costs of management. Otherwise, management would have to
advance such costs out of their own pockets, and there is no assurance that they
will advance such costs.
Other routine expenses, such as making required filings with the SEC
and office rent and related expenses will inevitably be incurred. In order to
pay these, the company will be forced to utilize the available funds, and, if
insufficient, will be forced to borrow money or prevail upon existing
shareholders to provide additional capital, whether as a loan or investment, to
the Company. It is by no means certain that existing shareholders will want or
be financially able to do so. There are no plans to sell additional securities
of the Company to raise capital. The company's failure for any reason to timely
file reports required under the Securities Exchange Act of 1934, as amended,
could subject it to fines and penalties and make it less desirable to a
potential combination candidate. None of these sources of funds is assured and,
if no funds can be raised, the Company may be effectively unable to pursue its
business plan.
The Company's shareholders and management members who advance money to
the Company to cover operating expenses will expect to be reimbursed by the
company acquired, prior to or simultaneously with the completion of a
combination. The Company has no intention of borrowing money to pay any officer,
director or shareholder of the Company or their affiliates.
YEAR 2000 ISSUES
The Company has no operations or revenues, does no business with
customers, vendors or suppliers, and has no material relationships with other
companies. Therefore, the Company has not experienced and does not anticipate
experiencing any problems due to year 2000 related issues. If general economic
problems resulting from year 2000 issues develop and are severe or prolonged,
however, demand for blank check companies could be reduced or eliminated for a
period of time.
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ITEM 3. DESCRIPTION OF PROPERTY
The Company does not own or lease any real property except for an
executive office suite leased from Sal Pension Fund until March 31, 2000 at a
monthly base rent of approximately $1,500. The lease is terminable by either
party on 30 days prior notice.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BENEFICIAL OWNERSHIP
The following table sets forth information as of the date hereof, based
on information obtained from the persons named below, with respect to the
beneficial ownership of the Common Stock by (i) each person known by the Company
to own beneficially 5% or more of the Common Stock, (ii) each director and
officer of the Company and (iii) all directors and officers as a group. The
number of shares of Common Stock owned are those "beneficially owned" as
determined under the rules of the Securities and Exchange Commission, including
any shares of Common Stock as to which a person has sole or shared voting or
investment power and any shares of Common Stock which the person has the right
to acquire within 60 days through the exercise of any option, warrant or right.
Number of Percent
Name and Address of Beneficial Owner Shares Owned Owned
------------ -------
Ian Rice.................................. 837,900 5.55%
c/o Ikon Ventures, Inc.
163-169 Brompton Road
London SW 3 1PY
England
All Executive Officers and Directors 837,900 5.55%
as a Group (3 persons)....................
CHANGES IN CONTROL
A change in control of the Company probably will occur upon
consummation of a business combination, which is anticipated to involve a
significant change in ownership of the Company and in the membership of the
board of directors. The extent of any such change of control in ownership or
board composition cannot be predicted at this time.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
DIRECTORS AND OFFICERS
The following table sets forth the name, age and position of each
director and executive officer of the Company as of the date hereof.
NAME AGE POSITION
Ian Rice 60 Chairman, Chief Executive Officer and Director
Stephen Gross 51 Treasurer and Director
Kurt Schlapfer 46 Secretary and Director
There are no family relationships among the officers and directors.
There is no arrangement or understanding between the Company (or any of its
directors or officers) and any other persons pursuant to which such person was
or is to be selected as a director or officer, or under which any officer or
director is acting or will act on behalf of or at the direction of any other
person. The directors and officers are expected to devote their time to the
Company's affairs on an "as needed" basis and in the case of Mr. Rice, as
reasonably requested by the Company, but are not required to make any specific
portion of their time available to the Company. It is anticipated that officers
and directors in the aggregate will, on average, devote no more than 30 hours
per week to the Company`s affairs.
Ian Rice has been Chairman, Chief Executive Officer and a director of
the Company since June 1997. From June 1999 to September 1999, Mr. Rice was
President and a director, and since September 1999 to date has been Chairman, of
Wall Street Strategies Corporation, a provider of financial services whose
shares are traded on the OTC Bulletin Board. From January 1994 until October
1996, Mr. Rice was Chairman and a director of Asia Media Communications, Ltd.
(n/k/a My Web Inc.com), then a holding company based in Switzerland whose shares
are traded on the OTC Bulletin Board. From November 1985, until the present, Mr.
Rice has been employed as a consultant to Sigma Limited S.A., a private
investment firm based in Switzerland.
Stephen Gross has been a director of the Company since June 1997. Mr.
Gross is a certified public accountant and since November 1970 to date, has been
the Chairman of the Board of HLB Gross Collins, P.C., an accounting firm located
in Atlanta, Georgia. During the past five years, Mr. Gross has been a director
of the following companies, all of whose shares are publicly traded: Charter
Bank & Trust from January 1987 to January 1997; Common Sense Trusts from January
1987 to date; Comstar.net, Inc. from November 1999 to date; e-bank,com, Inc.
from April 1998 to date; Van Kampen American Capital Bond Fund, Inc., SSB
Concert Investment Series, from January 1998 to date; Van Kampen American
Capital Exchange Fund from January 1996 to January 1998; Van Kampen American
Capital Convertible Securities from January 1996 to January 1998; Van Kampen
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Capital Income Trust from January 1996 to January 1998; Wall Street Strategies
Corporation from August 1999 to date; and WebMD, Inc. from January 1997 to
August 1998.
Kurt Schlapfer has been Secretary and a director of the Company since
June 1997. From October 1997 to date, Mr. Schlapfer has been President and Chief
Executive Officer of JML Portfolio Management Ltd., a private investment advisor
based in Zug, Switzerland. From February 1992, until June 1998, Mr. Schlapfer
was a director, and from June 1995 until June 1998, the President and Chief
Financial Officer, of Marshall Minerals Corp., a Canadian gold mining company
whose shares are publicly traded on the Toronto Stock Exchange. From June 1996,
until June 1998, Mr. Schlapfer was a director of Eden Roc Mineral Corp., a
Canadian gold mining company whose shares are publicly traded on the Toronto
Stock Exchange.
PRIOR EXPERIENCE WITH BLANK CHECK COMPANIES
None of the officers or directors of the Company has ever been an
executive officer or director of a blank check or "blind pool" company that
conducted a public offering. Mr. Rice has, however, been an executive officer
and director of two blank check companies (one of which, Asia Media
Communications, Ltd., was a reporting company, i.e., required to file periodic
reports with the SEC, while Mr. Rice served in such capacities), and his
experience is detailed below.
1. Asia Media Communications, Ltd. (n/k/a My Web Inc.com)("AMCL") -
Organized in 1985 in Nevada. In January 1994, as part of a federal bankruptcy
court approved plan of reorganization, AMCL acquired all of the assets of a
corporation owned and controlled by Mr. Rice and his daughter consisting of a
film library. In connection with such acquisition, Mr. Rice and his daughter
were issued 3,800,000 shares of AMCL, representing approximately 54% of the then
total issued and outstanding capital stock of AMCL, and Mr. Rice and his
daughter were elected as directors and Mr. Rice was elected as Chairman and
Chief Executive Officer of AMCL. Commercial exploitation of the film library
proved not viable and the Company was inactive until March 18, 1996 when it
merged with Kremlyovskaya Group, Inc. ("KGI"), a privately held corporation
engaged in the distribution of a proprietary premium brand of vodka and other
luxury goods. In connection with the merger, the former shareholders of KGI were
issued a controlling interest in the shares of AMCL, all of the directors of
AMCL immediately prior to the merger other than Mr. Rice resigned and Mr. Rice
and his daughter voluntarily canceled 3,0592,000 shares of AMCL common stock
owned by them. Mr. Rice remained a director and the Chairman.
On October 9, 1996, the merger with KGI was rescinded on account of
certain breaches of the representations and warranties made by the former
shareholders of KGI and all of the shares of AMCL issued to such shareholders
were canceled. As a result, Mr. Rice again became the controlling shareholder of
AMCL.
In October 1997, Mr. Rice and another shareholder of AMCL, sold to an
unrelated party 2,220,000 and 1,435,667 shares, respectively of AMCL for an
aggregate consideration of $150,000 (approximately $.04 per share) and Mr. Rice
resigned as an officer and director of AMHL. Mr. Rice was retained for a period
of 90 days as a consultant to AMCL for which he received 750,000 shares of AMCL.
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2. Wall Street Strategies Corporation ("WSSC") - Organized in 1999 in
Nevada under the name Vacation Emporium Corporation as a successor to The
Vacation Emporium International, Inc., a Colorado corporation. In June 1999, Mr.
Rice purchased 8,000,000 shares of common stock of WSSC, representing
approximately 57% of the total shares of WSSC common stock then issued and
outstanding, for $20,000 and was elected the sole director and President of
WSSC. At the time, WSSC was a blank check company. In September 1999, WSSC
acquired all of the capital stock of Wall Street Strategies Inc., a private
company engaged in providing financial services, in exchange for 9,455,898
shares of WSSC's common stock, representing approximately 53.84% of the total
shares of WSSC common stock then issued and outstanding. Mr. Rice resigned as
president but was elected Chairman and as of the date of this Registration
Statement is Chairman of WSSC. Mr. Rice has not sold or otherwise disposed of
any of his shares of WSSC common stock except that immediately prior to the
acquisition he voluntarily canceled 7, 850,000 of his shares in WSSC.
POTENTIAL CONFLICTS OF INTEREST
None of the Company's officers or directors are presently affiliated
with any other company having a similar business plan to that of the Company. If
any officer or director should become so affiliated, the interests of such
company may from time to time be inconsistent in some respects with the
interests of the Company because both may be competing directly or indirectly
for the acquisition of a combination candidate. There may be factors that make
the Company or such other company more or less attractive to a potential
combination candidate, such as age of the company, name, capitalization, state
of incorporation, articles of incorporation or by-law provisions, etc. However,
any such conflicts would not be expected to be resolved through arm's-length
negotiation, but rather in the discretion of management.
Certain conflicts of interest may also arise between the Company and
its officers and directors due to the fact that each has other employment and
business interests to which he devotes his primary attention. The Company has
not established policies or procedures for the resolution of conflicts of
interest between the Company and its management.
There can be no assurance that members of management will resolve all
conflicts of interest in the Company's favor. The officers and directors of the
Company are accountable to the Company and its shareholders as fiduciaries,
which means that they are legally obligated to exercise good faith and integrity
in handling the Company's affairs and in their dealings with the company.
Failure by them to conduct the Company's business in its best interests may
result in liability to them.
ITEM 6. EXECUTIVE COMPENSATION
CASH AND OTHER COMPENSATION
During the three preceding fiscal years, the Company has not paid any
cash or cash equivalent compensation to any named executive officer or director
of the Company except as follows:
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SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------------------------------------------
Name and Other Annual
Principal Position Year Salary Bonus Compensation
($) ($) ($)
(a) (b) (c) (d) (e)
Ian Rice, CEO 1996 $0.00 $0.00 $0.00
1997 $64,000* $0.00 $0.00
1998 $147,000* $0.00 $0.00
*Paid as a consulting fee to Sigma Limited S.A., a Swiss corporation ("Sigma"),
for the services of its consultant, Ian Rice, pursuant to a Consulting
Agreement, dated as of July 1, 1997 and as amended on October 27, 1997. The
agreement expires on July 1, 2000 and provides for the payment of an annual
consulting fee of $147,000. On January 10, 2000, Sigma agreed that if the
Company had insufficient funds to pay the required consulting fee the Company
could defer payment thereof until such time as the Company completed a
combination transaction. All of the capital stock of Sigma is owned by a
discretionary trust of which Mr. Rice is neither a trustee nor a beneficiary.
Among the discretionary beneficiaries of the trust are members of Mr. Rice's
family. Mr. Rice disclaims beneficial ownership of Sigma. Since the date of the
Consulting Agreement between the Company and Sigma, Mr. Rice has not received
any consulting fees from Sigma.
COMPENSATION PURSUANT TO PLANS
No director or executive officer has received compensation from the
Company pursuant to any compensatory or benefit plan. There is no plan or
understanding, express, or implied, to pay any compensation to any director or
executive officer pursuant to any compensatory or benefit plan of the Company,
although the Company anticipates that it may compensate its officers or
directors for services to the Company with options to purchase stock, in lieu of
cash.
In June 1997, the Company's board of directors adopted an incentive
program and pursuant thereto granted options to various officers and directors,
all subject to approval by the Company's shareholders. The program was never
approved by shareholders and in 1998 the program and the options granted
thereunder were terminated. In 1999, the board of directors adopted and the
shareholders approved an incentive program. The Company has no long-term
incentive plan, as that term is defined in the rules and regulations of the SEC.
1999 INCENTIVE PROGRAM
The Company has adopted the 1999 Incentive Program (the "Program") that
permits the granting of any or all of the following types of awards: stock
options, including incentive stock options, stock appreciation rights in tandem
with stock options or free standing and restricted stock grants. The purpose of
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the Program is to promote the growth of the Company by enabling the Company to
attract and retain the best available persons for positions of substantial
responsibility and to provide certain key employees with additional incentives
to contribute to the success of the Company.
The aggregate number of shares that may be issued or transferred under
the Program is 2,225,000, plus (i) any shares that are forfeited under the
program, plus (ii) the number of shares repurchased by the company in the open
market and otherwise with an aggregate price no greater than the cash received
by the Company from the sale of shares under the Program; plus (iii) any shares
surrendered to the Company in payment of the exercise price of options issued
under the Program. However, no award may be issued that would bring the total of
all outstanding awards under the Program to more than 15% of the total number of
shares of Common Stock of the Company at the time outstanding.
Eligible participants under the program include executives, directors,
professional or administrative employees, consultants or advisors to the Company
or any subsidiary thereof, all of whom are referred to as "Grantees." Incentive
stock options may be granted under the Program only to selected employees
(including officers) of the Company and its affiliates. All Grantees may be
awarded grants under the Program other than incentive stock options.
The maximum term of incentive stock options under the Program is 10
years, except that in certain cases, as discussed below, the maximum term is
five years. The exercise price of incentive stock options under the program may
not be less than the fair market value of the common Stock subject to the option
on the date of grant and, in some cases, as discussed below, may not be less
than 110% of such fair market value. The exercise price of non-qualified options
under the Program is determined by the Company's board of directors (or a
committee thereof if so appointed) which is the administrator of the Program.
No incentive stock option may be granted under the Program to any
person who, at the time of grant, owns (or is deemed to own) stock possessing
more than 10% of the total combined voting power of the Company or any affiliate
of the Company, unless the option price is at least 110% of the fair market
value of the stock subject to the option on the date of grant, and the term of
the option does not exceed five years from the date of grant. For incentive
stock options granted under the program. The aggregate fair market value,
determined at the date of grant, of the shares of Common Stock with respect to
which such options are exercisable for the first time by any grantee during any
calendar year may not exceed
Grants under the program may only be exercised while the Grantee is in
the employment or consultancy of the Company, except that the board may grant
may provide for partial or complete exceptions to this requirement. The Program
terminates on the tenth anniversary of its effective date unless terminated
earlier by the board or extended by the board.
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has not entered into any transactions during the last two
fiscal years with any director, executive officer, director nominee, 5% or more
shareholder, nor has the Company entered into transactions with any member of
the immediate families of the foregoing persons (includes spouse, parents,
children, siblings, and in-laws) nor is any such transaction proposed, except
that during 1998 the Holding Societa Per La Generale Fisica E Chimica Spa in
Proprieta Mista (Holding Institute of General & Physical Chemistry), the then
owner of approximately 10% of the Company's issued and outstanding shares of
Common Stock and controlled by Professor Dusan Vucelic, the then President and a
director of the Company, provided certain technical assistance to the Company's
then 90% owned subsidiary, Zeolite Mira s.r.l. for which the Company paid the
Institute $122,000.
It is the policy of the Company with respect to insider transactions,
that all transactions between the Company, its officers, directors, principal
stockholders and their affiliates be on terms no less favorable to the Company
than could be obtained from unrelated third parties in arms-length transactions,
and that all such transactions shall be approved by a majority of the
disinterested members of the board of directors. The Company believes that the
transaction described above complied with such policy.
In addition, on January 10, 2000, Sigma Limited S.A., the provider of
Ian Rice's services to the Company, agreed that the Company may defer any
consultancy fees payable to Sigma until such time as the Company completes a
combination transaction whereupon all deferred fees shall be due and payable.
ITEM 8. DESCRIPTION OF SECURITIES
GENERAL
The Company's authorized capital consists of 100,000,000 shares of
Common Stock, par value $.001 per share. As of the date of this Registration
Statement, the Company has outstanding 15,105,000 shares of Common Stock.
COMMON STOCK
Holders of shares of Common Stock are entitled to one vote per share at
all meetings of stockholders. Stockholders are not permitted to cumulate votes
in the election of directors. All shares of Common Stock are equal to each other
with respect to liquidation rights and dividend rights. There are no preemptive
rights to purchase any additional shares of Common Stock. In the event of
liquidation, dissolution or winding up of the Company, holders of the Common
Stock will be entitled to receive on a pro rata basis all assets of the Company
remaining after satisfaction of all liabilities. The outstanding shares of
Common Stock are duly and validly issued, fully paid and non-assessable.
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WARRANTS
In connection with a private placement in July 1997, the Company issued
1,600,000 Units, each unit consisting of one share of Common Stock and one
warrant to purchase one-half share of Common Stock at an exercise price equal to
$7.50 per share (the "Warrants"). The Warrants are exercisable at any time after
issuance until three years after the closing of the private placement. The
Company is entitled to accelerate the exercise period at any time after the
Common Stock has traded for 21 consecutive days with a daily closing price of at
least $10.00 per share. If the Company accelerates the exercise period of the
Warrants, the warrant holders will have 10 days to exercise the Warrants, after
which time each outstanding Warrant will automatically become null and void. As
of the date of this Registration Statement, none of the Warrants has been
exercised.
TRANSFER AGENT
Madison Stock Transfer, Inc., 1813 East 24th Street, Brooklyn, New York
11229, is the transfer agent and registrar for the Common Stock.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
MARKET PRICE FOR COMMON STOCK
The Company's Common Stock traded on the OTC Bulletin Board under the
symbol "IKON" from May 1997 until January 11, 2000. Since January 13, 2000, the
Company's Common Stock has traded on the National Quotation Bureau's pink sheets
under the symbol "IKON". The following table sets forth the high and low closing
bid prices for the Common Stock for the periods indicated.
HIGH LOW
Year Ended December 31, 1998
First Quarter......................... $7.25 $5.375
Second Quarter........................ 5.75 3.00
Third Quarter......................... 3.00 1.125
Fourth Quarter........................ 1.50 .40625
Year Ended December 31, 1999
First Quarter......................... $.625 $.15625
22
<PAGE>
Second Quarter........................ .25 .0625
Third Quarter......................... .20 .065
Fourth Quarter........................ .10 .03
Year Ended December 31, 2000
First Quarter through January 26, 2000 $.10 $.01
On January 26, 2000 the closing bid price of the Common Stock on the
National Quatotion Bureau's pink sheets was $.01.
PENNY STOCK RULES
Unless and until the Common Stock is quoted on the Nasdaq system or on
a national securities exchange and so long as the Common Stock trades below
$5.00 per share, the Common Stock would come within the definition of "penny
stock" as defined in the Exchange Act and be covered by Rule 15g-9 of the
Exchange Act. That rule imposes additional sales practices requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5 million or individuals with net worth in excess of $1 million or annual
income exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by Rule 15g-9, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to sale. Consequently, the applicability of
Rule 15g-9 may effect the ability or willingness of broker-dealers to sell the
Company's securities.
RULE 144 RESALES
As of the date of the Registration Statement the Company has 15,105,000
shares of Common Stock issued and outstanding, of which approximately 13,319,955
shares are unrestricted and may be freely traded in the securities markets.
There are in addition approximately 1,385,000 shares of Common Stock that have
been issued and outstanding, and fully paid, for more than two years that could
be resold pursuant to Rule 144 under the Act. Rule 144 provides that a person
who acquired securities in a private placement transaction and has beneficially
owned those securities, fully paid, for a period of at least one year may, under
certain conditions, sell every three months, in brokerage transactions, a number
of shares that does not exceed one percent (1`%) of the issuer's outstanding
common stock. For issuers whose shares are listed on a stock exchange or Nasdaq
, a shareholder may alternatively sell a number of shares that does not exceed
the average weekly trading volume during the four calendar weeks prior to his or
her sale.
However, if a person has beneficially owned securities for a period of
at least two years and has not been an affiliate (control person) of the issuer
for the preceding three-month period, the person may request that all
23
<PAGE>
restrictive legends affecting the securities be removed, and there is no limit
on the number of shares that the non-affiliate may then sell. The sale of a
substantial number of shares of the Company under Rule 144 or under any other
exemption from the Act could have a depressive effect upon the price of the
Common Stock.
RELATED STOCKHOLDER MATTERS
The Company has not agreed to register any shares of Common Stock under
the Act for sale by security holders except that the Company has granted
piggy-back registration rights to Ludgate Communications Inc. and its assignee
with respect to 400,000 shares of Common Stock.
The Company is not, and has not proposed to, publicly offer any shares
of Common Stock.
HOLDERS OF RECORD
As of January 13, 2000, there were 89 holders of record of the
Company's Common Stock, and the number of beneficial holders was approximately
139.
DIVIDENDS
The Company has never paid a cash dividend on its Common Stock nor does
the Company anticipate paying cash dividends on its Common Stock in the near
future. It is the present policy of the Company not to pay cash dividends on the
Common Stock but to retain earnings, if any, to fund growth and expansion. Under
Nevada law, a Company is prohibited from paying dividends if the Company, as a
result of paying such dividends, would not be able to pay its debts as they come
due, or if the Company's total liabilities and preferences to preferred
shareholders exceed total assets. Any payment of cash dividends of the Common
Stock in the future will be dependent upon the Company's financial condition,
results of operations, current and anticipated cash requirements, plans for
expansion, as well as other factors the board of directors deems relevant.
ITEM 2. LEGAL PROCEEDINGS
As of the date hereof, the Company is not a party to any material
pending legal proceeding and is not aware of any threatened legal proceeding.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change in principal independent accountants or
reported disagreements on any matter of accounting principles or procedures or
financial statement disclosures during the Company's two most recent fiscal
years.
24
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
No securities that were not registered under the Act have been issued
or sold by the Company within the past three years, except as described below.
1. On March 5, 1987, the Company issued 25,550,000 shares of Common
Stock to the shareholders of its then parent corporation, Northline Industrial
Corporation, in connection with the merger of the parent into the Company for
the sole purpose of reincorporating the parent in the State of Nevada. The
shares were issued in reliance upon Rule 145 (a)(2) as promulgated by the SEC
under the Act.
2. On June 11, 1997, the Company completed a private placement of its
Common Stock to 20 investors pursuant to Rule 504 of Regulation D, as
promulgated by the SEC under the Act. The Company issued 9,500,000 shares of its
Common Stock at $0.10 per share. The shares were issued to the following
investors:
Number of Shares Amount
Name of Investor Purchased Invested
---------------- ---------------- --------
Avatar Business Corp. 500,000 $ 50,500
Beltown Investments Holding Ltd. 475,000 $ 47,500
Corevalor Investments & Finance
Establishment 475,000 $ 47,500
DG Bank (Schweiz) AG 500,000 $ 50,000
First Capital Investment Corp. 500,000 $ 50,000
Givigest SA 500,000 $ 50,000
HAPI Handels-und Beteiligungs-
gesellschaft 475,000 $ 47,500
mbH
Japonica Ventures Ltd. 300,000 $300,000
Kirkwood Investments Trading Ltd. 475,000 $ 47,500
Noble Trading Limited 400,000 $ 40,000
Partner Marketing AG 475,000 $ 40,000
Perkhill Investments Ltd. 300,000 $ 30,000
President Holdings Ltd. 475,000 $ 47,500
Prevost holding Limited 300,000 $ 30,000
Rice, Ian 1,000,000 $100,000
Tech Pacific Company 475,000 $ 47,500
25
<PAGE>
Number of Shares Amount
Name of Investor Purchased Invested
---------------- ---------------- --------
Turf Holding Limited 400,000 $ 40,000
Valorinvest Ltd. 500,000 $ 50,000
Value Invest Inc. 500,000 $ 50,000
Vaglio Investments Ltd. 475,000 $ 50,000
3. On June 12, 1997, the Company issued an aggregate of 4,770,000
shares of Common Stock as follows: 180,000 shares of Common Stock to the Holding
Societa Per La Generale Fisica E Chemica Spa In Proprieta Mista (Holding
Institute of General & Physical Chemistry)(the "Institute") as consideration for
the purchase of the Institute's 40% interest in the capital stock of Zeolite
Mira s.r.l. ("Zeolite"); 1,020,000 shares of Common Stock to the Institute as
consideration for the purchase from the Institute of all of the capital stock of
Deacon Holding N.V. ("Deacon"); 1,275,000 shares of Common Stock to Professor
Dusan Vucelic as consideration for the conveyance by Professor Vucelic to Deacon
of certain intellectual property rights related to the detergent industry; and
an aggregate of 2,295,000 shares of Common Stock to the Institute and Professor
Vucelic as additional consideration in connection with the purchase by the
Company of Deacon and the additional intellectual property rights, all of such
shares to be held in escrow and to be released based upon the cash flow to be
generated by Zeolite over a period of 10 years but, in any event, at the end of
such period. All of the foregoing shares were canceled in July 1998 and March
1999 in connection with the sale of Deaon to Professor Vucelic and the sale of a
portion of the Company's interest in Zeolite to the Institute. All of the
foregoing offers and sales were made to sophisticated investors in reliance upon
the exemption provided by Section 4(2) of the Act. The certificates representing
all shares issued were stamped with a legend restricting transfer of the shares
represented thereby, and the Company issued stop transfer instructions to its
transfer agent.
4. On October 9, 1997, the Company issued an aggregate of 1,600,000
Units at $5.00 per Unit, or an aggregate gross proceeds of $8,000,000. Each Unit
consisted of one share of Common Stock and one Warrant to purchase one-half
share of Common Stock at an exercise price equal to $7.50 per share until the
third anniversary of the closing of the offering. The Units were issued to the
following investors:
Number
of Units Amount
Name of Investor Purchased Invested
---------------- --------- -------------
Richard Ansley 5,000 $25,000.00
Bank J. Vontobel & Co. AG 95,000 $475,000.00
Bank Sal. Oppenheim Jr. & Cie
(Schweiz) AG 20,000 $100,000.00
Bank Sarasin & CIE 500,000 $2,500,000.00
26
<PAGE>
Number
of Units Amount
Name of Investor Purchased Invested
---------------- --------- -------------
Colin Bennett 5,000 $25,000.00
Pierre Besuchet 100,000 $500,000.00
Pierre Besuchet 100,000 $500,000.00
Maria Bilgeri 20,000 $100,000.00
Andrew Paul Butler 1,000 $5,000.00
Ken Cashion 10,000 $50,000.00
James A. Causier 5,000 $25,000.00
Credit Lyonnais (Schweiz) AG 75,000 $375,000.00
Credit Lyonnais (Schweiz) AG 80,000 $400,000.00
Credit Suisse 53,000 $265,000.00
John Daoud 15,000 $75,000.00
Clarence P. Davis 5,000 $25,000.00
David G. Davis 10,000 $50,000.00
Joerg F. Debatin 5,000 $25,000.00
Claudia Dornier 2,000 $10,000.00
EH&P Investments AG 50,000 $250,000.00
Thomas Etterlin 2,000 $10,000.00
G.C. Legge Holdings 5,000 $25,000.00
George D. Galer 15,000 $75,000.00
John R. Galer 5,000 $25,000.00
Robert J. Galer 15,000 $75,000.00
Lydia Glystras 15,000 $75,000.00
William Hinchcliff 40,000 $200,000.00
Peter A. Huber 5,000 $25,000.00
Barbara Hutter 5,000 $25,000.00
Thomas & Dale Krikke 3,000 $15,000.00
K.S. Lee 10,000 $50,000.00
Donald McGee 10,000 $50,000.00
Jalil A. Mirza 5,000 $25,000.00
27
<PAGE>
Number
of Units Amount
Name of Investor Purchased Invested
---------------- --------- -------------
Mufour SA 10,000 $50,000.00
Chris Potter 10,000 $50,000.00
Therese Ryser 5,000 $25,000.00
Lorne Salmond 6,000 $30,000.00
Ernst Schlotter 3,000 $15,000.00
Ernst Schlotter 7,000 $35,000.00
Christine Silberschmidt 3,000 $15,000.00
Maria Steiner 3,000 $15,000.00
Donald J. Stuart 5,000 $25,000.00
Von Graffenried AG 50,000 $250,000.00
Whalen Beliveau & Associates 100,000 $500,000.00
Whalen, Beliveau & Associates 100,000 $500,000.00
John Williamson 2,000 $10,000.00
X. Zong Ltd. 5,000 $25,000.00
The Units were issued to accredited investors in a private offering in reliance
upon the exemption provided by Section 4(2) of the Act. Each investor was
furnished with information regarding the offering and the Company and each had
the opportunity to verify the information supplied. Additionally, the Company
obtained a representation from each investor of such investor's intent to
acquire the securities for the purpose of investment only, and not with a view
toward the subsequent distribution thereof. The securities bear appropriate
restrictive legends.
5. October 27, 1998, the Company issued an aggregate of 1,000,000
shares of Common Stock at $.80 per share to MFC Merchant Bank S.A., an
accredited investor, pursuant to Rule 504 of Regulation D, as promulgated by the
SEC under the Act.
6. On February 18, 1999, the Company issued to David Palmer, its then
Chief Financial Officer, a warrant to purchase 50,000 shares of Common Stock at
$.001 in connection with his employment by the Company. The warrant was
exercised in April 1999, at which time 50,000 shares of Common Stock were issued
to Mr. Palmer. The warrant and the shares issued upon exercise thereof were
offered and sold to a sophisticated investor in reliance upon the exemption
provided by Section 4(2) of the Act. The securities have been appropriately
legended and the Company received from Mr. Palmer a representation regarding his
intent to acquire the securities for the purpose of investment only, and not
with a view toward the subsequent distribution thereof.
28
<PAGE>
7. On January 28, 2000, the Company issued to Ludgate Communications,
Inc., and its designee, Jeremy T. Glantz, an aggregate of 400,000 shares of
Common Stock as partial payment for certain public relations services rendered
to the Company by Ludgate. The foregoing offers and sales were made to
sophisticated parties in reliance upon the exemption provided by Section 4(2) of
the Act. Each party was furnished with information regarding the Company and
each had an opportunity to verify the information supplied. Additionally, the
Company obtained a representation from each party of its intention to acquire
the securities for the purpose of investment only, and not with a view toward
the subsequent distribution thereof. The securities bear appropriate restrictive
legends.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Nevada General Corporation Law ("NGCL") permits corporations to
indemnify any director, officer, employee or agent of a corporation from and
against any and all expenses and other liabilities incurred in connection with
any threatened, pending or completed action or proceeding, whether civil,
criminal administrative or investigative, except an action by or in the right of
the corporation, if such person acted in good faith and in a manner which such
person 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
reasonable cause to believe his conduct was unlawful.
In addition, under the NGCL, a corporation may indemnify any director,
officer, employee or agent of a corporation from and against any and all
expenses and other liabilities incurred in connection with any threatened,
pending or completed action or suit by or in the right of the corporation if
such person acted in good faith and in a manner which such person reasonably
believed to be or not opposed to the best interests of the corporation. However,
the NGCL provides that indemnification may not be made with respect to any
matter as to which a person has been determined to be liable to the corporation
by a court of competent jurisdiction in a final adjudication, unless and only to
the extent that the court in which the action was brought or another court of
competent jurisdiction determines that the person is entitled to indemnity.
The NGCL further provides that a corporation must indemnify any
director, officer, employee or agent of a corporation from and against any and
all expenses incurred by such person in the defense of any action, suit or
proceeding, provided that such person has been successful in the defense of such
suit.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that, in the opinion of the SEC, such indemnification is against
public policy as expressed in that Act and is, therefore, unenforceable.
Furthermore, a successful indemnification of any officer or director could
deplete the assets of the Company.
29
<PAGE>
PART F/S
(1) Audited Financial Statements
Independent Auditor's Report
Consolidated Balance Sheets at December 31, 1998 and 1997 Consolidated
Statements of Operations for the year ended
December 31, 1998 and 1997
Consolidated Statements of Stockholders' Equity for the
year ended December 31, 1998 and 1997
Consolidated Statements of Cash Flows for the years
ended December 31, 1998 and 1997
Notes to Consolidated Financial statements
(2) Management Prepared Interim Financial Statements (Unaudited)
Consolidated Balance Sheets at September 30, 1999 and 1998 Consolidated
Statements of operations for the nine months
ended September 30, 1999 and 1998
Consolidated Statements of Stockholders' Equity for the
nine months ended September 30, 1999 and 1998
Consolidated Statements of Cash flows for the nine
months ended September 30, 1999 and 1998
Consolidated Statements of Stockholders' Equity for
the nine months ended September 30, 1999 and 1998
Notes to Consolidated Financial Statements
30
<PAGE>
kpmg
PO Box 695
8 Salisbury Square
London EC4Y 8BB
United Kingdom
Report of the auditors to the members of Ikon Ventures, Inc.
The Board of Directors and Stockholders
We have audited the accompanying consolidated balance sheets of Ikon Ventures,
Inc. and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
two years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of IKON Ventures, Inc.
and subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for the two years then ended in conformity with
U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that Ikon
Ventures, Inc. and subsidiaries will continue as a going concern. As discussed
in note 2 to the financial statements, Ikon Ventures, Inc. and subsidiaries have
suffered losses from operations resulting in significantly depleted cash flows.
These matters raise substantial doubt about the ability of Ikon Ventures, Inc.
and subsidiaries to continue as a going concern. The directors plans in regard
to these matters are also described in note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
KPMG
Chartered Accountants 15 July, 1999
Registered Auditors
31
<PAGE>
Ikon Ventures, Inc.
Consolidated balance sheets
at December 31, 1998 and 1997
Note 1998 1997
$000 $000
Assets
Current assets
Cash and cash equivalents 166 2,576
Trade accounts receivable, net 744 288
Prepaid and other current assets 95 -
----- ------
Total current assets 1,005 2,864
Property, plant and equipment, net 52 715
Net assets of discontinued operations 4 600 11,065
----- ------
Total assets 1,657 14,644
===== ======
The accompanying notes are an integral part of these consolidated financial
statements.
32
<PAGE>
Ikon Ventures, Inc.
Consolidated balance sheets (continued)
at December 31, 1998 and 1997
1998 1997
$000 $000
Liabilities and stockholders' equity
Current liabilities
Bank overdraft - 26
Trade accounts payable 294 898
Accrued expenses and other 92 1
----- -----
Total current liabilities 386 925
Other liabilities 80 80
----- -----
Total liabilities 466 1,005
----- -----
Stockholders' equity
Common stock, $0.001 par value. Authorised
100,000,000 shares; issued and outstanding
14,835,000 shares in 1998 and 16,130,000
shares in 1997 15 16
Additional paid-in capital 11,720 18,017
Accumulated deficit (10,544) (4,394)
------- ------
Total stockholders' equity 1,191 13,639
------- -------
Total liabilities and stockholders' equity 1,657 14,644
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
33
<PAGE>
Ikon Ventures, Inc.
Consolidated statements of operations
for the year ended December 31, 1998 and 1997
Note 1998 1997
$000 $000
Net sales - continuing operations - -
Cost of goods sold - continuing operations - -
------- -------
Gross profit - continuing operations - -
Selling, general and administrative expenses (1,767) (1,748)
Provision for loss on disposal - Deacon Holding - (2,272)
Provision for loss on disposal - Zeolite Mira (87) -
Loss on disposal - Bexley subsidiary (247) -
------- -------
Operating loss - continuing operations (2,101) (4,020)
Other income (expense), net 47 (12)
Loss from continuing operations before
provision for income taxes (2,054) (4,032)
Provision for income tax 7 - (80)
------- -------
Loss from continuing operations (2,054) (4,112)
Net loss from discontinued operations 4 (3,939) (257)
Provision for loss on disposal of discontinued
operations 4 (491) (2,272)
------- -------
Net loss 2 (6,150) (4,369)
======= =======
Loss per common share (Basic)
($0.41) ($0.27)
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
34
<PAGE>
Ikon Ventures, Inc.
Consolidated statements of stockholders' equity
for the year ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Total
Common Additional Accumulated stockholders
Shares stock capital deficit equity
$000 $000 $000 $000
----------- ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balances at December 31 ,
1996 25,550,000 26 25 (25) 3
Reverse split of common
stock on a one for ten (22,995,000) (23) 1 - 1
basis
Issuance of common stock
for cash at $0.10 per share 9,500,000 9 941 - 950
Issuance of common stock
for cash at $5 per share 1,600,000 2 7,998 - 8,000
Issuance of shares for
intellectual property at
$4 2,295,000 2 9,178 - 9,180
per share
Issuance of shares to
acquire subsidiary
undertaking at $4 per share 180,000 - 720 - 720
Share issue expenses (846) - (846)
Net loss (4,369) (4,369)
---------- --- ------ ------- -------
Balances at December 31,
1997 16,130,000 16 18,017 (4,394) 13,639
Retirement of shares in
connection with Deacon
sale (2,295,000) (2) (6,906) - (6,908)
Issuance of common stock
for cash at $0.80 per share 1,000,000 1 800 - 801
Share issue expenses - - (191) - (191)
Net loss - - - (5,993) (5,993)
---------- --- ------ -------- -------
Balances at December 31,
1998 14,835,000 15 11,720 (10,387) 1,348
========== === ====== ======== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
35
<PAGE>
Ikon Ventures, Inc.
Consolidated statements of cash flows
for the years ended December 31, 1998 and 1997
Note 1998 1997
$000 $000
Net cash used by operating activities 8 (3,020) (4,693)
Cash flows from investing activities
Acquisition of subsidiaries - (1,028)
Net cash acquired on acquisition of subsidiaries - 190
------- -------
Net cash used in investing activities - (838)
Cash flows from financing activities
Proceeds from issuance of common stock 610 8,105
------- -------
Net cash provided by financing activities 610 8,105
Net increase/(decrease) in cash and cash equivalents (2,410) 2,574
Cash and cash equivalents at beginning of year 2,576 2
------- -------
Cash and cash equivalents at end of year 166 2,576
======= =======
Major non-cash transactions
During 1998 the Company disposed of Deacon Holding N.V. (as described in note
3), for consideration of $6,908,000 through the return of 2,295,000 shares of
the Company's common stock.
The accompanying notes are an integral part of these consolidated financial
statements.
36
<PAGE>
Ikon Ventures, Inc.
Notes to Financial Statements
(forming a part of the financial statements)
1 Summary of significant accounting policies and practices
(a) Description of Business
Ikon Ventures Inc. ("the Company") was incorporated in Nevada on May 31, 1997.
The Company operates a Zeolite and related chemicals production facility in
Mira, Italy, through its main subsidiary Zeolite Mira S.r.l. ("Zeolite Mira").
The Company's customers are major European detergent companies with a small
proportion of production being sold through trading companies.
In recent years the majority of sales have been to one European detergent
company which occupies a shared chemical site in Mira. This company is also the
provider of a number of critical services to Zeolite Mira. Sales of product and
purchase of services are controlled by a medium term agreement.
Raw materials are readily available and comprise commodity chemicals purchased
in bulk from major corporations or through intermediate trading companies. No
one supplier has control over the supply of these raw materials which are
available at market prices. Zeolite Mira was sold subsequent to the year end and
is treated as a discontinued operation in the consolidated financial statements
and accompanying notes.
(b) Principles of Consolidation
The consolidated financial statements include the financial statements of the
Company and its subsidiaries. The company does not recognize receivables from
minority interests in respect of deficits on shareholders' equity. All
significant inter-company balances and transactions have been eliminated on
consolidation.
(c) Cash Equivalents
The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
(d) Inventories
Inventories are stated at the lower of cost or market value. Cost is determined
using the weighted average method for all inventories.
(e) Property, Plant, and Equipment
Property, plant, and equipment are stated at cost. Depreciation on plant and
equipment is calculated on the straight-line method over the estimated useful
lives of the assets.
37
<PAGE>
Notes to Financial Statements (continued)
1 Summary of significant policies and practices (continued)
(f) Intangible Assets
Intangible assets consist principally of patents. The cost of patents is
amortized on a straight line basis over the estimated useful lives of the
respective assets.
(g) Research and Development
Research and development costs are expensed as incurred. Research and
development costs for the years ended December 31, 1998 and 1997 amounted to
$52,700 and $46,000 respectively.
(h) Year 2000
In June 1998, the Company developed a plan to deal with their Year 2000 issues.
The plan provides for the computer systems to be year 2000 compliant by the end
of 1999. The total costs of the project are believed by the directors to be
insignificant and are being expensed as they arise.
(i) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
(j) Commitments and Contingencies
Liabilities for loss contingencies, including environmental remediation costs,
arising from claims, assessments, litigation, fines and penalties, and other
sources are recorded when it is probable that a liability has been incurred and
the amount of the assessment and/or remediation can be reasonably estimated.
Recoveries from third parties which are probable of realization are separately
recorded, and are not offset against the related environmental liability, in
accordance with Financial Accounting Standards Board Interpretation No. 39,
Offsetting of Amounts Related to Certain Contracts.
In October 1997, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 96-1, Environmental Remediation Liabilities. SOP
96-1 was adopted by the Company on January 1, 1998, and requires, among other
things, environmental remediation liabilities to be accrued when the criteria of
Statement of Financial Accounting Standards
38
<PAGE>
Notes to financial statements (continued)
1 Summary of significant accounting policies and practices (continued)
("SFAS") No. 5, Accounting for Contingencies, have been met. The guidance
provided by SOP 96-1 is consistent with the Company's current method of
accounting for environmental remediation costs and, therefore, adoption of this
new Statement does not have a material impact on the Company's financial
position, results of operations, or liquidity.
The Company accrues for losses associated with environmental remediation
obligations when such losses are probable and reasonably estimable. Accruals for
estimated losses from environmental remediation obligations generally are
recognized no later than completion of the remedial feasibility study. Such
accruals are adjusted as further information develops or circumstances change.
Costs of future expenditures for environmental remediation obligations are not
discounted to their present value. Recoveries of environmental remediation costs
from other parties are recorded as assets when their receipt is deemed probable.
(k) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from these estimates.
(l) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, on
January 1, 1997. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell.
During 1998, the Company performed a review of their long-lived assets and
determined that an impairment of certain Zeolite Mira assets existed as at
December 31, 1998. As a result, a charge of $2,917,000 was recorded in 1998 to
write the assets down to net realizable value.
(m) Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are translated into US
dollars at current exchange rates. For operations using the US dollar or the
currency of a highly inflationary economy as their functional currency,
translation gains or losses are generally reported in non-interest revenues.
39
<PAGE>
Notes to Financial Statements (continued)
1 Summary of significant accounting policies and practices (continued)
Translation gains and losses for operations using any other currency as their
functional currency are reported, net of tax effects, in stockholders' equity as
cumulative translation adjustments.
2 Financial position and basis of accounting
These consolidated financial statements have been prepared on a going concern
basis which contemplates the commencement, continuation and expansion of trading
activities as well as the realization of assets and liquidation of liabilities
in the ordinary course of business.
During 1997 the Company acquired the net liabilities of Zeolite Mira, issuing
shares to finance the acquisition. The Company traded at a loss during 1997 and
Zeolite Mira has since continued to record losses in 1998, depleting the
Company's cash resources. The Company has an agreement to sell Zeolite Mira in
1999 resulting in the Company having no operating entities.
Management's future plans for the Company are to raise further capital from both
existing and new shareholders and to use the proceeds to acquire additional
businesses. Discussions are currently underway with a number of possible
acquirees.
The Company's continuation as a going concern is dependent on the level of
consideration received from the sale of Zeolite Mira and the ability to issue
new stock which will be required to fund the purchase of additional businesses.
These factors among others may indicate that the Company will be unable to
continue as a going concern for a reasonable period of time. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
3 Acquisitions and dispositions
1998
On July 7, 1998, the Company sold the entire share capital of Deacon Holding
N.V. ("Deacon Holding") to the Holding Institute of General and Physical
Chemistry and Professor Vucelic, both of whom are related parties to the
Company. The Company received $6,908,000 through the return of 2,295,000 shares
of the Company's stock. The market value of these shares on return was lower
than the deemed value on acquisition which resulted in a loss on disposal of $
2,272,000. To reflect this, the book value of Deacon Holding at December 31,
1997 was written down to the disposal price and a provision for the loss on
disposal was recorded in the 1997 income statement.
Also on July 7, 1998, the Company disposed of its interest in Bexley Ltd.
("Bexley") to Hemslade Trading Limited. The Company received consideration of
$1,083,000 and recorded a loss on disposal of $247,000 in the 1998 income
statement.
40
<PAGE>
1997
On May 31, 1997 the Company acquired 90% of the capital stock of Zeolite Mira.
The consideration of $1,749,000 was satisfied by cash of $1,028,000 for 50% of
the capital stock, with the further 40% satisfied by the issue of 180,000 shares
of the Company's stock at $4 per share. The total assets of Zeolite Mira on
acquisition were $8,289,000 with total liabilities of $9,707,000, resulting in
net liabilities of $1,418,000. As a result of this net liability position
goodwill of $3,167,000 arose on acquisition.
On May 30, 1997 the Company acquired the entire capital stock of Deacon Holding
for consideration of $6,000.
On October 10, 1997 Deacon Holding acquired intellectual property from the
Institute of General and Physical Chemistry for consideration of $9,180,000.
This consideration was provided in the form of 2,295,000 of the Company's shares
at $4 per share.
On October 1, 1997 the Company acquired 90% of Bexley, for consideration of
$10,000, in order to build a factory
in Yugoslavia to manufacture Zeolite.
The aggregate cost of these 1997 acquisitions including all direct costs was
$1,765,000 of which $3,167,000 represents goodwill which was being amortised
over a 20 year period.
All of the above acquisitions have been accounted for by the purchase method of
accounting. Accordingly, the results of their operations are included in the
accompanying consolidated financial statements from their respective dates of
acquisition.
4 Discontinued operations
During the first quarter of 1999, the Company completed the sale of its sole
operating entity, Zeolite Mira, to CEFT Engineering & Trading AG, a Swiss
registered company. Under the terms of the purchase agreement, the Company
received $600,000 cash consideration and the return of 180,000 shares of the
Company's common stock. Results of these operations have been classified as
discontinued and prior periods have been restated. Summarised financial
information on the discontinued operation of Zeolite Mira is as follows:
1998 1997
$000 $000
Net sales 20,368 12,074
Gross profit 212 131
Operating profit (4,133)(1) (315)
------- ------
Loss from discontinued operations (3,939) (257)
======= =======
Provisions for loss on disposal of
discontinued operations (491) (2,272)
(1) Included in the determination of gross profit is a charge of $2,917,000
related to the permanent impairment of goodwill. The goodwill was related to the
1998 acquisition by the Company.
41
<PAGE>
Notes to Financial Statements (continued)
4 Discontinued operations (continued)
1998 1997
$000 $000
Net Assets of Discontinued Operations
Current assets 7,818 8,269
Property, plant & equipment 5,095 3,892
Other assets 64 3,106
Current liabilities (11,574) (10,546)
Other liabilities (646) (558)
-------- --------
Net assets of discontinued operations 757 4,163
======== ========
5 Fair value of financial instruments
SFAS No 107, Disclosure About Fair Value of Financial Instruments, requires
certain disclosures regarding the fair value of financial instruments including
cash and cash equivalents, trade accounts receivables, other current assets,
bank overdraft, trade accounts payables, and accrued expenses (non-derivatives)
are reflected in the consolidated financial statements at fair value because of
the short term maturity of these instruments. The Company uses quoted market
prices, where applicable, or discounted cash flows to calculate these fair
values.
6 Income Taxes
No credit has been taken for the operating losses, which potentially give rise
to a deferred tax asset for the Company, on the grounds that the directors do
not believe that the Company will be able to derive any value from such an asset
as a result of the Company's plans to dispose of the operating subsidiary.
7 Reconciliation of Net Income to Net Cash Provided by Operating Activities
The reconciliation of loss to net cash provided by operating activities for the
years ended
42
<PAGE>
Notes to Financial Statements (continued
Reconciliation of net loss to net cash provided by operating activities
(continued)
December 31, 1998 and 1997 was as follows.
1998 1997
$000 $000
Loss before income taxes (6,049) (4,369)
Adjustments to reconcile loss to net cash provided by
operating activities:
Loss from discontinued operations 3,939 257
Changes in assets and liabilities net of effect
from acquisitions and disposals:
Depreciation and amortization of property, plant
and equipment 37 71
Increase in accounts receivable (456) (287)
Increase/(decrease) in accounts payable (604) 898
Increase in accrued expenses and liabilities 65 107
Increase in prepayments and other assets (95) (5)
Increase in inter-company receivables
------- -------
Cash used by continuing operations (3,163) (3,328)
Cash provided/(used) by discontinued operations 143 (1,365)
------- -------
Cash used by operating activities (3,020) (4,693)
======= =======
8 Stock Option Plan
On June 20, 1997 the directors of Ikon Ventures, Inc. adopted a stock option
plan (the "Plan") pursuant to which the Board of Directors of IKON Ventures Inc.
may grant stock options to officers, directors and key employees. The Plan
authorizes grants of options to purchase up to 3,500,000 shares of authorized
but un-issued common stock. At December 31, 1998 no options had been granted
under the Plan.
9 Related party transactions
The services stated below were provided to Zeolite Mira by the Institute of
General and Physical Chemistry, which holds a 10% share in Zeolite Mira.
1998 1997
$000 $000
Technical assistance 122 208
Research & development cost - 271
--- ---
122 479
=== ===
43
<PAGE>
Notes to Financial Statements (continued)
10 Business and Credit Concentrations
On November 6, 1998, Zeolite Mira entered into a new sales and service agreement
with Benckiser Italia S.r.l. ("Benckiser Italia") This agreement provides for
fixed sales volumes and sales prices, as well as prices for the provision of
services by Benckiser Italia to Zeolite Mira, for the period October 1, 1998, to
September 30, 2000. This agreement should allow Zeolite Mira to be slightly
profitable assuming current market conditions and overhead structure, but puts
significant pressure on Zeolite Mira to improve the Copolymer formulae. In
addition termination clauses are clearly in favor of Benckiser Italia.
Sales by Zeolite Mira to the Benckiser group represented 83% and 92% of turnover
in 1998 and 1997 respectively.
Although the concentration of credit risk with respect to trade accounts
receivable is high due to the low number of customers, Zeolite Mira, at the date
of preparation of these financial statements, has collected its receivables on a
timely basis.
11 Post balance sheet events
On March 30, 1999, the Company completed the sale of Zeolite Mira to CEFT
Engineering & Trading AG. Under the terms of the sale agreement the Company
received $600,000 in cash consideration and 180,000 of its common stock in
return for the Company's ownership interest and the cancellation of all
indebtedness owed by Zeolite Mira to the Company. The results of operations of
Zeolite Mira have been classified as discontinued operations and prior periods
have been restated. The sale resulted in the Company having no operating
companies as of the sale date.
44
<PAGE>
IKON Ventures, Inc.
Consolidated financial statements
30 September 1999
Ikon Ventures, Inc.
Consolidated Balance Sheets
September 30, 1999 (unaudited) and 1998
Note 1999 1998
(Unaudited)
$000 $000
Assets
Current assets
Cash and cash equivalents 130 14
Trade accounts receivable, net - 1,373
Prepaid and other current assets 28 -
---- ------
Total current assets 158 1,387
Property, plant and equipment, net 11 56
Net assets of discontinued operations 4 - 1,328
---- ------
Total assets 169 2,771
==== ======
The accompanying notes are an integral part of these consolidated financial
statements.
45
<PAGE>
Ikon Ventures, Inc.
Consolidated balance sheets (continued)
at September 30, 1999 and 1998 (Unaudited)
1999 1998
$000 $000
Liabilities and stockholders' equity
Current liabilities
Bank overdraft - -
Trade accounts payable 15 1,345
Accrued expenses and other - 101
--- ------
Total current liabilities 15 1,356
Other liabilities - -
--- ------
Total liabilities 15 1,356
--- ------
Stockholders' equity
Common stock, $0.001 par value. Authorized
100,000,000 shares; issued and outstanding
14,655,000 shares in 1999 and 13,835,000
shares in 1998 15 14
Additional paid-in capital 11,675 11,111
Accumulated deficit (11,536) (9,710)
-------- --------
Total stockholders' equity 154 1,415
-------- --------
Total liabilities and stockholders' equity 169 2,771
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
46
<PAGE>
Ikon Ventures, Inc.
Consolidated statements of operations
for the nine months ended September 30, 1999 and 1998 (Unaudited)
Note 1999 1998
$000 $000
Net sales - continuing operations - -
Cost of goods sold - continuing operations - -
------- --------
Gross profit - continuing operations - -
Selling, general and administrative expenses (908) (1,228)
Provision for loss on disposal - Zeolite Mira (83) (87)
Loss on disposal - Bexley subsidiary - (247)
------- --------
Operating loss - continuing operations (991) (1,562)
Other income (expense), net (1) (31)
------- --------
Loss from continuing operations before
provision for income taxes (992) (1,593)
Provision for income tax 6 - -
------- --------
Loss from continuing operations (992) (1,593)
Net loss from discontinued operations 4 - (3,723)
------- -------
Net loss 2 (992) (5,316)
======= =======
Loss per common share (Basic)
($0.07) ($0.38)
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
47
<PAGE>
Ikon Ventures, Inc.
Consolidated statements of stockholders' equity
for the nine months ended September 30, 1999 and 1998 (Unaudited)
<TABLE>
<CAPTION>
Total
Common Additional Accumulated stockholders
Shares stock capital deficit equity
$000 $000 $000 $000
<S> <C> <C> <C> <C> <C>
Balances at December 31,
1997 16,130,000 16 18,017 (4,394)) 13,639
Retirement of shares in
Connection with Deacon
sale (2,295,000) (2) (6,906) (6,908)
Net loss (5,316) (5,316)
Balances at September
30,1998 13,835,000 14 11,111 (9,710) 1415
Issuance of common stock
for cash at $0.80 per share 1,000,000 1 800 801
Share issue expenses - - (191) - (191)
Net loss - - - (834) (834)
----------- --- ------- --------- -------
Balances at December 31,
1998 14,835,000 15 11,720 (10,544) 1,191
=========== === ======= ========= =======
Retirement of shares in
connection with Zeolite
Mira sale (180,000) - (45) (45)
============ === ======== ======
Net loss
Balances at September (992) (992)
30,1999 ========= ======
14,655,000 15 11,675 (11,536) 154
----------- --- ------- --------- ------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
48
<PAGE>
Ikon Ventures, Inc.
Consolidated statements of cash flows
for the nine months ended September 30, 1999 and 1998 (Unaudited)
Note 1999 1998
$000 $000
Net cash used by operating activities 7 (668) (2,562)
Cash flows from investing activities
Sale proceeds from Zeolite Mira 3 600
Sale proceeds from fixed assets 32
Net cash generated by investing activities 632
Cash flows from financing activities
Proceeds from issuance of common stock - -
Net cash provided by financing activities - -
Net increase/(decrease) in cash and cash equivalents (36) (2,562)
Cash and cash equivalents at beginning of year 166 2,576
Cash and cash equivalents at September 30 130 14
The accompanying notes are an integral part of these consolidated financial
statements.
49
<PAGE>
Notes to Financial Statements (Unaudited)
1 Summary of significant accounting policies and practices
(a) Description of Business
Ikon Ventures, Inc. (the "Company") was incorporated in Nevada on May 31, 1997.
Until March 1999, the Company was engaged in the manufacture and sale of Zeolite
and related chemicals, primarily for the detergent industry, through its
subsidiary, Zeolite Mira S.r.l. ("Zeolite Mira"). In March 1999, Zeolite Mira
was sold and has been treated as a discontinued operation in the financial
statements and accompanying notes. The Company has no business operations and is
exploring new opportunities.
(b) Principles of Consolidation
The consolidated financial statements include the financial statements of the
Company and its subsidiaries. The Company does not recognize receivables from
minority interests in respect of deficits on shareholders' equity. All
significant inter-company balances and transactions have been eliminated on
consolidation.
(c) Cash Equivalents
The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
(d) Inventories
Inventories are stated at the lower of cost or market value. Cost is determined
using the weighted average method for all inventories.
(e) Property, Plant, and Equipment
Property, plant, and equipment are stated at cost. Depreciation on plant and
equipment is calculated on the straight-line method over the estimated useful
lives of the assets.
(f) Intangible Assets
Intangible assets consist principally of patents. The cost of patents is
amortized on a straight line basis over the estimated useful lives of the
respective assets.
(g) Research and Development
Research and development costs are expensed as incurred. Research and
development costs for the nine months ended September 30, 1999 and 1998 amounted
to $nil and $39,500, respectively.
50
<PAGE>
Notes to Financial Statements (Unaudited)(continued)
1 Summary of significant accounting policies and practices (continued)
(h) Year 2000
In June 1998, the Company developed a plan to deal with their Year 2000 issues.
The plan provides for the computer systems to be year 2000 compliant by the end
of 1999. The total costs of the project are believed by the directors to be
insignificant and are being expensed as they arise.
(i) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
(j) Commitments and Contingencies
Liabilities for loss contingencies, including environmental remediation costs,
arising from claims, assessments, litigation, fines and penalties, and other
sources are recorded when it is probable that a liability has been incurred and
the amount of the assessment and/or remediation can be reasonably estimated.
Recoveries from third parties which are probable of realization are separately
recorded, and are not offset against the related environmental liability, in
accordance with Financial Accounting Standards Board Interpretation No. 39,
Offsetting of Amounts Related to Certain Contracts.
In October 1997, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 96-1, Environmental Remediation Liabilities. SOP
96-1 was adopted by the Company on January 1, 1998, and requires, among other
things, environmental remediation liabilities to be accrued when the criteria of
Statement of Financial Accounting Standards ("SFAS") No. 5, Accounting for
Contingencies, have been met. The guidance provided by SOP 96-1 is consistent
with the Company's current method of accounting for environmental remediation
costs and, therefore, adoption of this new Statement does not have a material
impact on the Company's financial position, results of operations, or liquidity.
The Company accrues for losses associated with environmental remediation
obligations when such losses are probable and reasonably estimable. Accruals for
estimated losses from environmental remediation obligations generally are
recognized no later than completion of the remedial feasibility study. Such
accruals are adjusted as further information develops or circumstances change.
51
<PAGE>
Notes to financial statements (Unaudited)(continued)
1 Summary of significant accounting policies and practices (continued)
Costs of future expenditures for environmental remediation obligations are not
discounted to their present value. Recoveries of environmental remediation costs
from other parties are recorded as assets when their receipt is deemed probable.
(k) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from these estimates.
(l) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, on
January 1, 1997. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell.
During 1998, the Company performed a review of their long-lived assets and
determined that an impairment of certain Zeolite Mira assets existed as at
December 31, 1998. As a result, a charge of $2,917,000 was recorded in 1998 to
write the assets down to net realisable value. Zeolite Mira was subsequently
sold for its written down value in 1999.
(m) Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are translated into US
dollars at current exchange rates. For operations using the US dollar or the
currency of a highly inflationary economy as their functional currency,
translation gains or losses are generally reported in non-interest revenues.
Translation gains and losses for operations using any other currency as their
functional currency are reported, net of tax effects, in stockholders' equity as
cumulative translation adjustments.
52
<PAGE>
Notes to Financial statements (Unaudited)(Continued)
2 Financial position and basis of accounting
These consolidated financial statements have been prepared on a going concern
basis which contemplates the commencement, continuation and expansion of trading
activities as well as the realization of assets and liquidation of liabilities
in the ordinary course of business.
During 1997 the Company acquired the net liabilities of Zeolite Mira, issuing
shares to finance the acquisition. The Company traded at a loss during 1997 and
Zeolite Mira continued to record losses in 1998, depleting the Company's cash
resources. The Company sold Zeolite Mira in 1999 resulting in the Company having
no operating business.
Management's future plans for the Company are to acquire one or more businesses
but none have yet been identified.
The Company's continuation as a going concern is dependent on acquiring a new
business or businesses. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
3 Acquisitions and dispositions
1998
On July 7, 1998, the Company sold the entire share capital of Deacon Holding
N.V. ("Deacon Holding") to the Holding Institute of General and Physical
Chemistry and Professor Vucelic, both of whom are related parties to the
Company. The Company received $6,908,000 through the return of 2,295,000 shares
of the Company's stock. The market value of these shares on return was lower
than the deemed value on acquisition which resulted in a loss on disposal of
$2,272,000. To reflect this, the book value of Deacon Holding at December 31,
1997 was written down to the disposal price and a provision for the loss on
disposal was recorded in the 1997 income statement.
Also on July 7, 1998, the Company disposed of its interest in Bexley Ltd.
("Bexley") to Hemslade Trading Limited. The Company received consideration of
$1,083,000 and recorded a loss on disposal of $247,000 in the 1998 income
statement.
1999
On March 30, 1999, the Company sold its 90% interest in the capital stock of
Zeolite Mira with effect from January 1,1999, the date from which the Company
took no active part in the management of Zeolite Mira. The consideration
received was $600,000 in cash, the return of 180,000 shares of the Company's
stock and the cancellation of all indebtedness between the Company and Zeolite
Mira. The market value of the stock on return was lower than the deemed value on
acquisition resulting in a loss provided for in full in the financial statements
to September 1998.
53
<PAGE>
Notes to Financial Statements (Unaudited)(Continued)
4 Discontinued operations
During the first quarter of 1999, the Company completed the sale of its sole
operating entity, Zeolite Mira, to CEFT Engineering & Trading AG, a Swiss
registered company. Under the terms of the purchase agreement, the Company
received $600,000 cash consideration and the return of 180,000 shares of the
Company's common stock. Results of these operations have been classified as
discontinued in the period to September 1998. Summarised financial information
on the discontinued operation of Zeolite Mira is as follows:
1999 1998
$000 $000
Net sales - 16,076
Gross profit - 2,353
Operating loss - (3,793)
---- -------
Loss from discontinued operations - (3,723)
==== =======
Included in the determination of operating profit for the period to September
30,1998 is a charge of $2,917,000 related to the permanent impairment of
goodwill. The goodwill was related to the 1998 acquisition by the Company.
1999 1998
$000 $000
Net Assets of Discontinued Operations
Current assets - 7,650
Property, plant & equipment - 5,513
Other assets - 304
Current liabilities - (12,139)
Other liabilities - -
--- --------
Net assets of discontinued operations - 1,328
=== ========
5 Fair value of financial instruments
SFAS No 107, Disclosure About Fair Value of Financial Instruments, requires
certain disclosures regarding the fair value of financial instruments including
cash and cash equivalents, trade accounts receivables, other current assets,
bank overdraft, trade accounts payables, and accrued expenses (non-derivatives)
are reflected in the consolidated financial statements at fair value because of
the short term maturity of these instruments. The Company uses quoted market
prices, where applicable, or discounted cash flows to calculate these fair
values.
54
<PAGE>
Notes to Financial Statements (Unaudited)(Continued)
6 Income Taxes
No credit has been taken for the operating losses, which potentially give rise
to a deferred tax asset for the Company, on the grounds that the directors do
not believe that the Company will be able to derive any value from such an asset
as a result of the Company's disposal of its operating subsidiary.
7 Reconciliation of Net Income to Net Cash Provided by Operating Activities
The reconciliation of loss to net cash provided by operating activities for the
years ended September 30, 1999 and 1998 was as follows.
1999 1998
$000 $000
Loss before income taxes (992) (5,316)
Adjustments to reconcile loss to net cash provided by
operating activities:
Loss from discontinued operations (45) 3,723
Changes in assets and liabilities net of effect from
acquisitions and disposals:
Depreciation and amortisation of property, plant and
equipment 9 27
Increase in accounts receivable 744 (342)
Increase/(decrease) in accounts payable (294) (453)
Increase in accrued expenses and liabilities (157) 48
Increase in prepayments and other assets 67 (71)
Increase in inter-company receivables
----- -------
Cash used by continuing operations (623) (2,384)
Cash provided/(used) by discontinued operations (45) (178)
----- -------
Cash used by operating activities (668) (2,562)
===== =======
8 Stock Option Plan
In June 1997, the Company's directors adopted a stock option plan (the " 1997
Plan") pursuant to which the directors were authorized to grant stock options to
purchase up to 3,500,000 shares of authorized but unissued shares of common
stock to officers, directors and key employees, subject to obtaining shareholder
approval of the 1997 Plan. No such approval was obtained and in 1998 the
directors terminated the 1997 Plan, and all outstanding options granted
thereunder were canceled as of the respective dates of grant.
In March 1999, the Company's directors adopted, and the Company's shareholders
approved, the 1999 Incentive Program (the "1999 Plan). The 1999 permits the
granting to executives, directors, professional or administrative employees,
consultants or advisors to the Company or any subsidiary thereof of any or all
55
<PAGE>
of the following types of awards: stock options, including incentive stock
options, stock appreciation rights in tandem with stock options or free standing
and restricted stock grants..
The aggregate number of shares that may be issued or transferred under
the 1999 Plan is 2,225,999, plus (i) any shares that are forfeited under the
plan, plus (ii) the number of shares repurchased by the company in the open
market and otherwise with an aggregate price no greater than the cash received
by the Company from the sale of shares under the 1999 Plan; plus (iii) any
shares surrendered to the Company in payment of the exercise price of options
issued under the 1999 Plan. However, no award may be issued that would bring the
total of all outstanding awards under the 1999 Plan to more than 15% of the
total number of shares of Common Stock of the Company at the time outstanding.
The 1999 Plan terminates on the tenth anniversary of its effective date unless
terminated earlier by the board or extended by the board. As of September 30,
1999, no awards had been made under the 1999 Plan.
9 Related party transactions
The services stated below were provided to Zeolite Mira by the Institute of
General and Physical Chemistry, which held a 10% share in Zeolite Mira.
1999 1998
$000 $000
Technical assistance - 122
Research & development cost - -
--- ----
- 122
=== ====
56
<PAGE>
PART III
ITEM 1. LIST OF EXHIBITS
Exhibit Number Description of Exhibit
3.1 (1) Articles of Incorporation
3.1 (2) Certificate of Amendment to Articles of Incorporation
3.2 (2) By-law as currently in effect
4.1 (2) Specimen Common Stock Certificate
4.1 (3) Form of Warrant Issued to Purchasers of Units
10.1 Consulting Agreement dated as of July 1, 1997 between the
Registrant and Sigma Limited S.A.
10.2 Amendment to Consulting Agreement, dated October 10, 1997
between the Registrant and Sigma Limited S.A.
10.3 Letter from Sigma Limited S.A. amending Consulting Agreement
dated January 10, 2000
10.4 1999 Incentive Program
27.1 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has caused this Registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
IKON VENTURES, INC.
By: /s/ Ian Rice
------------
Ian Rice
Chairman, President and Chief Executive Officer
Date: January 31, 2000
57
Exhibit 3.1 (1)
ARTICLES OF INCORPORATION
OF
Air Epicurean, Inc.
Article I. The name of the Corporation is Air Epicurean, Inc.
Article II. Its principal and registered office in the State of
Nevada is 774-180 Mays Boulevard, Incline Village NV 89451. The initial
registered agent for services of process at that address is N & R Group, Ltd.a
Nevada Corporation.
Article III. The purposes for which the corporation is organized are
to engage in any activity or business not in conflict with the laws of the State
of Nevada or of the United States of America. The period of existence of the
corporation shall be perpetual.
Article IV. The Corporation shall have authority to issue an
aggregate of One Hundred Million (100,000,000) shares of common voting equity
stock of par value one mil ($0.001) per share, and no other class or classes of
stock, for a total capitalization of $100,000. The Corporation's capital stock
may be sold from time to time for such consideration as may be fixed by the
Board of Directors, provided that no consideration so fixed shall be less than
par value.
Article V. No shareholder shall be entitled to any preemptive or
preferential rights to subscribe to any unissued stock or any other securities
which the corporation may now or hereafter be authorized to issue, nor shall any
shareholder possess cumulative voting rights at any shareholders meeting for the
purpose of electing Directors.
Article VI. The affairs of the corporation shall be governed by a
Board of Directors of one (1) person. The Initial Director of the Corporation,
whose name and address is J. Dan Sifford, Jr., 3131 Southwest Freeway, Suite 46,
Houston, TX 77098, to serve until the next regular meeting of shareholders or
until their successors are elected.
Article VII. The Capital Stock after the amount of the subscription
price or par value shall not be subject to assessment to pay the debts of the
corporation, and no stock issued as paid up shall ever be assessable or
assessed.
Article VIII. The initial By-laws of the corporation shall be adopted
by its Board of Directors. The power to alter, amend or repeal the By-laws, or
adopt new By-laws, shall be vested in the Board of Directors, except as
otherwise may be specifically provided in the By-laws.
Article IX. The name and address of the Incorporator of the
corporation is J. Dan Sifford, Jr., 3131 Southwest Freeway, Suite 46, Houston,
TX 77098
<PAGE>
I THE UNDERSIGNED, being the Incorporator hereinbefore named for the
purpose of forming a Corporation pursuant the General Corporation Law of the
State of Nevada, do make and file these Articles of Incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have set my hand hereunto this Day, July 12, 1996.
/S/
J. Dan Sifford, Jr.
INCORPORATOR
Exhibit 3.1 (2)
AMENDMENT TO ARTICLES OF INCORPORATION
OF
Air Epicurean, Inc.
(after payment of capital and issuance of stock)
We the Undersigned, Officers of Air Epicurean, Inc. ("the Corporation")
hereby certify:
The Board of Directors of the Corporation at a meeting of duly convened
and held on April 24, 1997 adopted a resolution to amend the Articles of
Incorporation as Originally filed and/or amended.
Article One is superseded and replaced as follows:
Article I. The name of the Corporation shall be Ikon Ventures, Inc.
The number of shares of the Corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 25,550,000; and the
foregoing changes and amendment have been consented to and approved by
affirmative vote of 23,720,000 shares, a majority vote of 92% of each class of
stock outstanding and entitled to vote thereon, at a Meeting of Shareholders
duly called upon notice; immediately following which approval, this amendment
was adopted by the Board of Directors.
Matthew R. Bauer J. Dan Sifford
PRESIDENT SECRETARY
NOTARIZATION OF SIGNATURES REQUIRED
Exhibit 3.2 (2)
BY-LAWS
OF
IKON VENTURES, INC.
ARTICLE I - OFFICES
1. REGISTERED OFFICE AND AGENT
The registered office of the corporation shall be maintained at
3131 Southwest Freeway
Suite 46
Houston, Texas 77098
The registered office or the registered agent, or both, may be
changed by resolution of the board of directors, upon filing the statement
required by law.
2. PRINCIPAL OFFICE
The principal office of the corporation shall be at
3131 Southwest Freeway
Suite 46
Houston, Texas 77098
provided that the board of directors shall have power to change the location of
the principal office in its discretion.
3. OTHER OFFICES
The corporation may also maintain other offices at such places
within or without the State of Texas as the board of directors may from time to
time appoint or as the business of the corporation may require.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETING
All meetings of shareholders, both regular and special, shall
be held either at the principal office of the corporation in Texas or at such
other places, either within or without the state, as shall be designated in the
notice of the meeting.
<PAGE>
2. ANNUAL MEETING
The annual meeting of shareholders for the election of
directors and for the transaction of all other business which may come before
the meeting shall be held on the 15th day of April in each year (if not a legal
holiday and, if a legal holiday, then on the next business day following) at the
hour specified in the notice of meeting.
If the election of directors shall not be held on the day above
designated for the annual meeting, the board of directors shall cause the
election to be held as soon thereafter as conveniently may be at a special
meeting of the shareholders called for the purpose of holding such election.
The annual meeting of shareholders may beheld for any other
purpose in addition to the election of directors which may be specified in a
notice of such meeting. The meeting may be called by resolution of the board of
directors or by a writing filed with the secretary signed either by a majority
of the directors or by shareholders owning a majority in amount of the entire
capital stock of the corporation issued and outstanding and entitled to vote at
any such meeting.
3. NOTICE OF SHAREHOLDERS' MEETING
A written or printed notice stating the place, day and hour of
the meeting, and in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten (10) more than fifty
(50) days before the date of the meeting, either personally or by mail, by or at
the direction of the president, secretary or the officer or person calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
share transfer books of the corporation, with postage thereon prepaid.
4. VOTING OF SHARES
Each outstanding share with voting privileges, regardless of
class, shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting rights of the
shares of any class or classes are limited or denied by the Articles of
Incorporation or by law.
Treasury shares, shares of its own stock owned by another
corporation the majority of the voting stock of which is owned or controlled by
this corporation, and shares of its own stock held by this corporation in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact. No proxy
shall be valid after eleven (11) months from the date of its execution unless
otherwise provided in the proxy. Each proxy shall be revocable unless expressly
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provided therein to be irrevocable, and in no event shall it remain irrevocable
for a period of more than eleven (11) months.
At each election for directors every shareholder entitled to
vote at such election shall have the right to vote, in person or by proxy, the
number of shares owned by him for as many persons as there are directors to be
elected and for whose election he has a right to vote, or unless prohibited by
the articles of incorporation, to cumulate his votes by giving one candidate as
many votes as the number of such directors multiplied by the number of his
shares shall equal, or by distributing such votes on the same principal among
any number of such candidates. Any shareholder who intends to cumulate his votes
as herein authorized shall give written notice of such intention to the
secretary of the corporation on or before the day preceding the election at
which such shareholder intends to cumulate his votes.
5. CLOSING TRANSFER BOOKS AND FIXING RECORD DATE
For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the board of directors may provide
that the share transfer books shall be closed for a stated period not exceeding
fifty (50) days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten (10) days immediately
preceding such meeting. In lieu of closing the stock transfer books, the by-laws
or in the absence of an applicable by-law the board of directors, may fix in
advance a date as the record date for any such determination of shareholders,
not later than fifty (50) days and, in case of a meeting of shareholders, not
earlier than ten (10) days prior to the date on which the particular action,
requiring such determination of shareholders is to be taken. If the share
transfer books are not closed and no record date is fixed for the determination
of shareholders entitled to notice of or to vote at a meeting of shareholders,
or shareholders entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the board
of directors declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof, except where the determination has been made through the closing of
share transfer books and the stated period of closing has expired.
6. QUORUM OF SHAREHOLDERS
Unless otherwise provided in the articles of incorporation, the
holders of a majority of the shares entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of shareholders, but in no
event shall a quorum consist of the holders of less than one-third (1/ 3) of the
shares entitled to vote and thus represented at such meeting. The vote of the
holders of a majority of the shares entitled to vote and thus represented at a
meeting at which a quorum is present shall be the act of the shareholders'
meeting, unless the vote of a greater number is required by law, the articles of
incorporation of the by-laws.
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<PAGE>
7. VOTING LISTS
The officer or agent having charge of the share transfer books
for the shares of the corporation shall make, at least ten (10) days before each
meeting of shareholders, a complete list of the shareholders entitled to vote at
such meeting or any adjournment thereof, arranged in alphabetical order, with
the address of and the number of shares held by each, which list, for a period
of ten (10) days prior to such meeting, shall be kept on file at the registered
office of the corporation and shall be subject to inspection by any shareholder
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting. The original
share transfer books shall be prima-facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote any
meeting of shareholders.
8. ACTION BY CONSENT OF SHAREHOLDERS
In lieu of a formal meeting, action may be taken by unanimous
consent of the shareholders.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS
The business and affairs of the corporation shall be managed by
a board of directors. Directors need not be residents of the State of Texas nor
be shareholders in the corporation.
2. NUMBER AND ELECTION OF DIRECTORS
The number of directors shall be 3 provided that the number may
be increased or decreased from time to time by an amendment to these bylaws, but
no decrease shall have the effect of shortening the term of any incumbent
director. At each annual election the shareholders shall elect directors to hold
office until the next succeeding annual meeting.
3. VACANCIES
Any vacancy occurring in the board of directors may be filled
by the affirmative vote of the remaining directors, though less than a quorum of
the board. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. Any directorship to be filled by
reason of an increase in the number of directors shall be filled by election at
an annual meeting or at a special meeting of shareholders called for that
purpose.
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4. QUORUM OF DIRECTORS
A majority of the board of directors shall constitute a quorum
for the transaction of business. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
5. ANNUAL MEETING OF DIRECTORS
Within thirty days after each annual meeting of shareholders
the board of directors elected at such meeting shall hold an annual meeting at
which they shall elect officers and transact such other business as shall come
before the meeting.
6. REGULAR MEETING OF DIRECTORS
A regular meeting of the board of directors may be held at such
time as shall be determined from time to time by resolution of the board of
directors.
7. SPECIAL MEETINGS OF DIRECTORS
The secretary shall call a special meeting of the board of
directors whenever requested to do so by the president or by two directors. Such
special meeting shall be held at the time specified in the notice of meeting.
8. PLACE OF DIRECTORS' MEETINGS
All meetings of the board of directors (annual, regular or
special) shall be held either at the principal office of the corporation or at
such other place, either within or without the State of Texas, as shall be
specified in the notice of meeting.
9. NOTICE OF DIRECTORS' MEETINGS
All meetings of the board of directors (annual, regular or
special) shall be held upon five (5) days' written notice stating the date,
place and hour of meeting delivered to each director either personally or by
mail or at the direction of the president or the secretary or the officer or
person calling the meeting.
In any case where all of the directors execute a waiver of
notice of the time and place of meeting, no notice thereof shall be required,
and any such meeting (whether annual, regular or special) shall be held at the
time and at the place (either within or without the State of Texas) specified in
the waiver of notice. Neither the business to be transacted at, nor the purpose
of, any annual, regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
10. COMPENSATION
Directors, as such, shall not receive any stated salary for
their services, but by resolution of the board of directors a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each annual,
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regular or special meeting of the board, provided, that nothing herein contained
shall be construed to preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
11. ACTION BY CONSENT OF DIRECTORS
In lieu of a formal meeting, action may be taken by unanimous
written consent of the directors.
ARTICLE IV - OFFICERS
1. OFFICERS ELECTION
The officers of the corporation shall consist of a president,
one or more vice-presidents, a secretary, and a treasurer. All such officers
shall be elected at the annual meeting of the board of directors provided for in
Article III, Section 5. If any office is not filled at such annual meeting, it
may be filled at any subsequent regular or special meeting of the board. The
board of directors at such annual meeting, or at any subsequent regular or
special meeting may also elect or appoint such other officers and assistant
officers and agents as may be deemed necessary. Any two or more offices may be
held by the same person, except the offices of president and secretary.
All officers and assistant officers shall be elected to serve
until the next meeting of directors (following the next annual meeting of
shareholders) or until their successors are elected; provided, that any officer
or assistant officer elected or appointed by the board of directors may be
removed with or without cause at any regular or special meeting of the board
whenever in the judgment of the board of directors the best interests of the
corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Any agent appointed
shall serve for such term, not longer than the next annual meeting of the board
of directors, as shall be specified, subject to like right of removal by the
board of directors.
2. VACANCIES
If any office becomes vacant for any reason, the vacancy may be
filled by the board of directors.
3. POWER OF OFFICERS
Each officer shall have, subject to these by-laws, in addition
to the duties and powers specifically set forth herein, such powers and duties
as are commonly incident to this office and such duties and powers as the board
of directors shall from time to time designate. All officers shall perform their
duties subject to the directions and under the supervision of the board of
directors. The president may secure the fidelity of any and all officers by bond
or otherwise.
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<PAGE>
4. PRESIDENT
The president shall be the chief executive officer of the
corporation. He shall preside at all meetings of the directors and shareholders.
He shall see that all orders and resolutions of the board are carried out,
subject however, to the right of the directors to delegate specific powers,
except such as may be by statute exclusively conferred on the president, to any
other officers of the corporation.
He or any vice-president shall execute bonds, mortgages and
other instruments requiring a seal, in the name of the corporation, and, when
authorized by the board, he or any vice-president may affix the seal to any
instrument requiring the same, and the seal when so affixed shall be attested by
the signature of either the secretary or an assistant secretary. He or any
vice-president shall sign certificates of stock.
The President shall be ex-officio a member of all standing
committees.
He shall submit a report of the operations of the corporation
for the year to the directors at their meeting next preceding the annual meeting
of the shareholders and to the shareholders at their annual meeting.
5. VICE-PRESIDENTS
The vice-president shall, in the absence or disability of the
president, perform the duties and exercise the powers of the president, and they
shall perform such other duties as the board of directors shall prescribe.
6. THE SECRETARY AND ASSISTANT SECRETARIES
The secretary shall attend all meetings of the board and all
meetings of the shareholders and shall record all votes and the minutes of all
proceedings and shall perform like duties for the standing committees when
required. He shall give or cause to be given notice of all meetings of the
shareholders and all meetings of the board of directors and shall perform such
other duties as may be prescribed by the board. He shall keep in safe custody
the seal of the corporation, and when authorized by the board, affix the same to
any instrument requiring it, and when so affixed, it shall be attested by his
signature or by the signature of an assistant secretary.
The assistant secretary shall, in the absence or disability of
the secretary, perform the duties and exercise the powers of the secretary, and
they shall perform such other duties as the board of directors shall prescribe.
In the absence of the secretary or an assistant secretary, the
minutes of all meetings of the board and shareholders shall be recorded by such
person as shall be designated by the president or by the board of directors.
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7. THE TREASURER AND ASSISTANT TREASURERS
The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects 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, taking proper vouchers for such
disbursements. He shall keep and maintain the corporation's books of account and
shall render to the president and directors an account of all of his
transactions as treasurer and of the financial condition of the corporation and
exhibit his books, records and accounts to the president or directors at any
time. He shall disburse funds for capital expenditures as authorized by the
board of directors and in accordance with the orders of the president, and
present to the president for his attention any requests for disbursing funds if
in the judgment of the treasurer any such request is not property authorized. He
shall perform such other duties as may be directed by the board of directors or
by the president.
If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board for the faithful performance of the duties of his
office and for the restoration to the corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the corporation.
The assistant treasurers in the order of their seniority shall,
in the absence or disability of the treasurer, perform the duties and exercise
the powers of the treasurer, and they shall perform such other duties as the
board of directors shall prescribe.
ARTICLE V - CERTIFICATES OF STOCK: TRANSFER. ETC.
1. CERTIFICATES OF STOCK
The certificates for shares of stock of the corporation shall
be numbered and shall be entered in the corporation as they are issued. They
shall exhibit the holder's name and number of shares and shall be signed by the
president or a vice-president and the secretary or an assistant secretary and
shall be sealed with the seal of the corporation or a facsimile thereof. If the
corporation has a transfer agent or a registrar, other than the corporation
itself or an employee of the corporation, the signatures of any such officer may
be facsimile. In case any officer or officers who shall have signed or whose
facsimile signature or signatures shall have been used on any such certificate
or certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation or otherwise, before said certificate may
nevertheless be issued by the corporation with the same effect as though the
person or persons who signed such certificates or whose facsimile signature or
signatures shall have been used thereon had been such officer or officers at the
date of its issuance. Certificates shall be in such form as shall in conformity
to law be prescribed from time to time by the board of directors.
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The corporation may appoint from time to time transfer agents
and registrars, who shall perform their duties under the supervision of the
secretary.
2. TRANSFERS OF SHARES
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction upon its books.
3. REGISTERED SHAREHOLDERS
The corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder in fact thereof and, accordingly
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person, whether or not is shall have express
or other notice thereof, except as otherwise provided by law.
4. ISSUANCE OF ADDITIONAL SHARES
The corporation shall be enabled to issue additional common
shares or to create additional classes of stock, however any such issuance shall
require approval by three quarters (75%) of the then outstanding shares.
5. LOST CERTIFICATE
The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate to be lost. when authorizing such issue of a new certificate or
certificates, the board of directors in its discretion and as a condition
precedent to the issuance thereof, may require the owner of such lost or
destroyed certificate or certificates or his legal representatives to advertise
the same in such manner as it shall require or to give the corporation a bond
with surety and in form satisfactory to the corporation (which bond shall also
name the corporation's transfer agents and registrars, if any, as obligees) in
such sum as it may direct as indemnity against any claim that may be made
against the corporation or other obligees with respect to the certificate
alleged to have been lost or destroyed, or to advertise and also give such bond.
ARTICLE VI - DIVIDEND
1. DECLARATION
The board of directors may declare at any annual, regular or
special meeting of the board and the corporation may pay, dividends on the
outstanding shares in cash, property or in the shares of the corporation to the
extent permitted by, and subject to the provisions of, the laws of the State of
Texas.
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2. RESERVES
Before payment of any dividend there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time in their absolute discretion think proper as a
reserve fund to meet contingencies or for equalizing dividends or for repairing
or maintaining any property of the corporation or for such other purpose as the
directors shall think conducive to the interest of the corporation, and the
directors may abolish any such reserve in the manner in which it was created.
ARTICLE VII - MISCELLANEOUS
1. INFORMAL ACTION
Any action required to be taken or which may be taken at a
meeting of the shareholders, directors or members of the executive committee,
may be taken without a meeting if a consent in writing setting forth the action
so taken shall be signed by all of the shareholders, directors, or members of
the executive committee, as the case may be, entitled to vote with respect to
the subject matter thereof, and such consent shall have the same force and
effect as a unanimous vote of the shareholders, directors, or members of the
executive committee, as the case may be, at a meeting of said body.
2. SEAL
The corporate seal shall be circular in form and shall contain
the name of the corporation, the year of its incorporation and the name "TEXAS".
The seal may be used by causing it or a facsimile to be impressed or affixed or
in any other manner reproduced. The corporate seal may be altered by order of
the board of directors at any time.
3. CHECKS
All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
4. FISCAL YEAR
The fiscal year of the corporation shall be determined by
resolution of the Board of Directors.
5. DIRECTORS' ANNUAL STATEMENT
The board of directors shall present at each annual meeting of
shareholders a full and clear statement of the business and condition of the
corporation.
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6. CLOSE CORPORATIONS: MANAGEMENT BY SHAREHOLDERS
If the articles of incorporation of the corporation and each
certificate representing its issued and outstanding shares states that the
business and affairs of the corporation shall be managed by the shareholders of
the corporation rather than by a board of directors, then, whenever the context
so requires by the shareholders of the corporation shall be deemed the directors
of the corporation for purposes of applying any provision of these bylaws.
7. AMENDMENTS
These by-laws may be altered, amended or repealed in whole or
in part by the affirmative vote of the holders of a majority of the shares
outstanding and entitled to vote, but such power may be delegated by the
shareholders to the board of directors.
The above By-Laws approved and adopted by the Board of
Directors on July 7, 1996.
/S/
------------------------------
J. Dan Sifford, Jr., Secretary
Exhibit 4.1 (2)
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT INCORPORATED UNDER THE LAWS
OF THE STATE OF NEVADA
INCORPORATED IN THE STATE OF NEVADA
NUMBER SHARES
IKON VENTURES, INC.
100,000,000 AUTHORIZED SHARES
PAR VALUE: $.001 PER SHARE CUSIP 451714 10 9
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
IKON VENTURES, INC.
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
- --------------------------------- -----------------------------------
SECRETARY PRESIDENT
Countersigned & Registered:
MADISON STOCK TRANSFER, INC.
P.O. BOX 290-145
Brooklyn, NY 11229-0145
By:
--------------------------
IKON VENTURES, INC.
CORPORATE NEVADA
CORPORATE SEAL
Exhibit 4.1 (3)
________________________________________________________________
WARRANT TO PURCHASE COMMON STOCK
OF
IKON VENTURES, INC.
_______________________________________________________________
THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE PURSUANT TO THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED UNDER THE ACT OR AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
FOR VALUE RECEIVED, Ikon Ventures, Inc., a Nevada corporation (the
"Company"), grants the following rights to ___________________ , having an
address at __________________ ("Holder").
ARTICLE 1. DEFINITIONS. As used herein, the following terms shall have
the following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean the common stock, par value $.01
per share, of the Company.
(b) "Corporate Office" shall mean the office of the Company
(or its successor) at which at any particular time its principal business shall
be administered, which office is located at the date hereof at 5 Craysfort
House, 14 West Halkin Street, London SW1X 8JS, England..
(c) "Exercise Date" shall mean any date upon which the Holder
shall give the Company a Notice of Exercise.
(d) "Exercise Price" shall mean the price to be paid to the
Company for each share of Common Stock to be purchased upon exercise of this
Warrant in accordance with the terms hereof which shall be $7.50.
(e) "Expiration Date" shall mean 5:00 p.m. (New York time) on
_______ 2000.
<PAGE>
(f) "SEC" shall mean the United States Securities and Exchange
Commission.
ARTICLE 2. EXERCISE.
2.1 Exercise of Warrant. This Warrant shall entitle Holder to
purchase up to ___________ shares of Common Stock (the "Shares") at the Exercise
Price. This Warrant shall be exercisable at any time and from time to time prior
to the Expiration Date (the "Exercise Period"). This Warrant and the right to
purchase Shares hereunder shall expire and become void at the Expiration Date.
2.2 Acceleration of Exercise Period. The Company shall have the
right, at any time after the Common Stock has traded for twenty-one consecutive
days with a daily closing bid price of $10.00 or more per share, to accelerate
the Exercise Period by sending to the Holder, at the Holder's address written
above, a Notice of Acceleration in substantially the form attached as Appendix I
hereto (the "Notice"). In the event the Company does accelerate the Exercise
Period, the Holder shall have ten (10) days from the date the Holder receives
the Notice within which to exercise this Warrant in the manner provided for in
Section 2.3, after which time this Warrant and the right to purchase the Shares
hereunder, to the extent not previously exercised, shall expire and become void.
The Holder shall be deemed to have received the Notice five (5) days after the
date the Notice is deposited in the U.S. Mails.
2.3 Manner of Exercise.
(a) Holder may exercise this Warrant at any time and from time
to time during the Exercise Period, in whole or in part (but not in
denominations of fewer than 2,500 Shares, except upon an exercise of this
Warrant with respect to the remaining balance of Shares purchasable hereunder at
the time of exercise), by delivering to the Company at its Corporate Office (i)
a duly executed Notice of Exercise in substantially the form attached as
Appendix II hereto and (ii) a bank cashier's or certified check for the
aggregate Exercise Price of the Shares being purchased.
(b) From time to time upon exercise of this Warrant, in whole
or part, in accordance with its terms, the Company will cause its transfer agent
to countersign and deliver stock certificates to the Holder representing the
number of Shares being purchased pursuant to such exercise, subject to
adjustment as described herein.
(c) Promptly following any exercise of this Warrant, if the
Warrant has not been fully exercised and has not expired, the Company will
deliver to the Holder a new Warrant for the balance of the Shares covered
hereby.
2.4 Termination. All rights of the Holder in this Warrant, to the
extent they have not been exercised, shall terminate on the Expiration Date.
2.5 No Rights Prior to Exercise. Prior to its exercise pursuant to
Section 2.3 above, this Warrant shall not entitle the Holder to any voting or
other rights as holder of Shares.
<PAGE>
2.6 Adjustments. In case of any reclassification, capital
reorganization, stock dividend or other change of outstanding shares of Common
Stock, or in case of any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification,
capital reorganization, stock dividend or other change of outstanding shares or
Common Stock), or in case of any sale or conveyance to another corporation of
the property of the Company as, or substantially as, an entirety (other than a
sale/leaseback, mortgage or other financing transaction), the Company shall
cause effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and number of
shares of stock or other securities or property (including cash) receivable upon
such reclassification, capital reorganization, stock dividend or other change,
consolidation, merger, sale or conveyance as the Holder would have been entitled
to receive had the Holder exercised this Warrant in full immediately before such
reclassification, capital reorganization, stock dividend or other change,
consolidation, merger, sale or conveyance. Any such provision shall include
provision for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 2.5. The foregoing
provisions shall similarly apply to successive reclassifications, capital
reorganizations, stock dividends and other changes of outstanding shares of
Common Stock and to successive consolidations, mergers, sales or conveyances.
2.7 Fractional Shares. No fractional Shares shall be issuable upon
exercise or conversion of this Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional Share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional Share interest by paying Holder the amount computed by
multiplying the fractional interest by the closing bid price of a full Share on
the date of the Notice of Exercise.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents
and warrants to the Holder as follows:
(a) All Shares which may be issued upon the exercise of the
purchase right represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully-paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws, and not subject to any
pre-emptive rights.
(b) The Company is a corporation duly organized and validly
existing under the laws of the State of Nevada, and has the full power and
authority to issue this Warrant and to comply with the terms hereof. The
execution, delivery and performance by the Company of its obligations under this
Warrant, including, without limitation, the issuance of the Shares upon any
exercise of the Warrant have been duly authorized by all necessary corporate
action. This Warrant has been duly executed and delivered by the Company and is
a valid and binding obligation of the Company, enforceable in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting enforceability of
<PAGE>
creditors' rights generally and except as the availability of the remedy of
specific enforcement, injunctive relief or other equitable relief is subject to
the discretion of the court before which any proceeding therefor may be brought.
(c) The Company is not subject to or bound by any provision of
any certificate or articles of incorporation or by-laws, mortgage, deed of
trust, lease, note, bond, indenture, other instrument or agreement, license,
permit, trust, custodianship, other restriction or any applicable provision of
any law, statute, judgment, order, writ, injunction or decree of any court,
governmental body, administrative agency or arbitrator which could prevent or be
violated by or under which there would be a default (or right of termination) as
a result of the execution, delivery and performance by the Company of this
Warrant.
ARTICLE 4. MISCELLANEOUS.
4.1 Transfer. This Warrant may not be transferred or assigned, in
whole or in part, at any time, except in compliance with applicable federal and
state securities laws by the transferor and the transferee (including, without
limitation, the delivery of an investment representation letter and a legal
opinion reasonably satisfactory to the Company), provided that this Warrant may
not be transferred or assigned such that either the Holder or any transferee
will, following such transfer or assignment, hold a Warrant for the right to
purchase fewer than 2,500 Shares.
4.2 Transfer Procedure. Subject to the provisions of Section 5.1,
Holder may transfer or assign this Warrant by giving the Company notice setting
forth the name, address and taxpayer identification number of the transferee or
assignee, if applicable (the "Transferee"), and surrendering this Warrant to the
Company for reissuance to the Transferee (and the Holder, in the event of a
transfer or assignment of this Warrant in part). (Each of the persons or
entities in whose name any such new Warrant shall be issued are herein referred
to as a Holder").
4.3 Loss, Theft, Destruction or Mutilation. If this Warrant shall
become mutilated or defaced or be destroyed, lost or stolen, the Company shall
execute and deliver a new Warrant in exchange for and upon surrender and
cancellation of such mutilated or defaced Warrant or, in lieu of and in
substitution for such Warrant so destroyed, lost or stolen, upon the Holder
filing with the Company evidence satisfactory to it that such Warrant has been
so mutilated, defaced, destroyed, lost or stolen. However, the Company shall be
entitled, as a condition to the execution and delivery of such new Warrant, to
demand indemnity satisfactory to it and payment of the expenses and charges
incurred in connection with the delivery of such new Warrant. Any Warrant so
surrendered to the Company shall be cancelled.
4.4 Notices. All notices and other communications from the Company
to the Holder or vice versa shall be deemed delivered and effective when given
personally, by facsimile transmission and confirmed in writing or mailed by
first-class registered or certified mail, postage prepaid at such address and/or
facsimile number as may have been furnished to the Company or the Holder, as the
case may be, in writing by the Company or the Holder from time to time.
<PAGE>
4.5 Waiver. This Warrant and any term hereof may be changed,
waived, or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
4.6 Governing Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of the Company's incorporation, without
giving effect to its principles regarding conflicts of law.
Dated: _______________, 1997
Attest:
IKON VENTURES, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
<PAGE>
APPENDIX I
NOTICE OF ACCELERATION
Dated: _______________________
Ikon Ventures, Inc. (the "Company") does hereby notify you of its election to
exercise its right, pursuant to Section 2.2 of the Warrants issued to you by the
Company on _________, 1997 (the "Warrant"), to accelerate the exercise period of
such Warrants. Please be advised that you have ten (10) days from the date you
receive this Notice of Acceleration (the "Ten-Day Period") to exercise your
Warrants in the manner provided for in the Warrants. You will be deemed to have
received this Notice of Acceleration five (5) days after the above date when
this Notice of Acceleration was first deposited in the U.S. Mails.
You will automatically forfeit your right to purchase the shares of common stock
issuable upon exercise of such Warrants, to the extent not previously purchased,
unless the Warrants are exercised before the end of the Ten-Day Period.
Ikon Ventures, Inc.
By: __________________________
Name: ________________________
Title: _______________________
<PAGE>
APPENDIX II
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ______ shares of the
Common Stock of Ikon Ventures, Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name as is specified below:
_________________________________________________
(Name)
_________________________________________________
(Address)
3. The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.
_________________________________________________
(Signature)
_______________________
(Date)
Exhibit 10.1
CONSULTING AGREEMENT
AGREEMENT, dated as of July 1, 1997, by and between IKON
VENTURES, INC., a Nevada corporation (the "Corporation) and SIGMA LIMITED, S.A.,
a company organized under the laws of Switzerland ("Consultant").
W I T N E S S E T H:
WHEREAS, the Corporation is engaged in the Zeolite
manufacturing business (the "Business"); and
WHEREAS, the Corporation desires to use and the Consultant
wishes to supply consultancy services to the Corporation upon the terms and
conditions set forth herein,
NOW, THEREFORE, the parties hereto agree as follows:
1. Duties.
(a) The Corporation hereby engages Consultant and
Consultant hereby agrees to render services as a consultant to the Corporation
for the term specified in Section 2 hereof and specifically procure Ian Rice as
an employee of the Consultant to perform the Consultant's duties hereunder.
(b) Consultant shall at all reasonable times and as
reasonably required consult with and give advice to the directors, officers,
employees and representatives of the Corporation, its subsidiaries and
affiliates, concerning the Business and affairs of the Corporation. Consultant
shall provide such services to and shall devote such time and attention as in
the Corporation's reasonable discretion may be necessary or desirable for the
performance of its duties as a consultant when called upon to do so by the
Corporation, provided that (i) the Corporation shall not require that
Consultant's services be performed at any particular place or at any particular
time and (ii) it is expressly understood and agreed that Consultant's services
are of great value to the Corporation by reason of Consultant's prior experience
and knowledge and that telephonic advice and judgments of Consultant are as
valuable to the Corporation as written reports or physical attendance at any
particular place or at any particular time.
2. Term. The term of this Agreement shall commence on the
date hereof and shall continue for a period of three (3) years thereafter (the
"Term") unless sooner terminated pursuant to Section 6 of this Agreement.
3. Compensation. For all services to be rendered hereunder by
Consultant, the Corporation agrees to pay to Consultant an annual fee (the "Base
Fee") equal to Sixty Thousand Dollars ($60,000) payable in substantially equal
monthly installments.
4. Expenses. The Corporation shall pay or reimburse
Consultant for all reasonable and necessary expenses of Consultant for
entertainment, travel and similar items incurred in connection with the
performance of services rendered by Consultant to the Corporation hereunder. All
<PAGE>
payments for reimbursement of such expenses shall be made to Consultant in
advance upon presentation to the Corporation of appropriate vouchers and bills.
5. Other Benefits. The employees of Consultant who provide
consulting services to the Corporation (the "Employees") shall be entitled to
receive such so-called "fringe benefits" as shall be provided by the Corporation
to its executive employees subject to the eligibility provisions or requirements
of any applicable plan pursuant to which such fringe benefits are provided.
6. Termination. Notwithstanding any provision of this
Agreement to the contrary, this Agreement may be terminated under any of the
following circumstances:
(a) The Corporation may terminate this Agreement at any
time for good and just cause by giving written notice thereof to the Consultant.
For purposes of this Agreement, the term "good and just cause" shall mean (a)
the inability of Consultant to provide consulting services to the Corporation,
(b) the death or permanent incapacity of Ian Rice or (c) a determination by the
full board of directors of the Corporation at a meeting at which Consultant and
its attorney(s) are present throughout, that Consultant has been demonstrably
guilty of engaging in conduct justifying immediate dismissal as a result of acts
clearly against the best interests of the Corporation.
(b) Consultant may terminate this Agreement at any time
for good reason by giving at least one (1) month written notice thereof to the
Corporation. For purposes of this Agreement, Consultant shall have "good reason"
to terminate this Agreement if (i) the Corporation attempts to impose any change
of responsibility, assignment of duties or authority of Consultant without its
consent or (ii) the Corporation shall breach any of the material terms or
conditions of this Agreement.
(c) The Corporation or Consultant may terminate this
Agreement at any time by giving to the other no less than one (1) month prior
written notice.
(d) Upon termination of Consultant pursuant to this
Section 6, the Consultant shall be entitled to all amounts or benefits to be
paid or provided by the Corporation under this Agreement up to the date of
termination. In addition, and in lieu of any and all other rights or remedies
which Consultant would or might have, if this Agreement is terminated prior to
the end of the Term, either by the Corporation for any reason other than good
and just cause (as defined herein) or by Consultant for good reason (as defined
herein), Consultant shall also be entitled to receive, as its sole and exclusive
remedy, in a single lump sum, an amount equal to the total additional
compensation Consultant would have been entitled to receive had there been no
termination of its employment and in addition thereto, the Corporation shall
continue to provide the Employees with all fringe benefits then being enjoyed,
or the value thereof for the remainder of the Term.
7. No Set Offs, Etc. Except as expressly set forth in this
Agreement, no amounts agreed to be paid or benefits agreed to be furnished by
the Corporation under this Agreement shall be subject to any deduction,
diminution or set off of any kind whatsoever.
2
<PAGE>
8. Binding Effect and Assignment. This Agreement shall be
binding upon and insure to the benefit of the Corporation, its successors and
permitted assigns and the Consultant, its successors and assigns. No assignment
of this Agreement shall be valid unless consented to in writing by the
non-assigning party or parties.
9. Waivers. The failure of any party to this Agreement to
enforce its terms and provisions or covenants shall not be construed as a waiver
of the same or of the right of such party to enforce the same.
10. Entire Agreement. This Agreement sets forth the entire
Agreement among the parties with respect to its subject matter and merges and
supersedes all prior discussions, agreements and understandings of every kind
and nature among them, including, without limitation, any other agreement with
any third party for the supply of the Consultant's service to the Corporation.
No party hereto shall be bound by any term or condition other than as expressly
set forth or provided for in this Agreement. This Agreement may not be changed
or modified except by agreement in writing, signed by the party or parties to be
bound thereby.
11. Notices. All notices, requests, demands and other
communications provided for, under, or made in connection with this Agreement,
shall be in writing and shall be deemed to have been given by any party hereto
at the time when delivered by hand against the appropriate receipt, or sent by
facsimile transmission or mailed by registered or certified mail or the
equivalent thereof, addressed to the addresses of the respective parties stated
below, or as changed or added as any party may fix in accordance with this
Section 11.
If to the Corporation:
Ikon Ventures, Inc.
570 Lexington Avenue
New York, NY 10022
with a copy to:
Bryan Cave LLP
245 Park Avenue
New York, NY 10167
Attention: Steven A. Saide, Esq.
If to the Consultant:
Sigma Limited, S.A.
Rue-Fritz- Courvoisier 40
2300 La Chaux-de-Fonds
Switzerland
3
<PAGE>
12. Governing Law. This Agreement shall be governed by and
construed in all respects in accordance with the laws of the State of New York
without regard to its conflict of law principles.
IN WITNESS WHEREOF this Agreement has been entered into the
day and year first above written.
IKON VENTURES, INC.
By: /s/ Brian Copsey
________________________________
Name: Brian Copsey
Title: Chief Financial Officer
SIGMA LIMITED, S.A.
By: /s/ Ian Rice
________________________________
Name: Ian Rice
Title:
4
Exhibit 10.2
AMENDMENT NO. 1 TO CONSULTING AGREEMENT
AGREEMENT (this "Agreement"), made as of the 10th day of October, 1997,
by and between Ikon Ventures, Inc., a Nevada corporation, with offices at 570
Lexington Avenue, New York, New York 10022 (the "Company") and Sigma Limited,
S.A., a corporation organized under the laws of Switzerland, with offices at
Rue-Fritz- Courvoisier 40, 2300 La Chaux-de-Fonds, Switzerland ("Consultant").
W I T N E S S E T H:
WHEREAS, the Company and Consultant entered into a consulting agreement
dated July 1, 1997 (the Consulting Agreement");
WHEREAS, the Company and Consultant desire to amend the Consulting
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, the Company and Consultant agree as follows:
1. Paragraph 3 of the Consulting Agreement is hereby amended to reflect
that, commencing as of October 1, 1997, the Base Fee (as defined in the
Consulting Agreement) shall be equal to $147,000.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
IKON VENTURES, INC.
By: /s/ Brian Copsey
_______________________________
Name: Brian Copsey
Title: Chief Financial Officer
SIGMA LIMITED, S.A.
By: /s/ Ian Rice
______________________________
Name: Ian Rice
Title:
Exhibit 10.3
Sigma Limited S.A.
Rue-Fritz-Courvoisier 40
2300 La Chaux-deFonds
Switzerland
January 19, 2000
Ikon Ventures, Inc
163-169 Brompton Road
London SW3 1PY
England
Gentlemen:
Reference is made to the Consulting Agreement between us dated
as of July 1, 1997, as amended on October 10, 1997. This will confirm our
agreement that Ikon may defer payment of the fees payable under the Consulting
Agreement, effective for the month of January 2000, until the earlier of such
time as Ikon shall have funds available to make such payments or upon the
closing of a combination transaction between Ikon and a third party, whereupon
all accrued but unpaid fees shall be immediately due and payable.
Very truly yours,
SIGMA LIMITED S.A.
By: /s/ Ian Rice
Authorized Agent
Exhibit 10.4
IKON VENTURES, INC.
1999 INCENTIVE PROGRAM
The 1999 Incentive Program (the "Program") provides for the
grant to officers, directors and employees of IKON Ventures, Inc. and its direct
and indirect subsidiaries (collectively, the "Company"), and certain consultants
to the Company, with certain rights to acquire shares of the Company's common
stock, par value $.001 per share (the "Common Stock"). The Company believes that
this Program will cause those persons to contribute materially to the growth and
success of the Company, thereby benefiting its stockholders.
1. Administration.
The Program shall be administered and interpreted by the Board
of Directors of the Company or by one or more Committees appointed by the Board
of Directors of the Company from among its members (the "Plan Administrator").
The Board of Directors may appoint different Committees to handle different
duties under the Program. The Plan Administrator's decisions shall be final and
conclusive with respect to the interpretation and administration of the Program
and any Grant made under it.
2. Grants.
Incentives under the Program shall consist of incentive stock
options, non-qualified stock options, stock appreciation rights in tandem with
stock options or freestanding, and restricted stock grants (any of the
foregoing, in any combination, collectively, "Grants"). All Grants shall be
subject to the terms and conditions set out herein and to such other terms and
conditions consistent with this Program as the Plan Administrator deems
appropriate. The Plan Administrator shall approve the form and provisions of
each Grant. Grants under a particular section of the Program need not be
uniform, and Grants under two or more sections may be combined in one
instrument.
3. Eligibility for Grants.
Grants may be made to any employee, officer, key executive,
director, professional or administrative employee, consultant or advisor to the
Company or any subsidiary of the Company selected by the Plan Administrator to
receive Grants under the Program (persons so selected, the "Grantees").
Provided, that incentive stock options may only be granted to employees of the
Company.
4. Shares Available for Grant.
(a) Shares Subject to Issuance or Transfer. Subject to
adjustment as provided in Section 4(b), the aggregate number of shares of Common
Stock (the "Shares") that may be issued or transferred under the Program is
2,225,000 Shares, plus, (i) any Shares which are forfeited under the Program
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<PAGE>
after the adoption of the Program by the Company's Board of Directors (the
"Adoption Date"); plus (ii) the number of Shares repurchased by the Company in
the open market and otherwise with an aggregate price no greater than the cash
proceeds received by the Company from the sale of Shares under the Program; plus
(iii) any Shares surrendered to the Company in payment of the exercise price of
options issued under the Program. However, no award may be issued that would
bring the total of all outstanding awards under the Program to more than 15% of
the total number of Shares of Common Stock of the Company at the time
outstanding. The Shares may be authorized but unissued Shares or treasury
Shares. The number of Shares available for Grants at any given time shall be
reduced by the aggregate of all Shares previously issued or transferred pursuant
to the Program plus the aggregate of all Shares which may become subject to
issuance or transfer under then-outstanding and then-currently exercisable
Grants under the Program. The maximum number of Shares for which options and
stock appreciation rights may be granted under the Program to any person during
any calendar year is 150,000 (subject to appropriate adjustment in the event of
any changes in capitalization of the Company).
(b) Adjustments Upon Changes in Capitalization or Other
Events. Upon changes in the Common Stock of the Company by reason of a stock
dividend, stock split, reverse split, recapitalization, merger, consolidation,
combination or exchange of shares, separation, reorganization or liquidation,
the number and class of Shares available under the Program as to which Grants
may be made (both in the aggregate and to any one Grantee), the number and class
of Shares under each then-outstanding Stock Option and the Option Price per
share of such options, and the terms of stock appreciation rights shall be
correspondingly adjusted by the Plan Administrator, such adjustments to be made
in the case of outstanding Stock Options without change in the total price
applicable to such options. In the event of a merger, consolidation,
combination, reorganization or other transaction in which the Company will not
be the surviving corporation, or in which the Company becomes a wholly-owned
subsidiary of the new corporation, a Grantee of Stock Options under the Program
shall be entitled to options on that number of shares of stock in the new
corporation which the Grantee would have received had the Grantee exercised all
of the unexercised options available to the Grantee under the Program, whether
or not then exercisable, at the instant immediately prior to the effective date
of such transaction, and, if such unexercised options had related stock
appreciation rights, the Grantee also will receive new stock appreciation rights
related to the new options. Thereafter, adjustments as provided above shall
relate to the options or stock appreciation rights of the new corporation.
Except as otherwise specifically provided in the instrument of Grant, in the
event of a Change in Control (as defined below), merger, consolidation,
combination, reorganization or other transaction in which the shareholders of
the Company will receive cash or securities (other than Common Stock) or in the
event that an offer is made to the holders of Common Stock of the Company to
sell or exchange such Common Stock for cash, securities or stock of another
corporation and such offer, if accepted, would result in the offeror becoming
the owner of (a) at least 50% of the outstanding Common Stock of the Company or
(b) such lesser percentage of the outstanding Common Stock which the Plan
Administrator in its sole discretion determines will materially adversely affect
the market value of the Common Stock after the tender or exchange offer, the
Plan Administrator shall have the right, but not the obligation, in the exercise
of its business judgment, prior to the shareholders' vote on such transaction or
prior to the expiration date (without extensions) of the tender or exchange
offer, (i) accelerate the time of exercise so that all Stock Options and stock
2
<PAGE>
appreciation rights which are outstanding shall become immediately exercisable
in full, and all Restricted Stock Grants shall immediately vest in full, without
regard to any limitations of time, performance or amount otherwise contained in
the Program or in the instruments of Grant and/or (ii) determine that the
options and stock appreciation rights shall be adjusted and make such
adjustments by substituting for Common Stock of the Company subject to options
and stock appreciation rights, common stock of the surviving corporation or
offeror if such stock of such corporation is publicly traded or, if such stock
is not publicly traded, by substituting common stock of a parent of the
surviving corporation or offeror if the stock of such parent is publicly traded,
in which event the aggregate option price shall remain the same and the number
of shares subject to outstanding grants shall be the number of shares which
could have been purchased on the closing day of such transaction or the
expiration date of the offer with the proceeds which would have been received by
the Grantee if the option had been exercised in full prior to such transaction
or expiration date and the Grantee had exchanged all of such shares in the
transaction or sold or exchanged all of such shares pursuant to the tender or
exchange offer, and if any such option has related stock appreciation rights,
the stock appreciation rights shall likewise be adjusted. For purposes of this
Section 4(b), "Change in Control" means (i) any "person", as such term is used
in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportion as their ownership of stock of the Company),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
30% or more of the combined voting power of the Company's then outstanding
securities without the approval of the Board of Directors of the Company; (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (i), (iii), or (iv) of this sentence)
whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
cease for any reason to constitute at least a majority thereof; (iii) the
shareholders of the Company approve a merger or consolidation of the Company
with any other company, other than (1) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (2) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no "person" (as hereinabove defined) acquires
more than 50% of the combined voting power of the Company's then outstanding
securities; or (iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets and properties.
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<PAGE>
5. Stock Options.
The Plan Administrator may grant options qualifying as
incentive stock options under the Internal Revenue Code of 1986, as amended
("Incentive Stock Options"), or non-qualified options not entitled to special
tax treatment under Section 422 of the Internal Revenue Code of 1986 (the
"Code"), as amended (collectively, "Stock Options"). The following provisions of
this Section 5 are applicable to Stock Options:
(a) Exercise of Option. A Grantee may exercise a Stock
Option by delivering a notice of exercise to the Company, either with or
without accompanying payment of the option price (the "Option Price"). The
notice of exercise, once delivered, shall be irrevocable.
(b) Satisfaction of Option Price. The Grantee shall pay the
Option Price in cash or with the Program Administrator's permission, by
delivering shares of Common Stock already owned by the Grantee and having a Fair
Market Value on the date of exercise equal to the Option Price, or a combination
of cash and Shares. The Grantee shall pay the Option Price not later than thirty
(30) days after the date of a statement from the Company following exercise
setting forth the Option Price, Fair Market Value of Common Stock on the
exercise date, the number of shares of Common Stock that may be delivered in
payment of the Option Price, and the amount of withholding tax due, if any. If
the Grantee fails to pay the Option Price within the thirty (30) day period, the
Plan Administrator shall have the right to take whatever action it deems
appropriate, including voiding the option exercise. The Company shall not issue
or transfer shares of Common Stock upon exercise of a Stock Option until the
Option Price is fully paid.
(c) Share Withholding. With respect to any non-qualified
option or SAR (as defined below), the Plan Administrator may, in its discretion
and subject to such rules as the Plan Administrator may adopt, permit the
Grantee to satisfy, in whole or in part, any withholding tax obligation which
may arise in connection with the exercise of the non-qualified option or SAR by
electing to have the Company withhold shares of Common Stock having a Fair
Market Value equal to the amount of the withholding tax. Notwithstanding the
foregoing, as a condition of the Grant of any Stock Option or SAR to any officer
or director of the Company subject to the reporting requirements (a "Reporting
Person") of Section 16 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Plan Administrator shall require, upon the
exercise of any Stock Option or SAR by any Reporting Person, at a time when the
Company shall be required to file periodic reports under Section 13 of the
Exchange Act, that the number of shares of Common Stock otherwise issuable upon
the exercise of such Stock Option or SAR shall be reduced by the number of
shares of Common Stock having an aggregate Fair Market Value equal to the amount
of the Reporting Person's liability for any and all taxes required by law to be
withheld.
(d) Price and Term. The Option Price per share, term and
other provisions of Stock Options granted under the Program shall be specified
by the Grant, as limited, in the case of Incentive Stock Options, by the
provisions of Section 5(e) below, if granted pursuant to such Section. In
addition, the Plan Administrator may prescribe such other conditions as it may
deem appropriate, which conditions shall be specified in the instrument of
Grant.
(e) Limits on Incentive Stock Options. The aggregate fair
market value of the stock covered by Incentive Stock Options granted under the
Program or any other stock option plan of the Company or any subsidiary or
4
<PAGE>
parent of the Company that become exercisable for the first time by any employee
in any calendar year shall not exceed $100,000. The aggregate Fair Market Value
will be determined at the time of grant. The period for exercise of an Incentive
Stock Option shall not exceed ten (10) years from the date of the Grant (or five
years if the Grantee is also a 10% stockholder). The Option Price at which
Common Stock may be purchased by the Grantee under an Incentive Stock Option
shall be the Fair Market Value (or 110% of the Fair Market Value if the Grantee
is a 10% stockholder) of the Common Stock on the date of the Grant. Incentive
Stock Options may only be granted to employees of the Company or any subsidiary
or parent of the Company. Incentive Stock Options by their terms shall not be
transferable by the Grantee other than by the laws of descent and distribution,
and shall be exercisable, during the lifetime of the Grantee, only by the
Grantee.
(f) Restored Options. Stock Options granted under the
Program may, with the Plan Administrator's permission, include the right to
acquire a restored option (a "Restored Option"). If a Stock Option grant
contains a Restored Option feature and if a Grantee pays all or part of the
Option Price of such Stock Option with shares of Common Stock held by the
Grantee, then upon exercise of such Stock Option the Grantee shall be granted a
Restored Option to purchase, at the Fair Market Value of the Common Stock as of
the date of the grant of the Restored Option, the number of shares of Common
Stock of the Company equal to the sum of the number of whole shares used by the
Grantee in payment of the Option Price and the number of whole shares, if any,
withheld by the Company as payment for withholding taxes. A Restored Option may
be exercised between the date of grant and the date of expiration, which will be
the same as the date of expiration of the Stock Option to which such Restored
Option is related.
6. Stock Appreciation Right.
The Plan Administrator may grant a Stock Appreciation Right
("SAR") either independently or in conjunction with any Stock Option granted
under the Program. The following provisions are applicable to each SAR:
(a) Options to Which Right Relates. Each SAR which is issued
in conjunction with a Stock Option shall specify the Stock Option to which the
SAR is related, together with the Option Price and number of option shares
subject to the SAR at the time of its grant.
(b) Requirement of Employment. An SAR may be exercised only
while the Grantee is in the employment or consultancy of the Company, except
that the Plan Administrator may provide for partial or complete exceptions to
this requirement as it deems equitable.
(c) Exercise. A Grantee may exercise an SAR in whole or in
part by delivering a notice of exercise to the Company, except that the Plan
Administrator may provide for partial or complete exceptions to this requirement
as it deems equitable.
(d) Payment and Form of Settlement. If a Grantee exercises
an SAR which is issued in conjunction with a Stock Option, he shall receive the
aggregate of the excess of the fair market value of each share of Common Stock
with respect to which the SAR is being exercised over the Option Price of each
5
<PAGE>
such share. Payment, in any event, may be made in cash, Common Stock or a
combination of the two, in the discretion of the Plan Administrator. Fair Market
Value shall be determined as of the date of exercise.
(e) Expiration and Termination. Each SAR shall expire on a
date determined by the Plan Administrator at the time of grant. If a Stock
Option is exercised in whole or in part, any SAR related to the Shares purchased
in connection with such exercise shall terminate immediately.
7. Restricted Stock Grants.
The Plan Administrator may issue or transfer shares of Common
Stock ("Restricted Stock") to a Grantee under a Restricted Stock Grant. Shares
of Restricted Stock are subject to forfeiture unless and until specified
employment vesting and/or performance vesting conditions are met, as determined
by the Plan Administrator. Until the shares vest or are forfeited, as the case
may be, the Grantee shall be entitled to vote the shares and to receive any
dividends paid. The following provisions are applicable to Restricted Stock
Grants:
(a) Requirement of Employment. If the Grantee's employment
terminates prior to the fulfillment of the conditions for vesting of the
Restricted Stock, as set forth in the specific instrument of Grant, all shares
of Restricted Stock held by him or her and still subject to restriction will be
forfeited and must be returned immediately to the Company. However, the Plan
Administrator may provide for partial or complete exceptions to this requirement
as it deems equitable.
(b) Restrictions of Transfer and Legend on Stock Certificate.
Prior to the fulfillment of the conditions for vesting, a Grantee may not sell,
assign, transfer, pledge, or otherwise dispose of the shares of Common Stock
except to a Successor Grantee under Section 9(a). Each certificate for shares
issued or transferred under a Restricted Stock Grant shall contain a legend
giving appropriate notice of the restrictions applicable to the Grant. The Plan
Administrator may, in its sole discretion, require that such certificates be
placed into escrow with the Company until vesting.
(c) Lapse of Restrictions. All restrictions imposed under a
Restricted Stock Grant shall lapse upon the fulfillment of the conditions for
vesting set forth in the instrument of Grant provided that all of the conditions
stated in Sections 7(a) and (b) have been met as of the date of such lapse. The
Grantee shall then be entitled to have the legend removed from the certificate.
8. Amendment and Termination of the Program.
(a) Amendment. The Administrator may from time to time amend,
alter, suspend or discontinue the Program, subject to any requirement of
stockholder approval required by applicable law, rule or regulation, including
Section 162(m) of the Code or, if the Common Stock is then listed or admitted
for trading on any United States securities exchange or on the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"),
6
<PAGE>
any requirement for stockholder approval required under the rules of such
exchange or NASDAQ, as the case may be; provided, however, that no amendment
shall be made without stockholder approval if such amendment would (1) increase
the maximum number of shares of Common Stock available for issuance under this
Program (subject to Section 4(b)), (2) reduce the minimum Option Price in the
case of an option or the base price in the case of an SAR, (3) effect any change
inconsistent with Section 422 of the Code or (4) extend the term of this
Program.
(b) Termination of the Program. The Program shall terminate
on the tenth anniversary of its effective date unless terminated earlier by the
Board or unless extended by the Board.
(c) Termination and Amendment of Outstanding Grants. A
termination or amendment of the Program that occurs after a Grant is made shall
not result in the termination or amendment of the Grant unless the Grantee
consents or unless the Plan Administrator acts under Section 9(d). The
termination of the Program shall not impair the power and authority of the Plan
Administrator with respect to outstanding Grants. Whether or not the Program has
terminated, an outstanding Grant may be terminated or amended under Section 9(d)
or may be amended by agreement of the Company and the Grantee on terms
consistent with the Program.
9. General Provisions.
(a) Prohibitions Against Transfer. Only a Grantee or his or
her authorized representative may exercise rights under a Grant. Such persons
may not transfer those rights, except upon the express written consent of the
Company, which may be granted or denied in the Company's discretion. Except as
otherwise expressly provided herein or in the instrument of grant, when a
Grantee dies, the personal representative or other person entitled under a Grant
under the Program to succeed to the rights of the Grantee ("Successor Grantee")
may exercise the rights. A Successor Grantee must furnish proof satisfactory to
the Plan Administrator of his or her right to receive the Grant under the
Grantee's will or under the applicable laws of descent and distribution.
(b) Suitable Grants. The Plan Administrator may make a Grant
to an employee of another corporation who becomes an Eligible Grantee by reason
of a corporate merger, consolidation, acquisition of stock or property, share
exchange, reorganization or liquidation involving the Company in substitution
for a stock option, stock appreciation right, performance award, or restricted
stock grant previously granted by such corporation (the "Original Incentives").
The terms and conditions of the substitute Grant may vary from the terms and
conditions required by the Program and from those of the Original Incentives.
The Plan Administrator shall prescribe the exact provisions of the substitute
Grants, preserving where possible the provisions of the Original Incentives.
(c) Subsidiaries. The term "subsidiary" means a corporation
in which the Company owns directly or indirectly 50% or more of the voting
power.
(d) Compliance with Law. The Program, the exercise of Grants,
and the obligations of the Company to issue or transfer shares of Common Stock
under Grants shall be subject to all applicable laws and to approvals by any
7
<PAGE>
governmental or regulatory agency as may be required. The Plan Administrator may
revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory government regulation. The Plan
Administrator may also adopt rules regarding the withholding of taxes on payment
to Grantees.
(e) Ownership of Stock. A Grantee or Successor Grantee shall
have no rights as a stockholder of the Company with respect to any Shares
covered by a Grant until the Shares are issued or transferred to the Grantee or
Successor Grantee on the Company's books.
(f) No Right to Employment. The Program and the Grants under
it shall not confer upon any Grantee the right to continue in the employment of
the Company or affect in any way the right of the Company to terminate the
employment of a Grantee at any time.
(g) Effective Date of the Program. The Program shall become
effective upon its approval by the Company's stockholders under applicable law
and regulatory requirements. Grants may be made prior to such approval but no
Grant may be exercised until such approval is obtained.
(h) Fair Market Value. For the purposes of the Program, the
term "Fair Market Value" means, as of any date, the closing price of a share of
Common Stock of the Company on such date. The closing price shall be (i) if the
Common Stock is then listed or admitted for trading on any national securities
exchange, or if not so listed or admitted for trading, is listed or admitted for
trading on NASDAQ, the last sale price of the Common Stock, regular way, or the
mean of the bid and asked prices thereof for any trading day on which no such
sale occurred, in each case as officially reported on the principal securities
exchange on which the Common Stock is listed or admitted for trading or on
NASDAQ, as the case may be, or (ii) if not so listed or admitted for trading on
a national securities exchange or NASDAQ, the mean between the closing high bid
and low asked quotations for the Common Stock in the over-the-counter market as
reported by NASDAQ, or any similar system for the automated dissemination of
securities prices then in common use, if so quoted, as reported by any member
firm of the New York Stock Exchange selected by the Company; provided, however,
that if, by reason of extended or continuous trading hours on any exchange or in
any market or for any other reason, the time, with respect to any trading day,
of the close of trading for the purpose of determining the "last sale price" or
the "closing" bid and asked prices is not objectively determinable, the time on
such trading day used for the purpose of reporting any compilation of last sale
prices or closing bid and asked prices in The Wall Street Journal shall be the
time on such trading day as of which the "last sale price" or "closing" bid and
asked prices are determined for purposes of this definition. If the Common Stock
is quoted on a national securities or central market system in lieu of a market
or quotation system described above, the closing price shall be determined in
the manner set forth in clause (i) of the preceding sentence if actual
transaction are reported, and in the manner set forth in clause (ii) of the
preceding sentence if bid and asked quotations are reported but actual
transactions are not. If on the date in question, there is no exchange or
over-the-counter market for the Common Stock, the "fair market value" of such
Common Stock shall be determined by the Plan Administrator acting in good faith.
Notwithstanding the foregoing, so long as the Common Stock of the Company shall
be listed for trading on the Vancouver Stock Exchange (the "VSE"), for the
purposes of the Program the term "Fair Market Value" means, as of any date, the
average of the closing price of a share of Common Stock of the Company for the
8
<PAGE>
ten trading days immediately preceding such date, and the closing price shall
mean the last sale price of the Common Stock on the VSE.
(i) Application of Funds. The proceeds received by the
Company from the issuance of Grants pursuant to the Program will be used for
general corporate purposes.
(j) No Obligation to Exercise Option. The granting of an
option to any Grantee under the Program shall impose no obligation upon such
Grantee to exercise such option.
(k) Severability. If any provision of the Program, or any
term or condition of any Grant granted or form executed or to be executed
thereunder, or any application thereof to any person or circumstances is
invalid, such provision, term, condition or application shall to that extent be
void (or, in the discretion of the Plan Administrator, such provision, term or
condition may be amended so as to avoid such invalidity or failure), and shall
not affect other provisions, terms or conditions or applications thereof, and to
this extent such provisions, terms and conditions are severable.
(l) Instrument of Grant. Each Grant under this Program shall
be evidenced by an agreement (i.e., an instrument of Grant) setting forth the
terms and conditions applicable to such Grant. No Grant shall be valid until an
agreement is executed by the Company and the recipient of such award and, upon
execution by each party and delivery of the agreement to the Company, such award
shall be effective as of the effective date set forth in the Agreement.
(m) Restricted Shares. Each award made hereunder shall be
subject to the requirement that if at any time the Company determines that the
listing, registration or qualification of the shares of Common Stock subject to
such award upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other action is
necessary or desirable as a condition of, or in connection with, the delivery of
shares thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any award made hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
(n) Program Controls. In the case of any conflict or
inconsistency between the terms of this Program and the terms of any instrument
of Grant, the terms of this Program will control, unless the instrument of grant
expressly provides that the terms of such instrument of grant will control.
9
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 27.1
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-START> JAN-01-1998
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 166
<SECURITIES> 0
<RECEIVABLES> 839
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,005
<PP&E> 70
<DEPRECIATION> 18
<TOTAL-ASSETS> 1,657
<CURRENT-LIABILITIES> 386
<BONDS> 0
0
0
<COMMON> 1,191
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,657
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,767
<OTHER-EXPENSES> 334
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (47)
<INCOME-PRETAX> (2,054)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,054)
<DISCONTINUED> (4,430)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,150)
<EPS-BASIC> (0.41)
<EPS-DILUTED> (0.41)
</TABLE>
