<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1999
/ / Transition report pursuant to Section 13 or 15(d) of the Exchange Act
For the transition period from _____________ to _____________
Commission file number 000-25205
CELLPOINT INC.
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(Exact name of small business issuer as specified in its charter)
NEVADA 52-2032380
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
SOFIELUNDSVAGEN 4, S-191 47, SOLLENTUNA, SWEDEN
(Address of principal executive offices)
011-468-544-90000
(Issuer's telephone number, including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No __________
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.
Yes _______ No __________
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: AS OF NOVEMBER 2, 1999:
8,265,000 SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE.
Transitional Small Business Disclosure Format (check one):
Yes _______ No X
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements for the Company's fiscal quarter
ended September 30, 1999 are attached to this Report, commencing at page F-1.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CellPoint Inc. and its subsidiaries, CellPoint Systems AB and
CellPoint Systems S.A. (Pty) Ltd., are development stage companies
(collectively referred to as the "Company"). The Company has limited operating
history upon which an evaluation of the Company's prospects can be made. The
Company's prospects must be considered keeping in mind the risks, expenses, and
difficulties frequently encountered in the establishment of a new business in an
ever changing industry and the research, development, manufacture, distribution,
and commercialization of technology, procedures, and products and related
technologies. There can be no assurance that unanticipated technical or other
problems will not occur which would result in material delays in product
commercialization or that the efforts of the Company will result in successful
product commercialization. There can be no assurance that the Company will be
able to achieve profitable operations.
The report of the Company's independent accountants, BDO
International AB, on the Company's financial statements for the fiscal years
ended June 30, 1998 and June 30, 1999, includes a statement that the Company is
a development stage company, with no revenues, which has sustained losses from
operations since inception. The auditors have stated that there is substantial
doubt about the ability of the Company to continue as a going concern. Investors
in the Company's shares should review carefully the report of BDO International
AB. There can be no assurances that the Company will be able to continue as a
going concern.
Except for historical information, the material contained in
this Management's Discussion and Analysis or Plan of Operation is
forward-looking. This discussion includes, in addition to historical
information, forward-looking statements, which involve risks and uncertainties.
The Company's actual results could differ materially from the results discussed
in the forward-looking statements. Factors that could cause or contribute to
such differences are discussed below and elsewhere in the Registration Statement
on Form 10-SBA-1 on file with the Securities and Exchange Commission. These
risks and uncertainties include the rate of market development and acceptance
of cellular positioning technology, the unpredictability of the Company's
sales cycle, the limited revenues and significant operating losses generated
to date, and the possibility of significant ongoing capital requirements. For
the purposes of the safe harbor protection for forward-looking statements
provided by the Private Securities Litigation Reform Act of 1995, readers are
urged to review the list of certain important factors set forth in
"Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995".
For purposes of the discussion contained herein, all
information is reported on a consolidated basis for the Company and its
wholly-owned subsidiaries.
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<PAGE>
RESULTS OF OPERATIONS
The Company commenced operations in February 1997. The Company
has had only minimal commercial revenues to date and has relied solely upon
proceeds from the sale of its securities to fund its operations.
The Company has funded its operations to date out of proceeds
from equity offerings. During the quarter ended September 30, 1999, the
Company earned revenue of $81,319 from its contracts, as compared to no
revenues in the quarter ended September 30, 1998. For the fiscal quarter
ended September 30, 1999, the Company incurred a net loss of ($1,787,985), as
compared to a net loss of ($283,651) during the fiscal quarter ended
September 30, 1998.
During the first quarter of fiscal 2000 ending September 30,
1999, the Company had total operating expenses of $1,358,544, which represents a
significant increase over $272,966 of operating expenses during the comparable
quarter in 1998. This increase resulted from the Company's efforts in expanding
its operations to achieve commercialization of the technology, increasing its
marketing activities and expanding its staff and also includes depreciation
and amortization expenses of $509,235, primarily related to the purchased
technology and Matrix franchising concept. The Company also incurred
financial items of $510,760 during the first fiscal quarter, which is mostly
attributable to the interest costs and original issue discount associated
with the $2,000,000 bridge financing closed in August 1999.
The average cash outflow for operations per month during
the quarter was approximately $270,000, consisting of salaries and personnel
costs (approximately $175,000), rent and other facilities (approximately
$7,500), marketing and selling expenses (approximately $25,000), professional
services (approximately $45,000), insurance ($2,500), and computers and
equipment ($15,000).
The number of employees at September 30, 1999 was 36, up from
31 at the June 30, 1999 fiscal year-end.
The Company entered into an agreement in April 1999 to provide
its technology and related services to a GSM operator in Sweden, Tele2. Tele2
launched commercial services in Sweden for positioning of mobile phones based on
the CellPoint System in November 1999. The Company will receive a percentage of
the revenue stream created through the new service being offered by Tele2. Those
revenue streams are a percentage of fees that Tele2 will collect and include a
monthly minimum payment requirement.
In July 1999, the Company entered into an agreement with
France Telecom Mobiles to provide it's technology and related services in
France. Revenues will commence during this evaluation project and significant
revenue is expected by management upon completion of the evaluation project.
From the Company's inception (February 1997) through September
30, 1999, the Company has had only minimal commercial revenues. At September 30,
1999, the Company had an accumulated loss from operations of ($5,010,831) and an
accumulated deficit of ($5,594,328). While the Company has begun to realize a
minimum level of revenues from commercial operations since September 30, 1999,
there can be no assurances that the Company will be able to expand its
revenue-generating operations or that its operations will be profitable.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the Company had $1,426,083 in current
assets. Cash and cash equivalents amounted to $1,297,148. At June 30, 1999, the
Company had total current assets of $236,193. The increase in current assets is
attributable to the closing of the Company's $2,000,000 bridge financing in
August 1999.
The Company's stockholders' equity was $10,030,076 at
September 30, 1999, including an accumulated deficit of ($5,264,328), as
compared to stockholders' equity of $11,160,902 and an accumulated deficit of
($3,806,343) at its fiscal year end of June 30, 1999.
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<PAGE>
In August 1999, the Company completed a bridge financing in
which it issued $2,000,000 of promissory notes and 180,000 common stock purchase
warrants. The bridge notes bear interest at 12% per annum and mature in August
2000. Of the warrants issued, 100,000 warrants have an exercise price of $7.49
per share and 80,000 warrants have an exercise price of $8.04 per share. Madison
Securities, Inc. ("Madison") of Chicago, Illinois acted as placement agent for
the bridge financing. Madison received commissions equal to 5% of the gross
proceeds of the financing plus a $50,000 due diligence retainer. In addition,
Madison received warrants to purchase an aggregate of 100,000 shares of
Common Stock, at an exercise price of $7.49 per share. The bridge notes and
warrants were sold pursuant to an exemption from registration under Section
4(2) of the Securities Act and Rule 506 of Regulation D thereunder. The
bridge notes were repaid in October 1999 out of the proceeds from a private
placement. See "Subsequent Events" below.
SUBSEQUENT EVENTS
In September 1999, the Company commenced a private offering of
its Common Stock for a minimum of $3,000,000 and a maximum of $10,000,000. Such
offering consists of Units of 11,250 shares of Common Stock each, at an initial
offering price (subject to adjustment) of $100,000. On October 29, 1999, the
Company closed the first tranche of such offering, issuing an aggregate of
393,750 shares of Common Stock for gross proceeds of $3,500,000. In such
offering, $1,200,000 of bridge notes were exchanged for shares of Common Stock
and $841,557 of the gross proceeds were used to repay in full the balance of the
bridge notes plus interest accrued on all bridge notes. After paying
underwriting commissions, the Company received $1,108,443 in proceeds from the
first tranche of the offering. As of November 12, 1999, the Company closed
the second and final tranche of the private placement, issuing an aggregate
of 731,250 shares for gross proceeds of $6,500,000. Madison is acting as
placement agent for the private placement. The Company has agreed to pay
Madison commissions equal to 7% of the gross proceeds from the financing plus
a non-accountable expense allowance equal to 3% of the gross proceeds from
the financing. In addition, Madison will receive warrants to purchase an
aggregate number of shares of Common Stock of the Company equal to 10% of the
aggregate number of shares of Common Stock placed by Madison in the offering.
The warrants to be issued to Madison will have an exercise price of $8.89 per
share and will be exercisable from the date which is the first anniversary of
the closing of such offering through the third anniversary of such closing
date. The Units and the shares of Common Stock are being offered and sold
pursuant to an exemption from registration under Section 4(2) of the
Securities Act and Rule 506 of Regulation D thereunder.
The Company will use the additional capital raised in the
private placement to implement its business strategies, including (i) the
payment of increased operating expenses such as salaries for additional
employees; and (ii) the expansion of marketing activities. The Company currently
anticipates that its working capital on hand will be sufficient to fund its
operations for at least the next twelve months. No assurance can be given,
however, that the Company will have access to the capital markets in the future,
or that financing will be available on acceptable terms to satisfy the cash
requirements of the Company to implement its business strategies. The inability
of the Company to access the capital markets or obtain acceptable financing
could have a material adverse effect on the results of operations and financial
conditions of the Company. If, as the Company expands its operations, adequate
funds are not available, the Company may be required to curtail operations
significantly or to obtain funds through entering into arrangements with
collaborative partners or others that may require the Company to relinquish
rights to certain of its technologies or product candidates that the Company
would not otherwise relinquish. If the Company decides to expand its business
faster, or to geographic areas outside of Europe, the Company may need to raise
further capital.
YEAR 2000 ISSUES
The services of the CellPoint technology are based primarily
on technology developed by the South African company Wasp International (Pty)
Ltd. Wasp International, the original developers
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<PAGE>
of the technology, issued a Year 2000 compliance statement to the Company
wherein it confirmed that all software and hardware is millennium compliant.
The CellPoint services to be offered to Swedish customers
initially will be contingent upon the supply of communications services and base
station data from the Swedish telecommunications operator Tele2. Tele2 has
issued a Year 2000 compliance statement to the Company wherein it is confirmed
that most of Tele2's systems are currently millennium compliant. A limited
number of Tele2's systems are not currently millennium compliant, but these
systems are scheduled to be millennium compliant by the end of 1999. The Company
has no reason to question the correctness of Tele2's statement or the
reasonableness of Tele2's time schedule.
Any new supplier of vital goods and services to the Company
and subsidiaries will be requested to submit a millennium compliance statement
before the Company accepts the supplier as a supplier of goods and services to
the Company.
During recent years, there has been significant global
awareness raised regarding the potential disruption to business operations
worldwide resulting from the inability of current technology to process properly
the change from the year 1999 to 2000. The Company is aware of the potential
Year 2000 problem, and has undertaken a Year 2000 project to address the
Company's readiness and exposure to Year 2000 issues. The Year 2000 project
addresses the Company's products; internally used operating systems, software,
and other technology; and third party vendors and suppliers. Each of these areas
is discussed below.
The Company believes that it has substantially identified and
resolved all potential Year 2000 problems with any of the products that it
develops and markets. In order to confirm its belief, the Company has
implemented an ongoing program to test its products for Year 2000 issues. The
Company believes that if any Year 2000 issues are identified, the Company will
be able to correct the problem with a minimal cost or time investment. However,
management also believes that it is not possible to determine with complete
certainty that all Year 2000 problems affecting the Company's products have been
identified or corrected due to the fact that these products interact with other
third party vendor systems not under the Company's control (see below). In
addition, the Company's evaluation is based on a limited number of actual
customer installations.
The Company has conducted a process to identify all internally
used operating systems, software, and other technology that may be impacted by
the Year 2000 problem. This process is now substantially complete. For the
internally used operating systems, software, and technology the Company has
identified as material, the Company is assessing the Year 2000 exposure through
testing and vendor inquiry. Material operating systems, software, and other
technology deemed to be adversely affected by the Year 2000 problem will be
upgraded or replaced. The Company currently estimates the range of costs to
upgrade or replace systems it believes may be impacted by Y2K issues to be from
$50,000 to $150,000. In addition to operating systems, software, and other
technology, the operation of office and facilities equipment, such as fax
machines, photocopiers, telephone systems, security systems, elevators, and
other common devices may be affected by the Year 2000 problem.
The Company has identified major suppliers and other third
party vendors integral to the operations of the Company's business. The Company
will initiate communications with those suppliers and third party vendors to
assess their readiness to deal with Year 2000 problems. As part of the Year 2000
project, the Company will identify alternative providers of products and
services deemed material to the Company's operations. However, the Company has
no control over and cannot predict the corrective actions of these third party
vendors and suppliers. The Company intends to arrange, to the extent available,
alternate supplier arrangements in the event a third party vender is materially
impacted by Y2K issues. While the Company expects that it will be able to
resolve any significant Year 2000 problems related to third party products and
services, there can be no assurance that it will be successful in resolving any
such problems. Any failure of these third party vendors and suppliers to
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<PAGE>
resolve Year 2000 problems with their systems in a timely manner could have a
material adverse effect on the Company's business, financial condition, and
results of operations.
The discussions of the Company's efforts relating to Year 2000
compliance are forward-looking statements. The Company's ability to achieve Year
2000 compliance and the associated level of incremental costs could be adversely
impacted by, among other things, the availability and cost of programming and
testing resources, vendors' ability to modify proprietary software, and other
unanticipated problems. The failure to correct a material Year 2000 problem
could result in an interruption of certain normal business activities or
operations. Such failures could materially affect the Company's results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 problem, the Company is unable at this time to
determine those consequences. The Company believes that, with the completion of
the Year 2000 project as scheduled, the possibility of significant interruptions
of normal operations should be reduced or eliminated.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In August 1999, the Company completed a bridge financing in
which it issued $2,000,000 of promissory notes and 180,000 common stock purchase
warrants. The bridge notes bear interest at 12% per annum and mature in August
2000. Of the warrants issued, 100,000 warrants have an exercise price of $7.49
per share and 80,000 warrants have an exercise price of $8.04 per share. Madison
Securities, Inc. ("Madison") of Chicago, Illinois acted as placement agent for
the bridge financing. Madison received commissions equal to 5% of the gross
proceeds of the financing plus a $50,000 due diligence retainer. In addition,
Madison received warrants to purchase an aggregate of 100,000 shares of
Common Stock, at an exercise price of $7.49 per share. The bridge notes and
warrants were sold pursuant to an exemption from registration under Section
4(2) of the Securities Act and Rule 506 of Regulation D thereunder.
In September 1999, the Company commenced a private offering of
its Common Stock for a minimum of $3,000,000 and a maximum of $10,000,000. Such
offering consists of Units of 11,250 shares of Common Stock each, at an initial
offering price (subject to adjustment) of $100,000. On October 29, 1999, the
Company closed the first tranche of such offering, issuing an aggregate of
393,750 shares of Common Stock for gross proceeds of $3,500,000. In such
offering, $1,200,000 of bridge notes were exchanged for shares of Common Stock
and $841,557 of the gross proceeds were used to repay in full the balance of the
bridge notes plus interest accrued on all bridge notes. After paying
underwriting commissions, the Company received $1,108,443 in proceeds from the
first tranche of the offering. As of November 12, 1999, the Company closed
the second and final tranche of the private placement, issuing an aggregate
of 731,250 shares for gross proceeds of $6,500,000. Madison is acting as
placement agent for the private placement. The Company has agreed to pay
Madison commissions equal to 7% of the gross proceeds from the financing plus
a non-accountable expense allowance equal to 3% of the gross proceeds from
the financing. In addition, Madison will receive warrants to purchase an
aggregate number of share of Common Stock of the Company equal to 10% of the
aggregate number of shares of Common Stock placed by Madison in the offering.
The warrants to be issued to Madison will have an exercise price of $8.89 per
share and will be exercisable from the date which is the first anniversary of
the closing of such offering through the third anniversary of such closing
date. The
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<PAGE>
Units and the shares of Common Stock are being offered and sold pursuant to an
exemption from registration under Section 4(2) of the Securities Act and Rule
506 of Regulation D thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
On October 4, 1999, Technor International, Inc. changed its
name to "CellPoint Inc." The Company also changed its trading symbol from "TNOR"
to "CLPT".
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
a. Exhibits
<S> <C>
4.1 Form of Bridge Warrant
4.2 Form of Warrant Issued to Madison Securities, Inc.
Exhibit 27 Financial Data Schedule
</TABLE>
b. Reports on Form 8-K
i. Current Report on Form 8-K, filed September
23, 1999, as amended on October 26, 1999.
ii. Current Report on Form 8-K, filed October 5,
1999.
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<PAGE>
CELLPOINT INC. (FORMERLY TECHNOR INTERNATIONAL INC.) AND SUBSIDIARIES
Index to Consolidated Financial Statements
<TABLE>
<S> <C>
Consolidated Balance Sheets as of September 30, 1999 (unaudited)
and June 30, 1999 (audited) F-2
Consolidated Statements of Operations for the periods ended
September 30, 1999 and 1998 and the period from February 28,
1997 (inception) through September 30, 1999 (unaudited) F-4
Consolidated Statements of Comprehensive Income for the periods
ended September 30, 1999 and 1998 (unaudited) and the period
from February 28, 1997 (inception) through September 30, 1999
(unaudited) F-5
Consolidated Statements of Cash Flows for the periods ended
September 30, 1999 and 1998 and the period from February 28,
1997 (inception) through September 30, 1999 (unaudited) F-6
Notes to Consolidated Financial Statements F-8
</TABLE>
F-1
<PAGE>
CELLPOINT INC. (FORMERLY TECHNOR INTERNATIONAL INC.) AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheet
(amounts in US$)
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1999 JUNE 30, 1999
CURRENT ASSETS: UNAUDITED AUDITED
--------------- --------- -------
<S> <C> <C>
Cash and cash equivalents $1,297,148 $180,073
Accounts receivable 22,147 --
Other assets 16,183 15,990
Prepaid expenses 53,101 19,597
Other receivables 37,504 20,533
----------- -----------
TOTAL CURRENT ASSETS 1,426,083 236,193
LONG-TERM ASSETS:
Purchased technology, net of amortization of $845,838
and $483,336, respectively 9,304,162 9,666,664
Intangible assets, net of amortization of $194,446 and $111,112,
respectively 805,554 888,888
Employment contracts, net of amortization of $119,579 and
$68,331, respectively 303,409 354,657
Investment in affiliate 500,000 500,000
Machinery and equipment, net of depreciation of $58,243 and
$46,142, respectively 124,506 110,140
----------- -----------
TOTAL LONG-TERM ASSETS 11,037,631 11,520,349
----------- -----------
TOTAL ASSETS $12,463,714 $11,756,542
=========== ===========
LIABILITIES AND STOCKHOLDERS= EQUITY
CURRENT LIABILITIES:
Accrued expenses $95,626 $210,732
Accounts payable 159,121 39,518
Deferred revenue -- 58,690
Due to shareholders -- 150,000
Due to affiliate 144,731 123,799
Notes payable 1,670,000 --
Other current liabilities 364,160 12,901
----------- -----------
TOTAL CURRENT LIABILITIES 2,433,638 595,640
----------- -----------
TOTAL LIABILITIES 2,433,638 595,640
----------- -----------
</TABLE>
F-2
<PAGE>
<TABLE>
<S> <C> <C>
STOCKHOLDERS' EQUITY:
Preferred shares ($0.001 par value; 3,000,000 shares
authorized, no shares issued) -- --
Common stock ($0.001 par value; 22,000,000 shares
authorized, 7,440,000 shares issued and 750,000 shares to
be issued) 8,190 8,190
Additional paid-in capital 15,621,373 14,961,373
Cumulative translation adjustment (5,159) (2,318)
Accumulated deficit (5,594,328) (3,806,343)
----------- -----------
Total stockholders equity 10,030,076 11,160,902
----------- -----------
Total liabilities and stockholders equity $12,463,714 $11,756,542
=========== ===========
</TABLE>
F-3
<PAGE>
CELLPOINT INC. (FORMERLY TECHNOR INTERNATIONAL INC.) AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Amounts in US$)
<TABLE>
<CAPTION>
Period from
February 28,
THREE MONTHS ENDED 1997
------------------ (inception)
through
September 30, September 30, September 30,
1999 1998 1999
(unaudited) (unaudited) (unaudited)
----------- ----------- ---------------
<S> <C> <C> <C>
Revenue $ 81,319 $ 81,319
Selling, general and
administrative expenses (668,054) (234,590) (2,833,736)
Professional Fees (181,255) (30,003) (1,040,391)
Depreciation and
amortization (509,235) (8,373) (1,218,023)
----------- --------- -----------
Total operating
expenses (1,358,544) (272,966) (5,092,150)
Loss from operations (1,277,225) (272,966) (5,010,831)
Financial items, net (510,760) (10,685) (583,497)
----------- --------- -----------
Net Loss $(1,787,985) $(283,651) $(5,594,328)
=========== ========= ===========
Net loss per share
basic and diluted $ (0.22) $ (0.04)
=========== ============
Weighted average shares
outstanding basic and
diluted 8,190,000 7,440,000
</TABLE>
F-4
<PAGE>
CELLPOINT INC. (FORMERLY TECHNOR INTERNATIONAL INC.) AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Comprehensive Income
(Amounts in US$)
<TABLE>
<CAPTION>
Period from
February 28,
1997
THREE MONTHS ENDED (inception)
------------------------------ through
September 30, September 30, September 30,
1999 1998 1999
(unaudited) (unaudited) (unaudited)
------------ ------------ ------------
<S> <C> <C> <C>
Net loss $(1,787,985) $ (283,651) $(5,594,328)
Other comprehensive
income (loss)
Currency translation
adjustment $ (2,841) $ (300) $ (5,159)
----------- ----------- -----------
Comprehensive loss for
fiscal year $(1,790,826) $ (283,951) $(5,599,487)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
F-5
<PAGE>
CELLPOINT INC. (FORMERLY TECHNOR INTERNATIONAL INC.) AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flow (unaudited)
(Amounts in US$)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------ Period from February 28,
September 30, September 30, 1997 (inception) through
1999 1998 September 30, 1999
(unaudited) (unaudited) (unaudited)
------------- ------------- ------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss........................... $ (1,787,985) $(283,651) $(5,264,328)
Depreciation and
amortization....................... 509,235 8,373 1,218,023
Noncash financing costs............ 330,000 -- --
Adjustments to reconcile net loss to
net cash used in
operating activities:
Other Assets.................... (193) -- (16,183)
(Increase) decrease in prepaid
expenses........................ (33,504) 12,650 (53,101)
(Increase) decrease in short-
term receivables................ (39,118) -- (59,651)
(Increase) decrease in accrued
expenses and other current
liabilities..................... 177,463 (287,454) 454,623
Increase (decrease) in accounts
payable......................... 119,603 (147,399) 159,121
Increase in due to affiliate.... 20,932 -- 144,731
--------- --------- -----------
NET CASH USED IN OPERATING
ACTIVITIES......................... (703,567) (697,481) (3,416,765)
--------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of technology............. -- -- (50,000)
Purchase of shares in subsidiary
and affiliate...................... -- -- (950,000)
Purchase of fixed assets (26,517) (12,463) (165,840)
--------- --------- -----------
NET CASH USED IN INVESTING
ACTIVITIES:........................ (26,517) (12,463) (1,165,840)
-------- -------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances (payments) of
stockholders' loans................ (150,000) (250,000) --
Proceeds from notes payable 2,000,000 -- 2,000,000
Net proceeds from issuance of shares -- 2,246,667 3,879,753
</TABLE>
F-6
<PAGE>
<TABLE>
<S> <C> <C> <C>
NET CASH PROVIDED BY FINANCING
ACTIVITIES......................... 1,850,000 1,996,667 5,879,753
--------- --------- ---------
Effect of changes in exchange rates
on cash (2,841) 300 (5,159)
--------- --------- ---------
Net increase in cash and cash
equivalents........................ 1,117,075 1,287,023 1,297,148
Cash and cash equivalents,
beginning of period................ 180,073 764,603 --
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF
PERIOD............................. $1,297,148 $2,051,626 $1,297,148
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
NATURE OF REPORT. The consolidated balance sheet at the end of
the preceding fiscal year has been derived from the audited consolidated balance
sheet contained in the Company's Annual Report on Form 10-KSB, on file with the
Securities and Exchange Commission, and is presented for comparative purposes.
All other financial statements are unaudited. In the opinion of management, all
adjustments, which include only normal recurring adjustments necessary to
present fairly the financial position, results of operations and changes in cash
flows, for all periods presented, have been made. The results of operations for
interim periods are not necessarily indicative of the operating results for the
full year.
FOOTNOTES. Certain footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted in accordance with the published rules and
regulations of the Securities and Exchange Commission. These consolidated
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-KSB, on
file with the Securities and Exchange Commission.
ESTIMATES AND UNCERTAINTIES. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results, as determined at a later
date, could differ from those estimates. Estimates relate primarily to
recoverability of the Company's tangible and intangible assets.
PRINCIPLES OF CONSOLIDATION. The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.
2. NOTES PAYABLE
During August 1999, the Company closed on a $2 million bridge
financing. The Company sold 20 units, each unit consisting of a one-year
$100,000 promissory note that bears interest at 12% per annum and a warrant to
purchase 4,000 shares of the Company's Common Stock at a price equal to the
ten-day average closing bid price prior to closing. The placement agent received
commissions of 5% of the total financing and warrants to purchase shares of the
Company's common stock equal to 5,000 warrants per unit sold out of proceeds
from the Company's private placement. See Note 3. The bridge financing was
retired during October 1999. The financing resulted in an original issue
discount of $660,000, of which $330,000 has been recorded as a component of
financial items on the accompanying statement of operations for the period
ended September 30, 1999. The remaining discount will be charged to operation
in October 1999 upon retirement of the bridge notes.
3. SUBSEQUENT EVENT -- PRIVATE PLACEMENT
On October 29, 1999, the Company completed the first tranche
of its private placement financing, in which it sold an aggregate of 393,750
shares of Common Stock for gross proceeds of $3,500,000. In such offering,
$1,200,000 of bridge notes were exchanged for shares of Common Stock, and
$841,557 of the gross proceeds were used to repay in full the balance of the
bridge notes plus interest accrued on all of the bridge notes. After paying
underwriting commissions, the Company received $1,108,443 in proceeds from the
first tranche of the offering. As of November 12, 1999, the Company closed the
second and final tranche of the private placement, issuing an aggregate of
731,250 shares from gross proceeds of $6,500,000.
F-8
<PAGE>
SIGNATURE
In accordance with the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CELLPOINT INC.
By /s/ PETER HENRICSSON
---------------------------------------
Peter Henricsson
President and Chief Executive Officer
Date: November 19, 1999
<PAGE>
EXHIBIT 4.1
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
(1) REGISTRATION IN COMPLIANCE WITH SUCH ACT AND SUCH STATE LAWS OR (2) AN
OPINION OF COUNSEL FOR THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED.
WARRANT
For the Purchase of Common Stock, Par Value $0.001 per Share,
of CellPoint Inc.
Void After 5 P.M., Chicago time, on September 2, 2002
Date of Issuance: September 2, 1999 Warrant __
For value received, CellPoint Inc., a Nevada corporation (the
"Corporation") hereby grants to ______________________________________________
___________, or registered assigns, subject to the terms and conditions
hereinafter set forth, on or after September 2, 2000 and at any time prior to
5:00 P.M., Chicago time, on September 2, 2002, but not thereafter, the right to
purchase from the Corporation _______ shares (the "Shares") of Common Stock, par
value $0.001 per share (the "Common Stock") of the Corporation upon payment to
the Corporation of $7.49 per share (the "Exercise Price") if and to the extent
this Warrant is exercised, in whole or in part, during the period this Warrant
remains in force, subject in all cases to adjustment as provided in the
following sentence and in Article II hereof, and to deliver a certificate or
certificates representing the Shares so purchased, upon presentation and
surrender to the Corporation of this Warrant, with the form of subscription
attached hereto duly executed, and accompanied by payment of the Exercise Price
of each Share purchased.
ARTICLE
I.
TERMS OF THE WARRANT
A. Subject to the provisions of Sections I.E. and III.A.
hereof, this Warrant may be exercised at any time and from time to time after
September 2, 2000 (the "Exercise Commencement Date"), but no later than 5:00
P.M., Chicago time, September 2, 2002 (the "Expiration Time"). If this Warrant
is not exercised on or before the Expiration Time it shall become void, and all
rights hereunder shall thereupon cease.
B. 1. The holder of this Warrant (the "Holder") may exercise
this Warrant, in whole or in part, upon surrender of this Warrant and a
notice of exercise in the form attached hereto as Exhibit A (the
"Notice of Exercise") duly executed, completed and delivered to the
Corporation at its corporate office. Promptly upon receipt of this
Warrant and the Notice of Exercise and the payment of the Exercise
Price in accordance with terms set forth below, and in no event later
than ten (10) days thereafter, the Corporation shall issue and deliver
to the Holder or its nominee certificates for the total number of whole
Shares for which this Warrant is being exercised in such denominations
as are required for delivery to the Holder and shall execute the Notice
of Exercise indicating the number of Shares which remain subject to
future purchases if any.
<PAGE>
The Exercise Price may be paid at the Holder's election either (i) by
cash or check, or (ii) by surrender of this Warrant ("Net Issuance") as
determined below. If the Holder elects the Net Issuance method, the Corporation
will issue Common Stock to the Holder (without any further payment) in
accordance with the following formula:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
X = Y(A-B)
------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common Stock then requested to
be issued under this Warrant.
A = the fair market value (per share) of the Common Stock of
the Corporation as of the date of the Notice of Exercise.
B = the Exercise Price as of the date of the Notice of Exercise.
</TABLE>
As used herein, current fair market value of Common Stock shall mean
with respect to each share of Common Stock:
(i) if traded on a securities exchange, the fair market value
shall be deemed to be the average of the closing prices over a
twenty-one (21) day period ending three days before the date
of the Notice of Exercise; or
(ii) if actively traded over-the-counter, the fair market value
shall be deemed to be the average of the closing bid and asked
prices quoted on the National Association of Securities
Dealers Automated Quotation System (the "NASDAQ System") (or
similar system) over the twenty-one (21) day period ending
three days before the date of the Notice of Exercise;
(ii) if at any time the Common Stock is not listed on any
securities exchange or quoted on the NASDAQ System or similar
system, the current fair market value of Common Stock shall
be the highest price per share which the Corporation could
obtain from a willing buyer (not a current employee or
director) for shares of Common Stock sold by the Corporation,
from authorized but unissued shares, as determined in good
faith by its Board of Directors, or if requested by the Holder
and, at the Holder's expense, by an independent third-party
investment bank or other professional designated by the
Corporation and satisfactory to the Holder or, in the absence
of a mutually agreeable investment bank or other professional,
by the average of the fair market value of Common Stock shall
be deemed to be the value received by the holders of the
Corporation's Common Stock pursuant to such merger or
acquisitions.
Upon partial exercise by either cash or Net Issuance, the Corporation
shall promptly issue to the Holder an amended warrant representing the
remaining number of shares purchasable hereunder. All other terms and
conditions of such amended warrant shall be identical to those
contained herein, including, but not limited to the Effective Date
hereof.
2
<PAGE>
2. In case the Holder shall exercise
this Warrant with respect to less than all of the shares that may be
purchased under this Warrant, the Corporation shall execute a new
Warrant identical to the terms and conditions contained in the original
Warrant for the balance of the Shares that may be purchased upon
exercise of this Warrant and deliver such new Warrant to the Holder.
3. The Corporation shall not be
required to pay any income tax, transfer tax or other governmental charge which
may be payable in respect of the issue and of this Warrant or the issue of any
Shares upon the exercise of this Warrant or in respect of any transfer involved
in the issuance or delivery of this Warrant or of the Shares in a name other
than that of the Holder at the time of surrender. Until the payment of any such
transfer tax as may be required, the Corporation shall not be required to issue
such Shares.
C. This Warrant may be split-up, combined or
exchanged for another Warrant or Warrants of like tenor to purchase a like
aggregate number of Shares. If the Holder desires to split-up, combine or
exchange this Warrant, it shall make such request in writing delivered to the
Corporation at its corporate office and shall surrender this Warrant and any
other Warrants to be so split-up, combined or exchanged at said office. Upon any
such surrender for a split-up, combination or exchange, the Corporation shall
execute and deliver to the person entitled thereto a Warrant or Warrants, as the
case may be, as so requested. The Corporation shall not be required to effect
any split-up, combination or exchange which will result in the issuance of a
Warrant entitling the Holder to purchase upon exercise a fraction of a Share.
The Corporation may require the Holder to pay a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any split-up,
combination or exchange of Warrants.
D. This Warrant may not be transferred for
a period of one year after the issue date hereof except to partners of officers
of the Holder. Prior to due presentment for registration of transfer of this
Warrant, the Corporation may deem and treat the Holder as the absolute owner of
this Warrant (notwithstanding any notation of ownership or other writing hereon)
for the purpose of any exercise hereof and for all other purposes, and the
Corporation shall not be affected by any notice to the contrary.
E. Any assignment permitted hereunder shall
be made by surrender of this Warrant to the Corporation at its principal office
with the form of assignment attached hereto as Exhibit B ("Assignment") duly
executed and funds sufficient to pay any transfer tax. In such event, the
Corporation shall, without charge, execute and deliver a new Warrant in the name
of the assignee named in the Assignment and this Warrant shall promptly be
canceled. This Warrant may be divided or combined with other Warrants which
carry the same rights upon presentation thereof at the corporate office of the
Corporation together with a written notice signed by the Holder, specifying the
names and denominations in which such new Warrants are to be issued.
F. Nothing contained in this Warrant shall be
construed as conferring upon the Holder the right to vote or to consent or to
receive notice as a stockholder in respect of any meetings of stockholders for
the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Corporation. If, however, at any time prior
to the expiration of this Warrant and prior to its exercise, any of the
following shall occur:
3
<PAGE>
1. the Corporation shall take a record
of the holders of its shares of Common Stock for the purpose of entitling
them to receive a dividend or distribution payable otherwise than in cash,
or a cash dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Corporation; or
2. the Corporation shall offer to the
holders of its Common Stock any additional shares of capital stock of the
Corporation or securities convertible into or exchangeable for shares of
capital stock of the Corporation, or any option, right or warrant to
subscribe therefore; or
3. there shall be proposed any capital
reorganization or reclassification of the Common Stock, or a sale of all or
substantially all of the assets of the Corporation, or a consolidation or
merger of the Corporation with another entity; or
4. there shall be proposed a voluntary
or involuntary dissolution, liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall cause to be mailed
to the Holders, at the earliest practicable time (and, in any event, not less
than thirty (30) days before any record date or other date set for definitive
action), written notice of the date on which the books of the Corporation shall
close or a record shall be taken to determine the stockholders entitled to such
dividend, distribution, convertible or exchangeable securities or subscription
rights, or entitled to vote on such reorganization, reclassification, sale,
consolidation, merger, dissolution, liquidation or winding up, as the case may
be. Such notice shall also set forth such facts as shall indicate the effect of
such action (to the extent such effect may be known at the date of such notice)
on the Exercise Price and the kind and amount of the Common Stock and other
securities and property deliverable upon exercise of this Warrant.
Such notice shall also specify the date as of which the holders of the Common
Stock of record shall participate in said distribution or subscription rights or
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, sale,
consolidation, merger, dissolution, liquidation or winding up, as the case may
be (on which date, in the event of voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, the right to exercise this Warrant
shall terminate).
Without limiting the obligation of the Corporation to provide notice to
the holder of actions hereunder, it is agreed that failure of the Corporation to
give notice shall not invalidate such action of the Corporation.
G. If this Warrant is lost, stolen, mutilated or destroyed,
the Corporation shall, on such reasonable terms as to indemnity or otherwise as
it may impose (which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and tenor as, and
in substitution for, this Warrant, which shall thereupon become void. Any such
new Warrant shall constitute an additional contractual obligation of the
Corporation, whether or not the Warrant so lost, stolen destroyed or mutilated
shall be at any time enforceable by anyone.
H. 1. The Corporation covenants and agrees that at all times
it shall reserve and keep available for the exercise of this Warrant such number
of authorized Shares as are sufficient to permit the exercise in full of this
Warrant.
4
<PAGE>
2. Prior to the issuance of any Shares upon exercise of
this Warrant, the Corporation shall secure the listing of such Shares upon any
securities exchange or automated quotation system upon which the shares of the
Corporation's Common Stock are listed for trading.
3. The Corporation covenants that all Shares when issued
upon the exercise of this Warrant will be validly issued, fully paid,
non-assessable and free of preemptive rights.
ARTICLE
II.
ADJUSTMENT OF EXERCISE PRICE
AND NUMBER OF SHARES PURCHASABLE UPON EXERCISE
A. In case the Corporation shall, while this Warrant
remains unexercised, in whole or in part, and in force, effect a
recapitalization of such character that the Shares purchasable hereunder shall
be changed into or become exchangeable for a larger or smaller number of shares,
then, after the date of record for effecting such recapitalization, the number
of Shares of Common Stock which the Holder hereof shall be entitled to purchase
hereunder shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in the number of shares of Common Stock
by reason such recapitalization, and of the Exercise Price, per share, whether
or not in effect immediately prior to the time of such recapitalization, of such
recapitalized Common Stock shall in the case of an increase in the number of
such Shares be proportionately reduced, and in the case of a decrease in the
number of such Shares shall be proportionately increased. For the purposes of
this Section II.A., a stock dividend, stock split-up or reverse split shall be
considered as a recapitalization and as an exchange for a larger or smaller
number of shares, as the case may be.
B. In case of any consolidation of the Corporation with,
or merger of the Corporation into, any other corporation, or in case of any sale
or conveyance of all or substantially all of the assets of the Corporation other
than in connection with a plan of complete liquidation of the Corporation, then,
as a condition of such consolidation, merger or sale or conveyance, adequate
provision shall be made whereby the Holder shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions specified
in this Warrant and in lieu of Shares of Common Stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
such shares of stock or securities as may be issued in connection with such
consolidation, merger or sale or conveyance, with respect to the rights and
interests of the Holder of this Warrant to the end that the provisions hereof
shall be applicable as nearly as may be in relation to any shares of stock or
securities thereafter deliverable upon the exercise hereof.
C. Subject to the provisions of D. below, in the case the
Corporation shall, while this Warrant remains unexercised, in whole or in part,
and in force, declare to make any distribution of its assets to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
otherwise, then, after the date of record for determining stockholders entitled
to such distribution, but prior to the date of distribution, the Holder shall be
entitled upon exercise of this Warrant and purchase of any or all of the Shares
of Common Stock subject hereto, to receive the amount of such assets (or, at the
option of the Corporation, a sum equal to the value thereof at the time of such
distribution to holders of Common Stock as such value is
5
<PAGE>
determined by the Board of Directors of the Corporation in good faith) which
would have been payable to the Holder had it been the holder of such Shares of
Common Stock on the record date for the determination of stockholders entitled
to such distribution.
D. Except as other provided in Section II.B. above, in the
case of any sale or conveyance of all or substantially all of the assets of the
Corporation in connection with a plan of complete liquidation of the
Corporation, in the case of the dissolution, liquidation of the Corporation, in
the case of the dissolution, liquidation or winding-up of the Corporation, all
rights under this Warrant shall terminate on a date fixed by the Corporation,
such date so fixed to be not earlier than the date of the commencement of the
proceedings for such dissolution, liquidation or winding-up and not later than
thirty (30) days after such commencement date. Notice of such termination of
purchase rights shall be given to the Holder at least thirty (30) prior to such
termination date.
E. Any adjustment pursuant to the provisions of this
Article II shall be made on the basis of the number of Shares of Common Stock
which the Holder would have been entitled to acquire by exercise of this Warrant
immediately prior to the event giving rise to such adjustment and, as to the
Exercise Price per share in effect immediately prior to the rise to such
adjustment. Whenever any such adjustment is required to be made, the Corporation
shall forthwith determine the new number of Shares of Common Stock which the
Holder hereof shall be entitled to purchase hereunder and/or such new Exercise
Price per share and shall prepare, retain on file and transmit to the Holder
within ten (10) days after such preparation a statement describing in reasonable
detail the method used in calculating such adjustment.
F. Anything contained herein to the contrary
notwithstanding, the Corporation shall not be required to issue any fraction of
a Share in connection with the exercise of this Warrant, and in any case where
the Holder would, except for the provisions of this Section II.F., be entitled
under the terms of this Warrant to receive a fraction of a Share upon such
exercise, the Corporation shall upon the exercise and receipt of the Exercise
Price, issue the largest number of whole Shares purchasable upon exercise of
this Warrant. The Corporation shall not be required to make any cash or other
adjustment in respect of such fraction of a Share to which the Holder would
otherwise be entitled. The Holder, by the acceptance of this Warrant, expressly
waives its right to receive a certificate for any fraction of a Share upon
exercise hereof.
G. The form of Warrant need not be changed because of any
change pursuant to this Article II in the Exercise Price or in the number of
Shares of Common Stock purchasable upon the exercise of a Warrant, and Warrants
issued after such change may state the same Exercise Price and the same number
of shares of Common Stock as are stated in the Warrants initially issued
pursuant to the Agreement.
6
<PAGE>
ARTICLE
III.
REGISTRATION UNDER THE SECURITIES ACT OF 1933
A. The corporation agrees and undertakes, during the five
(5) year period commencing on the Exercise Commencement Date and ending on the
Expiration Time, that if the Corporation shall seek to register an offering of
its securities, each holder of this Warrant shall be notified and shall be
entitled to elect to have included in such proposed registration, without cost
or expense, any or all of the Shares Underlying the Warrants ("Underlying
Shares") (the "Piggy-Back Rights"). In the event of such a proposed
registration, the Corporation shall furnish the holders of the Warrants or the
Underlying Shares with no less than thirty (30) days written notice prior to the
proposed filing of a registration statement. Such notice shall continue to be
given by the Corporation to such warrant holders for each proposed registration
by the Corporation until such time as all of the Underlying Shares have been
registered. Such holders shall exercise these Piggy-Back Rights by giving
written notice within twenty (20) days of the receipt of the Corporation's
notice of intention to file a registration statement.
B. If the managing Underwriter gives the Corporation and
the holders of Warrants, or the Underlying Shares which are being registered
("Registrable Securities") a written opinion that the number of Registrable
Securities requested to be included exceeds the number of securities that can be
sold on terms reasonably acceptable to the Corporation, the Company will include
in the registration only the number of Registrable Securities that the
underwriters believe can be sold on such terms. The Registrable Securities
included in the registration shall be allocated pro rata among the holders of
Registrable Securities on the basis of the total number of Registrable
Securities requested to be included in the registration.
C. The Corporation agrees to defend, indemnify and hold
the Holder, its officers, directors, partners, employees, agents, legal
representatives, successors and assigns (collectively the "Holder Group")
harmless from and against any and all loss, liability, charge, claim, damage,
cost and expense whatsoever, including, without limitation, reasonable
attorneys' fees (collectively "Claims"), incurred or sustained by the Holder
Group, or any of them, in connection with (i) any untrue statement of a material
fact contained (a) in any registration statement, preliminary prospectus or
final prospectus and each amendment and supplement thereto (including all
Exhibits) relating to the registration or sale of this Warrant or any of the
Shares of Common Stock issuable upon exercise of this Warrant, or (b) in any
application, document or other communication executed by or on behalf of the
Corporation in order to register or qualify this Warrant or any of the Shares of
Common Stock issuable upon the exercise of this Warrant under any state's blue
sky laws, PROVIDED, HOWEVER, that the foregoing indemnity shall not apply to any
such statement made by the Company in reliance upon information provided to the
Company be in writing by any member of the Holder Group, or (ii) any breach of
any representation, warranty, covenant or agreement of the Corporation contained
in this Warrant.
7
<PAGE>
D. If any indemnity is sought against the Corporation
pursuant to this Article III, the indemnified party or parties shall promptly
notify the Corporation in writing of the assertion of such Claim, and promptly
furnish the Corporation with all relevant information and copies of all
pertinent documents relating to the Claim in the indemnified party's possession
or control. The failure of the indemnified party to give notice of the claim
will not affect the indemnified party's right to indemnification hereunder,
except if, and only to the extent that, the Corporation's defense of such Claim
is actually prejudiced by reason of such failure to give such timely notice. The
Corporation will undertake and continuously defend such Claim with counsel of
reputable standing, and the indemnified party may participate in such defense by
counsel of its own choosing and its own expense. The Corporation may effect
settlement of a Claim on such terms and conditions as it shall determine,
provided that, at such time the Corporation acknowledges and reaffirms to the
indemnified party its financial responsibility for the Claim and the settlement
thereof. If the indemnified party shall be required to pay any amount with
respect to said Claim, such amount shall be paid by the Corporation to the
indemnified party upon the indemnified party giving the Corporation a written
request therefor. If the Corporation does not timely undertake or continuously
defend any such Claim, then the indemnified party will have the right to employ
separate counsel in any such action and to participate in the defense thereof,
and the fees and expense of such counsel as well as all other fees and expenses
incurred by the indemnified party in connection with such defense will be the
Corporation's obligation and responsibility. Furthermore, the indemnified party
will then have the right to defend or dispose of the Claim in such manner as it
deems advisable, and for the purposes hereof, as if such defense or disposition
had been undertaken by the Corporation.
ARTICLE
IV.
OTHER MATTERS
A. All the covenants and provisions of this Warrant by or
for the benefit of the Corporation shall bind and inure to the benefit of its
successors and assigns hereunder.
B. Notices or demands pursuant to this Warrant to be given
or made by the Holder to or on the Corporation shall be sufficiently given or
made if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, until another address is designated in writing by the
Corporation, as follows:
CELLPOINT INC.
ATTENTION: PETER HENRICCSON
SOFIELUNDSVAGEN 4
S-19147
SOLLENTUNA, SWEDEN
Notices to the Holder provided for in this Warrant shall be deemed
given or made by the Corporation if sent by certified or registered mail, return
receipt requested, postage prepaid, and addressed to the Holder at its last
known address as it shall appear on the books of the Corporation.
C. The validity, interpretation and performance of this
Warrant shall be governed by the laws of the State of Illinois.
8
<PAGE>
D. Nothing in this Warrant expressed and nothing that may
be implied from any of the provisions hereof is intended, or shall be construed,
to confer upon, or give to, any person or corporation other than the Corporation
and the Holder any right, remedy or claim under promise or agreement hereof, and
all covenants, conditions, stipulations, promises and agreements contained in
the Warrant shall be for the sole and exclusive benefit of the Corporation and
its successors and of the Holders it successors and, if permitted, its
assignees.
E. The Article headings herein are for convenience only
and are not part of this Warrant and shall not affect the interpretation
thereof.
F. Whenever required by context, the singular shall
include the plural, and vice versa.
G. For purposes of Article III only, the Holder of this
Warrant shall continue to be entitled to the rights and shall be bound by the
obligations contained in Article III of this Warrant after the Holder exercises
this Warrant and purchases the Underlying Shares, but such rights and
obligations shall not inure to the benefit of any transferee of the Underlying
Shares.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
executed by its officers thereunto duly authorized as of the Date of Issuance.
CELLPOINT INC.
By:____________________________________
Peter Henricsson, CEO
MADISON SECURITIES, INC.
By:_____________________________________
Wayne Gilpin, President
10
<PAGE>
EXHIBIT A
CELLPOINT INC.
Notice of Exercise
(TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THE RIGHT TO PURCHASE COMMON STOCK EVIDENCED BY THE
FOREGOING WARRANT)
CellPoint Inc.
Sofielundsvagen 4
S-19147
Sollentuna, Sweden
Attn: Peter Henriccson
The undersigned hereby irrevocably subscribes for the purchase of ____ shares of
CellPoint Inc.'s $0.001 par value of common stock ("Common Stock"), pursuant to
and in accordance with the terms and conditions of this Warrant, and herewith
(i) makes payment of $ _______________ therefor; or
(ii) directs the Corporation to withhold from such __________
shares the number of shares necessary to satisfy the Exercise
Price based on the Net Issuance method described in Section
I.B.1 of this Warrant;
and requests that the certificates for the shares to be issued as requested in
this Notice of Exercise be issued in the name of and be delivered to the
undersigned at the address stated below, and, if said number of shares shall not
be all of the shares purchasable hereunder, that a new Warrant of like tenor for
the balance of the remaining shares purchasable hereunder be delivered to the
undersigned at the address stated below.
The undersigned agrees that: (1) the undersigned will not offer, sell,
transfer or otherwise dispose of any such shares of Common Stock unless either
(a) a registration statement, or post-effective amendment thereto, covering such
shares of Common Stock has been filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and
such sale, transfer or other disposition is accompanied by a prospectus meeting
the requirements of Section 10 of the Act forming a part of such registration
statement, or post-effective amendment thereto, which is in effect under the Act
covering the shares of Common
11
<PAGE>
Stock to be so sold, transferred or otherwise disposed of, or (b) counsel to
CellPoint Inc. reasonably satisfactory to the undersigned has rendered an
opinion in writing and addressed to CellPoint Inc. that such proposed offer,
sale, transfer or other disposition of the shares of Common Stock is exempt from
the provisions of Section 5 of the Act in view of the circumstances of such
proposed offer, sale, transfer or other disposition; and (2) CellPoint Inc., may
notify the transfer agent for its Common Stock that the certificates for the
Common Stock acquired by the undersigned are not to be transferred unless the
transfer agent receives advice from CellPoint Inc. that one or both of the
conditions referred to in (1)(a) and (1)(b) above have been satisfied.
Dated: Signed:
------------------------------ ------------------------------
Address:
-----------------------------
------------------------------
------------------------------
12
<PAGE>
ACKNOWLEDGEMENT OF EXERCISE
The undersigned CellPoint Inc., (the "Corporation"), hereby
acknowledges receipt of the "Notice of Exercise" from
_____________________________________ to purchase ______ shares of the Common
Stock of the Corporation, pursuant to the terms of the Warrant, and further
acknowledges that _______ shares remain subject to purchase under the terms of
the Warrant.
CELLPOINT INC.
By:
------------------------------------------
Title:
---------------------------------------
Date:
----------------------------------------
13
<PAGE>
EXHIBIT B
CELLPOINT INC.
Assignment
(TO BE EXECUTED BY THE REGISTERED HOLDER TO EFFECT A TRANSFER OF THE FOREGOING
WARRANT)
FOR VALUE RECEIVED, ________________________ hereby sells, assigns
and transfers unto ___________________________ the within Warrant and the
rights represented thereby, and does hereby irrevocably constitute and
appoint _______________________ - Attorney, to transfer said Warrant on the
books of the Corporation, with full power of substitution.
Dated: Signed:
-------------------------- -------------------------------
Signature guaranteed:
- -----------------------------
- ----------------------------- ---------------------------------------
14
<PAGE>
EXHIBIT 4.2
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
(1) REGISTRATION IN COMPLIANCE WITH SUCH ACT AND SUCH STATE LAWS OR (2) AN
OPINION OF COUNSEL FOR THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED.
WARRANT
For the Purchase of Common Stock, Par Value $0.001 per Share,
of CellPoint Inc.
Void After 5 P.M., Chicago time, on October 29, 2002
Date of Issuance: October 29, 1999 Warrant ___
For value received, CellPoint Inc., a Nevada corporation (the
"Corporation") hereby grants to Madison Securities, Inc., a Delaware corporation
(the "Agent"), or registered assigns, subject to the terms and conditions
hereinafter set forth, on or after October 29, 2000 and at any time prior to
5:00 P.M., Chicago time, on October 29, 2002, but not thereafter, the right to
purchase from the Corporation 112,500 shares (the "Shares") of Common Stock, par
value $0.001 per share (the "Common Stock") of the Corporation upon payment to
the Corporation of $8.89 per share (the "Exercise Price") if and to the extent
this Warrant is exercised, in whole or in part, during the period this Warrant
remains in force, subject in all cases to adjustment as provided in the
following sentence and in Article II hereof, and to deliver a certificate or
certificates representing the Shares so purchased, upon presentation and
surrender to the Corporation of this Warrant, with the form of subscription
attached hereto duly executed, and accompanied by payment of the Exercise Price
of each Share purchased.
ARTICLE
I.
TERMS OF THE WARRANT
A. Subject to the provisions of Sections I.E. and III.A.
hereof, this Warrant may be exercised at any time and from time to time after
October 29, 2000 (the "Exercise Commencement Date"), but no later than 5:00
P.M., Chicago time, October 29, 2002 (the "Expiration Time"). If this Warrant is
not exercised on or before the Expiration Time it shall become void, and all
rights hereunder shall thereupon cease.
B. 1. The holder of this Warrant (the "Holder") may
exercise this Warrant, in whole or in part, upon surrender of this
Warrant and a notice of exercise in the form attached hereto as
Exhibit A (the "Notice of Exercise") duly executed, completed and
delivered to the Corporation at its corporate office. Promptly upon
receipt of this Warrant and the Notice of Exercise and the payment of
the Exercise Price in accordance with terms set forth below, and in no
event later than ten (10) days thereafter, the Corporation shall issue
and deliver to the Holder or its nominee certificates for the total
number of whole Shares for which this Warrant is being exercised in
such denominations as are required for delivery to the Holder and
shall execute the Notice of Exercise indicating the number of Shares
which remain subject to future purchases if any.
<PAGE>
The Exercise Price may be paid at the Holder's election either (i) by
cash or check, or (ii) by surrender of this Warrant ("Net Issuance") as
determined below. If the Holder elects the Net Issuance method, the Corporation
will issue Common Stock to the Holder (without any further payment) in
accordance with the following formula:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
X = Y(A-B)
------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common Stock then requested to
be issued under this Warrant.
A = the fair market value (per share) of the Common Stock of the
Corporation as of the date of the Notice of Exercise.
B = the Exercise Price as of the date of the Notice of Exercise.
</TABLE>
As used herein, current fair market value of Common Stock shall mean
with respect to each share of Common Stock:
(i) if traded on a securities exchange, the fair market value
shall be deemed to be the average of the closing prices over a
twenty-one (21) day period ending three days before the date
of the Notice of Exercise; or
(ii) if actively traded over-the-counter, the fair market value
shall be deemed to be the average of the closing bid and asked
prices quoted on the National Association of Securities
Dealers Automated Quotation System (the "NASDAQ System") (or
similar system) over the twenty-one (21) day period ending
three days before the date of the Notice of Exercise;
(iii) if at any time the Common Stock is not listed on any
securities exchange or quoted on the NASDAQ System or similar
system, the current fair market value of Common Stock shall be
the highest price per share which the Corporation could obtain
from a willing buyer (not a current employee or director) for
shares of Common Stock sold by the Corporation, from
authorized but unissued shares, as determined in good faith
by its Board of Directors, or if requested by the Holder and,
at the Holder's expense, by an independent third-party
investment bank or other professional designated by the
Corporation and satisfactory to the Holder or, in the absence
of a mutually agreeable investment bank or other professional,
by the average of the fair market value of Common Stock shall
be deemed to be the value received by the holders of the
Corporation's Common Stock pursuant to such merger or
acquisitions.
Upon partial exercise by either cash or Net Issuance, the Corporation
shall promptly issue to the Holder an amended warrant representing the
remaining number of shares purchasable hereunder. All other terms and
conditions of such amended warrant shall be identical to those
contained herein, including, but not limited to the Effective Date
hereof.
2. In case the Holder shall exercise
this Warrant with respect to less than all of the shares that may be
purchased under this Warrant, the Corporation shall execute a new
Warrant identical to the terms and conditions contained in the
original Warrant for the balance of the Shares that may be purchased
upon exercise of this Warrant and deliver such new Warrant to the
Holder.
2
<PAGE>
3. The Corporation shall not be
required to pay any income tax, transfer tax or other governmental
charge which may be payable in respect of the issue and of this
Warrant or the issue of any Shares upon the exercise of this Warrant
or in respect of any transfer involved in the issuance or delivery of
this Warrant or of the Shares in a name other than that of the Holder
at the time of surrender. Until the payment of any such transfer tax
as may be required, the Corporation shall not be required to issue
such Shares.
C. This Warrant may be split-up, combined or
exchanged for another Warrant or Warrants of like tenor to purchase a
like aggregate number of Shares. If the Holder desires to split-up,
combine or exchange this Warrant, it shall make such request in
writing delivered to the Corporation at its corporate office and shall
surrender this Warrant and any other Warrants to be so split-up,
combined or exchanged at said office. Upon any such surrender for a
split-up, combination or exchange, the Corporation shall execute and
deliver to the person entitled thereto a Warrant or Warrants, as the
case may be, as so requested. The Corporation shall not be required to
effect any split-up, combination or exchange which will result in the
issuance of a Warrant entitling the Holder to purchase upon exercise a
fraction of a Share. The Corporation may require the Holder to pay a
sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any split-up, combination or exchange of
Warrants.
D. This Warrant may not be transferred for a
period of one year after the issue date hereof except to partners or
officers of the Holder. Prior to due presentment for registration of
transfer of this Warrant, the Corporation may deem and treat the
Holder as the absolute owner of this Warrant (notwithstanding any
notation of ownership or other writing hereon) for the purpose of any
exercise hereof and for all other purposes, and the Corporation shall
not be affected by any notice to the contrary.
E. Any assignment permitted hereunder shall be
made by surrender of this Warrant to the Corporation at its principal
office with the form of assignment attached hereto as Exhibit B
("Assignment") duly executed and funds sufficient to pay any transfer
tax. In such event, the Corporation shall, without charge, execute and
deliver a new Warrant in the name of the assignee named in the
Assignment and this Warrant shall promptly be canceled. This Warrant
may be divided or combined with other Warrants which carry the same
rights upon presentation thereof at the corporate office of the
Corporation together with a written notice signed by the Holder,
specifying the names and denominations in which such new Warrants are
to be issued.
F. Nothing contained in this Warrant shall be
construed as conferring upon the Holder the right to vote or to
consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other
matter, or as having any rights whatsoever as a stockholder of the
Corporation. If, however, at any time prior to the expiration of this
Warrant and prior to its exercise, any of the following shall occur:
1. the Corporation shall take a record
of the holders of its shares of Common Stock for the purpose of
entitling them to receive a dividend or distribution payable otherwise
than in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of
the Corporation; or
2. the Corporation shall offer to the
holders of its Common Stock any additional shares of capital stock of
the Corporation or securities convertible into or exchangeable for
shares of capital stock of the Corporation, or any option, right or
warrant to subscribe therefore; or
3. there shall be proposed any capital
reorganization or reclassification of the Common Stock, or a sale of
all or substantially all of the assets of the Corporation, or a
consolidation or merger of the Corporation with another entity; or
3
<PAGE>
4. there shall be proposed a voluntary
or involuntary dissolution, liquidation or winding up of the
Corporation;
then, in any one or more of said cases, the Corporation shall cause to be mailed
to the Holders, at the earliest practicable time (and, in any event, not less
than thirty (30) days before any record date or other date set for definitive
action), written notice of the date on which the books of the Corporation shall
close or a record shall be taken to determine the stockholders entitled to such
dividend, distribution, convertible or exchangeable securities or subscription
rights, or entitled to vote on such reorganization, reclassification, sale,
consolidation, merger, dissolution, liquidation or winding up, as the case may
be. Such notice shall also set forth such facts as shall indicate the effect of
such action (to the extent such effect may be known at the date of such notice)
on the Exercise Price and the kind and amount of the Common Stock and other
securities and property deliverable upon exercise of this Warrant.
Such notice shall also specify the date as of which the holders of the Common
Stock of record shall participate in said distribution or subscription rights or
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, sale,
consolidation, merger, dissolution, liquidation or winding up, as the case may
be (on which date, in the event of voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, the right to exercise this Warrant
shall terminate).
Without limiting the obligation of the Corporation to provide notice to
the holder of actions hereunder, it is agreed that failure of the Corporation to
give notice shall not invalidate such action of the Corporation.
G. If this Warrant is lost, stolen, mutilated or
destroyed, the Corporation shall, on such reasonable terms as to indemnity or
otherwise as it may impose (which shall, in the case of a mutilated Warrant,
include the surrender thereof), issue a new Warrant of like denomination and
tenor as, and in substitution for, this Warrant, which shall thereupon become
void. Any such new Warrant shall constitute an additional contractual obligation
of the Corporation, whether or not the Warrant so lost, stolen destroyed or
mutilated shall be at any time enforceable by anyone.
H. 1. The Corporation covenants and agrees that at all
times it shall reserve and keep available for the exercise of this Warrant such
number of authorized Shares as are sufficient to permit the exercise in full of
this Warrant.
2. Prior to the issuance of any Shares upon exercise
of this Warrant, the Corporation shall secure the listing of such Shares upon
any securities exchange or automated quotation system upon which the shares of
the Corporation's Common Stock are listed for trading.
3. The Corporation covenants that all Shares when
issued upon the exercise of this Warrant will be validly issued, fully paid,
non-assessable and free of preemptive rights.
4
<PAGE>
ARTICLE
II.
ADJUSTMENT OF EXERCISE PRICE
AND NUMBER OF SHARES PURCHASABLE UPON EXERCISE
A. In case the Corporation shall, while this Warrant
remains unexercised, in whole or in part, and in force, effect a
recapitalization of such character that the Shares purchasable hereunder shall
be changed into or become exchangeable for a larger or smaller number of shares,
then, after the date of record for effecting such recapitalization, the number
of Shares of Common Stock which the Holder hereof shall be entitled to purchase
hereunder shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in the number of shares of Common Stock
by reason such recapitalization, and of the Exercise Price, per share, whether
or not in effect immediately prior to the time of such recapitalization, of such
recapitalized Common Stock shall in the case of an increase in the number of
such Shares be proportionately reduced, and in the case of a decrease in the
number of such Shares shall be proportionately increased. For the purposes of
this Section II.A., a stock dividend, stock split-up or reverse split shall be
considered as a recapitalization and as an exchange for a larger or smaller
number of shares, as the case may be.
B. In case of any consolidation of the Corporation with,
or merger of the Corporation into, any other corporation, or in case of any sale
or conveyance of all or substantially all of the assets of the Corporation other
than in connection with a plan of complete liquidation of the Corporation, then,
as a condition of such consolidation, merger or sale or conveyance, adequate
provision shall be made whereby the Holder shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions specified
in this Warrant and in lieu of Shares of Common Stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
such shares of stock or securities as may be issued in connection with such
consolidation, merger or sale or conveyance, with respect to the rights and
interests of the Holder of this Warrant to the end that the provisions hereof
shall be applicable as nearly as may be in relation to any shares of stock or
securities thereafter deliverable upon the exercise hereof.
C. Subject to the provisions of D. below, in the case the
Corporation shall, while this Warrant remains unexercised, in whole or in part,
and in force, declare to make any distribution of its assets to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
otherwise, then, after the date of record for determining stockholders entitled
to such distribution, but prior to the date of distribution, the Holder shall be
entitled upon exercise of this Warrant and purchase of any or all of the Shares
of Common Stock subject hereto, to receive the amount of such assets (or, at the
option of the Corporation, a sum equal to the value thereof at the time of such
distribution to holders of Common Stock as such value is determined by the Board
of Directors of the Corporation in good faith) which would have been payable to
the Holder had it been the holder of such Shares of Common Stock on the record
date for the determination of stockholders entitled to such distribution.
D. Except as other provided in Section II.B. above, in the
case of any sale or conveyance of all or substantially all of the assets of the
Corporation in connection with a plan of complete liquidation of the
Corporation, in the case of the dissolution, liquidation of the Corporation, in
the case of the dissolution, liquidation or winding-up of the Corporation, all
rights under this Warrant shall terminate on a date fixed by the Corporation,
such date so fixed to be not earlier than the date of the commencement of the
proceedings for such dissolution, liquidation or winding-up and not later than
thirty (30) days after such commencement date. Notice of such termination of
purchase rights shall be given to the Holder at least thirty (30) prior to such
termination date.
5
<PAGE>
E. Any adjustment pursuant to the provisions of this
Article II shall be made on the basis of the number of Shares of Common Stock
which the Holder would have been entitled to acquire by exercise of this Warrant
immediately prior to the event giving rise to such adjustment and, as to the
Exercise Price per share in effect immediately prior to the rise to such
adjustment. Whenever any such adjustment is required to be made, the Corporation
shall forthwith determine the new number of Shares of Common Stock which the
Holder hereof shall be entitled to purchase hereunder and/or such new Exercise
Price per share and shall prepare, retain on file and transmit to the Holder
within ten (10) days after such preparation a statement describing in reasonable
detail the method used in calculating such adjustment.
F. Anything contained herein to the contrary
notwithstanding, the Corporation shall not be required to issue any fraction of
a Share in connection with the exercise of this Warrant, and in any case where
the Holder would, except for the provisions of this Section II.F., be entitled
under the terms of this Warrant to receive a fraction of a Share upon such
exercise, the Corporation shall upon the exercise and receipt of the Exercise
Price, issue the largest number of whole Shares purchasable upon exercise of
this Warrant. The Corporation shall not be required to make any cash or other
adjustment in respect of such fraction of a Share to which the Holder would
otherwise be entitled. The Holder, by the acceptance of this Warrant, expressly
waives its right to receive a certificate for any fraction of a Share upon
exercise hereof.
G. The form of Warrant need not be changed because of any
change pursuant to this Article II in the Exercise Price or in the number of
Shares of Common Stock purchasable upon the exercise of a Warrant, and Warrants
issued after such change may state the same Exercise Price and the same number
of shares of Common Stock as are stated in the Warrants initially issued
pursuant to the Agreement.
ARTICLE
III.
REGISTRATION UNDER THE SECURITIES ACT OF 1933
A. The corporation agrees and undertakes, during the five
(5) year period commencing on the Exercise Commencement Date and ending on the
Expiration Time, that if the Corporation shall seek to register an offering of
its securities, each holder of this Warrant shall be notified and shall be
entitled to elect to have included in such proposed registration, without cost
or expense, any or all of the Shares Underlying the Warrants ("Underlying
Shares") (the "Piggy-Back Rights"). In the event of such a proposed
registration, the Corporation shall furnish the holders of the Warrants or the
Underlying Shares with no less than thirty (30) days written notice prior to the
proposed filing of a registration statement. Such notice shall continue to be
given by the Corporation to such warrant holders for each proposed registration
by the Corporation until such time as all of the Underlying Shares have been
registered. Such holders shall exercise these Piggy-Back Rights by giving
written notice within twenty (20) days of the receipt of the Corporation's
notice of intention to file a registration statement.
B. If the managing Underwriter gives the Corporation and
holders of Warrants, or the Underlying Shares which are being registered
("Registrable Securities") a written opinion that the number of Registrable
Securities requested to be included exceeds the number of securities that can be
sold on terms reasonably acceptable to the Corporation, the Company will include
in the registration only the number of Registrable Securities that the
underwriters believe can be sold on such terms. The Registrable Securities
included in the registration shall be allocated pro rata among the holders of
Registrable Securities on the basis of the total number of Registrable
Securities requested to be included in the registration.
6
<PAGE>
C. The Corporation agrees to defend, indemnify and hold
the Holder, its officers, directors, partners, employees, agents, legal
representatives, successors and assigns (collectively the "Holder Group")
harmless from and against any and all loss, liability, charge, claim, damage,
cost and expense whatsoever, including, without limitation, reasonable
attorneys' fees (collectively "Claims"), incurred or sustained by the Holder
Group, or any of them, in connection with (i) any untrue statement of a material
fact contained (a) in any registration statement, preliminary prospectus or
final prospectus and each amendment and supplement thereto (including all
Exhibits) relating to the registration or sale of this Warrant or any of the
Shares of Common Stock issuable upon exercise of this Warrant, or (b) in any
application, document or other communication executed by or on behalf of the
Corporation in order to register or qualify this Warrant or any of the Shares of
Common Stock issuable upon the exercise of this Warrant under any state's blue
sky laws, PROVIDED, HOWEVER, that the foregoing indemnity shall not apply to any
such statement made by the Company in reliance upon information provided to the
Company be in writing by any member of the Holder Group, or (ii) any breach of
any representation, warranty, covenant or agreement of the Corporation contained
in this Warrant.
D. If any indemnity is sought against the Corporation
pursuant to this Article III, the indemnified party or parties shall promptly
notify the Corporation in writing of the assertion of such Claim, and promptly
furnish the Corporation with all relevant information and copies of all
pertinent documents relating to the Claim in the indemnified party's possession
or control. The failure of the indemnified party to give notice of the claim
will not affect the indemnified party's right to indemnification hereunder,
except if, and only to the extent that, the Corporation's defense of such Claim
is actually prejudiced by reason of such failure to give such timely notice. The
Corporation will undertake and continuously defend such Claim with counsel of
reputable standing, and the indemnified party may participate in such defense by
counsel of its own choosing and its own expense. The Corporation may effect
settlement of a Claim on such terms and conditions as it shall determine,
provided that, at such time the Corporation acknowledges and reaffirms to the
indemnified party its financial responsibility for the Claim and the settlement
thereof. If the indemnified party shall be required to pay any amount with
respect to said Claim, such amount shall be paid by the Corporation to the
indemnified party upon the indemnified party giving the Corporation a written
request therefor. If the Corporation does not timely undertake or continuously
defend any such Claim, then the indemnified party will have the right to employ
separate counsel in any such action and to participate in the defense thereof,
and the fees and expense of such counsel as well as all other fees and expenses
incurred by the indemnified party in connection with such defense will be the
Corporation's obligation and responsibility. Furthermore, the indemnified party
will then have the right to defend or dispose of the Claim in such manner as it
deems advisable, and for the purposes hereof, as if such defense or disposition
had been undertaken by the Corporation.
ARTICLE
IV.
OTHER MATTERS
A. All the covenants and provisions of this Warrant by or
for the benefit of the Corporation shall bind and inure to the benefit of its
successors and assigns hereunder.
7
<PAGE>
B. Notices or demands pursuant to this Warrant to be given
or made by the Holder to or on the Corporation shall be sufficiently given or
made if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, until another address is designated in writing by the
Corporation, as follows:
CELLPOINT INC.
ATTENTION: PETER HENRICCSON
SOFIELUNDSVAGEN 4
S-19147
SOLLENTUNA, SWEDEN
Notices to the Holder provided for in this Warrant shall be deemed
given or made by the Corporation if sent by certified or registered mail, return
receipt requested, postage prepaid, and addressed to the Holder at its last
known address as it shall appear on the books of the Corporation.
C. The validity, interpretation and performance of this
Warrant shall be governed by the laws of the State of Illinois.
D. Nothing in this Warrant expressed and nothing that may
be implied from any of the provisions hereof is intended, or shall be construed,
to confer upon, or give to, any person or corporation other than the Corporation
and the Holder any right, remedy or claim under promise or agreement hereof, and
all covenants, conditions, stipulations, promises and agreements contained in
the Warrant shall be for the sole and exclusive benefit of the Corporation and
its successors and of the Holders it successors and, if permitted, its
assignees.
E. The Article headings herein are for convenience only
and are not part of this Warrant and shall not affect the interpretation
thereof.
F. Whenever required by context, the singular shall
include the plural, and vice versa.
G. For purposes of Article III only, the Holder of this
Warrant shall continue to be entitled to the rights and shall be bound by the
obligations contained in Article III of this Warrant after the Holder exercises
this Warrant and purchases the Underlying Shares, but such rights and
obligations shall not inure to the benefit of any transferee of the Underlying
Shares.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
executed by its officers thereunto duly authorized as of the Date of Issuance.
CELLPOINT INC.
By:
-------------------------------------
Peter Henricsson, CEO
MADISON SECURITIES, INC.
By:
-------------------------------------
Wayne Gilpin, President
9
<PAGE>
EXHIBIT A
CELLPOINT INC.
Notice of Exercise
(TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THE RIGHT TO PURCHASE COMMON STOCK EVIDENCED BY THE
FOREGOING WARRANT)
CellPoint Inc.
Sofielundsvagen 4
S-19147
Sollentuna, Sweden
Attn: Peter Henriccson
The undersigned hereby irrevocably subscribes for the purchase of ____ shares of
CellPoint Inc.'s $0.001 par value of common stock ("Common Stock"), pursuant to
and in accordance with the terms and conditions of this Warrant, and herewith
(i) makes payment of $ _______________ therefor; or
(ii) directs the Corporation to withhold from such __________
shares the number of shares necessary to satisfy the Exercise
Price based on the Net Issuance method described in Section
I.B.1 of this Warrant;
and requests that the certificates for the shares to be issued as requested in
this Notice of Exercise be issued in the name of and be delivered to the
undersigned at the address stated below, and, if said number of shares shall not
be all of the shares purchasable hereunder, that a new Warrant of like tenor for
the balance of the remaining shares purchasable hereunder be delivered to the
undersigned at the address stated below.
The undersigned agrees that: (1) the undersigned will not offer, sell,
transfer or otherwise dispose of any such shares of Common Stock unless either
(a) a registration statement, or post-effective amendment thereto, covering such
shares of Common Stock has been filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and
such sale, transfer or other disposition is accompanied by a prospectus meeting
the requirements of Section 10 of the Act forming a part of such registration
statement, or post-effective amendment thereto, which is in effect under the Act
covering the shares of Common Stock to be so sold, transferred or otherwise
disposed of, or (b) counsel to CellPoint Inc. reasonably satisfactory to the
undersigned has rendered an opinion in writing and addressed to CellPoint Inc.
that such proposed offer, sale, transfer or other disposition of the shares of
Common Stock is exempt from the provisions of Section 5 of the Act in view of
the circumstances of such proposed offer, sale, transfer or other disposition;
and (2) CellPoint Inc., may notify the transfer agent for its Common Stock that
the certificates for the Common Stock acquired by the undersigned are not to be
transferred unless the transfer agent receives advice from CellPoint Inc. that
one or both of the conditions referred to in (1)(a) and (1)(b) above have been
satisfied.
Dated: Signed:
------------------------ -----------------------------
Address:
----------------------------
-----------------------------
-----------------------------
10
<PAGE>
ACKNOWLEDGEMENT OF EXERCISE
The undersigned CellPoint Inc., (the "Corporation"), hereby
acknowledges receipt of the "Notice of Exercise" from
_____________________________________ to purchase ______ shares of the Common
Stock of the Corporation, pursuant to the terms of the Warrant, and further
acknowledges that _______ shares remain subject to purchase under the terms of
the Warrant.
CELLPOINT INC.
By:
-------------------------------------
Title:
----------------------------------
Date:
-----------------------------------
11
<PAGE>
EXHIBIT B
CELLPOINT INC.
Assignment
(TO BE EXECUTED BY THE REGISTERED HOLDER TO EFFECT A TRANSFER OF THE FOREGOING
WARRANT)
FOR VALUE RECEIVED, Madison Securities, Inc. hereby sells, assigns and
transfers unto ___________________________ the within Warrant and the rights
represented thereby, and does hereby irrevocably constitute and appoint
_______________________ - Attorney, to transfer said Warrant on the books of the
Corporation, with full power of substitution.
Dated: Signed:
-------------------------- -------------------------------
Signature guaranteed:
- -----------------------------
- ----------------------------- ---------------------------------------
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements indicated below and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
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