<PAGE>
As filed with the Securities and Exchange Commission on October 8, 1998
Registration No. 333-61185
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
AMENDMENT NO. ONE TO
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
____________________
VOXCOM HOLDINGS, INC.
(Name of small business issuer in its charter)
NEVADA 7389 75-2715335
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
8115 PRESTON ROAD
EIGHTH FLOOR - EAST
DALLAS, TEXAS 75225
(214) 691-0055
(Address and telephone number
of principal executive offices)
LAWRENCE R. BIGGS, JR. WITH A COPY TO:
CHAIRMAN AND CHIEF EXECUTIVE OFFICER RONALD L. BROWN, ESQ.
8115 PRESTON ROAD 2200 ONE GALLERIA TOWER
EIGHTH FLOOR - EAST 13355 NOEL ROAD
DALLAS, TEXAS 75225 DALLAS, TEXAS 75240-6657
(214) 691-0055
(Name, address and telephone number
of agent for service)
Approximate date of proposed sale to the public: From time to time after the
effective date of the registration statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH AMOUNT OFFERING AGGREGATE AMOUNT OF
CLASS OF SECURITIES TO BE PRICE PER OFFERING REGISTRATION
TO BE REGISTERED REGISTERED SHARE PRICE FEE(1)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.0001 par value (2) 9,300,000 $1.24 $11,532,000 $3,402.00
===========================================================================================
</TABLE>
(1) $3,348.21 paid upon filing original Form SB-2.
(2) Includes 8,000,000 shares to be offered and sold by the Selling Stockholders
upon conversion of 350,000 outstanding shares of Series B Preferred Stock
("Series B Preferred Stock"). The conversion price is equal to the lesser of
$3.24375 or 80% of the average closing bid price of the Common Stock for the
five trading days preceding the date upon which notice of conversion is
given. The Company is contractually obligated to register 200% of the shares
into which the Series B Preferred Stock would be converted at the time of
registration in the event the lesser conversion price prevails and,
consequently, the number of shares registered is approximately 200%of the
number of shares presently issuable upon conversion. In the event of a stock
split, stock dividend or similar transaction involving the Common Stock, in
order to prevent dilution, or in the event of an increase in the number of
shares issuable upon conversion of the Series B Preferred Stock by reason of
the floating rate conversion price, the number of shares registered shall be
automatically increased to cover additional shares in an indeterminate
amount in accordance with Rule 416(a) under the Securities Act.
___________________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 8, 1998.
VOXCOM HOLDINGS, INC.
9,300,000 SHARES
COMMON STOCK, PAR VALUE $0.0001 PER SHARE
This Prospectus (the "Prospectus") relates to the offer and sale of up to
9,300,000 shares of Common Stock, par value $.0001 per share (the "Common
Stock"), by certain stockholders of Voxcom Holdings, Inc. (the "Company") named
under the heading of "Selling Stockholders," of which up to 8,000,000 are
issuable upon conversion of 350,000 shares of Series B Preferred Stock ("Series
B Preferred Stock") of the Company and required to be registered under certain
Registration Rights Agreements. The Company will not receive any of the
proceeds from the sale of Common Stock by the Selling Stockholders. The Company
will pay all of its expenses in connection with this offering, and the Selling
Stockholders will be solely responsible for paying any sales or brokerage
commissions or discounts with respect to sales of the shares offered hereby.
A total of 8,000,000 shares of Common Stock are required to be registered
under Registration Rights Agreements along with the shares of Common Stock
underlying the Series B Preferred Stock. The conversion price for the Series B
Preferred Stock is equal to the lesser of $3.24375 or 80% of the average closing
bid price of the Common Stock for the five trading days preceding the date upon
which notice of conversion is given by holders of Series B Preferred Stock. As
of the date of this Prospectus, based upon trading price the number of shares of
Common Stock into which the Series B Preferred Stock is convertible is 3,954,802
shares. The actual number of shares of Common Stock issued or issuable upon
conversion of the Series B Preferred Stock is subject to adjustment and could be
materially less or more than such estimated amount, depending upon factors that
cannot be predicted by the Company at this time, including, among others, the
future market price of the Common Stock. See "Risk Factors-Potential Volatility
of Stock Price." There are also two limitations on the number of shares of
Common Stock that can be issued upon conversion at any particular time. First,
the Selling Stockholders have contractually agreed not to convert the Series B
Preferred Stock to the extent such a conversion would result in their
beneficially owning more than 9.99% of the then outstanding Common Stock, unless
the Company is in default under agreements with the Selling Stockholders.
However, the Company has agreed with the Selling Stockholders to register
8,000,000 shares of Common Stock for resale upon conversion in the event the
conversion price decreases as a result of the foregoing formula.
The Company has been advised that sales of Common Stock may be made from
time to time by or for the account of the Selling Stockholders in the over-the-
counter market or on any stock exchange on which the Common Stock of the Company
may be listed at the time of sale, or in block transactions or private
transactions or otherwise, through brokers or dealers. These sales will be made
either at market prices prevailing at the time of sale or at negotiated prices.
The brokers or dealers may act as agents for the Selling Stockholders or may
purchase any of the shares as principal and thereafter may sell such shares from
time to time at market prices prevailing at the time of sale or at negotiated
prices.
Brokers or dealers used by the Selling Stockholders may be deemed to be
"underwriters" as defined in the Securities Act of 1933 (the "Securities Act").
In addition, the Selling Stockholders may be deemed to be underwriters within
the meaning of the Securities Act with respect to the Common Stock offered
hereby.
In lieu of making sales through the use of this Prospectus, the Selling
Stockholders may also make sales of the shares covered by this Prospectus
pursuant to Rule 144 or Rule 144A under the Securities Act, to the extent that
the provisions of such rules are applicable.
The Company's Common Stock is traded on the National Association of
Securities Dealers, Inc. Bulletin Board under the symbol "VXCH". On October 2,
1998, the closing bid and asked prices for the Company's Common Stock were $1-
7/32 and $1-1/4 per share, respectively.
The Company has informed the Selling Stockholders that the anti-
manipulative rules and regulations under the Securities Exchange Act of 1934,
including Regulation M thereunder, may apply to their sales in the market and
has furnished each of the Selling Stockholders with a copy thereof. The Company
has also informed the Selling
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<PAGE>
Stockholders of the need for delivery of copies of this Prospectus in connection
with any sale of shares of Common Stock registered hereunder.
FOR A DISCUSSION OF CERTAIN CONSIDERATIONS ASSOCIATED WITH THE PURCHASE OF
THE COMMON STOCK OFFERED HEREBY, SEE "RISK FACTORS".
__________________
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY
SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY THE
SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
AVAILABLE INFORMATION
The Company has filed under the Securities Act with the Securities and
Exchange Commission (the "Commission") a Registration Statement on Form SB-2
(the "Registration Statement") with respect to its shares of Common Stock
offered hereby. This Prospectus was filed as a part of the Registration
Statement. As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information contained in the Registration Statement,
and reference is hereby made to the Registration Statement for further
information with respect to the Company and its Common Stock.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements, and other
information with the Commission. Reports, proxy statements and other
information filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also
be available for inspection and copying at the regional offices of the
Commission located at 7 World Trade Center, New York, New York 10048; Room
1204, Everett McKinley Dirksen Building, 219 South Dearborn Street, Chicago,
Illinois 60604; and Suite 500 East, 5757 Wilshire Boulevard, Los Angeles,
California 90036. Copies of such material may also be obtained upon written
request addressed to the Commission, Public Reference Section, Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
also maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that filed electronically
with the Commission at http://www.sec.gov.
No person has been authorized to give any information or to make any
representation other than as contained or incorporated by reference in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company. Neither the delivery of
this Prospectus nor any sale of Common Stock made hereunder shall, under any
circumstances, create any implication that the information contained herein is
correct as of any date subsequent to the date hereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy the securities
offered by this Prospectus to any person or by anyone in any jurisdiction in
which it is unlawful to make such an offer or solicitation.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and Financial Statements and related notes thereto appearing
elsewhere in this Prospectus.
FORWARD LOOKING STATEMENTS
This Prospectus includes certain statements that are not historical facts
and are deemed to be "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. See "Management's Discussion
and Analysis or Plan of Operations - Forward Looking Statements" for a further
discussion of these "forward-looking statements".
THE COMPANY
Voxcom Holdings, Inc. (the "Company" or "Voxcom") is engaged in the
business of (i) selling credit card processing and authorization systems; (ii)
selling printing services to home based business seminar sponsors and multi-
level marketing companies; and (iii) assembly through contractors and marketing
of a high performance, multi-media add-in card providing both hardware and
software to personal computers. The address of the Company's principal executive
offices is 8115 Preston Road, Eighth Floor - East, Dallas, Texas 75225, and its
telephone number there is (214) 691-0055.
THE OFFERING
The shares offered hereby constitute issued and outstanding shares of
Common Stock of the Company and are being offered and sold by the Selling
Stockholders. The Company will not receive any of the proceeds from the sale of
the Common Stock by the Selling Stockholders.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that sales of
Common Stock may be made from time to time by or for the account of the Selling
Stockholders in the over-the-counter market or on any exchange on which the
Common Stock of the Company may be listed at the time of sale, or in block
transactions or private transactions or otherwise, through brokers or dealers.
Brokers or dealers may be paid commissions or receive sales discounts in
connection with such sales, and the Selling Stockholders will be solely
responsible for paying such commissions or absorbing such discounts.
RISK FACTORS
See "Risk Factors" for a discussion of various matters that should be
considered in connection with the purchase of Common Stock hereunder.
3
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------
1998 1997
---- ----
<S> <C> <C>
Statement of Operations Data:
Net sales $21,255,098 $13,420,766
Gross Profit 18,634,023 11,537,659
Operating income (loss) (1,002,190) 3,162,307
Net earnings (loss) (1,098,907) 2,923,519
Net earnings (loss) per share (.20) N/A
Pro forma net earnings (1) -- 1,964,378
Pro forma earnings per share -- .39
</TABLE>
(1) Pro forma net earnings give effect to income taxes that would have been
provided if the Company had been subject to federal and state income taxes
for all periods.
<TABLE>
<CAPTION>
Balance Sheet Data:
June 30, 1998 June 30, 1997
------------- --------------
<S> <C> <C>
Total assets $5,995,951 $ 1,312,441
Working capital (deficit) 540,354 (5,017,331)
Total liabilities 3,240,662 10,438,045
Stockholders' equity (deficit) 2,755,289 (9,125,604)
</TABLE>
- --------------------------------------------------------------------------------
RISK FACTORS
In addition to the other information presented in this Prospectus,
prospective investors should carefully consider the following factors in
evaluating an investment in the shares of Common Stock offered hereby.
Limited Operating History. The Company has a limited history of
operations. It was formed in accordance with the Plan of Reorganization of
Weaver Arms Corporation, as confirmed by the United States Bankruptcy Court,
Central District of California on January 20, 1994. In June 1997, it acquired
all of the issued and outstanding common stock of Voxcom Systems, Inc. and
AmeraPress, Inc. and commenced business operations. See "Management's Discussion
and Analysis or Plan of Operation".
Uncertainty of Market Acceptance. Developing marketing acceptance for the
Company's existing and proposed products and services will require substantial
marketing and sales efforts and the expenditure of a significant amount of
funds. There can be no assurance that the Company will be able to successfully
develop or position its products or services, or that any marketing efforts
undertaken by the Company will result in increased demand for or market
acceptance of the Company's products and services.
Federal Trade Commission. On February 17, 1998, the Federal Trade
Commission ("FTC") obtained from the United States District Court an ex parte
Temporary Restraining Order and Asset Freeze on AmeraPress, Inc., and Home
Business Group, Inc., then two of the subsidiary companies of the Company. A
Temporary Receiver was also appointed by the Court. The FTC alleged violations
of the Federal Trade Commission Act (the "FTC Act") in
4
<PAGE>
connection with the Company's business of marketing sales opportunities for home
based businesses. On February 27, 1998, the Federal District Court removed the
Temporary Restraining Order and replaced it with a new order which substantially
eased the restrictions placed on the Company. Under the new order, the Company
resumed operations under limited oversight by a Court-appointed monitor to
review expenditures of the Company within specified limits and monitor sales
information. On April 13, 1998, the FTC and the Company agreed to a compromise
and settlement of the case. The Company did not admit to any violation of any
law, statute, rule, or regulation or to the commission of any wrongful act.
The agreement with the FTC included the payment to the FTC of refunds to
distributors which would be reimbursed to those distributors by the FTC.
Refunds due prior to the FTC action were approximately $145,000 and increased to
more than $465,000 during the time of the FTC investigation. The Company
believes that many of the distributors were led to believe that the Company was
being closed. In addition, an administrative fee of $35,000 was also agreed to
be paid. HBG has a policy of offering refunds to distributors for a period of
ten days, and the average rate of refunds experienced before the FTC action was
approximately 10% of sales.
Legal fees approximating $800,000 have been incurred fighting this action.
These requests for refunds and legal fees have impacted upon the Company's
profitability and cash resources during the fourth quarter of fiscal 1998. See
"Management's Discussion and Analysis or Plan of Operations - Recent Events -
FTC Action."
Disposition of HBG. On September 30, 1998, the Company disposed of HBG
to its founders in exchange for the cancellation of 200,000 shares of Common
Stock. As a result, the Company has eliminated a significant asset and source
of revenues. Although AmeraPress will continue to provide printing services to
HBG, it will initially be AmeraPress' only customer, and if HBG is unsuccessful
in generating more sales of AmeraPress products, or if AmeraPress is unable to
generate sales to other customers, the ability of AmeraPress to generate profit
for the Company will be hampered.
Liquidity and Capital Resources. The Company has experienced recent cash
shortages resulting from the extraordinary costs to defend the FTC litigation,
pay the settlement cost thereof, and resume operations after a significant
closure following the FTC's injunction action. The Company has met these needs
through the issuance of debt and equity securities, and may continue to require
additional cash infusions before operations return to prior levels.
Regulation. While the Company is not subject to extensive levels of
regulation, its home-based businesses products are direct-marketed to customers
on a mass marketing scale. A greater number of jurisdictions are broadening the
scope of products and services that come within the jurisdiction of the
regulatory authorities within such states, particularly in the direct marketing
and mass marketing industries. Consequently, the trend in regulation on a
national basis is to encompass organizations, similar to the Company, within the
ambit of state regulatory authority, the consequence of which may involve
greater restrictions relevant to the products and services distributed by the
Company. Also, as noted above, the FTC regulates the Company's home-based
business services and sales programs. The FTC's laws and regulations provide for
consumer protection against false and misleading sales promotions.
Competition. The competition for credit card verification business is
intense, and the market is saturated with systems to meet this need. Many of the
competitors of the Company are substantially larger and have greater financial
resources than the Company. There can be no assurance that the Company will be
able to compete profitably with such other companies on a long-term basis. The
home-based business industry is extremely large and also very competitive.
Distributors are sought for many multi-level and direct sales organizations, and
many home-based business opportunity seminars are held. In general, there are no
significant barriers to entry into business in this area, therefore, this area
of the Company's operations could be subject to substantial additional future
competition and many of the competitors are, and future competitors could be,
substantially larger and have greater financial resources than the Company.
There can be no assurance that the Company will be able to compete profitably
with such companies
5
<PAGE>
on a long-term basis. Competition for computer software and equipment is
intense, and new products and developments are announced regularly by larger and
more active competitors in the industry.
Dependence on Key Personnel. The Company is highly dependent on Lawrence
R. Biggs, Jr. and Donald G. McLellan, Chief Executive Officer and President,
respectively, of the Company for the profitable operation of the Company and the
expansion of its markets and products acceptance. Neither Mr. Biggs nor Mr.
McLellan has an employment agreement with the Company. The loss of either Mr.
Biggs or Mr. McLellan potentially could have a material adverse effect on the
Company's business and results of operations. See "Management".
Concentration of Ownership in Management. Members of the Board of
Directors and certain officers own an aggregate of approximately 75% of the
outstanding Common Stock as of the date of this Prospectus and will therefore be
a significant influence over the outcome of matters submitted to the
stockholders for approval, including election of the Company's directors. See
"Principal Stockholders and Security Ownership of Management".
Limited Market for the Company's Common Stock; Possible Volatility of
Securities Prices. There is currently only a limited trading market for the
Common Stock of the Company. The Common Stock of the Company trades on the
Nasdaq OTC Bulletin Board under the symbol "VXCH", which is a limited market and
subject to substantial restrictions and limitations in comparison to the Nasdaq
System. There can be no assurance that a substantial trading market will be
sustained for the Common Stock. Recent history relating to the market prices of
newly public companies indicates that, from time-to-time, there may be
significant volatility in the market price of the Company's securities because
of factors unrelated, as well as related, to the Company's operating
performance. There can be no assurances that the Company's Common Stock will
ever qualify for inclusion within the Nasdaq System, or that more than a limited
market will ever develop for its Common Stock.
Anti-Takeover Provisions. In addition to the voting control held by
officers and directors, the Company is subject to agreements and provisions
which could hinder or preclude an unsolicited acquisition of the Company. The
Company's Articles of Incorporation authorizes the Board of Directors to issue,
without stockholder authorization, shares of preferred stock, in one or more
designated series or classes. The Company's Articles or Bylaws also provide that
special meetings of stockholders may only be called by stockholders owning at
least 66 2/3% of the Common Stock; directors may be removed from office only for
"cause" by the affirmative vote of holders of at least 66 2/3% of the Common
Stock; and certain provisions of the Bylaws may be amended only upon a vote of
66 2/3% of the Common Stock. The Company is also subject to Nevada statutes
regulating business combinations. Any of these agreements or provisions could
discourage, hinder or preclude an unsolicited acquisition of the Company and
could make it less likely that stockholders receive a premium for their shares
as a result of any such attempt. These provisions may have a depressive effect
on the market price of the Common Stock. See "Description of Capital Stock -
Possible Anti-Takeover Provisions".
Limitation of Liability. Chapter 78 of the Nevada Revised Statutes ("NRS")
provides that a Nevada corporation may limit the personal liability of a
director or officer to the corporation or its stockholders for breaches of
fiduciary duty, except that such provision may not limit liability for acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law, or payment of dividends or other distributions in violation of the NRS. The
Company's Articles provide for the maximum limit of the personal liability of
officers and directors allowable under the NRS. See "Description of Capital
Stock - Limitation on Liability of Directors".
Lack of Dividends. The Company does not anticipate paying any cash
dividends on its Common Stock in the foreseeable future. The Company intends to
retain profits, if any, to fund growth and expansion. See "Dividend Policy."
Integration of Unspecified Acquisitions. A material element of the
Company's growth strategy is to expand its existing business through strategic
acquisitions. While the Company continuously evaluates opportunities to make
strategic acquisitions, it has no present commitments or agreements with respect
to any material acquisitions. There
6
<PAGE>
can be no assurance that the Company will be able to identify and acquire such
companies or that it will be able to successfully integrate the operations of
any company it acquires. Further, any acquisition may initially have an adverse
effect upon the Company's results while the acquired business is adapting to the
Company's management and operating practices. There can be no assurance that the
Company's personnel, systems, procedures, and controls will be adequate to
support the Company's growth. In addition, there can be no assurance that the
Company will be able to establish, maintain or increase profitability of an
entity once it has been acquired. There can be no assurance that the Company
will be able to obtain adequate financing for any acquisition, or that, if
available, such financing will be on terms acceptable to the Company.
SELLING STOCKHOLDERS
The following table sets forth as of October 2, 1998, the names of and the
number of shares that could be sold by each of the Selling Stockholders, and the
number of shares offered hereby, assuming conversion of the shares of Series B
Preferred Stock into Common Stock prior to such offering at the conversion price
of $0.885 per share.
<TABLE>
<CAPTION>
Maximum Number Percentage of Outstanding
Name of Sellable Shares Shares Owned Prior to Offering
---- ------------------- ------------------------------
<S> <C> <C>
Dominion Capital Fund, Ltd. 2,259,887 (1) 22.1
Sovereign Partners, L.P. 1,242,938 (1) 12.1
Canadian Advantage Limited Partnership 451,977 (1) 4.4
Lloyd Wade Securities 400,000 (2) 6.2
Mitchell Shapiro 100,000 (2) 1.6
Gary Raabe 800,000 (3) 12.0
</TABLE>
- ----------------------
(1) Represents number of shares of Common Stock issuable upon conversion of
Series B Preferred Stock at the conversion price of $0.885 per share. As
required by regulations of the Securities and Exchange Commission, the
number of shares shown as beneficially owned includes shares which can be
purchased within 60 days after October 2, 1998. The actual number of
shares of Common Stock beneficially owned is subject to adjustment and
could be materially more or less than the estimated amount indicated
depending upon factors which cannot be predicted by the Company at this
time, including, among others, the market price of the Common Stock
prevailing at the actual date of conversion of Series B Preferred Stock,
and whether or to what extent dividends to the holders of the Series B
Preferred Stock are paid in Common Stock.
(2) Represents the maximum number of shares of Common Stock obtainable under an
agreement with Lloyd Wade Securities and the person introducing such firm
to the Company to provide investment banking and consulting services.
(3) Represents the maximum number of shares that may be purchased by Mr. Raabe
at $5.00 per share using amounts otherwise payable to him as bonus
compensation in the amount of 25% of the net profit of MAXpc.
PLAN OF DISTRIBUTION
The shares may be sold from time to time by the Selling Stockholders or by
pledgees, donees, transferees or other successors in interest. Such sales may
be made in the over-the-counter market or on any stock exchange on which the
Common Stock of the Company may be listed at the time of sale or otherwise at
prices and terms then prevailing or at prices related to the then current market
price, or in negotiated transactions. The shares may be sold by one or more of
the following:
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<PAGE>
(a) A block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
(b) Purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this Prospectus;
(c) Ordinary brokerage transactions and transactions in which the
broker solicits purchasers; or
(d) Privately negotiated transactions between the Selling Stockholder
and a purchaser.
There is no underwriter or coordinating broker acting in connection with
this offering. Each Selling Stockholder may be deemed an "underwriter" within
the meaning of the Securities Act with respect to the shares of Common Stock
offered by such Selling Stockholder. The Company and each Selling Stockholder
have agreed to indemnify one another against certain liabilities, including
liabilities under the Securities Act.
In effecting sales, brokers or dealers engaged by the Selling Stockholder
may arrange for other brokers or dealers to participate. Brokers and dealers
will receive commissions or discounts from Selling Stockholders in amounts to be
negotiated immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act, in connection with such sales.
Upon the Company being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker or dealer for the sale of shares
through a block trade, special offering or secondary distribution or a purchase
by a broker or dealer, a supplement to this Prospectus will be filed with the
Commission, if required, pursuant to Rule 424 under the Securities Act,
disclosing: (a) the name of each such Selling Stockholder and of the
participating broker(s) or dealer(s); (b) the number of shares involved; (c) the
price at which such shares were sold; (d) the commissions paid or discounts or
concessions allowed to such broker(s) or dealer(s), where applicable; (e) that
such broker(s) or dealer(s) did not conduct any investigation to verify the
information set out in this Prospectus; and (f) other facts material to the
transactions.
The Company has agreed to pay for all costs and expenses incident to the
issuance, offer, sale and delivery of the shares of Common Stock offered by the
Selling Stockholders, including all expenses and fees of preparing, filing and
printing the Registration Statement and Prospectus and related exhibits,
amendments and supplements thereto and mailing of such items. The Company will
not pay sales or brokerage commissions or discounts with respect to sales of the
shares offered by the Selling Stockholders.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
MARKET INFORMATION
The Company's Common Stock is traded in the over-the-counter market on the
Nasdaq OTC Bulletin Board under the Symbol "VXCH." The following table shows
the price range of the Company's Common Stock since it was initially quoted in
November 1997 until June 30, 1998.
<TABLE>
<CAPTION>
BID ASK
HIGH LOW HIGH LOW
<S> <C> <C> <C> <C>
Fourth Quarter 1997 6-1/8 2 6-5/8 2-7/8
First Quarter 1998 5-3/4 1-5/8 6-1/4 1-7/8
Second Quarter 1998 6 2-1/8 6-1/4 2-3/8
Third Quarter 1998 2-13/16 7/8 3 1
</TABLE>
8
<PAGE>
HOLDERS
As of June 30, 1998, there were 233 record holders of the Company's Common
Stock, 3 holders of the Company's Series A Preferred Stock and 3 holders of the
Company's Series B Preferred Stock.
DIVIDENDS
The Company does not anticipate any stock or cash dividends on its Common
Stock in the foreseeable future.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATIONS
GENERAL
The Company through its wholly-owned subsidiaries:
(i) sells and distributes merchant credit card authorization and payment
systems to direct marketing merchants throughout the United States
(commenced November 1994);
(ii) markets home-based business through seminars (acquired in October
1997 and sold in September 1998) and produces customized printing for
distribution by home-based businesses (commenced January 1996); and
(iii) manufactures and markets computer hardware and software (acquired in
April 1998).
Revenues and expenses for the fiscal year ended June 30, 1997 applied only
to the credit card authorization systems and customized printing business.
Revenues and expenses for the fiscal year ended June 30, 1998 applied to a full
year for each of these businesses, and for the seminar and computer hardware and
software businesses from the dates of acquisition.
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Year Ended
STATEMENT OF OPERATIONS DATA June 30, 1998 June 30, 1997
-------------- -------------
<S> <C> <C>
Net sales $21,255,098 $13,420,766
Gross profit 18,634,023 11,537,659
Operating income (loss) (1,002,190) 3,162,307
Net earnings (loss) (1,098,907) 2,923,519
Net earnings (loss) per share (.20) N/A
Pro forma net earnings (1) -- 1,964,378
Pro forma earnings per share -- .39
</TABLE>
(1) Pro forma net earnings give effect to income taxes that would have been
provided if the Company had been subject to federal and state income taxes
for all periods.
<TABLE>
<CAPTION>
BALANCE SHEET DATA June 30, 1998 June 30, 1997
------------- --------------
<S> <C> <C>
Total assets $5,995,951 $ 1,312,441
Working capital (deficit) 540,354 (5,017,331)
Total liabilities 3,240,662 10,438,045
Stockholders' equity (deficit) 2,755,289 (9,125,604)
</TABLE>
9
<PAGE>
RESULTS OF OPERATIONS
YEAR ENDED JUNE 30, 1998 COMPARED TO YEAR ENDED JUNE 30, 1997.
Revenues
Revenues increased by approximately 58% from $13,420,766 in the year ended
June 30, 1997 to $21,255,098 in the year ended June 30,1998. This increase was
primarily from sales by the Home Based Business Segment through expansion of the
printing business and the inclusion of the revenues of Home Business Group Inc.
Revenues of this segment were the largest component of sales and increased by
approximately 63% from $12,008,786 in the year ended June 30, 1997 to
$19,631,238 in the year ended June 30,1998.
Revenues during the year ended June 30, 1998 were adversely affected by the
FTC action (See "-Recent Events"). This effect has not been quantified.
Cost of Sales
Cost of sales increased by approximately 39% from $1,883,107 in the year
ended June 30,1997 to $2,621,075 in the year ended June 30, 1998. The increase
resulted from the increased operating activity of the Home Based Business
Segment, but reflects the higher margins obtainable as such sales increase.
Gross Profit
Gross profit increased approximately 62% from $11,537,659 in the year ended
June 30, 1997 to $18,634,023 in the year ended June 30, 1998. The increase is
almost entirely due to, and reflects the expansion of, the printing business and
the inclusion of gross profit from the seminar business, both forming the Home
Based Business Segment.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased approximately 134%
from $8,375,352 in the year ended June 30, 1997 to $19,636,213 in the year ended
June 1998. The increase was due almost entirely to the Home Based Business
Segment and reflects the increases of labor, commissions, delivery expenses, and
overheads necessary to achieve the increased revenues achieved by the division.
In addition, attorney fees increased by $757,325 to $905,668 for the year ended
June 30, 1998, due primarily to the defense against the FTC action. (See "--
Recent Events").
Interest Expense
Interest expense of $148,975 incurred during the year ended June 30, 1998
was primarily on the promissory note to the Company's Shareholders who sold
AmeraPress to the Company. On December 15, 1997 the note was converted to
Series A Preferred Stock, and no further interest is payable. Interest expense
of $44,247 was incurred for the year ended June 30, 1997 on the note to the
Company's shareholders.
Income Taxes
Income tax benefit of $52,258 was accrued based on losses which can be
carried back to prior years for tax purposes for the year ended June 30, 1998.
State income tax was the primary amount accrued for the year ended June 30,
1997, because for most of that period the income was earned in a limited
liability company for which the members were personally responsible for federal
taxes on the Company's income.
Net Earnings
Net earnings decreased by $4,022,426 from earnings of $2,923,519 in the
year ended June 1997 to a loss of ($1,098,907) in the year ended June 30, 1998.
This decrease was due to losses in the Home Based Business
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<PAGE>
Segment as well as significantly higher selling, general and administrative
expenses and legal fees related to the defense against the FTC action. (See "-
Recent Events"). Losses in the Home Based Business Segment were a direct result
of the FTC action.
YEAR ENDED JUNE 30, 1997 COMPARED TO YEAR ENDED JUNE 30, 1996
Revenues
Revenues increased by approximately 569% from $2,005,486 in the year ended
June 30, 1996 to $13,420,766 in the year ended June 30, 1997. The increase is
due almost entirely to the Home Based Business Segment which booked its first
full year of operation.
Cost of Sales
Cost of sales increased by approximately 344% from $424,198 in the year
ended June 30, 1996 to $1,883,107 in the year ended June 30, 1997. The increase
was almost entirely due to the Home Based Business Segment and represents the
increased costs needed to achieve the increased revenues.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased approximately 266%
from $2,291,121 in the year ended June 30, 1996 to $8,375,352 in the year ended
June 30, 1997. The increase represents the costs of labor, commissions,
delivery expenses, and overheads required by the Home Based Business Segment to
achieve the increased revenues.
Interest Expense
Interest expense of $44,247 incurred in the year ended June 30, 1997 was
paid on the promissory note to the Sellers of AmeraPress. No interest expense
was incurred in the year ended June 30, 1996.
Income Tax
The income tax expense in the year ended June 30, 1997 of $194,541 was
accrued on the net profit of the divisions earned from the date of acquisition
by the Company to June 30, 1997. No income tax was accrued in the year ended
June 30, 1996. The effective rate of tax for the year ended June 30, 1997 was
less than the full statutory rate due to the availability of net operating
losses from prior years.
Net Earnings
Net earnings increased from a loss of $709,833 in the year ended June 30,
1996 to a profit of $2,923,519 in the year ended June 30, 1997. The increase of
profitability was almost entirely due to the Home Based Business Segment which
operated for the full year to June 30, 1997 compared to only six months in the
year to June 30, 1996.
LIQUIDITY
The Company had working capital of $540,354 at June 30, 1998 and a working
capital deficit of ($5,017,331) at June 30, 1997. The Company's cash flow and
working capital requirements are primarily affected by the receipt of payments
from customers, which generally are due at the time of sale, and payment of
operating expenses. The change in working capital from June 30, 1997 to June
30, 1998, of $5,557,685, included (a) additional investment in receivables,
inventories and other assets as a result of increased sales and related
activities; (b) $5,000,000 of current maturities of notes payable to
stockholders that were converted to preferred stock; and (c) a net increase in
cash arising primarily from the sale of $3,500,000 of Series B Preferred Stock
and borrowings of $400,000 under convertible debentures. These increases were
offset by the increase in accounts payable and accrued expenses of
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<PAGE>
$1,987,072. Overall, the Company's operating activities used net cash of
$151,249 for the year ended June 30, 1998 and provided net cash of $3,290,810
for the year ended June 30, 1997.
Investing activities of the Company consisted of the acquisition of
property and equipment in the amounts of $263,978 and $742,481 for the years
ended June 30, 1997 and 1998, respectively.
Financing activities of the Company included note repayments and
distributions to stockholders in the total amounts of $2,680,000 and $1,640,000
for the years ended June 30, 1997 and 1998, respectively. Other financing
activities of the Company for the year ended June 30, 1998 included the sale of
$3,500,000 of Series B Preferred Stock, borrowings of $400,000 under convertible
debentures and the sale of common stock under warrant exercises in the amount of
$643,340.
Notes payable to stockholders in the total amount of $8,000,000 were
converted to Series A Preferred Stock in the year ended June 30, 1998.
Future cash resources available to the Company are expected to come from
profitable operations and the additional issue of shares as a result of
anticipated exercises of warrants at $4 each if the price of the Company's
Common Stock returns to a price in excess of the $4 exercise price. Should the
need arise for further funding for increases in inventories or for capital
equipment, the Company would address the possibility of lines of credit from
lending authorities and new issues of capital stock. There is no assurance that
these resources will be available to the Company.
RECENT EVENTS
Federal Trade Commission
On February 17, 1998, the Federal Trade Commission (FTC) obtained from the
United States District Court an ex parte Temporary Restraining Order and Asset
Freeze on AmeraPress, Inc., and Home Business Group, Inc., two of the subsidiary
companies of the Company. A Temporary Receiver was also appointed by the Court.
The FTC alleged that the Company was offering prepaid business ventures in which
the purchaser could expect to receive a specific level of earnings and that such
representations were false and misleading and constituted deceptive acts or
practices in violation of Section 5(c) of the FTC Act (15 U.S.C Sec 45(a)).
On February 27, 1998, the Federal District Court removed the Temporary
Restraining Order and replaced it with a new order which substantially eased the
restrictions placed on the Company. Under the new order, the Company resumed
operations under limited oversight by a court appointed monitor to review
expenditures of the Company within specified limits and monitor sales
information.
On April 6, 1998, the defendants filed a counterclaim against the FTC
alleging that the FTC acted unlawfully in obtaining an exparte restraining order
that was overbroad, harassing and inappropriate to the Company's situation, and
that the FTC had acted in a pattern of deceit, coercion and harassment to obtain
information from and about the defendants.
On April 13, 1998 the FTC and the Company agreed to a compromise and
settlement of the case. The Company did not admit to any violation of any law,
statute, rule, or regulation or to the commission of any wrongful act; however,
it believed that it reached a settlement that would end the litigation and
permit the Company to operate under reasonable restrictions. Such agreed order
of settlement included a permanent injunction against making any false or
misleading statement or misrepresentation about any business venture, product or
service offered by it and the potential income that might be derived therefrom.
The agreement with FTC included the payment to the FTC of refunds to
distributors which would be reimbursed to those distributors by FTC. Refunds
due prior to the FTC action were approximately $145,000 and increased to more
than $465,000 during the time of the FTC investigation. The Company believes
that many of the distributors were led to believe that the Company was being
closed. In addition, the Company paid an administrative
12
<PAGE>
fee of $35,000. The Company has a policy of offering refunds to distributors for
a period of ten days, and the average rate of refunds experienced before the FTC
action was approximately 10% of sales.
Legal fees approximating $800,000 have been incurred and paid fighting this
action. These requests for refunds and legal fees have adversely affected the
Company's profitability and cash resources during the fourth quarter of fiscal
1998. To meet these extraordinary expenses the Company encouraged warrant
holders to exercise, by reducing the exercise price of its Class A Warrants from
$6.00 to $4.00 per warrant as permitted by the instrument creating the warrant.
As of June 30, 1998, a total of 160,835 shares had been issued upon exercise of
warrants, generating $643,340 in additional equity. In addition, in June 1998
the Company issued Convertible Debentures for $400,000 and 350,000 shares of
Series B Preferred Stock for a purchase price of $3,500,000. The Company has
therefore obtained adequate cash to enable it to return to a full operating
level and meet its obligations for the foreseeable future.
MAXpc Technologies, Inc.
On March 13, 1998, the Company agreed to purchase all of the issued and
outstanding stock of MAXpc Technologies, Inc., subject to a 30 day due diligence
period. The Company believed that MAX provided an opportunistic source of
revenues that could be acquired for common stock and future development costs
and that could provide an entry into the rapidly expanding market for computer
equipment.
On April 13, 1998, the agreement became effective, and 200,000 shares of
common stock were issued to the Seller. At the same time, finders fees of
10,000 shares of common stock were issued. MAX's assets consisted only of its
contract rights to acquire and develop its products and associated know-how and
good will. Since the acquisition, the activities of MAX have consisted of the
development of a marketing program, purchase and registration of trade marks and
trade names and development of packaging materials.
MAXpc Technologies, Inc. has the exclusive rights to manufacture and market
a high performance, multi-media add-in card providing both hardware and software
for inclusion in either new or existing computers.
SALE OF HBG
On September 30, 1998, the Company sold all of the outstanding Common Stock
of HBG to its founders, Kim Crowther and Brian Jensen, in exchange for the
cancellation of 200,000 shares of the Company's Common Stock owned by them. The
sale was made in order to concentrate the efforts of the Home Based Business
Segment to the specialty printing part of the business and to divest the seminar
business operated by HBG. As a result, AmeraPress will be free to market its
printing services to other direct and multi-level marketing companies in
addition to HBG. The Company expects to record income in the first quarter of
fiscal 1999 in the approximate amount of $800,000, representing the excess of
the estimated gain on sale over estimated operating losses for the quarter.
FORWARD LOOKING STATEMENTS
Statements that are not historical facts included in this registration
statement are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 that involve risks and uncertainties
that could cause actual results to differ from projected results. Such
statements address activities, events or developments that the Company expects,
believes, projects, intends or anticipates will or may occur, including such
matters as future capital, business strategies, expansion and growth of the
Company's operations, cash flow, marketing of products and services, and
development of new products and services. Factors that could cause actual
results to differ materially Cautionary Disclosures) are described throughout
this registration statement. Cautionary Disclosures include, among others:
general economic conditions, the markets for and market price of the Company's
products and services, the Company's ability to find, acquire, market, develop
and produce new products and services, the strength and financial resources of
the Company's competitors, the Company's ability to find and retain skilled
personnel, labor relations, availability and cost of material and equipment, the
results of financing efforts, and regulatory developments and compliance. All
written and oral forward-looking statements attributable to the Company are
expressly qualified in their entirety by the Cautionary Disclosures. The Company
disclaims any obligation to update or revise any forward-
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<PAGE>
looking statement to reflect events or circumstances occurring hereafter or to
reflect the occurrence of anticipated or unanticipated events.
BUSINESS
GENERAL
Newcorp One, Inc. ("Newcorp") is a corporation organized under the laws of
the State of Nevada in September 1996 in accordance with the Plan of
Reorganization of Weaver Arms Corporation ("Weaver"), as confirmed by the United
States Bankruptcy Court, Central District of California on January 20, 1994.
Weaver had existed as a publicly held corporation in the business of developing
and manufacturing weapons until its filing for protection under the bankruptcy
laws. Following its reorganization, Weaver changed its name to Madera
International, Inc. and began operating as a timber harvesting and exporting
company. A feature of Weaver's bankruptcy plan of reorganization allowed it to
create Newcorp and distribute its common stock and Class A warrants to the
shareholders and debtors of Weaver. Newcorp would then seek a merger partner
that would contribute an operating business to Newcorp.
The owners of Voxcom Systems, Inc. ("Voxcom Systems") and AmeraPress, Inc.
("AmeraPress") desired for Voxcom Systems and AmeraPress to consolidate and
become publicly traded; however, they had been unsuccessful in negotiating a
suitable underwriting arrangement to engage in a public offering.
Therefore, in June 1997, the managements of Newcorp and Voxcom Systems
negotiated an Agreement and Plan of Reorganization pursuant to which Newcorp
acquired all of the issued and outstanding shares of common stock of Voxcom
Systems in exchange for an aggregate of 4,000,000 shares of voting common stock
of Newcorp, $.0001 par value per share, and 4,000,000 Class A Warrants,
constituting approximately 80% of the outstanding securities of Newcorp. At the
time of the acquisition of Voxcom Systems, Newcorp had no assets, business or
operations.
Voxcom Systems provides merchant accounts and credit card processing
solutions to small businesses, home based businesses, multi-level marketing
distributors, and independent distributors. In operation since January 1995,
Voxcom Systems is engaged in the transaction processing industry, providing
low-cost credit card processing to diverse merchants, including in-home
businesses, through its patented and proprietary Credit Verification Phone
system.
Concurrent with its acquisition of Voxcom Systems, Newcorp acquired all of
the issued and outstanding common stock of AmeraPress, Inc., a corporation
organized under the laws of the State of Nevada in June 1997 to engage in the
specialty printing and finishing business. AmeraPress succeeded to the business
of Voxcom Sales, L.L.C. ("Voxcom Sales"), a company organized under the laws of
the State of Delaware in November 1995. The common stock of AmeraPress was
acquired in exchange for a $10,000,000 note, payable in 24 consecutive, equal
monthly installments. The Promissory Note was collateralized by all of the
outstanding shares of AmeraPress. In December 1997, the remaining balance of
the Promissory Note was exchanged for 80,000 shares of Series A Preferred Stock
redeemable at the option of the Company at the issue price of $100 each.
On June 18,1997, Newcorp filed Restated Articles of Incorporation with the
Secretary of State of Nevada, adding provisions regarding corporate management
and control, and changing the name of the Company to "Voxcom Holdings, Inc."
("Voxcom Holdings").
On July 1, 1997, the Company entered into a Consulting Agreement and
Covenant Not to Compete with Kim Crowther and Brian Jensen to manage a company
(the "Lecture Company") to conduct home business seminars to promote the
Company's goods and services, including the printed products of AmeraPress, and
to compensate them for their exclusive service to the Lecture Company for a
period of 60 months by granting them 200,000 shares of the Company's common
stock, 4% of the gross proceeds of sales by the Lecture Company, and commissions
equal to 25% of the net profit of the Lecture Company on a combined basis. The
Company was also to grant them shares of the Company's common stock at June 30,
1998. At June 30, 1998, no additional shares are due to be issued under this
Agreement. Home Business Group, Inc. ("HBG") was incorporated in the State of
Delaware and acquired certain assets and liabilities of and continued the
business of the Lecture Company, commencing during the quarter ended December
31, 1997. On September 30, 1998, HBG was sold to the founders, Kim Crowther and
Brian Jensen in
14
<PAGE>
exchange for the cancellation of 200,000 shares of the Company's Common Stock.
Sell "Management's Discussion and Analysis or Plan of Operations--Recent Events
- --Sale of HBG." The continuing operations of AmeraPress are referred to together
as the "Home Business Segment".
On March 13, 1998 the Company agreed to acquire all of the issued and
outstanding shares of MAXpc Technologies, Inc. in consideration for the issuance
of 210,000 shares of Common Stock. MAXpc has the exclusive manufacturing and
marketing rights to certain multimedia computer hardware and software.
Marketing of the product commenced at the end of April 1998. The contract also
provides that 25% of the net after tax profits of MAXpc will be paid to the
Seller.
The Company's activities to date have consisted of the promotion and
marketing through seminars of home-based business opportunities, the production
and sale of customized printing and the sale and distribution of merchant credit
card authorization and payment systems, as well as raising capital, locating and
acquiring equipment, identifying prospective customers, and administrative
activities relating to the foregoing. The Company's future business, including
expansion of its present operations, may require additional equity and/or debt
financing, which may not be available in a timely manner, on commercially
reasonable terms, or at all. See "Management's Discussion and Analysis or Plan
of Operation."
See "Management -- Certain Relationships and Related Transactions" for
information about the interests of certain directors, executive officers and
promoters of the Company in the formation and reorganization transactions
described above involving Voxcom Holdings, Voxcom Systems, AmeraPress, and HBG.
PRINCIPAL PRODUCTS, DISTRIBUTION AND COMPETITIVE CONDITIONS
The Company's activities are divided into three segments:
(i) Credit card processing and authorization systems;
(ii) Printing services for home based business seminar sponsors and
multi-level marketing companies; and
(iii) Technology.
CREDIT CARD PROCESSING AND AUTHORIZATION SYSTEMS
The Company, through its subsidiary Voxcom Systems, offers merchants of all
sizes a competitive product which can include processing hardware, voice
platform and authorization, and an attractive discount rate on all credit card
transactions. In May, 1992, the credit card industry responded to increasing
levels of credit card fraud by requiring advance authorization of all credit
card transactions or else charging the merchant extra processing fees for
unauthorized charges. It is estimated that 97% of all credit card purchases in
the U.S. are preceded by such authorizations.
For the small merchant, or direct salesperson, the Company offers its
Credit Verification Phone ("CVP"), which is a host-based system utilizing an
interactive Voice Platform instead of a modem. The device is manufactured by
KIA Intertrade, an unaffiliated company located in Korea. The CVP is compact
and light-weight. It does not require A.C. power, is portable, offers a voice
tutorial to users, and can be used as a standard telephone if desired. Prices
range from $195 to $395 for this product. The Company also provides minor
repairs at its Euless, Texas facility for malfunctioning CVP terminals, and
returns malfunctioning CVP terminals requiring major repair to the manufacturer
for replacement.
In addition to equipment, the Company provides credit card services as an
independent sales organization (ISO) of Heartland Card Services, Inc., a credit
processing company. The Company is charged interchange costs to the credit card
provider (VISA and Master Card) by Heartland and pays to Heartland a share of
the increase over the interchange cost charged to its clients. The Company also
has agency agreements with Delta Card
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<PAGE>
Systems/Woodforest Bank, Electronic Card Systems, First American Payment
Systems/First National Bank in Brookings and Money Transfer System/NPC whereby
the Company purchases credit card processing at an established rate, and retains
the incremental price it charges its customers above that rate. Because of these
relationships, the Company believes it is competitive in the rates being offered
to all types of businesses ranging from the sole trader to large merchants.
The Company's customers are broadly divided into two sections (i) small
merchant, sole traders or direct sales person, and (ii) larger, often multi-
locational businesses. Approximately 30% of sales were made to the small
merchant category during the twelve months ended June 30, 1998.
For the large merchant the Company is able to offer other manufacturers'
systems such as Verifone and Hypercom purchased to meet the appropriate need.
The larger merchants approached by the Company usually require more expensive
and more sophisticated credit card processing equipment. Most of this equipment
necessitates a dedicated phone line compared to the port ability of the CVP.
Competition for credit card verification business is intense, and the
market is saturated with systems to meet this need, many of which have greater
experience in the industry and financial resources available to them. Most are
modem based, on-line systems requiring a dedicated phone line, and the cost of
access systems ranges from $195 to $1,700. The Company believes it can compete
for a share of the business because of the affordability, portability and
multiple uses of its CVP and due to its relationships with processing banks and
card providers. In excess of $100 million of annual credit card processing has
been contracted by the Company since October 1997. Competition in this section
is also offered by major banking organizations or their subsidiaries, such as
Bank America, Wells Fargo, Citibank, Chase and First USA. While these
competitors obviously have more financial strength, the Company believes it can
compete effectively because of its flexibility to respond to customer needs and
its orientation to the smaller users in the marketplace.
Business is generated either by incoming responses from national
advertising or from contact by the Company's 75 commissioned sales
representatives.
HOME-BASED BUSINESS SEGMENT
The Company has operated this segment through two wholly owned
subsidiaries, HBG and AmeraPress. Until it was sold in September 1998, HBG
conducted seminars in major cities throughout the United States to offer
attendees the opportunity to purchase introductory kits to approximately three
different home-based businesses. One of these businesses is AmeraPress, and the
others include vending machines and an Internet product, neither of which is
affiliated with the Company except that a director of HBG is a shareholder and
officer of the vending machine company, Vendworx, Inc. The Internet product has
been developed by Wealth International, Inc. The Internet product provides
distributors their own web pages so they can advertise and promote items, such
as the AmeraPress trading cards, for profit. Additionally, they may sell
quality items through an Internet mall and may market the mall site and receive
overrides via a multi-level marketing payout plan. This vending product teaches
people how to get involved with the vending industry and offers small, bulk-
candy dispensing machines that they may purchase. The vending company teaches
distributors how to place the machines, which locations are most profitable, and
is a source for candy and supplies.
AmeraPress conducts business with the distributors enrolled at the HBG
seminars by the purchase of the introductory kit. This kit includes video and
audio tapes, distribution manual and sufficient salable materials to make 100%
return on their cost. The distributors are advised by AmeraPress how to make
their home business operate. Such business is to introduce consumers to the
opportunity of having a photograph of their choice, and the appropriate words or
sketches of their choice printed on high quality, fully-laminated trading,
business, or greeting card, or post card or calendar. Sales are made by way of
pre-paid voucher which the distributor buys from AmeraPress and resells to the
consumer at a profit. Thereafter the distributor's job for that sale is
finished, and the consumer returns the voucher with all appropriate information
to AmeraPress for fulfillment. Distributors are not authorized to sell
distributorships, and for that reason neither HBG nor AmeraPress are multi-level
marketing organizations.
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With the sale of HBG in September 1998, AmeraPress will offer its printing
services to other direct and multi-level marketing companies. Therefor, the
home based business segment of the Company in the future will operate on a
wholesale basis and will not deal directly with any consumers of home based
business opportunities.
AmeraPress conducts is printing operations in its 20,000 square foot
facility in Euless, Texas. See " --Offices and Printing Facility."
The home-based business industry is extremely large and very competitive.
Distributors are sought for many multi-level and direct sales organizations by
means of phone and mail solicitation and via the Internet. Many companies
operating as multi-level marketers are large and well- capitalized, including
companies such as Amway, Mary Kay, Home Interiors & Gifts and Avon. Home-based
business opportunities marketed via seminars are typically smaller firms without
extensive operating histories, and many such companies are created and cease to
exist each year. These companies rely on the responses to the mail campaigns for
attendance at seminars. Other seminar companies use Infomercials on local and
cable television. HBG's principal competitors include Financial Fortune System,
HOME and the vast array of small operators. While, there is no certainty that
the businesses being offered by HBG will be attractive to the attendees of the
seminars, the Company believes it has been able to compete effectively due to
the sheer size of the market for these goods and services and to the profit
potential of the materials offered by the Company compared to those of many of
its competitors.
TECHNOLOGY DIVISION
Through March 31, 1998, all of the Company's business and revenues were
produced from the Home-Based Business Segment and the Credit Card Processing and
Authorization Segment. However, the Company continually seeks opportunities to
diversify its operations and exploit products and markets with the potential for
rapid growth. The Company believes that the technology offered by the multi-
media add-in card of MAXpc Technologies, Inc. ("MAX") produced such an
opportunity.
In April 1998, the Company acquired all of the common stock of MAX, which
has the exclusive right to manufacture and market a high performance, multi-
media add-in card providing both hardware and software for personal computers.
MAX has begun marketing its card under the trade name OOMPH! This card offers
22 different media functions consisting of the following:
- H324 Video Phone over standard phone line with superior audio & video
quality
- PCI Video Capture (full motion 30fps with Realtime MPEG-1 compression) &
stereo audio capture
- Video Editing with 3-D Titling, wipe effects & fully syncronized audio
soundtrack editing
- Output captured video to VGA screen, VCR Tape, NTSC Television, Disk, or
CD-Recordable
- PCI DVD Video playback, smooth full-screen DVD-video on a Pentium 133 or
faster
- MPEG-1 Video playback, full motion 30fps; full screen or windowed
- Output PC- VGA desktop screen to NTSC Television, 640x480 or hi-res
virtual
- Output DVD or MPEG videos to NTSC Television for PC Home Theater
- Display Live-Video (from Camera, VCR, or int. TV-tuner) full motion; full
screen or windowed
- PCI 2D accelerated Graphics VGA, up to 1280x1024 non-interlaced in high
color
- PCI 3D accelerated Graphics Rendering with Z-buffering, Gourad Shading,
and more
- PCI DSVD Modem v.34bis (230k data/33.6k band) with full TAPI support
- Hands-free Speakerphone, full-Duplex with acoustic echo cancellation
- Voicemail Answermachine with Caller ID and Forwarding function
- Fax V.17 (14.4k) Class 1, 2, and 2.0 with send and receive capability
- Distinctive Ring call routing for all telephony functions
- PCI Sound Card, compatible with industry standards
- Full Wave Table synthesis with 32 simultaneous voices (4meg)
- Multiple *WAV channel playback/record capability (*multi-Duplex)
- Dolby Digital AC-3 Audio Output (5+1 channels) for DVD Playback
- SRS 3D Audio enhancement for surround sound from just 2 speakers
- Industry Standard Joystick with MIDI port
17
<PAGE>
As MAX is in the early stages of its operation, an insignificant amount of
revenues and expenses of MAX were incurred prior to June 30, 1998.
The Company continues to look for additional software applications which
may be integrated into the card, and it is believed some of these will give rise
to the availability of patent protection. The Company will continue limited
research and development in this regard.
Competition in the industry is extremely high, and new developments and
products are offered regularly. Many of Max' competitors have greater
experience in the industry and more financial resources available to them.
Competition in multi-media products comes from companies such as ATI
Technologies, Inc., Creative Technology, Ltd. and Sigma Designs, Inc. While
these competitors obviously have more financial strength, the Company believes
it can successfully compete because it believes the MAX board fulfills functions
that no other single board can achieve. Marketing is being targeted to original
equipment manufacturers, dealers and resellers in the industry. There is no
assurance the marketing efforts for this computer card will be successful.
ENVIRONMENTAL IMPACT
None of the Company's activities utilize any hazardous materials or results
in any discharge of pollutants into the environment. The Company believes it
complies fully with all environmental laws and regulations.
YEAR 2000
The Company does not expect any adverse consequences from the problems
arising in the computer industry upon the advent of the year 2000.
EMPLOYEES
The Company employs a total of 132 full-time persons, including 44 in its
HBG facility in St. George, Utah, 61 at its AmeraPress facility in Euless,
Texas, 4 in its technology division, 17 in its credit card verification
business, and six in its corporate headquarters, including three executive
personnel. The credit card verification business also relies on the sales
efforts of approximately 75 commission-only personnel. None of such persons is
represented by a union, and the Company believes its relations with its
employees is very good.
REGULATION
The Company's only regulatory issues not common to all businesses is the
oversight of its home-based business services and sales programs by the U.S.
Federal Trade Commission. The laws and regulations of the FTC provide for
consumer protection against false and misleading sales promotions, but do not
include any advance filing or approval requirements. The Company is required to
exercise supervision over the methods and content utilized
18
<PAGE>
in the marketing of business opportunities, and it believes it is in compliance
with these laws; however, see " -- Legal Proceedings."
LEGAL PROCEEDINGS
See "Management Discussion and Analysis or Plan of Operations - Recent
Developments - Federal Trade Commission." In addition to the refunds made in
such action, the Company also receives requests for refunds from time to time
from purchasers of HBG distributor materials, some of which also threaten
litigation if not paid. The Company's policy is to offer refunds for ten days,
after which it generally denies these requests, although the Company will often
seek a mutually satisfactory settlement of such claims.
OFFICES AND PRINTING FACILITY
On February 1, 1998, subsequent to the expiration of the Company's lease
from an unaffiliated party on its principal executive offices, located at 14990
Landmark Place, Suite 250, Dallas, Texas, the Company moved its principal
executive offices to 8115 Preston Road, Suite 800, Dallas, Texas 75225. The
premises, which are leased from an unaffiliated party, consist of 11,010 square
feet. The executive office facility contains five management offices, 11 work
stations, state of the art computers, and related software. Monthly rent is
$22,020 through the remainder of a sixty-four month Lease Term, which expires
on May 31, 2003.
The Company has a renewal option to extend the Lease Term for one
additional period of five years, at a rental rate equal to the prevailing market
for such premises at that time.
The Company's printing facility is located at 203 South Ector Drive,
Euless, Texas. The premises, which are leased from an unaffiliated party,
consist of approximately 19,777 square feet. Monthly rent is $3,500, commencing
January 1, 1996 through March 31, 1999. The Company has a renewal option to
extend the lease for one term of three years, at a monthly rental of $4,025.
The facility contains printing and pre-press equipment, including Polar cutting
machines, Challenge cutting machines, GBC double sided and single sided
laminating machines, multiple Cannon color processors, photo scanners, and
Macintosh computers. Approximately 1,500 square feet of this facility is used
for storage of executive office records, and for the shipping and programming of
CVP equipment. Pursuant to an Addendum to the lease, the Company has an
exclusive option to purchase the property, such option to terminate on March 31,
1999. The Company has the option to purchase the property and will consider the
possibility during 1998. The Company believes its current facilities are
adequate for its current needs.
The facility which houses HBG is located in St. George, Utah. The
premises, which are leased from a company owned by a director of HBG, consist of
approximately 3,000 square feet. Monthly rent is $3,000 under a month-to-month
lease. The Company has no further obligation on this lease.
All of the Company's properties are covered by property and casualty
insurance the Company believes to be adequate.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
POSITION WITH COMPANY
NAME AGE POSITION WITH COMPANY SUBSIDIARIES(1)(2)(3)
<S> <C> <C> <C>
Lawrence R. Biggs, Jr. 39 Chairman of the Board, (1)(2)(3)
Chief Executive Officer (1)(2)
Donald G. McLellan 58 President, Secretary and
Director (1)(2)(3)
Lawrence A. Cahill 61 Director (1)(2)
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH COMPANY
NAME AGE POSITION WITH COMPANY SUBSIDIARIES(1)(2)(3)
<S> <C> <C> <C>
Ronald L. Brown 51 Director
Leslie D. Crone 45 Chief Financial Officer (1)(2)(3)
Delmar E. Guenther 60 (1)
Gwynda Gee 30 (2)
Gary Raabe 32 (3)
</TABLE>
(1) Officer and/or Director of Voxcom Systems, Inc.
(2) Officer and/or Director of AmeraPress, Inc.
(3) Officer and/or Director of MAXpc Technologies, Inc.
LAWRENCE BIGGS is the founder of the Company and has been Chairman of the
Board and Chief Executive Officer of Voxcom Holdings, Inc., Voxcom Systems,
Inc., and AmeraPress, Inc. since June 1997. Mr. Biggs is Chairman of the Board
of Home Business Group, Inc., holding that position since August 1997. During
1988, Mr. Biggs was Vice president of Public Telecom Corporation; a private
company that developed a microprocessor controlled desktop telephone designed
for specific network access. From 1989 to 1994, Mr. Biggs was president and CEO
of Strategic Telecom, Inc. ("Strategic"). While associated with Strategic, he
developed and contracted for the manufacture of the Access Phone, a product
patented under his name for specific applications, some of which are used by
Voxcom. During the time Mr. Biggs was associated with Strategic, in excess of
150,000 Access Phones were placed in hotel rooms throughout the United States.
During 1993, Strategic's board of directors rejected the attempt of an investor
group to sell the company. The investor's group filed an involuntary Chapter 7
Bankruptcy Proceeding in the United States Bankruptcy Court, District of
Delaware in November, 1994, which was subsequently converted to a Chapter 11
Bankruptcy Proceeding in January, 1995 and confirmed by the Court in May 1995.
Mr. Biggs resigned as president and CFO in November 1993. Mr. Biggs was a
founding director of the National Pay Telephone Association in 1984. He
attended the University of Nevada, Las Vegas from 1977 to 1981.
DONALD G. MCLELLAN has been President of Voxcom Holdings, Inc. since June
1997, as well as Director of Voxcom Holdings, Inc., Voxcom Systems, Inc., and
AmeraPress, Inc. since that date. He has been a Director of Home Business
Group, Inc. since August 1997. Mr. McLellan is a native of Australia where he
was involved in the formation and capitalization of entrepreneurial companies
in various industries. In 1989, he found the initial investment monies for
Strategic Telecom, Inc., and acted as a consultant to the Company until 1992,
when he was appointed C.F.O. In November 1993, Mr. McLellan became C.E.O. of
Strategic, serving in that capacity throughout the company's Chapter 11
bankruptcy proceeding, and until the confirmation of its Plan of Reorganization
in May 1995. Mr. McLellan became a Fellow of the Institute of Chartered
Accounts (the Australian equivalent to Certified Public Accountant) in 1963.
LAWRENCE CAHILL has been a Director since June 1997. Mr. Cahill is the
President and Treasurer of Larkin, Inc., a Cedar Rapids, Iowa-based hospitality
management company founded by Mr. Cahill and his brother in 1956. Larkin, Inc.
presently manages over fifteen hotels with approximately 3,500 rooms throughout
the continental United States and has been the largest franchiser of Holiday Inn
hotels. Mr. Cahill specializes in property acquisitions and private
investments.
RONALD L. BROWN has been a director since June, 1997. Mr. Brown is a
principal of the Dallas law firm of Glast, Phillips & Murray, P.C., which serves
as general counsel to the Company. He has been in the private practice of law
since 1975. In 1983-85, he was an adjunct professor of law at Southern
Methodist University. Mr. Brown serves on the Board of Directors of several
privately owned companies.
20
<PAGE>
LESLIE D. CRONE, Chief Financial Officer, joined the Company in May 1998.
Prior to this, he was employed as a senior manager at a public accounting firm,
Grant Thornton, LLP, from November 1989 to November 1997. He was self-employed
from December 1997 to May 1998. Mr. Crone became a CPA in 1976.
DELMAR E. GUENTHER, President of Voxcom Systems, Inc., joined Voxcom
Systems, Inc., in August 1994, to help develop the banking and processing
systems for Voxcom Systems' CVP. Prior to 1994, he was self-employed as the
owner of Merchant Financial Systems.
GWYNDA GEE, President of AmeraPress, Inc., joined AmeraPress, Inc. as Vice
President of Operations in September 1996. In this capacity, Ms. Gee
restructured the customer service and production departments to maximize
employee efficiency, improve product quality and customer service. Ms. Gee was
named President of AmeraPress in January 1998. From November 1995 to August
1996, Ms. Gee was Vice President of Operations for Hardwarehouse. Ms. Gee was
Systems Director for Voxcom Systems from December 1994 to November 1995. Ms.
Gee jointed Strategic Telecom in 1989 and during the course of her tenure
advanced to Systems Director before her departure in December 1994. See the
discussion above under Mr. Biggs regarding the bankruptcy of Strategic Telecom.
GARY J. RAABE, CEO of MAXpc Technologies, Inc., since April 1998. Prior to
that, from 1993 to 1998, he was the owner and operator of Computer Broker. From
1991 to 1993, he was the operations manager of The Logic Approach. He has
specialized in the development of low cost telecommuting, televideo
conferencing, televideo marketing, video surveillance and video-configuration
systems.
Directors serve for a term of one year or until their successors are
elected and qualified. Directors do not receive cash compensation for serving
as such.
Executive officers are appointed by and serve at the will of the Board of
Directors. There are no family relationships between or among any of the
directors or executive officers of the Company.
By virtue of their activities in founding and organizing the Company, as
well as their beneficial ownership of its voting securities, Lawrence R. Biggs,
Jr., Donald G. McLellan, and Lawrence A. Cahill may be deemed to be "promoters"
of the Company.
PROMOTERS
By virtue of their activities in founding and organizing the Company, as
well as their beneficial ownership of its voting securities, Lawrence R. Biggs,
Jr., Donald G. McLellan, and Lawrence A. Cahill may be deemed to be "promoters"
of the Company.
RELATED PARTY TRANSACTIONS
Lawrence R. Biggs, Jr., a director, executive officer and promoter of the
Company, acquired
30,000 shares of Voxcom Systems for $300 upon its organization in November
1994.
Lawrence Cahill, a director and promoter of the Company, acquired 50,000
shares of Voxcom Systems for $500.
Donald G. McLellan, a director, executive officer and promoter of the
Company, acquired 20,000 shares of Voxcom Systems for $200 and transferred
10,000 shares to Vision Finance and Management.
The Company acquired all of the issued and outstanding stock of Voxcom
Systems in exchange for 4,000,000 shares of the Company's voting Common Stock
and 4,000,000 Class A Warrants pursuant to an Agreement and Plan of
Reorganization, dated June 9, 1997 In connection with this transaction,
Lawrence R. Biggs, Jr. received 1,200,000 of such shares and 1,200,000 of such
warrants; Donald G. McLellan and Vision Finance and Management received 800,000
of such shares and 800,000 of such warrants, and Lawrence Cahill received
2,000,000 of such shares and 2,000,000 of such warrants. See "Business--
General."
21
<PAGE>
In June 1997, concurrent with the closing of the Agreement and Plan of
Reorganization, the Company acquired 10,000 shares of AmeraPress common stock,
representing 100% of shares outstanding, pursuant to a Stock Purchase Agreement
dated June 9, 1997. Such transaction resulted from an arms'-length negotiation
between the AmeraPress sellers (Messrs. Biggs, McLellan and Cahill), and the
prior management of the Company. The consideration for the sale of AmeraPress
common stock was a Promissory Note in the amount of $10,000,000 payable to
Messrs. Biggs, McLellan, and Cahill payable in 24 monthly installments of
principal plus interest on the unpaid balance at the prime rate, secured by a
Security Agreement-Pledge in favor of Messrs. Biggs, Cahill and McLellan as
Secured Parties. Messrs. Cahill, Biggs and McLellan realized a gain of
approximately $9.3 million on the sale of AmeraPress. In December 1997, the
Company requested and the holders agreed to exchange the remaining $8,000,000
amount of the Promissory Note for 80,000 shares of the Company's Series A
Preferred Stock, valued at $8,000,000. Such exchange was made in order to
improve the Company's financial condition and cash flow. See "Description of
Capital Stock, Series A Preferred Stock."
In April 1998, Lawrence Cahill advanced $300,000 to pay the fees of law
firms representing the Company in the case against the Federal Trade Commission.
The Company repaid such loan without interest in June 1998.
In May 1998, the Company entered into a Consulting Agreement with Jande
International Holdings, LLC to provide consulting services consisting of
financial and securities advice and in connection therewith issued 110,000
shares of common stock valued at $275,000. An affiliate of Jande, Ely Mandell,
was the owner of 25% of the outstanding common stock of the Company prior to the
reorganization in June 1997.
In June 1998, the Company entered into a Consulting Agreement with S.G.
Financial, Inc., to provide consulting services consisting of exploring
marketing opportunities in Germany for the Company's products and securities,
and in connection therewith issued 30,000 shares of common stock valued at
$75,000. An affiliate of S.G. Financial, David Lezak, was a former director,
executive officer and owner of 25% of the common stock of the Company prior to
the reorganization in June 1997.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth certain information
regarding compensation paid during each of the three fiscal years ended June 30,
1998, 1997 and 1996, to the persons serving as the Company's chief executive
officer and each executive officer whose annual compensation exceeded $100,000.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL FISCAL TOTAL REMUNERATION
POSITION YEAR SALARY COMMISSIONS/(2)/
<S> <C> <C> <C>
Lawrence Biggs, 1998 $151,392 $562,252
Chairman 1997 151,392 384,655
1996/(1)/ 153,078 23,751
Donald G. McLellan, 1998 $102,000 $280,490
President 1997 102,000 192,328
1996/(1)/ 72,450 16,771
Gwynda Gee 1998 $101,458 $ 39,057
- ---------------------
</TABLE>
(1) Compensation paid by Voxcom Systems prior to acquisition by Voxcom
Holdings.
(2) Commissions paid are computed on a percentage of sales of AmeraPress as
follows: Lawrence Biggs - 4%, Donald G. McLellan - 2%, and Gwenda Gee -
0.4%.
There is no employment agreement with any executive officer. There are no
salary, bonus or incentive plans covering cash or securities except the
Company's 1997 Stock Bonus Plan relating to individuals or one-person service
corporations who render legal, professional, or consulting services to the
Company.
22
<PAGE>
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of June 30, 1998 with respect
to persons known to the Company to be the beneficial owners of more than 5% of
its voting securities and with respect to the beneficial ownership of such
Common Stock by each director of the Company and by all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
(ASSUMING NO EXERCISE (ASSUMING EXERCISE
NAME AND ADDRESS OF OF CLASS A WARRANTS OF CLASS A WARRANTS
BENEFICIAL OWNER BY HOLDER)(1) PERCENT BY HOLDER)(1) PERCENT
- --------------------- --------------------- ------- ------------------ ---------
<S> <C> <C> <C> <C>
Common Stock
- ------------
Lawrence R. Biggs, Jr. 1,070,000 17.2 2,158,000 29.5
8115 Preston Road, 8th Fl. E
Dallas, Texas 75225
Lawrence A. Cahill 2,049,800 32.9 3,949,800 48.6
3330 Southgate, S.W.
Cedar Rapids, Iowa 52404
Donald G. McLellan(2) 800,000 12.9 1,460,000 21.2
8115 Preston Road, 8th Fl. E.
Dallas, Texas 75225
Ronald L. Brown 50,000 0.8 50,000 0.8
One Galleria Tower, Suite 2200
Dallas, Texas 75240
Directors and executive 4,382,300 70.4 8,030,300 81.3
officers as a group
(9 persons)
</TABLE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF PERCENTAGE OF NUMBER OF
BENEFICIAL OWNER SERIES B SHARES SERIES B SHARES COMMON SHARES(3)
- ------------------- ---------------- --------------- ----------------
<S> <C> <C> <C>
Series B Preferred Stock
- ------------------------
Dominion Capital Fund, Ltd. 200,000 57.1 2,000,000
c/o Thomson Kernaghan & Co.
365 Bay Street
Toronto, Ontario M54-2V2
Sovereign Partners, Limited 110,000 31.5 1,100,000
Partnership
c/o Thomson Kernaghan & Co.
365 Bay Street
Toronto, Ontario M54-2V2
Canadian Advantage Ltd. 40,000 11.4 400,000
Partnership
c/o Thomson Kernaghan & Co.
365 Bay Street
Toronto, Ontario M54-2V2
</TABLE>
23
<PAGE>
_______________
(1) Messrs. Biggs, Cahill, McLellan and all executive officers and directors as
a group beneficially own Class A Warrants exercisable until June 1999 at a
price of $4.00 per share for 1,088,000, 1,900,000, 660,000 and 3,648,000
shares of Common Stock, respectively.
(2) Mr. McLellan has 50% voting and investment power in Vision Finance and
Management, a family company which owns of record 400,000 shares of Common
Stock and 400,000 Class A Warrants included in the table as being
beneficially owned by Mr. McLellan. His spouse owns the other 50% of
Vision Finance and Management.
(3) See "Description of Capital Stock - Series B Preferred Stock." Shares of
common stock issued upon conversion is based upon recent conversion price
of $1.00 per share. Such conversion price varies with the market price of
the Common Stock. Shares of Common Stock issuable upon conversion are
being registered by the Company for resale on the Company's trading market.
The Company is not aware of any arrangement which might result in a change
in control in the future.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 75,000,000 shares
of capital stock, composed of 25,000,000 shares of Common Stock, par value
$0.0001 per share ("Common Stock"), of which there were 6,085,772 shares
outstanding as of June 30, 1998, and 50,000,000 shares of Preferred Stock, par
value $.0001 per share ("Preferred Stock").
COMMON STOCK
Voting Rights. Each holder of shares of Common Stock is entitled to one
vote for each share of Common Stock for the election of directors and on each
other matter submitted to a vote of the stockholders of the Company. The
holders of Common Stock have exclusive voting power on all matters at any time.
No Preferred Stock with superior voting rights is issued and outstanding.
Liquidation Rights. Upon liquidation, dissolution or winding up of the
Company, holders of shares of Common Stock are entitled to share ratably in
distributions of any assets after payment in full or provision for all amounts
due creditors and provision for any liquidation preference of any other class or
series of stock of the Company then outstanding.
Dividends. Dividends may be declared by the Board of Directors and paid
from time to time to the holders of Common Stock, on such record dates as may be
determined by the Board of Directors, out of the net profits or surplus of the
Company.
WARRANTS
All stockholders of the Company hold one Class A Warrant for each common
share acquired by them. Each warrant entitles the holder to purchase one share
of Common Stock for $4.00. If not exercised, Class A Warrants expire in June
1999. If exercised, the holder will receive one Class B Warrant for each Class
A Warrant exercised. Each Class B Warrant entitles the holder to purchase one
share of common stock for $20.00. If not exercised, Class B Warrants expire in
June 2000. At June 30, 1998, there were 4,839,101 Class A Warrants and 160,835
Class B Warrants outstanding.
PREFERRED STOCK
The Board of Directors of the Company has the authority to divide the
Authorized Preferred Stock into series, the shares of each series to have such
relative rights and preferences as shall be fixed and determined by the Board of
Directors. The provisions of a particular series of Authorized Preferred Stock,
as designated by the Board of Directors, may include restrictions on the payment
of dividends on Common Stock. Such provisions may also include restrictions on
the ability of the Company to purchase shares of Common Stock or to purchase or
redeem shares of a particular series of Authorized Preferred Stock. Depending
upon the voting rights granted to any series of Authorized Preferred Stock,
issuance thereof could result in a reduction in the voting power of the holders
of Common Stock. In the event of any dissolution, liquidation
24
<PAGE>
or winding up of the Company, whether voluntary or involuntary, the holders of
each series of the then outstanding Authorized Preferred Stock may be entitled
to receive, prior to the distribution of any asset or funds to the holders of
Common Stock, a liquidation preference established by the Board of Directors,
together with all accumulated and unpaid dividends. Depending upon the
consideration paid for Authorized Preferred Stock, the liquidation preference of
Authorized Preferred Stock and other matters, the issuance of Authorized
Preferred Stock could result in a reduction in the assets available for
distribution to the holders of Common Stock in the event of the liquidation of
the Company.
As of June 30, 1998, the only outstanding Authorized Preferred Stock is (i)
a series of 100,000 authorized shares of Series A Preferred Stock of which
80,000 shares are outstanding and (ii) a series of 350,000 authorized shares of
Series B Preferred Stock, of which all 350,000 shares are outstanding.
Following is a brief summary of certain provisions of each of this Series of
Authorized Preferred Stock.
SERIES A PREFERRED STOCK
Voting Rights. Holders of Series A Preferred Stock have no right to vote
their Shares, except that holders of Series A Preferred Stock, voting as a
separate class by majority vote, must approve any amendment to the Designation
of Rights and Preferences of Series A Preferred Stock, to (i) increase or
decrease the number of authorized shares of Series A Preferred Stock, (ii)
increase or decrease the Issue Price, (iii) effect an exchange, reclassification
or cancellation of all or part of the shares of Series A Preferred Stock, (iv)
effect an exchange, or create a right of exchange, of all or any part of the
shares of another class into shares of Series A Preferred Stock, (v) change the
designations, preferences, limitations, or relative rights of the Series A
Preferred Stock, (vi) change the shares of Series A Preferred Stock into the
shares of another class, or (viii) cancel or otherwise affect accumulated but
undeclared dividends on the Series A Preferred Stock.
Preemptive Rights. No holder of Series A Preferred Stock will be entitled
as a matter of right to subscribe or receive additional shares of any class of
stock of the Company, whether now or hereafter authorized, or any bonds,
debentures or other securities convertible into such stock.
Liquidation Rights. In the event of any liquidation, dissolution or winding
up of the Company, holders of Preferred Stock are entitled to be paid an amount
agreed to $100 per share. Such Preferred Stock before any accounts an
distributed to the holder of this Common Stock.
Conversion Rights. There are no conversion rights for holders of
Preferred Stock.
Dividends. The holders of Preferred Stock are not entitled to receive any
dividends.
Redemption Rights. The Preferred Stock is redeemable by the Company. The
redemption price is $100 per share.
SERIES B PREFERRED STOCK
Voting Rights. Holders of Series B Preferred Stock have no right to vote
their shares, except as mandated by law and except that holders of Series B
Preferred Stock, voting as a separate class by majority vote, must approve any
amendment to the Designation of Rights and Preferences of Series B Preferred
Stock, and any action of the Board of Directors, if such amendment or action
would (i) increase or decrease the number of authorized shares of Series B
Preferred Stock, (ii) increase or decrease the Issue Price (which is $10.00 per
share), (iii) effect an exchange, reclassification or cancellation of all or
part of the shares of Series B Preferred Stock, (iv) effect an exchange, or
create a right of exchange, of all or any part of the shares of another class
into shares of Series B Preferred Stock, (v) change the designations,
preferences, limitations, or relative rights of the Series B Preferred Stock,
(vi) change the shares of Series B Preferred Stock into the shares of another
class, or (viii) cancel or otherwise affect accumulated but undeclared dividends
on the Series B Preferred Stock.
Preemptive Rights. No holder of Series B Preferred Stock is entitled as a
matter of right to subscribe or receive additional shares of any class of stock
of the Company or any bonds, debentures or other securities convertible into
such stock.
25
<PAGE>
Liquidation Rights. In the event of any liquidation, dissolution or winding
up of the Company, holders of Series B Preferred Stock are entitled to be paid
an amount per share equal to the Issue Price, plus any accumulated and unpaid
dividends, prior to any payments or distributions to the holders of Common
Stock, but on a pro rata basis with holders of Series A Preferred Stock.
Conversion Rights. Each share of Series B Preferred Stock is convertible,
at the option of the holder thereof at any time prior to redemption, into that
number of shares of Common Stock (the "Conversion Rate") determined by dividing
the Issue Price by the lesser of (i) $3.24375 or (ii) 80% of the average closing
bid price of the Common Stock in the over-the-counter market for the five
trading days preceding the date upon which notice of conversion is given. The
number of shares issuable upon conversion is also subject to certain anti-
dilution adjustments for stock splits and combinations, reclassifications and
mergers, consolidations or sales of all or substantially all of the assets of
the Company.
Dividends. The holders of Series B Preferred Stock are entitled to receive
annual dividends in the amount of 5% of the Issue Price, payable quarterly in
cash or, at the option of the Company, in shares of Common Stock at the rate
equal to the Conversion Rate. Dividends are payable monthly and no dividend or
other distribution shall be paid on shares of Common Stock or any other class of
stock or series of Preferred Stock ranking equal or junior to the Series B
Preferred Stock until all cumulative dividends have been paid.
Redemption Rights. The Series B Preferred Stock is redeemable by the
Company so long as all dividends on Series B Preferred Stock have been paid or
set apart for payment. The redemption price per share is 120% of the Issue
Price of the shares redeemed, plus the amount of any unpaid accumulated
dividends to the date of redemption. Any record holder of Series B Preferred
Stock may convert such Series B Preferred Stock into Common Stock prior to such
date of redemption by delivering written notice to the Company of such holder's
election to convert all or a portion of such shares.
CERTAIN RIGHTS OF HOLDERS OF COMMON STOCK
The Company is a Nevada corporation organized under Chapter 78 of the
Nevada Revised Statutes ("NRS"). Accordingly, the rights of the holders of
Common Stock are governed by Nevada law. Moreover, the rights of holders of
Common Stock differ from the rights of such holders of equity in the corporation
or other entity acquired by virtue of different provisions appearing in the
Articles of Incorporation ("Articles") and bylaws of the Company. Although it
is impracticable to set forth all of the material provisions of the NRS or the
Company's Articles and bylaws, the following is a summary of certain significant
provisions of the NRS and/or the Company's Articles and bylaws that affect the
rights of securities holders.
POSSIBLE ANTI-TAKEOVER PROVISIONS
Special Meetings of Stockholders; Director Nominees. The Company's bylaws
and Articles provide that special meetings of stockholders may be called by
stockholders only if the holders of at least 66-2/3% of the Common Stock join in
such action. The bylaws and Articles also provide that stockholders desiring to
nominate a person for election to the Board of Directors must submit their
nominations to the Company at least 60 days in advance of the date on which the
last annual stockholders' meeting was held, and provide that the number of
directors to be elected (within the minimum -maximum range of 3-21 set forth in
the Articles and bylaws) shall be determined by the Board of Directors or by the
holders of at least 66 2/3% of the Common Stock. While these provisions of the
Articles and bylaws have been established to provide a more cost-efficient
method of calling special meetings of stockholders and a more orderly and
complete presentation and consideration of stockholder nominations, they could
have the effect of discouraging certain stockholder actions or opposition to
candidates selected by the Board of Directors and provide incumbent management a
greater opportunity to oppose stockholder nominees or hostile actions by
stockholders. The affirmative vote of holders of at least 66-2/3% of the Common
Stock is necessary to amend, alter or adopt any provision inconsistent with or
repeal any of these provisions.
Removal of Directors. The Articles of the Company provide that directors
may be removed from office only for "cause" by the affirmative vote of holders
of at least 66 2/3% of the Common Stock. "Cause" means proof beyond the
existence of a reasonable doubt that a director has been convicted of a felony,
committed gross negligence or willful misconduct resulting in a material
detriment to the Company, or committed a material breach of such director's
fiduciary duty to the Company resulting in a material detriment to the Company.
The inability to remove directors except for "cause"
26
<PAGE>
could provide incumbent management with a greater opportunity to oppose hostile
actions by stockholders. The affirmative vote of holders of at least 66 2/3% of
the Common Stock is necessary to amend, alter or adopt any provision
inconsistent with or repeal this provision.
Control Share Statute. Sections 78.378 - 78.3793 of the NRS constitute
Nevada's control share statute, which set forth restrictions on the acquisition
of a controlling interest in a Nevada corporation which does business in Nevada
(directly or through an affiliated corporation) and which has 200 or more
stockholders, at least 100 of whom are stockholders of record and residents of
Nevada. A controlling interest is defined as ownership of Common Stock
sufficient to enable a person directly or indirectly and individually or in
association with others to exercise voting power over at least 20% but less than
33.3% of the Common Stock, or at least 33.3% but less than a majority of the
Common Stock, or a majority or more of the Common Stock. Generally, any person
acquiring a controlling interest must request a special meeting of stockholders
to vote on whether the shares constituting the controlling interest will be
afforded full voting rights, or something less. The affirmative vote of the
holders of a majority of the Common Stock, exclusive of the control shares, is
binding. If full voting rights are not granted, the control shares may be
redeemed by the Company under certain circumstances. If full voting rights are
granted, stockholders voting against such rights being granted may demand
payment from the Company for the fair value of their shares. The Board of
Directors may adopt a resolution amending the Bylaws within ten days following
the acquisition of any controlling interest to provide that the foregoing
provisions shall not be applicable to such acquisition. The Company does not
believe the foregoing provisions of the NRS is presently applicable to it
because it does not presently conduct business in Nevada; however, if in the
future it does conduct business in Nevada then such provisions may apply.
Business Combination Statute. Sections 78.411 - 78.444 of the NRS set
forth restrictions and prohibitions relating to certain business combinations
and prohibitions relating to certain business combinations with interested
stockholders. These Sections generally prohibit any business combination
involving the Company and a person that beneficially owns 10% or more of the
Common Stock (an "Interested Stockholder") (I) within five years after the date
(the "Acquisition Date") the Interested Stockholder became an Interested
Stockholder, unless, prior to the Acquisition Date, the Company's Board of
Directors had approved the combination or the purchase of shares resulting in
the Interested Stockholder becoming an Interested Stockholder; or (ii) unless
five years have elapsed since the Acquisition Date and the combination has been
approved by the holders of a majority of the Common Stock not owned by the
Interested Stockholder and its affiliates and associates; or (iii) unless the
holders of Common Stock will receive in such combination, cash and/or property
having a fair market value equal to the higher of (a) the market value per share
of Common Stock on the date of announcement of the combination or the
Acquisition Date, whichever is higher, plus interest compounded annually through
the date of consummation of the combination less the aggregate amount of any
cash dividends and the market value of other dividends, or (b) the highest price
per share paid by the Interested Stockholder for shares of Common Stock acquired
at a time when he owned 5% or more of the outstanding shares of Common Stock and
which acquisition occurred at any time within five years before the date of
announcement of the combination or the Acquisition Date, whichever results in
the higher price, plus interest compounded annually from the earliest date on
which such highest price per share was paid less the aggregate amount of any
cash dividends and the market value of other dividends. For purposes of these
provisions, a "business combination" is generally defined to include (I) any
merger or consolidation of the Company or a subsidiary with or into an
Interested Stockholder or an affiliate or associate; (ii) the sale, lease or
other disposition by the Company to an Interested Stockholder or an affiliate or
associate of assets of the Company representing 5% or more of the value of its
assets on a consolidated basis or 10% or more of its earning power or net
income; (iii) the issuance by the Company of any of its securities to an
Interested Stockholder or an affiliate or associate having an aggregate market
value equal to 5% or more of the aggregate market value of all outstanding
shares of the Company; (iv) the adoption of any plan to liquidate or dissolve
the Company proposed by or under an agreement with the Interested Stockholder or
an affiliate or associate; (v) any receipt by the Interested Stockholder or an
affiliate, except proportionately as a stockholder, of any loan, advance,
guarantee, pledge or other financial assistance or tax credit or other tax
advantage; and (vi) any recapitalization or reclassification of securities or
other transaction that would increase the proportionate shares of outstanding
securities owned by the Interested Stockholder or an affiliate. Sections 78.411
- - 78.444 of the NRS are presently applicable to the Company.
Special Meetings. The Company's bylaws and Articles provide that special
meetings of the stockholders of the Company may be called by the Chairman of the
Board, the Board of Directors or upon written request of stockholders holding
not less than 66 2/3% of the Common Stock.
Mergers, Consolidations and Sales of Assets. Nevada law provides that an
agreement of merger or consolidation, or the sale or other disposition of all or
substantially all of a corporation's assets, must be approved by the affirmative
vote
27
<PAGE>
of the holders of a majority of the voting power of the corporation (except that
no vote of the stockholders of the surviving corporation is required to approve
a merger if certain conditions are met, unless the articles of incorporation of
such corporation states otherwise, and except that no vote of stockholders is
required for certain mergers between a corporation and a subsidiary), but does
not require the separate vote of each class of stock unless the corporation's
articles of incorporation provides otherwise (except that class voting is
required in a merger if shares of the class are being exchanged or if certain
other rights of the class are affected). The Company's Articles do not alter the
provisions of Nevada law.
Directors; Removal of Directors. Under Nevada law, the number of directors
may be fixed by, or determined in the manner provided in, the articles of
incorporation or by-laws, and the Board of Directors may be divided into classes
as long as at least 25% in number of the directors are elected annually. Nevada
law further requires that a corporation have at least one director. Directors
may be removed under Nevada law with or without cause by the holders of not less
than two-thirds of the voting power of the corporation, unless a greater
percentage is set forth in the articles of incorporation. See "-Possible Anti-
Takeover Provisions - Removal of Directors" and "---Classification of
Directors", above, for a further discussion.
Amendments to Bylaws. The Company's bylaws may be amended by the Board of
Directors or stockholders, provided, however that certain provisions can only be
amended by the affirmative vote of holders of at least 66 2/3% of the Common
Stock. These provisions relate to special meetings of stockholders, actions by
written consent of stockholders, nomination of directors by stockholders,
proceedings for the conduct of stockholder's meetings and the procedures for
fixing the number of and electing directors.
LIMITATION ON LIABILITY OF DIRECTORS
Section 78.037 of the NRS provides that a Nevada corporation may limit the
personal liability of a director or officer to the corporation or its
stockholders for breaches of fiduciary duty, except that such provision may not
limit liability for acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law, or payment of dividends or other
distributions in violation of the NRS. The Company's Articles provide that no
director shall be personally liable to the Company or its stockholders for
monetary damages or breach of fiduciary duty as a director, except for liability
(I) for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involved
intentional misconduct or a knowing violation of law, (iii) liability under the
NRS, or (iv) for any transaction from which the director derived an improper
personal benefit.
In the opinion of the Securities and Exchange Commission, the
indemnification and limitation of liability provisions described in "--
Indemnification of Directors and Officers", above, and "-- Limitation on
Liability of Directors" would not eliminate or limit the liability of directors
and officers under the federal securities laws.
APPRAISAL RIGHTS
The NRS provides dissenting or objecting security holders with the right to
receive the fair value of their securities in connection with certain
extraordinary corporate transactions. These appraisal rights are available with
respect to certain mergers and share exchanges and in connection with the
granting of full voting rights to control shares acquired by an interested
stockholder. However, unless the transaction is subject to the control share
provisions of the NRS, a stockholder of a Nevada corporation may not assert
dissenters' rights, in most cases, if the stock is listed on a national
securities exchange or held by at least 2,000 stockholders of record (unless the
articles of incorporation expressly provide otherwise or the security holders
are required to exchange their shares for anything other than shares of the
surviving corporation or another publicly held corporation that is listed on a
national securities exchange or held of record by more than 2,000 stockholders).
DISTRIBUTIONS
Dividends and other distributions to security holders are permitted under
the NRS as authorized by a corporation's articles of incorporation and its board
of directors if, after giving effect to the distribution, the corporation would
be able to pay its debts as they become due in the usual course of business and
the corporation's total assets would exceed the sum of its total liabilities
plus (unless the articles of incorporation provide otherwise) the amount needed
to satisfy the preferential rights on dissolution of holders of stock whose
preferential rights are superior to those of the shares receiving the
distribution.
28
<PAGE>
PREEMPTIVE RIGHTS
Under the NRS, stockholders of Nevada corporations organized prior to
October 1, 1991 have preemptive rights unless the articles of incorporation
expressly deny those rights or the stock issuance is among those described in
Section 78.265 of the NRS. A stockholder who has preemptive rights is entitled,
on terms and conditions prescribed by the board of directors, to acquire
proportional amounts of the corporation's unissued or treasury shares in most
instances in which the board has decided to issue them. The Company's Articles
expressly deny availability of preemptive rights to the Company's stockholders.
CUMULATIVE VOTING
Under the NRS, the articles of incorporation of a corporation may provide
for cumulative voting, which means that the stockholders are entitled to
multiply the number of votes they are entitled to cast by the number of
directors for whom they are entitled to vote and then cast the product for a
single candidate or distribute the product among two or more candidates.
Cumulative voting is not available to stockholders of a Nevada corporation,
however, unless its articles expressly provide for that voting right, and the
Company's Articles do not contain a provision permitting stockholders to
cumulate their votes when electing directors.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered by this
Prospectus will be passed upon for the Company by Glast, Phillips & Murray, a
Professional Corporation, Dallas, Texas. Ronald L. Brown, an attorney with Glast
Phillips & Murray, is a director of the Company and owns 50,000 shares of Common
Stock.
EXPERTS
The consolidated financial statements of the Company as of June 30, 1998
and 1997 and for the years then ended, as listed below, included in this
Prospectus and the Registration Statement have been included herein in reliance
upon the report of Grant Thornton LLP, independent certified public accountants,
given on the authority of said firm as an expert in auditing and accounting.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Certified Public Accountants.................................. F-1
Consolidated Balance Sheets as of June 30, 1998 and June 30, 1997................... F-2
Consolidated Statements of Operations for the years ended June 30, 1998 and 1997.... F-3
Consolidated Statement of Stockholders' Equity (Deficit) for the years ended
June 30, 1998 and 1997.............................................................. F-4
Consolidated Statements of Cash Flows for the years ended June 30, 1998 and 1997.... F-5
Notes to Consolidated Financial Statements.......................................... F-6
Pro Forma Financial Statements...................................................... F-15
Pro Forma Balance Sheet as of June 30, 1998......................................... F-16
Pro Forma Statement of Operations for the year ended June 30, 1998.................. F-17
Notes to Pro Forma Financial Statements............................................. F-18
</TABLE>
29
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Voxcom Holdings, Inc.
We have audited the accompanying consolidated balance sheets of Voxcom Holdings,
Inc. and Subsidiaries as of June 30, 1998 and 1997, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly, in
all material respects, the consolidated financial position of Voxcom Holdings,
Inc., and Subsidiaries as of June 30, 1998 and 1997, and the consolidated
results of their operations and their consolidated cash flows for the years then
ended, in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Dallas, Texas
September 18, 1998
F-1
<PAGE>
VOXCOM HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and 1997
<TABLE>
<CAPTION>
ASSETS 1998 1997
------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,827,302 $ 375,687
Accounts receivable, net of allowance for doubtful
accounts of $36,000 at June 30, 1998 398,720 41,618
Inventories 762,100 363,409
Prepaid expenses 374,425 -
------------ -----------
TOTAL CURRENT ASSETS 3,362,547 780,714
PROPERTY AND EQUIPMENT, AT COST
Machinery and equipment 852,272 323,606
Furnishings 317,089 103,281
------------ -----------
1,169,361 426,887
Less accumulated depreciation 320,331 117,895
------------ -----------
849,030 308,992
OTHER ASSETS 1,784,374 222,735
------------ -----------
$ 5,995,951 $ 1,312,441
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Current maturities of notes payable to stockholders $ - $ 5,000,000
Current maturities of other notes payable 37,076 -
Accounts payable 1,542,184 536,953
Accrued expenses 1,242,933 261,092
------------ -----------
TOTAL CURRENT LIABILITIES 2,822,193 5,798,045
LONG-TERM DEBT 418,469 4,640,000
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.0001 par value; Series A, authorized, 100,000
shares; issued and outstanding, 80,000 shares 8,000,000 -
Preferred stock, $.0001 par value; Series B convertible, authorized,
issued and outstanding, 350,000 shares 3,500,000 -
Common stock, $.0001 par value; authorized, 25,000,000 shares;
issued and outstanding, 6,085,772 at June 30, 1998 and
4,999,937 shares at June 30, 1997 609 500
Additional paid-in capital 1,479,691 -
Accumulated deficit (10,225,011) (9,126,104)
------------ -----------
2,755,289 (9,125,604)
------------ -----------
$ 5,995,951 $ 1,312,441
============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
Voxcom Holdings, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Net sales $21,255,098 $13,420,766
Cost of sales 2,621,075 1,883,107
----------- -----------
Gross profit 18,634,023 11,537,659
Selling, general and administrative expenses 19,636,213 8,375,352
----------- -----------
Operating profit (loss) (1,002,190) 3,162,307
Interest expense 148,975 44,247
----------- -----------
Earnings (loss) before income taxes (1,151,165) 3,118,060
Income tax expense (benefit) (52,258) 194,541
----------- -----------
Net earnings (loss) $(1,098,907) $ 2,923,519
=========== ===========
Earnings (loss) per share - basic and diluted $(.20) $.58
=========== ===========
Weighted average shares outstanding 5,516,228 4,999,937
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
Voxcom Holdings, Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Years ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
Series A Series B
Common stock Preferred stock Preferred stock Additional
------------------- ------------------ -------------------- paid-in Accumulated
Shares Amount Shares Amount Shares Amount capital deficit Total
--------- -------- ------ ---------- ------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at July 1, 1996 100,000 $1,000 - $ - - $ - $ 1,294,000 $ (1,424,123) $ (129,123)
Reorganization (Note A)
Merger of Voxcom Holdings,
Inc. and Voxcom Systems,
Inc. 4,899,937 (500) - - - - (1,294,000) 1,294,500 -
Notes issued for
acquisition of AmeraPress,
Inc. - - - - - - - (10,000,000) (10,000,000)
Distributions to
stockholders - - - - - - - (1,920,000) (1,920,000)
Net earnings for the year - - - - - - - 2,923,519 2,923,519
--------- ------ ------ ---------- ------- ---------- ------------ ------------ ------------
Balances at June 30, 1997 4,999,937 500 - - - - - (9,126,104) (9,125,604)
Issuance of common stock 925,000 93 - - - - 1,449,907 - 1,450,000
Sale of preferred stock - - - - 350,000 3,500,000 (613,540) - 2,886,460
Exercise of warrants 160,835 16 - - - - 643,324 - 643,340
Conversion of debt - - 80,000 8,000,000 - - - - 8,000,000
Net loss for the year - - - - - - - (1,098,907) (1,098,907)
--------- ------ ------ ---------- ------- ---------- ------------ ------------ ------------
Balances at June 30, 1998 6,085,772 $ 609 80,000 $8,000,000 350,000 $3,500,000 $1,479,691 $(10,225,011) $ 2,755,289
========= ====== ====== ========== ======= ========== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
F-4
<PAGE>
VOXCOM HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
----------- ----------
<S> <C> <C>
Cash flows from operating activities
Net earnings (loss) $(1,098,907) $ 2,923,519
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 202,443 71,489
Change in prepaid operating assets and liabilities, net
of effects of acquisition of business
Prepaid expenses (60,175) 65,288
Accounts receivable (196,652) 258,085
Inventories (398,691) (303,459)
Other assets (111,639) (67,898)
Accounts payable and accrued expenses 793,516 343,786
----------- -----------
Net cash provided by (used in)
operating activities (870,105) 3,290,810
Cash flows from investing activities
Purchase of property and equipment (637,590) (263,978)
Cash received from business acquired 613,965 -
----------- -----------
Net cash used in investing activities (23,625) (263,978)
Cash flows from financing activities
Payments on notes payable to stockholders (1,640,000) (760,000)
Borrowings on long-term debt 455,545 -
Exercise of warrants 643,340 -
Sale of preferred stock 2,886,460 -
Distributions to stockholders - (1,920,000)
----------- -----------
Net cash provided by (used in) financing
activities 2,345,345 (2,680,000)
----------- -----------
Net increase in cash 1,451,615 346,832
Cash and cash equivalents at beginning of year 375,687 28,855
----------- -----------
Cash and cash equivalents at end of year $ 1,827,302 $ 375,687
=========== ===========
Cash paid during the year for:
Interest $ 69,273 $ -
Income taxes - -
</TABLE>
F-5
<PAGE>
VOXCOM HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Years ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----
<S> <C> <C>
Noncash financing activities:
Conversion of notes payable to stockholders into
80,000 shares of preferred stock, Series A $8,000,000 $ -
========== =====
Issuance of common stock for services and noncompetition agreements $ 925,000 $ -
========== =====
Issuance of common stock for technology $ 525,000 $ -
========== =====
Acquisition of business
Fair value of assets acquired $1,193,556
Liabilities assumed 1,193,556
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
VOXCOM HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998 and 1997
NOTE A - BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Voxcom Holdings,
Inc. (Holdings) and its subsidiaries, Voxcom Systems, Inc. (Systems),
AmeraPress, Inc. (AmeraPress), Home Business Group, Inc. (HBG), and MAXpc
Technologies, Inc., (MAXpc), collectively, "the Company."
Holdings, formerly Newcorp One, Inc., was incorporated in 1996. On June 17,
1997, Holdings, which had no operations and no significant assets or
liabilities, issued 4,000,000 shares of its common stock (equal to 80% of its
then outstanding shares) for all of the outstanding capital stock of Systems.
Since the stockholders of Systems owned 80% of the common stock of Holdings
after the sale of Systems, Systems is deemed to be the acquiring corporation
for accounting purposes. Concurrent with the above transactions, Holdings
acquired all of the outstanding common stock of AmeraPress in exchange for a
$10,000,000 note, payable in 24 equal monthly installments. AmeraPress was
incorporated on June 19, 1997 and succeeded to the business of Voxcom Sales,
L.L.C. (Voxcom Sales).
Voxcom Sales and Systems were under common control. Accordingly, the financial
statements include the accounts on a historical cost basis of Systems and
Voxcom Sales/AmeraPress for all periods presented. The $10,000,000 note given
in the acquisition of AmeraPress has been deemed a distribution to the
shareholders of AmeraPress for accounting purposes and resulted in a charge to
stockholders' equity of a like amount.
HBG and MAXpc, both wholly-owned subsidiaries, were acquired on October 1,
1997, and April 13, 1998, respectively.
The financial statements include the operations of Systems and Voxcom Sales
from July 1, 1996, AmeraPress and Holdings from June 17, 1997, and HBG and
MAXpc from the dates of acquisition.
NOTE B - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Business
AmeraPress sells materials to home-based businesses and produces laminated,
customized sports, trading, and greeting cards sold by those businesses. HBG
conducts seminars and sells introductory kits to home-based businesses.
Systems sells and provides services related to credit card verification units
for merchants. MAXpc has the exclusive manufacturing and marketing rights to
certain multi-media computer cards providing both hardware and software for
inclusion in either new or existing computers.
Advertising Costs
The Company charges advertising costs to expense when incurred. Advertising
costs for the years ended June 30, 1998 and 1997 were approximately $189,000
and $213,000, respectively.
F-7
<PAGE>
VOXCOM HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1998 and 1997
NOTE B - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks and all highly liquid
investments with maturities of three months or less when purchased.
Inventories
Inventories consist principally of finished goods and are stated at the lower
of cost or market; cost is determined using the first-in, first-out method.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed on a
straight-line basis over the estimated lives of the individual assets, ranging
from three to 15 years.
Intangible Assets
Purchased technology is being amortized over 7 years and noncompetition
agreements are being amortized over their terms which range from 32 to 60
months.
Revenue Recognition
Sales of products and services are recorded as products are shipped or services
are rendered.
Earnings (Loss) Per Share
The Company adopted Statement of Financial Accounting Standards No. 128 (SFAS
No. 128) during the year ended June 30, 1998. In accordance with SFAS No. 128,
the Company computes basic earnings or loss per share based on the weighted
average number of common shares outstanding. Diluted earnings per share is
computed based on the weighted average number of common shares outstanding plus
the number of additional common shares that would have been outstanding if
dilutive potential common shares, consisting of stock purchase warrants and
convertible debt and preferred stock, had been issued or converted. For all
periods presented, there was no dilutive effect from these securities.
The computation of weighted average shares outstanding gives retroactive effect
to the shares issued by Holdings in the acquisition of Systems (Note A).
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-8
<PAGE>
VOXCOM HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1998 and 1997
NOTE C - ACQUISITION OF BUSINESSES
Effective October 1, 1997, the Company acquired certain assets and assumed the
liabilities of a company engaged in the business of home-based business
seminars for no consideration. A major stockholder and officer of the acquired
business is a stockholder and officer of the Company. The acquisition was
accounted for as a purchase, and the financial statements include the
operations of the acquired business since October 1, 1997.
The following unaudited pro forma data presents combined net sales and net
earnings (loss) assuming the acquisition had taken place at the beginning of
fiscal 1997.
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Net sales $23,701,039 $21,968,000
Net earnings (loss) (611,116) 2,895,000
Earnings (loss) per share (.11) .58
</TABLE>
On April 13, 1998, the Company acquired all of the issued and outstanding
shares of MAXpc Technologies, Inc., in consideration for 210,000 shares of
common stock. The acquisition was accounted for as a purchase and the
financial statements include operations since April 13, 1998.
MAXpc had no operations, assets, or liabilities prior to its acquisition by the
Company.
NOTE D - OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
June 30, June 30,
1998 1997
---------- ---------
<S> <C> <C>
Deposits $495,073 $221,689
Noncompetition agreements 362,180 -
Purchased technology 517,708 -
Consulting agreement 252,083 -
Other 157,330 1,046
---------- --------
$1,784,374 $222,735
========== ========
</TABLE>
Purchased technology arose out of the acquisition of MAXpc on April 13, 1998.
F-9
<PAGE>
VOXCOM HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1998 and 1997
NOTE E - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
June 30, June 30,
1998 1997
---------- ----------
<S> <C> <C>
Notes payable to stockholders, interest at prime rate (8.5%
at June 30, 1997), principal and interest are due June 11,
2001, collateralized by all outstanding shares of AmeraPress $ - $9,640,000
Convertible debentures, interest at 5%, paid quarterly;
principal and accrued interest are due May 31, 2000 400,000 -
Other notes payable 55,545 -
---------- ----------
455,545 9,640,000
Less current portion 37,076 5,000,000
---------- ----------
Long-term debt $ 418,469 $4,640,000
========== ==========
</TABLE>
The debentures are convertible into common shares of Holdings at a conversion
price equal to the lower of (1) $3.24375 per share or (2) 80% of the closing
bid price for the five days preceding conversion.
The maturities of long-term debt are as follows:
Year ended
June 30,
-------------
1999 $ 37,076
2000 418,469
-------
$ 455,545
=======
NOTE F - FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of cash and cash equivalents, notes payable and convertible
debentures approximate carrying value.
F-10
<PAGE>
VOXCOM HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1998 and 1997
NOTE G - LEASE COMMITMENTS
The Company leases office and warehouse space and equipment under various
noncancellable lease agreements. Total rent expense was $466,179 and $180,097
for the years ended June 30, 1998 and 1997, respectively. As of June 30, 1998,
the future minimum rental payments are as follows:
Year ending
June 30,
-------------
1999 $524,433
2000 471,638
2001 462,126
2002 360,446
2003 267,384
----------
$2,086,027
==========
NOTE H - INCOME TAXES
The current income tax (benefit) expense for the years ended June 30, 1998 and
1997, consists of the following:
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Federal $ (52,258) $ 52,258
State - 142,283
----------- -----------
$ (52,258) $ 194,541
=========== ===========
</TABLE>
The deferred tax assets consisted of the following:
<TABLE>
<CAPTION>
June 30,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Deferred tax assets
Goodwill $ 3,453,334 $ 3,700,000
Accrued expenses 45,861 -
Noncompetition agreement 39,814 -
Net operating loss carryover 525,000 -
----------- -----------
Total deferred tax assets 4,064,009 3,700,000
Valuation allowance (4,064,009) (3,700,000)
----------- -----------
Net deferred tax assets $ - $ -
=========== ===========
</TABLE>
F-11
<PAGE>
VOXCOM HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1998 and 1997
NOTE H - INCOME TAXES - CONTINUED
The Company has provided a valuation allowance against deferred tax assets
because their recovery is uncertain. The goodwill relates to the consideration
of $10,000,000 given in the acquisition of AmeraPress (Note A) which, for
financial statement purposes, was charged to stockholders' equity. The tax
benefit related to goodwill will be credited to stockholders' equity upon
utilization.
Voxcom Sales, the predecessor to AmeraPress, was a limited liability company.
Therefore, federal income taxes on its earnings (year ended June 30, 1997) were
the liability of its stockholders. Following is a reconciliation of income
taxes at the federal statutory rate to income tax expense:
<TABLE>
<CAPTION>
June 30,
-----------------------
1998 1997
---------- -----------
<S> <C> <C>
Tax expense (benefit) at statutory rate $(391,396) $1,060,141
Earnings of Voxcom Sales, not subject to Federal tax - (838,629)
State income tax, net of Federal benefit - 131,646
Benefit of utilization of net operating loss carryovers of Systems - (157,155)
Change in valuation allowance 364,009 -
Other (24,871) (1,462)
--------- ----------
Income tax (benefit) expense $ (52,258) $ 194,541
========= ==========
</TABLE>
At June 30, 1998, the Company had net operating loss carryovers of
approximately $1,400,000.
NOTE I - STOCK PURCHASE WARRANTS
All stockholders of Holdings were given one Class A warrant for each common
share acquired by them. Each warrant entitles the holder to purchase one share
of common stock for $4.00. If not exercised, warrants expire in June 1999. If
exercised, the holder will receive one Class B warrant for each Class A
warrant. Each Class B warrant entitles the holder to purchase one share of
common stock for $20.00 and expires in June 2000.
At June 30, 1998, there were 4,839,101 and 160,835 Class A and Class B warrants
outstanding, respectively.
F-12
<PAGE>
VOXCOM HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1998 and 1997
NOTE J - INDUSTRY SEGMENTS
The Company operates in two industry segments, as described in Note B.
Financial information by segment as of June 30, 1998 and for the year then
ended is as follows:
<TABLE>
<CAPTION>
Home-based business
------------------------- Credit card Corporate
Seminars Printing verification and other Consolidated
------------ ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $ 8,174,984 $11,456,254 $1,613,124 $ 10,736 $21,255,098
=========== =========== ========== ========== ===========
Operating income (loss) $(1,103,442) $ 424,150 $ (220,604) $ - $ (899,896)
Corporate expenses - - - (251,269) (251,269)
----------- ----------- ---------- ---------- -----------
Earnings (loss) before income
taxes $(1,103,442) $ 424,150 $ (220,604) $ (251,269) $(1,151,165)
=========== =========== ========== ========== ===========
Identifiable assets $ 751,331 $ 3,200,555 $ 231,064 $1,813,001 $ 5,995,951
=========== =========== ========== ========== ===========
Capital expenditures $ 257,040 $ 467,911 $ 6,407 $ 11,123 $ 742,481
=========== =========== ========== ========== ===========
</TABLE>
Financial information by segment as of June 30, 1997 and for the year then
ended is as follows:
<TABLE>
<CAPTION>
Home-based
business- Credit card
printing verification Corporate Consolidated
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $12,008,786 $1,411,980 $ - $13,420,766
=========== ========== ========= ===========
Operating income $ 2,700,086 $ 462,221 $ - $ 3,162,307
Corporate expenses - - (44,247) (44,247)
----------- ---------- --------- -----------
Earnings before income taxes $ 2,700,086 $ 462,221 $(44,247) $ 3,118,060
=========== ========== ========= ===========
Identifiable assets at June 30, 1997 $ 1,168,394 $ 144,047 $ - $ 1,312,441
=========== ========== ========= ===========
Capital expenditures $ 250,208 $ 13,770 $ - $ 263,978
=========== ========== ========= ===========
</TABLE>
F-13
<PAGE>
VOXCOM HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1998 and 1997
NOTE K - FEDERAL TRADE COMMISSION SETTLEMENT
In April 1998, the Company and the Federal Trade Commission (FTC) agreed to a
compromise and settlement of a lawsuit filed by the FTC in February 1998. The
FTC had alleged violations of the FTC Act in connection with the Company's
business of marketing sales opportunities for home-based businesses.
The agreement resulted in refunds by the Company to distributors in the amount
of approximately $145,000 which were due at the time the lawsuit was filed,
plus an additional $320,000 which arose during the FTC's investigation after
the lawsuit was filed. The Company believes that many of the distributors were
led to believe during the investigation that the Company was being closed. The
Company has a policy of making refunds to distributors for a period of ten days
after receipt of goods.
Legal and professional fees in connection with this matter were approximately
$800,000.
NOTE L - CONTINGENCIES
At June 30, 1998, the Company was involved in litigation arising in the normal
course of business. Management believes that the ultimate resolution will not
have a material effect on financial position, results of operations or cash
flows.
F-14
<PAGE>
Unaudited Pro Forma Condensed Financial Statements
June 30, 1998 and the year then ended
The following unaudited pro forma condensed financial statements give effect to
the disposition of Home Business Group, Inc. (HBG) as if it had been consummated
(1) on June 30, 1998, in the case of the pro forma balance sheet and (2) on
October 1, 1997 (the date the Company acquired HBG) in the case of the pro forma
statement of operations. The sale of HBG and the related adjustments are
described in the accompanying notes. In the opinion of management, all
adjustments have been made that are necessary to present fairly the pro forma
data.
The unaudited pro forma financial statements are presented for illustrative
purposes only and are not necessarily indicative of future operating results or
financial position of the Company. These pro forma financial statements should
be read in conjunction with the historical financial statements of the Company
included elsewhere herein.
F-15
<PAGE>
Unaudited Pro Forma Condensed Balance Sheet
June 30, 1998
ASSETS
<TABLE>
<CAPTION>
Voxcom Pro forma
Holdings, Inc. adjustments Pro forma
--------------- ------------ -----------
(Note B)
<S> <C> <C> <C>
Cash and cash equivalents $1,827,302 $ (73,906)(1) $1,753,396
Accounts receivable 398,720 (120,864)(1) 277,856
Inventories 762,100 (9,633)(1) 752,467
Prepaid expenses 374,425 (262,386)(1) 112,039
Property assets, net 849,030 (220,899)(1) 628,131
Other assets 1,784,374 (63,643)(1) 1,560,731
(160,000)(2)
---------- ---------- ----------
Total assets $5,995,951 $(911,331) $5,084,620
========== ========== ==========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Current maturities of notes payable $ 37,076 $ - $ 37,076
Accounts payable 1,542,184 (897,221)(1) 644,963
Accrued expenses 1,242,933 (800,942)(1) 441,991
Long-term debt 418,469 - 418,469
---------- ---------- ----------
Total liabilities 3,240,662 (1,698,163) 1,542,499
Treasury stock - (210,000)(2) (210,000)
Stockholders' equity 2,755,289 946,832 (1) 3,752,121
210,000 (2)
(160,000)(2)
---------- ---------- ----------
Total liabilities and stockholders'
equity $5,995,951 $ (911,331) $5,084,620
========== ========== ==========
</TABLE>
F-16
<PAGE>
Unaudited Pro Forma Condensed Statement of Operations
Year ended June 30, 1998
<TABLE>
<CAPTION>
Voxcom Pro forma
Holdings, Inc. adjustments Pro forma
-------------- ------------ -----------
(Note B)
<S> <C> <C> <C>
Net sales $21,255,098 $(8,174,984)(3) $13,080,114
Cost of sales 2,621,075 (308,911)(3) 2,312,164
----------- ----------- -----------
Gross profit 18,634,023 (7,866,073) 10,767,950
Selling, general and administrative expenses 19,636,213 (8,969,515)(3) 10,666,698
----------- ----------- -----------
Operating profit (loss) (1,002,190) 1,103,442 101,252
Interest expense 148,975 - 148,975
----------- ----------- -----------
Loss before income taxes (1,151,165) 1,103,442 (47,723)
Income tax benefit (52,258) 35,258 (3) (17,000)
----------- ----------- -----------
Net loss $(1,098,907) $ 1,068,184 $ (30,723)
=========== =========== ===========
</TABLE>
F-17
<PAGE>
Notes to Unaudited Pro Forma Condensed Financial Statements
June 30, 1998 and the year then ended
NOTE A - SALE OF HOME BUSINESS GROUP, INC.
Effective October 1, 1997, Home Business Group, Inc., a subsidiary of the
Company, acquired the assets and liabilities of a home-based business seminar
company. Effective September 30, 1997, the Company sold the common stock of
Home Business Group, Inc. for 200,000 shares of the Company's common stock. In
connection with the sale, a noncompetition agreement between the Company and
management of the purchaser was cancelled.
NOTE B - PRO FORMA ADJUSTMENTS
The accompanying pro forma financial statements reflect the following pro forma
adjustments:
(1) To eliminate the assets and liabilities of Home Business Group, Inc.,
(2) To reflect consideration received of $210,000 and write-off of
noncompetition agreement in the amount of $160,000, and
(3) To eliminate the income and expenses of Home Business Group, Inc.
F-18
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada Revised Statutes ("NRS") provides broad
authority for indemnification of directors and officers. The Articles of
Incorporation of Voxcom Holdings, Inc. (the "Registrant" or the "Company")
provide for indemnification of its officers and directors to the fullest extent
permitted by the NRS.
As permitted by Section 78.037 of the NRS, the Registrant's Articles of
Incorporation provide that a director shall not be liable for monetary damages
for breach of his fiduciary duty as a director except in certain limited
circumstances.
Each Selling Stockholder has agreed to indemnify the Registrant, the
officers and directors and controlling persons of the Registrant, and the
employees of the Registrant who sign the Registration Statement against certain
liabilities incurred in connection with this offering as the result of claims
made under the Securities Act of 1933 (the "Securities Act"), the Securities
Exchange Act of 1934 (the "Exchange Act") or state law.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Registration Fee................................ $ 3,402.00
Printing Expenses*.................. ........... 2,000.00
Legal Fees and Expenses*........................ 10,000.00
Accounting Fees and Expenses*................... 5,000.00
Blue Sky Fees*.................................. 0
Engineering Fees and Expenses*.................. 0
Miscellaneous................................... 0
----------
Total...................................... $20,402.00
==========
- ------------------------
* Estimated
All of the above expenses will be paid by the Company.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The following information sets forth certain information for all securities
the Company sold during the past three years without registration under the
Securities Act. All transactions were effected in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act for
transactions not involving a public offering. There were no underwriters in any
of these transactions.
Pursuant to the Plan of Reorganization of Weaver Arms Corporation, a Nevada
corporation, as confirmed by the United States Bankruptcy Court, Central
District of California, on January 20, 1994, and in satisfaction of all approved
claims therein, the Company (then known as Newcorp One, Inc.) in June 1997
issued 1,000,000 post split shares of its Common Stock and 1,000,000 Class A
Warrants, to Weaver Arms' creditors, Certificate of Indebtedness holders,
shareholders, and administrative claimants.
In accordance with an Agreement and Plan of Reorganization, dated June 9,
1997, the Company issued 4,000,000 post-split shares of its Common Stock, and
4,000,000 post-split Class A Warrants and Class B Warrants, to Lawrence R.
Biggs, Jr., Lawrence A. Cahill, and Donald G. McLellan and Vision Finance and
Management, the shareholders of Voxcom Systems, Inc., in the amount of 1,200,000
shares, 2,000,000 shares, 400,000 shares and 400,000 shares, respectively.
Pursuant to the 1997 Stock Bonus Plan, the Company issued a total of
575,000 shares of its common stock at par to Rick Graf, Gwynda Gee, Ronald L.
Brown, Kim Crowther, Brian Jensen, and Herbert Sievers, for services provided to
the Company. 200,000 of such shares were cancelled upon sale of HBG to Messrs.
Crowther and Jensen.
II-1
<PAGE>
In December 1997, the Company issued 80,000 shares of Series A Preferred
Stock at an issue price of $100 per share to Messrs. Cahill, Briggs and McLellan
in conversion of $8,000,000 principal amount of promissory notes.
In April 1998, the Company issued 210,000 shares of Common Stock in
connection with the acquisition of the Company's computer based business for a
recorded issue price of $2.50 per share.
In May 1998, The Company issued 110,000 shares of Common Stock under a
Consulting Agreement with Jande International Holdings, LLC for consideration
consisting of future services to the Company.
In June 1998, the Company issued 350,000 shares of Series B Preferred Stock
at an issue price of $10 per share in cash to the Selling Stockholders.
In June 1998, the Company issued $400,000 of 5% Convertible Debentures.
In June 1998, the Company issued 30,000 shares of Common Stock under a
Consulting Agreement with S-G Consulting, Inc.
In October 1998 the Company issued 50,000 shares to Lloyd Wade Securities
and 25,000 shares to Mitchell Shapiro under the Investment Banking and
Consulting Agreement dated August 26, 1998.
ITEM 27. EXHIBITS.
Exhibit
Number Description of Exhibits
- ------ -----------------------
2.1 Agreement and Plan of Reorganization, dated June 9, 1997, among
Newcorp One, Inc. and the shareholders of Voxcom Systems, Inc. (filed
as Exhibit 2.01 to the Company's Form 10-SB filed with the Securities
and Exchange Commission on May 15, 1998 (the "Form 10-SB"), and
incorporated herein by reference).
2.2.1 Stock Purchase Agreement, dated June 30, 1997, among Voxcom Holdings,
Inc. and the shareholders of AmeraPress, Inc. (filed as Exhibit 2.02.1
to the Company's Form 10-SB, and incorporated herein by reference).
2.2.2 Promissory Note, dated June 30, 1997, in connection with Stock
Purchase Agreement between Voxcom Holdings, Inc. and the shareholders
of AmeraPress, Inc. (filed as Exhibit 2.02.2 to the Company's Form
10-SB, and incorporated herein by reference).
2.2.3 Security Agreement-Pledge, dated June 30, 1997, in connection with
Promissory Note between Voxcom Holdings, Inc. and the shareholders of
AmeraPress, Inc. (filed as Exhibit 2.02.3 to the Company's Form 10-SB,
and incorporated herein by reference).
2.3.1 Stock Purchase Agreement regarding MAXpc (filed as Exhibit 2.03.1
to the Company's Form 10-SB, and incorporated herein by reference).
2.3.2 Employment Agreement with Gary Raabe (filed as Exhibit 2.03.2 to
the Company's Form 10-SB, and incorporated herein by reference).
3.1 Restated Articles of Incorporation of Newcorp One, Inc., dated June
12, 1997 (filed as Exhibit 3.01 to the Company's Form 10-SB, and
incorporated herein by reference).
3.2 By-laws of Voxcom Holdings, Inc. (filed as Exhibit 3.02 to the
Company's Form 10-SB, and incorporated herein by reference).
II-2
<PAGE>
3.3 Certificate of Decrease in Authorized and Issued Shares (filed as
Exhibit 3.03 to the Company's Form 10-SB, and incorporated herein by
reference).
3.4 Certificate of Designation regarding Series A Preferred Stock (filed
as Exhibit 3.04 to the Company's Form 10-SB, and incorporated herein
by reference).
3.5 Amended and Restated Certificate of Designations, Preferences and
Rights of Preferred Stock creating the Series B Preferred Stock (filed
as Exhibit 3.05 to the Company's Form 10-SB, and incorporated herein
by reference.)
4.1.1 Securities Purchase Agreement dated June 19, 1998 with Carmax
Investments, Inc. (filed as Exhibit 4.01.1 to the Company's Form 10-SB
and incorporated herein by reference)
4.1.2 5% Convertible Debenture due May 31, 2000 dated June 19, 1998 (filed
as Exhibit 4.01.2 to the Company's Form 10-SB and incorporated herein
by reference)
4.2.1. Securities Purchase Agreement dated June 22, 1998 among the Company
and Dominion Capital Fund, Ltd. and Sovereign Partners Limited
Partnership (filed as Exhibit 4.02.1 to the Company's Form 10SB and
incorporated herein reference.)
4.2.2 Registration Rights Agreement (filed as Exhibit 4.02.2 to the
Company's Form 10SB and incorporated herein reference.)
*5.1 Opinion of Glast, Phillips & Murray, a Professional Corporation,
concerning legality.
10.1 Consulting Agreement and Covenant Not to Compete, dated July 1, 1997,
between the Company and Kim Crowther and Brian Jensen (filed as
Exhibit 10.01 to the Company's Form 10-SB, and incorporated herein by
reference).
10.2 1997 Stock Bonus Plan (filed as Exhibit 10.02 to the Company's Form
10-SB, and incorporated herein by reference).
10.3 Promissory Note and Purchase Money Security Agreement between the
Company and General Binding Corporation, dated March 27, 1997 (filed
as Exhibit 10.03 to the Company's Form 10-SB, and incorporated herein
by reference).
10.4 Settlement Agreement with FTC (filed as Exhibit 10.04 to the Company's
Form 10-SB, and incorporated herein by reference).
10.5 Consulting Agreement with Jande International Holdings, LLC (filed as
Exhibit 10.05 to the Company's Form 10SB and incorporated herein by
reference).
10.6 Consulting Agreement with S.G. Consulting, Inc.(filed as Exhibit 10.06
to the Company's Form 10SB and incorporated herein by reference).
*10.7 Investment Banking and Consulting Agreement dated August 26, 1998
between the Company and Lloyd Wade Securities.
*10.8 Stock Purchase Agreement dated September 30, 1998 among the
Company, Kim Crowther and Brian Jensen.
21.1 Subsidiaries (filed as Exhibit 21.01 to the Company's Form 10-SB, and
incorporated herein by reference).
23.1 Consent of Glast, Phillips & Murray, A Professional Corporation
(contained in Exhibit 5.1).
Ii-3
<PAGE>
*23.2 Consent of Grant Thornton LLP.
24.1 Power of attorney from directors and officers (see signature
pages to this Registration Statement).
*27.1 Financial Data Schedule
_____________________________
* Filed herewith.
ITEM 28. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment
to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information set forth in this Registration Statement; and
(iii) To include any additional or changed material information
on the plan of distribution.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has authorized this Amendment
No. One to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, State of Texas on October 8,
1998.
VOXCOM HOLDINGS, INC.
By: /s/ Lawrence R. Biggs, Jr.
-----------------------------
Lawrence R. Biggs, Jr.
Chief Executive Officer and Director
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature to the
Registration Statement appears below hereby appoints Lawrence R. Biggs, Jr. and
Donald G. McLellan, or either one of them, as such person's attorney-in-fact
with full power to act alone, with full power of substitution or resubstitution,
for such person and in such person's name, place and stead, in any and all
capacities to sign on such person's behalf, individually and in the capacities
stated below, and to file any and all amendments and post-effective amendments
to this Registration Statement, which amendment or amendments may make such
changes and additions as such attorney-in-fact may deem necessary or
appropriate.
Name Office Date
---- ------ ----
/s/ Lawrence R. Biggs, Jr. Chief Executive Officer October 8, 1998
- ---------------------------- and Director (Principal
Lawrence R. Biggs, Jr. Executive Officer)
/s/ Donald G. McLellan Director October 8, 1998
- ----------------------------
Donald G. McLellan
/s/ Lawrence A. Cahill Director October 8, 1998
- ----------------------------
Lawrence A. Cahill
/s/ Ronald L. Brown Director October 8, 1998
- ----------------------------
Ronald L. Brown
/s/ Leslie D. Crone Principal Financial October 8, 1998
- ---------------------------- Officer, Controller and
Leslie D. Crone Principal Accounting
Officer
II-5
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Exhibit
Number Description of Exhibits
- ------ -----------------------
2.1 Agreement and Plan of Reorganization, dated June 9, 1997, among
Newcorp One, Inc. and the shareholders of Voxcom Systems, Inc. (filed
as Exhibit 2.01 to the Company's Form 10-SB filed with the Securities
and Exchange Commission on May 15, 1998 (the "Form 10-SB"), and
incorporated herein by reference).
2.2.1 Stock Purchase Agreement, dated June 30, 1997, among Voxcom Holdings,
Inc. and the shareholders of AmeraPress, Inc. (filed as Exhibit 2.02.1
to the Company's Form 10-SB, and incorporated herein by reference).
2.2.2 Promissory Note, dated June 30, 1997, in connection with Stock
Purchase Agreement between Voxcom Holdings, Inc. and the shareholders
of AmeraPress, Inc. (filed as Exhibit 2.02.2 to the Company's Form 10-
SB, and incorporated herein by reference).
2.2.3 Security Agreement-Pledge, dated June 30, 1997, in connection with
Promissory Note between Voxcom Holdings, Inc. and the shareholders of
AmeraPress, Inc. (filed as Exhibit 2.02.3 to the Company's Form 10-SB,
and incorporated herein by reference).
2.3.1 Stock Purchase Agreement regarding MAXpc (filed as Exhibit 2.03.1
to the Company's Form 10-SB, and incorporated herein by reference).
2.3.2 Employment Agreement with Gary Raabe (filed as Exhibit 2.03.2 to
the Company's Form 10-SB, and incorporated herein by reference).
3.1 Restated Articles of Incorporation of Newcorp One, Inc., dated June
12, 1997 (filed as Exhibit 3.01 to the Company's Form 10-SB, and
incorporated herein by reference).
3.2 By-laws of Voxcom Holdings, Inc. (filed as Exhibit 3.02 to the
Company's Form 10-SB, and incorporated herein by reference).
3.3 Certificate of Decrease in Authorized and Issued Shares (filed as
Exhibit 3.03 to the Company's Form 10-SB, and incorporated herein by
reference).
3.4 Certificate of Designation regarding Series A Preferred Stock (filed
as Exhibit 3.04 to the Company's Form 10-SB, and incorporated herein
by reference).
3.5 Amended and Restated Certificate of Designations, Preferences and
Rights of Preferred Stock creating the Series B Preferred Stock (filed
as Exhibit 3.05 to the Company's Form 10-SB, and incorporated herein
by reference.)
4.1.1 Securities Purchase Agreement dated June 19, 1998 with Carmax
Investments, Inc. (filed as Exhibit 4.01.1 to the Company's Form 10-SB
and incorporated herein by reference)
4.1.2 5% Convertible Debenture due May 31, 2000 dated June 19, 1998 (filed
as Exhibit 4.01.2 to the Company's Form 10-SB and incorporated herein
by reference)
II-6
<PAGE>
4.2.1. Securities Purchase Agreement dated June 22, 1998 among the Company
and Dominion Capital Fund, Ltd. and Sovereign Partners Limited
Partnership (filed as Exhibit 4.02.1 to the Company's Form 10SB and
incorporated herein reference.)
4.2.2 Registration Rights Agreement (filed as Exhibit 4.02.2 to the
Company's Form 10SB and incorporated herein reference.)
*5.1 Opinion of Glast, Phillips & Murray, a Professional Corporation,
concerning legality.
10.1 Consulting Agreement and Covenant Not to Compete, dated July 1, 1997,
between the Company and Kim Crowther and Brian Jensen (filed as
Exhibit 10.01 to the Company's Form 10-SB, and incorporated herein by
reference).
10.2 1997 Stock Bonus Plan (filed as Exhibit 10.02 to the Company's Form
10-SB, and incorporated herein by reference).
10.3 Promissory Note and Purchase Money Security Agreement between the
Company and General Binding Corporation, dated March 27, 1997 (filed
as Exhibit 10.03 to the Company's Form 10-SB, and incorporated herein
by reference).
10.4 Settlement Agreement with FTC (filed as Exhibit 10.04 to the
Company's Form 10-SB, and incorporated herein by reference).
10.5 Consulting Agreement with Jande International Holdings, LLC (filed as
Exhibit 10.05 to the Company's Form 10SB and incorporated herein by
reference).
10.6 Consulting Agreement with S.G. Consulting, Inc.(filed as Exhibit
10.06 to the Company's Form 10SB and incorporated herein by
reference).
*10.7 Investment Banking and Consulting Agreement dated August 26, 1998
between the Company and Lloyd Wade Securities.
*10.8 Stock Purchase Agreement dated September 30, 1998 among the
Company, Kim Crowther and Brian Jensen.
21.1 Subsidiaries (filed as Exhibit 21.01 to the Company's Form 10-SB, and
incorporated herein by reference).
23.1 Consent of Glast, Phillips & Murray, A Professional Corporation
(contained in Exhibit 5.1).
*23.2 Consent of Grant Thornton LLP.
24.1 Power of attorney from directors and officers (see signature pages to
this Registration Statement).
*27.1 Financial Data Schedule.
_____________________________
* Filed herewith.
II-7
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF GLAST, PHILLIPS & MURRAY APPEARS HERE]
October 8 1998
Voxcom Holdings, Inc.
8115 Preston Rd, Eighth Floor East
Dallas, Texas 75225
Re: Form SB-2 Registration Statement relating to the registration of up to
9,300,000 shares of common stock, $0.0001 par value of Voxcom
Holdings, Inc.
Gentlemen:
We are acting as counsel for Voxcom Holdings, Inc., a Nevada corporation
(the "Company"), in connection with the filing under the Securities Act of 1933,
as amended, of a Registration Statement for the Company on Form SB-2 filed with
the Securities and Exchange Commission ("SEC") (the "Registration Statement"),
covering an aggregate of up to 9,300,000 shares (the "Shares") of common stock,
par value $0.0001 per share (the "Common Stock"), of the Company.
In that connection, we have examined the Form SB-2 Registration Statement
in the form to be filed with the SEC. We have also examined and are familiar
with the originals or authenticated copies of all corporate or other documents,
records and instruments that we have deemed necessary or appropriate to enable
us to render the opinion expressed below.
We have assumed that all signatures on all documents presented to us are
genuine, that all documents submitted to us as originals are accurate and
complete, that all documents submitted to us as copies are true and correct
copies of the originals thereof, that all information submitted to us was
accurate and complete and that all persons executing and delivering originals or
copies of documents examined by us were competent to execute and deliver such
documents. In addition, we have assumed that the Shares will not be issued for
consideration less than the par value thereof and that the form of consideration
to be received by the Company for the Shares will be lawful consideration under
the Nevada Revised Statutes, Chapter 78.
Based on the foregoing and having due regard for the legal considerations
we deem relevant, we are of the opinion that the Shares, or any portion thereof,
when issued as described in the Registration Statement, will be validly issued
by the Company, fully paid and nonassessable.
This opinion is limited in all respects to the laws of the United States of
America and the Nevada Revised Statutes, Chapter 78.
<PAGE>
We advise you that members of this firm own a total of 50,000 shares of
Common Stock of the Company.
This opinion may be filed as an exhibit to the Registration Statement.
Sincerely,
/s/ Glast, Phillips & Murray, P.C.
GLAST, PHILLIPS & MURRAY, P.C.
RLB/mdg
<PAGE>
Exhibit 10.7
INVESTMENT BANKING & CONSULTING AGREEMENT
This Agreement is made as of August 26, 1998, by and between VoxCom Holdings,
Inc., ("Contractor") with its principal office at 8115 Preston Road, Eighth
Floor-East, Dallas, Texas 75225 and Lloyd Wade Securities a Texas Corporation,
("LDWD") with its principal offices at 5005 LBJ Fwy., Suite 630, Dallas, Texas
75244.
WITNESSETH
WHEREAS, Contractor requires expertise in the area of investment banking to
support its business and growth; and
WHEREAS, LDWD has substantial contacts among the members of the investment
community, investment banking expertise, and desires to act as a consultant to
provide investment banking and advisory services;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants contained herein and subject specifically to the conditions
hereof, and intending to be legally bound thereby, the parties agree as follows:
1. CERTAIN DEFINITIONS - When used in this Agreement, the following terms
shall have the meanings set forth below:
1.1 Affiliate - any persons or entities controlled by a party.
1.2 Contractor - the Contractor who use the services of LDWD.
1.3 Contractor Clients - the Contractor's clients who use the services
of LDWD through the Contractor.
1.4 Contact Person - The person who shall be primarily responsible for
carrying out the duties of the parties hereunder. Contractor and LDWD
shall each appoint a Contact Person to be responsible for their respective
duties. In the event that one party gives notice to the other party in
writing that, in their reasonable opinion, the other party's Contact
Person is not able to fulfill their duties and responsibilities hereunder,
both parties shall mutually agree upon a replacement Contact Person within
IO days of the said notice.
1.5 Extraordinary Expenses - expenses that are beyond those expenses
that are usual, regular, or customary in the conduct of in-house
activities in fulfillment of the scope of this agreement.
1.6 Equity - cash, securities or liquid assets, specifically excluding
real property.
1.7 Payment or Payable in Kind. Distribution of the proceeds of a
transaction in the same type and form as was given as valuable
consideration for the transaction.
2. CONTACT PERSONS. The Contact Person for Contractor is Donald G. McLellan,
President. The
<PAGE>
Contact Person for LDWD is David Rutkoske, President.
3. SERVICES TO BE RENDERED BY: LDWD. Services to be rendered, on a best
efforts basis, by LDWD are as follows:
3.1 Advice and Counsel. LDWD will provide advice and counsel regarding
Contractor's strategic business and financial plans, strategy and
negotiations with potential lenders/inventors, merger/acquisition
candidates, joint ventures, corporate partners and others involving
financial and financially related transactions.
3.2 Introductions to the Securities Brokerage COMMUNITY. LDWD has a
close association with numerous broker/dealers and investment
professionals across the country and will enable contact between
Contractor and/or Contractor Clients to facilitate business transactions
among them. LDWD shall use their contacts in the brokerage community to
assist Contractor in establishing relationships with securities dealers
and to provide the most recent corporate information to interested
securities dealers on a regular and continuous basis. LDWD understands
that this is in keeping with Contractor's business objective to establish
a nationwide network of securities dealers who have an interest in
Contractor's securities.
3.3 Market-making Intelligence. LDWD is a market-maker in numerous
securities and has access through its market-making facilities and
personnel to LDWD proprietary information. LDWD will monitor and react to
sensitive market information on a timely basis and provide advice, and
counsel and proprietary intelligence (including but not limited to
information on price, volume and the identification of market-makers,
buyers and sellers) to Contractor in a timely fashion with respect to
securities in which Contractor has and interest. Contractor understands
that this information is available from other sources but acknowledges
that LDWD can provide it in a more timely fashion and with substantial
value-added interpretation of such information. The foregoing
notwithstanding, no information will be provided to Contractor with
respect to the activities of any other LDWD customers or customer accounts
without such customer's prior consent.
3.4 Contractor and/or Contractor Client Transaction Due Diligence. If
requested LDWD will undertake due diligence on all proposed financial
transactions affecting the Contractor, of which LDWD is notified in
writing in advance, including investigation and advice on the financial,
valuation and stock price implications thereof.
3.5 Additional Duties. Contractor and LDWD shall mutually agree upon any
additional duties which LDWD may provide for compensation paid or payable
by Contractor under this Agreement. Such additional agreement(s) may,
although there is no requirement to do so, be attached hereto and made a
part hereof by written amendments to be listed as "Exhibits" beginning
with "Exhibit A", and initialed by both parties.
3.6 Best Efforts. LDWD shall devote such time and best effort to the
affairs of the Contractor as is reasonable and adequate to render the
consulting services contemplated by this agreement. LDWD is not
responsible for the performance of any services which may be rendered
hereunder without the Contractor providing the necessary information in
writing prior thereto, nor shall LDWD include any services that constitute
the
<PAGE>
rendering of any legal opinions or performance of work that is in the
ordinary purview of the Certified Public Accountant. LDWD cannot guarantee
results on behalf of Contractor, but shall pursue all reasonable avenues
available through its network of financial contacts. At such time as an
interest is expressed by a third party in Contractor's needs, LDWD shall
notify Contractor and advise it as to the source of such interest and any
terms and conditions of such interest. The acceptance and consumption of
any transaction is subject to acceptance of the terms and conditions by
Contractor. It is understood that a portion of the compensation to be paid
hereunder is being paid hereunder is being paid by Contractor to have LDWD
remain available to assist it with transactions on an as needed basis.
4. COMPENSATION TO LDWD.
4.1 Fees. Contractor shall pay LDWD fees in accordance with the Addendum
attached hereto and made a part hereof.
4.2 Additional Fees. Approved in advance, Contractor and LDWD shall
mutually agree upon any additional fees which Contractor may pay in the
future for services rendered by LDWD under this Agreement. Such additional
agreement(s) may, although there is no requirement to do so, be attached
hereto and made a part hereof as Exhibits beginning with Exhibit A.
4.3 Optional Form of PAYMENT. LDWD may, at the time for each payment and
at its sole option, elect to receive all or a portion of said fees in the
form of securities, equity, or financing instruments issued by Contractor
to LDWD on terms agreed by Contractor in writing.
4.4 Extraordinary Expenses. Extraordinary expenses (those not defined in
4.7) of LDWD shall be submitted to Contractor for approval prior to
expenditure and shall be paid by Contractor, within ten (10) business days
of receipt of LDWD request for payment.
4.5 Finder Fees.
A. In the event LDWD mutually agrees with Contractor to introduce
Contractor or a Contractor affiliate to any third party funding
source(s), underwriter(s), merger partner(s), or joint venture(s)
who enters into a funding, underwriting, merger, joint venture or
similar agreement with Contractor or Contractor's affiliate,
Contractor hereby agrees to pay LDWD a minimum advisory fee of 5%
of the gross proceeds derived from such funding, underwriting,
merger, joint venture or similar agreement with Contractor or
Contractor's client, unless generally accepted industry standards
dictate otherwise, payable upon the commencement of such funding,
underwriting, merger, joint venture or similar agreement with
Contractor or Contractor's client. This provision shall survive
this agreement, even though the term of
<PAGE>
this agreement may have expired, as pursuant to the section
titled "Term of Agreement and Termination". Said advisory fee
will be payable only upon closing or funding of said transaction
or part thereof.
B. LDWD may, at its sole option, elect to receive all or a portion
of said advisory fee as payment in kind, i.e., prorated in the
same form and type of securities, equity, or financing
instruments issued to the funding source or underwriter by
Contractor. In the event the exercise of this option results in
additional expense over and above the expense of the funding
and/or underwriting then the additional expenses shall be borne
by LDWD. In addition the exercise of this option by LDWD shall
not impede or otherwise have a negative effect on the funding or
underwriting.
4.6 Interest on Funds Due. Contractor shall pay interests on all
payments in arrears due LDWD, at the rate of IO% per annum.
4.7 Expenses. All expenses including, but not limited to, all
registration fees paid to the Securities and Exchange Commission,
fees and expenses of accountants, fees and expenses of legal counsel,
printing and engraving expenses, postage and distribution fees,
transfer agent fees, escrow fees, NASD registration or exchange
listing fees, (but not including underwriting discounts and
commissions relating to shares and warrants of any holder being
offered thereby and fees and expenses of any special counsel of any
selling shareholder) of any registration(s) made pursuant to
paragraph (4. 1) hereof shall be borne and paid by the Contractor.
Underwriting discounts and commissions shall be borne pro rata by any
selling shareholder in proportion to the number of shares being
offered by such selling shareholder.
5. INDEMNIFICATION. The Contractor agrees to indemnify and hold harmless
LDWD, each of its officers, directors, employees and each person, if any,
who controls LDWD against any and all liability, loss, and costs, expenses
or damages, including but not limited to, any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever or howsoever
caused by reason of any injury (whether to body, property, personal or
business character or reputation) sustained by any person or to any person
or property by reason of any act, neglect, default or omission, or any
untrue or alleged untrue statement of a material fact, or any
misrepresentation of any material fact or any breach of any material
warranty or covenant as the Contractor or any of its agents, employees, or
other representatives arising out of, or in relation to, this Agreement.
Nothing herein is intended to nor shall it relieve either party from
liability for its own act, omission or negligence. All remedies provided
by law or in equity shall be cumulative and not in the alternative.
LDWD agrees to indemnify and hold harmless Contractor, each of its
officers, directors, employees and each person, if any, who controls
Contractor against any and all liability,
<PAGE>
loss, and costs, expenses or damages, including but not limited to, any
and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or
any claim whatsoever or howsoever caused by reason of any injury (whether
to body, property, personal or business character or reputation) sustained
by any person or to any person or property by reason of any act, neglect,
default or omission, or any untrue or alleged untrue statement of a
material fact, or any misrepresentation of any material fact or any breach
of any material warranty or covenant as the LDWD or any of its agents,
employees, or other representatives arising out of, or in relation to,
this Agreement. Nothing herein is intended to nor shall it relieve either
party from liability for its own act, omission or negligence. All remedies
provided by law or in equity shall be cumulative and not in the
alternative.
6. CONTRACTOR REPRESENTATIONS. In addition, Contractor hereby represent,
covenants and warrants to LDWD as follows: Contractor shall pay LDWD a
fee, of 200,000 (Two Hundred Thousand) free trading common stock shares
and 200,000 (Two Hundred Thousand) common share warrants upon execution of
this agreement, the underlying shares to be free trading or registered
with any current or next offering (via piggyback registration rights which
the Company will FILE within 180 days) for LDWD's initial setup activities
which are necessary for LDWD to provide the services herein. These fees
shall be considered in arrears if not received by the tenth (10) business
day following the due date specified in the "Addendum".
6.1 Authorization. Contractor and its signatories herein have full
corporate power and authority to enter into this Agreement and to carry
out the transactions contemplated hereby.
6.2 No Violation. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will violate
any provision of the charter or by-laws of Contractor, or violate any term
of provision of any other Agreement or any statute or law.
6.3 Agreement in Full Force and Effect. All contracts, Agreements,
plans, leases, policies and licenses referenced herein to which Contractor
is a party are valid and in full force and effect.
6.4 Litigation. Except as set forth below, there is no action, suit,
inquiry, proceeding or investigation by or before any court or
governmental or other regulatory or administrative agency or commission
pending or, to the best knowledge of Contractor threatened against or
invoking Contractor, or which questions or challenges the validity of this
Agreement and its subject matter; and Contractor does not know or have any
reason to know of any valid basis for any such action, proceeding or
investigation.
6.5 Consents. No consent of any person, other than the signatories
hereto, is necessary to the consummation of the transactions contemplated
hereby, including, without limitation, consents from parties to loans,
contracts, lease or other Agreements and consents from governmental
<PAGE>
agencies, whether federal, state, or local.
6.6 LDWD Reliance. LDWD has and will rely upon the documents,
instruments and written information furnished to LDWD by the Contractor's
officers, or designated employees.
A. Contractor's Material Representations. All representations and
statements provided about the Contractor are true and complete
and accurate to the best of Contractor's knowledge. Contractor
agrees to indemnify, hold harmless, and defend LDWD, its
officers, directors, agents and employees, at Contractor's
expense for any proceeding or suit which may raise out of any
inaccuracy or incompleteness of any such material or written
information supplied to LDWD.
B. Contractor's Client and Other Material. Contractor warrants that
all representation and statements provided, other than about the
Contractor, are, to the best of its knowledge, true and complete
and accurate.
6.7 Services NOT EXPRESSED OR IMPLIED.
A. LDWD that has not agreed with Contractor, in this Agreement or
any other Agreement, verbal or written, to be a market-maker (but
may be a placement agent by other "Selling Agreement" from time
to time) in Contractor's securities or in any specific securities
or securities in which Contractor or Contractor's Client has an
interest: and,
B. Any payments made herein to LDWD are not, and shall not be
construed as, compensation to LDWD for the purposes of making a
market, to cover LDWD out-of-pocket expenses for making a market,
or for the submission by LDWD of an application to make a market
in any securities; and,
C. No payment made herein to LDWD are for the purpose of affecting
the price of any security or influencing any market-making
functions, including but not limited to bid/ask quotations,
initiation and termination of quotations, retail securities
activities, or for the submission of any application to make a
market.
7. CONFIDENTIALITY.
7.1 LDWD and Contractor each agree to provide reasonable security
measures to keep information confidential where release may be detrimental
to their respective business interests. LDWD and Contractor shall each
require their employees, agents, affiliates, subcontractors, other
licensees, and others who will have access to the information through LDWD
and Contractor respectively, to first enter into appropriate non-
disclosure Agreements requiring the confidentiality contemplated by this
Agreement in perpetuity.
7.2 LDWD will not, either during its engagement by the Contractor
pursuant to this agreement or at any time thereafter, disclose, use, trade
on, or make known for its or another's benefit, any confidential
information, knowledge, or data of the Contractor or any of its affiliates
<PAGE>
in any way acquired or used by LDWD during its engagement by the
Contractor. Confidential information, knowledge or data of the Contractor
and its affiliates shall not include any information which is or becomes
generally available to the public other than as a result of a disclosure
by LDWD or its representatives.
8. MISCELLANEOUS PROVISIONS.
8.1 Amendment and Modification. This Agreement may be amended modified
and supplemented only by written Agreement of LDWD and Contractor.
8.2 Waiver of Compliance. Any failure of LDWD, on the one hand, or
Contractor, on the other, to comply with any obligation, agreement or
condition herein may be expressly waived in writing, but such waiver of
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
8.3 Expenses: Transfer Taxes, Etc. Whether or not the transaction, if
any, contemplated by this Agreement is consummated, LDWD agrees that all
fees and expenses incurred by LDWD, in connection with this Agreement
shall be borne by LDWD, and Contractor agrees that all fees and expenses
incurred by Contractor in connection with this Agreement shall be borne by
Contractor, including, without limitation, as to LDWD or Contractor, all
fees of counsel and accountants.
8.4 Other Business Opportunities. Except as expressly provided in this
Agreement, each party hereto shall have the right independently to engage
in and receive full benefits from business activities. In case of business
activities which would be competitive with the other party, notice shall
be given prior to this Agreement or, if such activities are proposed,
within 10 days prior to engagement therein. The doctrines of "corporate
opportunity" or "business opportunity" shall not be applied to any other
activity, venture, or operation of either party.
8.5 Each party agrees that all actions, direct or indirect, taken by it
and its respective agents, employees and affiliates in connection with
this Agreement and any financing or underwriting hereunder shall conform
to all applicable Federal and state securities laws. LDWD acknowledge that
it will, from time to time, be in possession of material inside
information about the Company, and agrees to abide by all laws and
regulations regarding trading in the stock of the Consultant while in
possession of such information.
8.6 Notices. Any notices to be given hereunder by any party to the other
may be effected by personal delivery in writing or by mail, registered or
certified, postage prepaid, with return receipt requested. Mailed notices
shall be addressed to the "Contact Person" at the addresses appearing in
the introductory paragraph of this Agreement, but any party may change his
address by written notice in accordance with this subsection. Notices
delivered personally shall be deemed communicated as of actual receipt;
mailed notices shall be deemed communicated as of five (5) days after
mailing.
8.7 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement
nor any right, interests or obligations hereunder shall be assigned by any
of the parties
<PAGE>
hereto without the prior written consent of the other parties, except by
operation of law.
8.8 Delegation. Neither party shall delegate the performance of its
duties under this Agreement without the prior written consent of the other
party.
8.9 Publici Neither LDWD nor Contractor shall make or issue, or cause to
be made or issued, any announcement or written statement concerning this
Agreement or the transactions contemplated hereby for dissemination to the
general public without the prior consent of the other party. This
provision shall not apply, however, to any announcement or written
statement required to be made by law or the regulations of any federal or
state governmental agency, except that the parties shall agree concerning
the timing and consent of such announcement before such announcement is
made.
8.10 Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the
laws of the State of Texas, without regard to its conflict of law
doctrine. Contractor and LDWD agree that if action is instituted to
enforce or interpret any provision of this Agreement the jurisdiction and
venue shall be in Dallas County, Texas.
8.11 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
8.12 Headings. The heading of the Sections of this Agreement are
inserted for convenience only and shall not constitute a part hereto or
affect in any way the meaning or interpretation of this Agreement.
8.13 Entire Agreement. This Agreement, including any Exhibits hereto, and
the other documents and certificates delivered pursuant to the terms
hereto, set forth the entire Agreement and understanding of the parties
hereto in respect of the subject matter contained herein, and superseded
all prior Agreements, promise, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer,
employee or representative of any party hereto.
8.14 Third Parties. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or corporation other than
the parties hereto and their successors or assigns, any rights or remedies
under or by reason of this Agreement.
8.15 Attorneys' Fees and Costs. If any action is necessary to enforce and
collect upon the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and costs, in addition to any other
relief to which that party may be entitled. This provision shall be
construed as applicable to the entire Agreement.
8.16 Survivability. If any part of this Agreement is found, or deemed by
a court of competent jurisdiction to be invalid or unenforceable, that
part shall be severable from the remainder of this Agreement.
8.17 Further Assurances. Each of the parties agrees that it shall from
the time to time take
<PAGE>
such actions and execute such additional instruments as may be reasonably
necessary or convenient to implement and carry out the intent and purpose
of this Agreement.
8.18 Right to Data After Termination. After termination of this
Agreement each party shall be entitled to copies of all information
acquired hereunder as of the date of termination and not previously
furnished to it.
8.19 Relationship of the Parties. Nothing contained in this Agreement
shall be deemed to cause either party to become the partner of the other,
the agent or legal representative of the other, nor create any fiduciary
relationship between them, except as otherwise expressly provided herein.
It is not the intention of the parties to create nor shall this Agreement
be construed to create any commercial relationship or other partnership.
Neither party shall have any authority to act for or to assume any
obligation or responsibility on behalf of the other party, except as
otherwise expressly provided herein. The rights, duties, obligations and
liabilities of the parties shall be several not Joint nor collective. Each
party shall be responsible only for its obligations as herein set out and
shall be liable only for its share of the costs and expenses as provided
herein.
8.20 No Authority to Obligate,- the Contractor. Without the consent of
the Board of Directors of the Contractor, LDWD shall have no authority to
take, nor shall it take, any action committing or obligating the
Contractor in any manner, and it shall not represent itself to others as
having such authority.
9. ARBITRATION. WITH RESPECT TO THE ARBITRATION OF ANY DISPUTE, THE
UNDERSIGNED HEREBY ACKNOWLEDGE AND AGREE THAT:
A. ARBITRATION IS FINAL AND BINDING ON THE PARTIES;
B. THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDY IN COURT,
INCLUDING THEIR RIGHT TO JURY TRIAL;
C. PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND DIFFERENT
FROM COURT PROCEEDING;
D. THE ARBITRATOR'S AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR
LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK
MODIFICATION OF RULING BY THE ARBITRATORS IS STRICTLY LIMITED;
E. THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF
ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY;
AND
F. THIS ARBITRATION AGREEMENT IS SPECIFICALLY INTENDED TO INCLUDE ANY
AND ALL STATUTORY CLAIMS WHICH MIGHT BE ASSERTED BY ANY PARTY.
<PAGE>
G. ALL DISPUTES, CONTROVERSIES, OR DIFFERENCES BETWEEN THE CONTRACTOR,
LLOYD WADE OR ANY OF THEIR OFFICERS, DIRECTORS, LEGAL
REPRESENTATIVES, ATTORNEYS, ACCOUNTANTS, AGENTS OR EMPLOYEES, OR ANY
CUSTOMER OR OTHER PERSON OR ENTITY, ARISING OUT OF, IN CONNECTION
WITH OR AS A RESULT OF THIS AGREEMENT, SHALL BE RESOLVED THROUGH
ARBITRATION RATHER THAN THROUGH LITIGATION.
H. THE UNDERSIGNED CONTRACTOR HEREBY AGREES TO SUBMIT THE DISPUTE FOR
RESOLUTION TO EITHER THE AMERICAN ARBITRATION ASSOCIATION, IN DALLAS,
TEXAS, OR THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., IN
DALLAS, TEXAS, WHICHEVER ASSOCIATION MAY ASSERT JURISDICTION OVER THE
DISPUTE, WITHIN FIVE (5) DAYS AFTER RECEIVING A WRITTEN REQUEST TO DO
SO FROM ANY OF THE AFORESAID PARTIES.
I. IF ANY PARTY FAILS TO SUBMIT THE DISPUTE TO ARBITRATION ON REQUEST,
THEN THE REQUESTING PARTY MAY ITSELF COMMENCE AN ARBITRATION
PROCEEDING, BUT IS UNDER NO OBLIGATION TO DO SO.
J. ANY HEARING SCHEDULED AFTER AN ARBITRATION IS INITIATED SHALL TAKE
PLACE IN DALLAS, DALLAS COUNTY, TEXAS AND THE ARBITRATION RULES OF
THE AMERICAN ASSOCIATION ACT SHALL GOVERN THE PROCEEDING AND ALL
ISSUES RAISED BY THIS AGREEMENT TO ARBITRATE.
K. IF ANY PARTY SHALL INSTITUTE ANY COURT PROCEEDING IN AN EFFORT TO
RESIST ARBITRATION AND BE UNSUCCESSFUL IN RESISTING ARBITRATION OR
SHALL UNSUCCESSFULLY CONTEST THE JURISDICTION OF ANY ARBITRATION
FORUM LOCATED IN DALLAS, DALLAS COUNTY, TEXAS, OVER ANY MATTER WHICH
IS THE SUBJECT OF THIS AGREEMENT, THE PREVAILING PARTY SHALL BE
ENTITLED TO RECOVER FROM THE LOSING PARTY ITS LEGAL FEES AND ANY OUT-
OF-POCKET EXPENSES INCURRED IN CONNECTION WITH THE DEFENSE OF SUCH
LEGAL PROCEEDING OR ITS EFFORTS TO ENFORCE ITS RIGHTS TO ARBITRATION
AS PROVIDED FOR HEREIN.
L. EACH PARTY WILL SIGN ANY REQUIRED NASD UNIFORM SUBMISSION AGREEMENT
OR THE APPLICABLE PAPERWORK FOR THE AMERICAN ARBITRATION ASSOCIATION,
AT THE TIME ANY DISPUTE IS SUBMITTED FOR ARBITRATION WHICHEVER ONE IS
APPLICABLE.
M. THE PARTIES SHALL ACCEPT THE DECISION OF ANY AWARD AS BEING FINAL AND
CONCLUSIVE AND AGREE TO ABIDE THEREBY.
N. ANY DECISION MAY BE FILED WITH ANY COURT AS A BASIS FOR JUDGMENT AND
EXECUTION FOR COLLECTION.
10. TERM OF AGREEMENT AND TERMINATION. This Agreement shall be effective upon
execution, shall continue for one year unless terminated sooner by LDWD,
or Contractor upon giving to the other party 30 days written notice, after
which time this Agreement is terminated. LDWD shall be entitled to the
finders fees described in this Agreement for funding or underwriting
commitments entered into by Contractor's client within one year after the
termination of this Agreement if said funding or underwriting was the
result of LDWD efforts
<PAGE>
prior to the termination of this Agreement.
11. CORPORATE AUTHORITY. The undersigned executer of this Agreement warrants
that a Corporate Resolution is on FILE, in the minutes of the Record Book
of the Corporation, expressly granting the power to enter into this
Agreement on behalf of the Corporation, and to consummate the transactions
contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CONTRACTOR: VOXCOM HOLDINGS, INC.
By: /s/ Donald McLellan
Donald McLellan, President
LDWD: LLOYD WADE SECURITIES, INC.
By: /s/ David Rutkoske
David Rutkoske, President
ADDENDUM
ADDENDUM TO INVESTMENT BANKING AGREEMENT
I. DTC Reports. The Contractor shall provide DTC reports weekly to LDWD, when
available.
2. BROKERAGE SERVICES. Contractor, its officers, directors, and other
"insiders" shall each have an opportunity to open an account at LDWD and
have all of their shares of any public company deposited into such account,
so that LDWD may become these individuals primary broker as per paragraph I
above.
3. INITIAL FEE. Contractor shall pay LDWD a retainer fee in the amount of
$5000 per month for twelve months. The first and last payment shall be at
the date of execution of this agreement with each additional payment to be
made in the same day of each subsequent month.
4. SHARES. The stock shares granted to LDWD from Contractor, are: (as of the
date of this agreement) amount of 200,000 (Two Hundred Thousand) Shares of
the Company's free trading common stock (hereinafter the "Shares"). LDWD's
ownership interest in the shares shall vest immediately as follows: 50,000
shares upon execution of this agreement, 50,000 shares 90 days after
execution of this agreement, 50,000 shares 180 days after this agreement,
and 50,000 shares 270 days after execution of this agreement.
6. WARRANTS. The warrants granted to LDWD from Contractor are 200,000 (Two
Hundred Thousand) Warrants on the Common Stock shares of the Contractor,
which shall vest as follows: 50,000 shares upon execution of this agreement,
50,000 shares 90 days after the execution of this agreement, 50,000 shares
180 after the execution of this agreement, 50,000 shares 270 days after
execution of this agreement.
<PAGE>
The Warrants shall be subject to the following terms:
A. EXERCISE PRICE. The exercise price shall be fixed at $2.00 (Two
Dollars). Each warrant shall be convertible upon exercise into one share
of common-stock.
B. TERM. The term shall be for a period of 3 years from the effective date
of this agreement.
7. PROVISIONS GOVERNING THE SHARES. The following provisions are applicable to
the Shares issued to LDWD pursuant to this agreement:
Contractor shall provide at the time of exercise of this Agreement, paperwork
for LDWD to have (as Attached "Exhibits 1, 11 and III"):
I. "Stock Certificates" of ownership of all shares with duly noted non-
registration statement, if applicable,
II. "Registration Rights Agreement" to the above mentioned stock, and
III. "[Form of Warrant Agreement" containing grant of warrants.
8. DATE of Pavements. The business advisory retainer fee and any other fees
resulting from this relationship shall be due upon the 3oth (thirtieth) day
of each month beginning with the month of execution of this agreement.
9. FINANCING FEE FORMULA. LDWD agrees to provide Contractor with a forum for
future financing with LDWD of other firms under the following formula of
fees to be paid to LDWD:
A. 3% non-accountable expense allowance (with expenses enumerated).
B. 2% dealer reallowance (to be shared with other members of the "Selling
Group").
C. 1O% sales concession or commission (to be paid as brokers' gross
commission).
D. Other fees and terms will be negotiated according to a written "term
sheet".
EXHIBIT A
DUTIES OF LLOYD WADE SECURITIES, INC.
<PAGE>
NO ADDITIONAL DUTIES OR FEES HAVE BEEN AGREED TO UNLESS THIS PAGE IS
AMENDED AND SIGNED BY BOTH PARTIES.
<PAGE>
EXHIBIT 10.8
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, made and entered into as of September 30,
1998, by and between VOXCOM HOLDINGS, INC., a Nevada corporation (hereinafter
referred to as the "Seller") and KIM CROWTHER and BRIAN JENSEN (hereinafter
together referred to as the "Buyer").
W I T N E S S E T H:
WHEREAS, the Seller owns all of the outstanding shares of Common Stock, par
value $0.01 (hereinafter referred to as the "Shares") of THE HOME BUSINESS
GROUP, INC., a Delaware corporation (hereinafter referred to as the "Company");
and
WHEREAS, the Seller desires to sell the Shares to Buyer and Buyer desires
to purchase the Shares on the terms and subject to the conditions set forth
herein;
NOW THEREFORE, in consideration of the premises and the mutual covenants
set forth below and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound,
the parties hereto do hereby agree as follows:
I.
PURCHASE AND SALE OF SHARES
SECTION 1.01 Purchase and Sale of Shares. Subject to the terms and
conditions set forth herein, effective the date on which all transactions
described herein are completed and closed (the "Closing Date") Seller shall sell
to the Buyer, and the Buyer shall purchase from Seller the Shares. Seller shall
transfer all of its right, title, and interest in and to the Shares being
conveyed by it to Buyer free and clear of any lien, security interest, or other
encumbrance of any nature and free of any claim by any person or entity to or
against the Shares.
SECTION 1.02 Purchase Price. (a) The purchase price of the Shares
(hereinafter referred to as the "Purchase Price") shall be the return by Buyer
and cancellation of 200,000 shares of the Common Stock of Seller.
II.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
PART A. The Seller hereby represents and warrants to, and agrees with, the
Buyer as follows:
SECTION 2.01 Organization, Qualifications, etc.
-1-
<PAGE>
(a) The Company is a corporation, duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Company has
the full corporate power and authority to own and hold its properties and
to conduct its business as currently conducted.
(b) The copies of the Company's articles of incorporation and bylaws
which have been delivered to Buyer are complete and correct, contain all
amendments thereto, and are in full force and effect as of the date hereof.
(c) The Company has no subsidiaries and does not own of record or
beneficially, directly or indirectly, (i) any shares of outstanding capital
stock or securities convertible into capital stock of any other
corporation, or (ii) any participation or interest in any partnership,
limited liability company, joint venture, or other non-corporate business
enterprise.
SECTION 2.02 Capital Stock. The authorized capital stock of the Company
consists solely of 100,000 shares of Common Stock, all of which are validly
issued and outstanding, fully paid and nonassessable. No subscription, warrant,
option, convertible security, or other right (contingent or other) to purchase
or acquire any shares of any class of capital stock of the Company from the
Company is authorized or outstanding. There is not any commitment of the
Company to issue any shares, warrants, options, or other such rights or to
distribute to holders of its capital stock any evidence of indebtedness or
assets. The Company has no obligation (contingent or other) to purchase, redeem
or otherwise acquire any shares of its capital stock or any interest therein or
to pay any dividend or make any other distribution in respect thereof.
SECTION 2.03 Brokers. Seller has not made any agreement or arrangement
which would result in any broker, finder, agent or other person or entity having
any claim for any fee, commission, or payment against Buyer or the Company in
connection with the negotiation or execution of this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 2.04 Ownership of Shares. Seller is the sole record and
beneficial owner of all of the Shares and has good and valid title to such
Shares free and clear of any lien, security interest, or other encumbrance of
any nature and free of any claim by any person or entity to or against such
Shares. Such Shares are not subject to any option, right, proxy, voting
agreement, voting trust, or any other agreement, understanding, or arrangement
affecting the Shares.
SECTION 2.05 Authorization, etc. Seller has the power, authority, and
capacity to enter into this Agreement and to carry out the transactions
contemplated hereby, and this Agreement has been duly executed and delivered by
Seller.
SECTION 2.06 No Consent Required. No consent, approval, order or
authorization of, or registration, declaration or filing with any governmental
or public body or authority or other party on the part of Seller is required for
such Seller to execute and deliver this Agreement and perform his obligations
hereunder.
-2-
<PAGE>
III.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to, and agrees with, the Sellers as
follows:
SECTION 3.01 Investment Representations
(a) The Shares to be acquired by Buyer will be acquired by Buyer for
investment for Buyer's own account, not as a nominee or agent for any
person, and not with a view to the sale or distribution of all or any part
thereof except in a transaction which is the subject of an effective
registration statement under the Securities Act of 1933 ("Securities Act")
and any applicable state securities laws or which is exempt from such
registration requirements, and the Buyer has no present intention of
selling, granting participation in, or otherwise distributing the Shares.
Buyer does not have any contract, undertaking, agreement or arrangement
with any person or entity to sell, transfer, or grant participation to such
person or entity, with respect to any of the Shares.
(b) The Buyer understands that the Shares have not been registered
under the Securities Act 1933 in reliance upon applicable exemptions from
the registration requirements of the Securities Act of 1933 and is
similarly exempt under state securities laws, and that the Seller's
reliance on such exemptions is predicated on the Buyer's representations
set forth herein.
SECTION 3.02 Brokers. Buyer has not made any agreement or arrangement
which would result in any broker, finder, agent or other person or entity having
any claim for any fee, commission, or payment against any Seller in connection
with the negotiation or execution of this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 3.03 Authorization, etc. Buyer has the power, authority, and
capacity to enter into this Agreement and to carry out the transactions
contemplated hereby, and this Agreement has been duly executed and delivered by
Buyer.
SECTION 3.04 No Consent Required. No consent, approval, order or
authorization of, or registration, declaration or filing with any governmental
or public body or authority is required for Buyer to execute and deliver this
Agreement and perform its obligations hereunder.
SECTION 3.05 Liabilities. Buyer acknowledges that upon the purchase of
the Shares, the Company will continue to be liable for all of its obligations,
whether fixed, accrued or contingent, whether existing or arising in the future,
and that Seller will have no further liability for any such obligation of the
Company.
-3-
<PAGE>
IV.
INDEMNIFICATION
SECTION 4.01 Buyer's Claims. The Seller shall indemnify and hold
harmless Buyer, its successors and assigns, and their respective officers,
directors, employees, shareholders, agents, and affiliates against any and all
damages, claims, losses, liabilities, and expenses actually incurred by Buyer,
including, without limitation, legal, accounting, and other expenses, which may
arise out of any breach of any of the representations or warranties made in this
Agreement by the Sellers (hereinafter referred to as a "Claim" or "Claims").
Buyer and the Company will indemnify Seller pursuant to the provisions of their
Bylaws and applicable law. Such indemnification obligation shall survive the
Closing.
SECTION 4.02 Sellers' Claim. Buyer shall indemnify and hold harmless
each Seller and his assigns, agents, and affiliates against any and all damages,
claims, losses, liabilities and expenses, including without limitation, legal
accounting, and other expenses actually incurred by Sellers, which may arise out
of any breach of any of the representations or warranties made in this Agreement
by Buyer, and for any liabilities or obligations of the Company now existing or
arising hereafter.
V.
OTHER AGREEMENTS
SECTION 5.01 Operations. From the date hereof until the Closing, Seller
and the Company shall take no action involving the Company without the knowledge
and consent of Buyer.
SECTION 5.02 Future Assistance. Each party hereto shall assist the
others in fulfilling the intent and purposes of this Agreement and shall take
all such further action as shall be reasonably necessary to effectively convey
the business of the Company to Buyer and allow for the timely reporting of the
transaction to all governmental and taxing authorities.
VI.
MISCELLANEOUS
SECTION 6.01 Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated, and the Seller shall not charge any such
expenses to the Company.
SECTION 6.02 Survival of Agreements. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the sale and delivery of the Shares pursuant
hereto.
SECTION 6.03 Certain Rules of Interpretation. Any information disclosed
in any schedule attached hereto or any certificate furnished in connection
herewith shall be deemed disclosed wherever otherwise required, and for all
purposes, under this Agreement, whether or not specific
-4-
<PAGE>
reference was made thereto. Inclusion of any information in a schedule or
exhibit shall not be deemed an admission as to the materiality of such
information or otherwise alter or affect the provisions of the representation or
warranty to which the schedule or exhibit relates.
SECTION 6.04 Parties in Interest. All covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not.
SECTION 6.05 Notices. All notices, requests, consents, or other
communications hereunder shall be in writing and shall be delivered personally
or by courier or mailed by first class registered or certified mail, postage
prepaid, in either case addressed as follows:
(a) if to the Buyer
c/o Kim Crowther and Brian Jensen
1240 E 100 S, Suite 11 & 12
St George, Utah 84790
(b) if to the Seller
Voxcom Holdings, Inc.
8115 Preston Road
Suite 800 - East
Dallas, Texas 75225
Attention: Don McLellan
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. Any such communication shall
be deemed given when actually delivered to the address indicated.
SECTION 6.06 LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.
SECTION 6.07 Entire Agreement. This Agreement, along with the Schedules
and Exhibits attached hereto, constitutes the entire agreement of the parties
with respect to the subject matter hereof and may not be modified or amended
except in writing.
SECTION 6.08 Counterparts. This Agreement, including all agreements
executed and delivered hereunder, may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
SECTION 6.09 Time. Time is of the essence of this Agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, each of the Sellers and the Buyer has executed this
Agreement or caused this Agreement to be executed on its behalf by its duly
authorized representative, as of the day and year first above written.
SELLER:
VOXCOM HOLDINGS, INC.
By: /s/ Donald G. McLellan
-----------------------------------
Donald G. McLellan, President
BUYER:
/s/ Kim Crowther
-----------------------------------------
Kim Crowther
/s/ Brian Jensen
-----------------------------------------
Brian Jensen
-6-
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
We have issued our report dated September 18, 1998, accompanying the financial
statements of Voxcom Holdings, Inc., contained in the Registration Statements
and Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus, and to the use of our name as it appears
under the caption "Experts".
/s/ GRANT THORNTON LLP
GRANT THORNTON LLP
Dallas, Texas
October 8, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 1,827,302
<SECURITIES> 0
<RECEIVABLES> 398,720
<ALLOWANCES> (36,000)
<INVENTORY> 762,100
<CURRENT-ASSETS> 3,362,547
<PP&E> 1,169,361
<DEPRECIATION> 320,331
<TOTAL-ASSETS> 5,995,951
<CURRENT-LIABILITIES> 2,822,193
<BONDS> 0
0
11,500,000
<COMMON> 609
<OTHER-SE> (8,745,320)
<TOTAL-LIABILITY-AND-EQUITY> 2,755,289
<SALES> 21,255,098
<TOTAL-REVENUES> 21,255,098
<CGS> 2,621,075
<TOTAL-COSTS> 19,636,213
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 148,975
<INCOME-PRETAX> (1,151,165)
<INCOME-TAX> (52,258)
<INCOME-CONTINUING> (1,098,907)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,098,907)
<EPS-PRIMARY> (.20)
<EPS-DILUTED> (.20)
</TABLE>
