<PAGE> 1
As filed with the Securities and Exchange Commission on October 12, 1999.
Registration No. __________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form SB-2
Registration Statement
Under the Securities Act of 1933
-------------------------
POP N GO, INC.
(Name of Small Business Issuer in Its Charter)
-------------------------
<TABLE>
<S> <C> <C>
DELAWARE 358100 95-4603172
- ---------------------- --------------------------- --------------------
State of Incorporation Primary Standard Industrial IRS Employer
Classification Code Number Identification No.
</TABLE>
12429 EAST PUTNAM STREET
WHITTIER, CALIFORNIA 90602
(562) 945-9351
(Address and Telephone Number of
Principal Executive Officer and Principal Place of Business)
MELVIN WYMAN
12429 EAST PUTNAM STREET
WHITTIER, CALIFORNIA 90602
(562) 945-9351
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Agent for Service)
With copy to:
DAVIS & ASSOCIATES, INC.
ATTORNEYS AT LAW
P. O. BOX 12009
MARINA DEL REY, CALIFORNIA 90295
(310) 823-8300
-------------------------
<PAGE> 2
Approximate Date of Commencement of Proposed Sale to the Public: From
time to time after the Registration Statement becomes effective.
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 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>
================================================================================
Title of Each Class of Amount to be Proposed Maximum
Securities to be Registered Registered(1) Offering Price Per Share(2)
- --------------------------- ------------- ---------------------------
<S> <C> <C>
Common Stock 1,994,548 $2.00
================================================================================
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as
amended. The maximum price per share information is based on the average
high and the low sale price of Pop N Go, Inc.'s Common Stock, reported
in the Pink Sheets for October 12, 1999.
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 shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act or until the Registration Statement shall become effective on such date as
the Securities and Exchange Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 3
SUBJECT TO COMPLETION, DATED OCTOBER , 1999
PROSPECTUS
POP N GO, INC.
1,994,548 SHARES OF THE COMPANY'S COMMON STOCK TO BE SOLD BY
EXISTING HOLDERS OF THE COMPANY'S COMMON STOCK
The stockholders of Pop N Go, Inc. as described under the caption
"Seller Stockholders" on page 10 of this Prospectus are offering and selling up
to 1,994,548 Shares of Pop N Go, Inc.'s Common Stock under this Prospectus. The
Common Stock is traded over-the-counter in the Pink Sheets. The Common Stock's
symbol is "POPN". On September 30, 1999, the average of the bid and ask price in
the Pink Sheets of a single share of the Common Stock was $2.00.
You should carefully review "Risk Factors" beginning on page 5 for a
discussion of things you should consider when investing in our Common Stock.
The shares we are offering are not being offered by the Company for
cash. Each of the selling stockholders may offer and sell from time to time
shares of Pop N Go's Common Stock directly or through broker-dealers or
underwriters who may act solely as agents, or who may acquire shares as
principals. The price to the public and the net proceeds to the selling
stockholders from sales of their shares will depend on the nature and timing of
the sales and therefore will not be known until the sales are actually made.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in the Prospectus is not complete and may be changed.
The selling stockholders may not sell these securities until the Registration
Statement filed with the SEC is effective. This Prospectus is not an offer to
sell securities and is not soliciting an offer to buy these securities in any
state where the offer is prohibited.
Prospectus dated September 30, 1999
1
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUMMARY 4
RISK FACTORS 5
We Have a Limited Operating History
On Which to Evaluate an Investment
In this Offering 5
We Are Currently a One Product
Company and Not Diversified 5
We May Fail to Obtain
Additional Funding If Needed 5
A Down turn in the Food Vending Industry
Would Adversely Affect our Business 6
Our Business is Subject to the
Risks of Foreign Operations 6
Our Operations Would be Adversely
Affected by the Loss of Key Personnel 6
We Have Fewer Financial Resources than
Many of our Competitors 6
We Have Applied for But Have Not Yet
Obtained Patent Protection 7
Our Business May Subject us to Expensive
Product Liability Claims 7
Controlling and Certain Other Current Shareholders
Acquired Their Shares as Promotion Shares for
Nominal Consideration or for Services; Investment
In Our Shares May Involve Future Dilution 7
Certain Stockholders Effectively Control
Our Operations 8
We Do Not Plan to Pay Any
Dividends for the Foreseeable Future 8
Our Business Could be Adversely
Affected if our Customers Encounter
Year 2000 Problems 8
Possible Volatility of Stock Price 8
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C>
SELECTED FINANCIAL INFORMATION 10
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION 11
USE OF PROCEEDS 14
WHERE YOU CAN GET MORE INFORMATION 14
NET TANGIBLE BOOK VALUE PER SHARE 15
MARKET PRICE OF THE COMMON STOCK 15
DIVIDEND POLICY 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 17
BUSINESS 22
MANAGEMENT 27
PRINCIPAL STOCKHOLDERS 29
CERTAIN TRANSACTIONS 30
DESCRIPTION OF SECURITIES 31
PROSPECTUS 32
EXPERTS 32
</TABLE>
3
<PAGE> 6
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. This summary is not complete and may not contain all of the
information you should consider before investing in the securities we are
offering. You should read the entire prospectus carefully. You should also read
our consolidated financial statements and the notes to the consolidated
financial statements.
POP N GO, INC.
Pop N Go, Inc., a Delaware corporation organized in October of 1996 (the
"Company"), is engaged in the development, manufacture and sale of proprietary
specialty food service and vending equipment.
We commenced business in October of 1996, and began shipping our first
product, the Pop N Go "Hot Air Popcorn Vending Machine", in the fourth quarter
of 1997. The Company has recently initiated development work on its second
product, "Go Nuts", a Hot Nuts Vending Machine.
We have shipped 420 units of our Pop N Go Hot Air Popcorn vending
machines through June 1, 1999, generating $1,143,826 in gross equipment sales
revenues. As of June 1, 1999, we had a backlog of $150,000 in orders for our
popcorn machines.
Our executive offices are located at 12429 East Putnam Street,
Whittier, California 90602. Our telephone number is (562) 945-9351.
4
<PAGE> 7
RISK FACTORS
Investing in the units is very risky. Investors should carefully
consider the following factors in addition to the other information in this
prospectus, in evaluating an investment in Pop N Go, Inc.
1. We Have A Limited Operating History On Which To Evaluate An
Investment In This Offering.
We have a limited operating history on which you must base your
investment decision and are subject to all of the risks associated with
development stage enterprises. We had no significant operations prior to October
of 1996. Accordingly, we are subject to various risks common to developing
businesses, including cash flow difficulties, competition for customers and
employees and delays in implementing business plans. We intend to expand our
sales, which will substantially increase our expenses and will likely decrease
our cash flow and earnings in the near future. Our ability to operate profitably
will depend on increasing sales, maintaining adequate profit margins and a
continuing demand for our products. Any of the increased sales may have a
negative impact on our profitability, at least in the short term, as significant
expenses will be incurred prior to the receipt of additional revenues. See
"Financial Statements" and "Business."
2. We are Currently a One Product Company and Not Diversified.
Pop N Go has only one product fully developed and in production at this
time - its popcorn machine. As a result, its business revenues and cash flow are
dependent on this single food vending machine.
The Company's nut machine is still in an experimental stage and will
require significant further research, development and testing. Because the
popcorn machine is so new, and because the nut machine is still to be developed,
both products are subject to the risks of failure in development and/or market
acceptance.
3. We May Fail To Obtain Additional Funding As Needed.
Our inability to raise additional capital when needed would have an
adverse effect on our plans to expand sales. This offering will not
generate proceeds to the Company from the sale by our shareholders of their
registered shares.
We believe, but cannot assure, that revenues from operations will be
sufficient to fund our current operational requirements. However, we will likely
need to raise additional capital
5
<PAGE> 8
within four to six months from this date. We do not know if additional funds
will be available on acceptable terms, or if at all, when needed.
4. A Downturn In The Food Vending Industry Would Adversely Affect
Our Business
An economic downturn in the food vending industry could have a serious
negative impact on our business. Since our customers depend on the discretionary
buying patterns of vending food consumers, our business is impacted by all of
the economic factors which affect the food vending industry. When the food
vending industry experiences an economic downturn, due to a down turn in the
economy, a reduction in consumer spending, a drop in travel or dietary trends
away from vending foods, or for other reasons, there is typically a
corresponding reduction in demand for food vending equipment and related
services, which causes price reductions and increased credit risks associated
with doing business.
5. Our Business is Subject to the Risks of Foreign Operations.
As a result of our worldwide marketing of our equipment, our success is
subject to risks of doing business abroad, particularly as these risks relate to
sales of equipment, marketing, possible financing of customers, currency
exchange fluctuations, and enforcement of contracts under foreign laws and in
foreign jurisdictions. There can be no assurance that one or more of such
factors will not have a negative impact on Pop N Go's business.
6. Our Operations Would be Adversely Affected by the Loss of Key
Personnel.
Our ability to successfully implement our business strategy and operate
profitability will be dependent to a significant degree upon the services of Mel
Wyman, our Chief Executive Officer, Vernon Brokke, our President, and Dwight
Moody, our Director of Manufacturing, and upon our ability to attract and retain
other qualified personnel experienced in the various phases of our business.
While we have entered into employment agreements with Mr. Wyman, Mr. Brokke, and
Mr. Moody, the loss of their services would jeopardize our operations. We will
also be dependent upon other employees as we expand operations. The loss of, or
failure to retain and develop such persons could negatively affect our business
or financial results. See "Management."
7. We Have Fewer Financial Resources Than Many Of Our Competitors
Kettle poppers that use oil to cook popcorn in batches are our major
competition. Major manufacturers of kettle poppers are companies with longer
operating histories and greater resources than Pop N Go. We believe the
freshness of our machine's product, as well as the ease of cleanup and the
entertainment value of the machine's design, give our product
6
<PAGE> 9
a significant advantage over kettle popper products, although such competitors
can afford to reduce their prices and commit more resources to marketing their
products so as to remain extremely competitive. We may not be able to afford to
match such measures, and thereby may be unable to compete successfully.
8. We have Applied for But Have Not Yet Obtained Patent Protection.
We have applied for, but have not yet been granted, patents on various
aspects of our popcorn machine. We intend to file for patents on various aspects
of our nut machine. However, there can be no assurance that current or future
patent applications will result in patents being issued. There also can be no
assurance that such patents, if issued, will afford effective protection against
competitors, or that any patents issued or licensed to Pop N Go will not be
infringed upon or designed around by others.
We also rely on trade secrets to protect our innovations. There can be
no assurance that secrecy obligations will be honored or that others will not
independently develop similar or superior products. To the extent that
consultants, key employees or other third parties apply technological
information independently developed by them or by others to our projects,
disputes may arise as to the proprietary rights to such information, and any
such disputes may not be resolved in our favor.
9. Our Business May Subject Us To Expensive Product Liability
Claims
Our business exposes us to possible claims for personal injury or death
which may result from a failure of our equipment, or its misuse by equipment
purchasers. We believe that we have taken adequate precautions to assure the
quality of our machines. We also maintain liability insurance with coverage
limits of $1,000,000 per occurrence and $2,000,000 in the annual aggregate.
Although Pop N Go has never been subject to A product liability claim, there can
be no assurance that the coverage limits of Pop N Go's insurance policies will
be adequate or that one or more successful claims brought against Pop N Go would
not have a material adverse effect upon Pop N Go's business, financial condition
and results of operations.
10. Controlling and Certain Other Current Shareholders Acquired
Their Shares as Promotion Shares for Nominal Consideration or
for Services; Investment In Our Shares May Involve Future
Dilution
Our controlling shareholders and certain of our other shareholders
acquired their stock in the Company in part as promotional stock for consulting
services, and the transfer of a patent and technology, and in part at cash
prices well below the price at which shares may be acquired from the Selling
Shareholders. We intend to issue and sell additional shares of our common stock
in the future, the result of which may dilute the percentage interest new
investors will receive.
7
<PAGE> 10
11. Certain Stockholders Effectively Control Our Operations
Certain of our stockholders own significant blocks of our common stock
and have the ability to exert significant influence over the operation of our
business. Our two founding shareholders, who also serve as our officers and
directors, beneficially own in the aggregate over 30% of our issued and
outstanding common stock. While each of these stockholders is an independent
party, if these parties were to act together as a group, they have the ability
to effectively control the election of all of the members of our Board of
Directors and, therefore, to control our business, policies and affairs.
12. We Do Not Plan to Pay Any Dividends for the Foreseeable Future
We have not in the past and do not plan in the foreseeable future to pay
dividends on our common stock. Earnings, if any, are expected to be retained to
finance and develop our business. See "Dividend Policy."
13. Our Business Could be Adversely Affected if our Customers
Encounter Year 2000 Problems
If the computer software programs and operating systems of our vendors,
customers and other third parties with whom we transact business are not "Year
2000" compliant, then our business could experience disruption and other
problems in early 2000. All of our hardware and software has been upgraded or
replaced so that it can interpret appropriately the upcoming calendar year 2000,
and our computer software programs and operating systems are "Year 2000"
compliant. However, we have not fully determined the extent to which our
vendors, customers and other persons with whom we transact business have systems
which are "Year 2000" compliant. In the event that a material portion of our
suppliers or customers suffer business disruption as the result of "Year 2000"
problems, we could be adversely affected. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Year 2000 Issue".
14. Possible Volatility of Stock Prices
The market price of our common stock may be subject to significant
volatility until a stable, regular trading market for our common stock develops.
As of September 30, 1999, we had 6,508,290 issued and outstanding shares of
common stock. There has been a history of significant volatility in the market
prices for securities of companies in a similar stage of development. We expect
that the market price of our common stock will be highly volatile in the future.
8
<PAGE> 11
Our Common Stock may be subject to certain limitations upon trading
activities. Trading of our securities will likely be subject to material
limitations as a consequence of certain provisions of the Securities Exchange
Act of 1934 which limit the activities of broker-dealers effecting transactions
in "penny stocks."
"Penny stocks" are equity securities with a market price below $5.00 per
share other than a security that is registered on a national exchange; included
for quotation in the NASDAQ system; or whose issuer has net tangible assets of
more than $2,000,000 and has been in continuous operation for greater than three
(3) years. Issuers who have been in operation less than three (3) years must
have net tangible assets of at least $5,000,000.
Rules promulgated by the Securities and Exchange Commission under
Section 15(g) of the Exchange Act require broker-dealers engaging in
transactions in "penny stocks," to first provide to their customers a series of
disclosures and documents, including: (i) a standardized risk disclosure
document identifying the risks inherent in investment in "penny stocks;" (ii)
all compensation received by the broker-dealer in connection with the
transaction; (iii) current quotation prices and other relevant market data; and
(iv) monthly account statements reflecting the fair market value of the
securities. In addition, these rules require that a broker-dealer obtain
financial and other information from a customer, determine that transactions in
penny stocks are suitable for such customer and deliver a written statement to
such customer setting forth the basis for such determination.
As a result of these rules, trading activities for our common stock will
be made more difficult for broker-dealers than in the case of securities not
defined as "penny stock". This may have the result of depressing the market for
our securities and an investor may find it difficult to dispose of such
securities.
Further, under the Exchange Act, and the regulations thereunder, any
person engaged in a distribution of the common stock offered by this Prospectus
may not simultaneously engage in market making activities with respect to the
common stock during the applicable "cooling off" periods prior to the
commencement of such distribution.
9
<PAGE> 12
SELECTED FINANCIAL INFORMATION
Set forth below is the historical selected financial information with
respect to Pop N Go, Inc. and subsidiary for the fiscal years ended September
30, 1997 and September 30, 1998, and for the nine months ended June 30, 1998,
and the nine months ended June 30, 1999.
<TABLE>
<CAPTION>
Nine Months Nine Months For the Fiscal For the Fiscal
Ended Ended Year Ended Year Ended
June 30, 1999 June 30,1998 Sept 30, 1998 Sept 30, 1997
------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues 499,244 342,820 504,222 250,000
Operating (Loss)
not including interest (1,444,303) (669,365) (1,150,439) (262,272)
Net Income (Loss) per share (0.36) (0.36) (0.48) (0.17)
Weighted average number of 4,039,380 2,361,028 2,795,384 1,769,224
shares outstanding
BALANCE SHEET DATA:
Working Capital (Deficit) 210,008 (386,186)
Total Assets 736,599 571,055
Total Liabilities 260,518 582,541
Total Stockholders'
Equity (Deficit) 476,081 (11,486)
Minority Interest -- --
Net Tangible Book Value
Per Share 0.04 (0.11)
</TABLE>
Forward Looking Statements in this Prospectus are Subject to Risks and
Uncertainties.
The statements contained or incorporated by reference in this Prospectus
that are not historical facts are "forward-looking statements" and can be
identified by the use of forward- looking terminology such as "believes",
"expects", "may", "will", "should", "intends" or "anticipates" or the negative
thereof or other variations thereon or comparable terminology, or by discussions
of strategy that involve risks and uncertainties.
Certain information set forth or incorporated by reference in this
Prospectus, including "Management's Discussion and Analysis of Financial
Condition and Results of Operations" is forward-looking, such as information
related to the effects of future capital commitments
10
<PAGE> 13
and the effects of competition. Such forward-looking information involves
important risks and uncertainties that could significantly affect expected
results in the future from those expressed in any forward-looking statements
made by, or on behalf of, us.
Important factors that may cause actual results to differ from
forward-looking statements may include, for example:
- the success or failure of our efforts to implement our business
strategy, including expanding our international sales;
- our ability to raise sufficient capital to expand our business;
- the effect of changing economic conditions on the food vending
industry;
- changes in government regulations, tax rates and similar matters;
- our ability to attract and retain quality employees; and
- other risks which may be described in our future filings with the
SEC.
We do not promise to update forward-looking information to reflect
actual results or changes in assumptions or other factors that could affect
those statements.
Persons reading this Prospectus are cautioned that such statements are
only predictions and that actual events or results may differ materially. In
evaluating such statements, readers should specifically consider the various
factors which could cause actual events or results to differ materially from
those indicated by such forward-looking statements.
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
The 1,994,548 shares offered under this Prospectus were originally
issued privately by the Company to a limited number of accredited or
sophisticated investors, for cash, in conversion of debt, or for services
rendered, at "private" purchase prices ranging from $0.07 to $1.40. In
connection with our initial sale of these shares to such shareholders, we
entered into agreements with the purchasers whereby we agreed to register the
1,994,548 shares of Common Stock for sale under this Prospectus.
The shares listed below represent, as of the date of this Prospectus,
all of the shares that each of the Selling Shareholders beneficially owns, the
number of shares that may be offered and the number of shares that each of the
Selling Shareholders will own after the offering assuming they each sell all of
the shares offered under this Prospectus.
11
<PAGE> 14
<TABLE>
<CAPTION>
Class A Class A Percent of Percent of
Common Common Class A Class A
Shares Shares Common Common Class A
Held Held Shares Held Shares Held Common
After Before After Before Shares
Name Offering Offering Offering Offering Offered
- ---- ---------- ---------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Calblue Inc.
(Mel Wyman)(1) 612,800 812,800 9.4 12.5 200,000
Gwendolyn
Investments LLC
(Vernon Brokke)(2) 83,250 83,250 1.28 1.3 0
Vernon L.M. Brokke and 816,750 1,016,750 12.5 15.6 200,000
Gwendolyn L. Brokke, TNENT
</TABLE>
(1) Mel Wyman is the Chief Executive and a Director of Pop N Go, Inc. and
through his personal corporation, Calblue Inc., beneficially owns
approximately 12.5% of the outstanding shares of Pop N Go, Inc.'s Common
Stock.
(2) Vernon Brokke is the President and a Director of Pop N Go, Inc. and
holds personally and through his personal corporation, Gwendolyn
Investments, LLC, owns approximately 17.1% of the outstanding shares of
Pop N Go, Inc.'s Common Stock.
<TABLE>
<CAPTION>
Class A Class A Percent of Percent of
Common Common Class A Class A
Shares Shares Common Common Class A
Held Held Shares Held Shares Held Common
After Before After Before Shares
Name Offering Offering Offering Offering Offered
- ---- ------------ ------------ ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Rick Fowler 0 7,143 n/a n/a 7,143
Kenneth A. Burdin 0 10,000 n/a n/a 10,000
Peterson
Family Trust 0 20,000 n/a n/a 20,000
Joseph Ben Mellory 0 7,143 n/a n/a 7,143
Michael J. Herb 0 7,143 n/a n/a 7,143
Stan Robbins 0 3,572 n/a n/a 3,572
Frank Horn 0 20,001 n/a n/a 20,001
Michael P. &
Doreen A
Patterson 0 7,143 n/a n/a 7,143
Stan Decker 0 30,000 n/a n/a 30,000
Matthew J. Goermer 0 7,143 n/a n/a 7,143
Patricia M. Thompson 0 7,143 n/a n/a 7,143
Benjamin Lim 0 23,979 n/a n/a 23,979
Cambridge Concrete Inc. 0 3,600 n/a n/a 3,600
Thomas F. & Donna K
Pliska 0 15,000 n/a n/a 15,000
Charles F. Ondreicek 0 20,000 n/a n/a 20,000
David T. Hunter 0 10,000 n/a n/a 10,000
Rocco R. Garrio 0 3,572 n/a n/a 3,572
Mary Jo Olson 0 30,000 n/a n/a 30,000
Lydia B. Ismael
Corinthian, LLC 0 20,000 n/a n/a 20,000
Nancy N. Potter 0 2,143 n/a n/a 2,143
Martin A. McGowan 0 5,000 n/a n/a 5,000
Diane M. Hissink and
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
Class A Class A Percent of Percent of
Common Common Class A Class A
Shares Shares Common Common Class A
Held Held Shares Held Shares Held Common
After Before After Before Shares
Name Offering Offering Offering Offering Offered
- ---- ------------ ------------ ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Patrick M. Bagg 0 7,143 n/a n/a 7,143
Kenneth Laufer 0 27,143 n/a n/a 27,143
Robert L. Mehl 0 50,001 n/a n/a 50,001
Carol M. York 0 14,286 n/a n/a 14,286
Brian Roland 0 10,000 n/a n/a 10,000
R.D. Boland 0 40,000 n/a n/a 40,000
Stanford L. Hart 0 5,000 n/a n/a 5,000
David Joseph Harsch 0 10,000 n/a n/a 10,000
Joseph G. Birnbaum 0 38,573 n/a n/a 38,573
Robert J. Corsiglia 0 10,000 n/a n/a 10,000
Ikon Group, Inc. 0 17,000 n/a n/a 17,000
George Auld 0 24,286 n/a n/a 24,286
R and J of Norfolk, Inc. 0 10,000 n/a n/a 10,000
R.W. Cameron 0 18,286 n/a n/a 18,286
Ricardo C. Carvalho 0 3,572 n/a n/a 3,572
Bernard Saul 0 100,001 0 1.5 100,001
Dr. Stuart C. Rubin 0 7,143 n/a n/a 7,143
Sandra H. Wilensky 0 7,143 n/a n/a 7,143
Neal Kaufman 0 715 n/a n/a 715
Kelly Mattia 0 3,572 n/a n/a 3,572
Barbara J. Stubblefield 0 7,143 n/a n/a 7,143
Nels & Mary-Ann Nelson
Living Trust dd 6/21/81 0 11,000 n/a n/a 11,000
Mary L. Ducummon 0 7,143 n/a n/a 7,143
Midas Fund, Ltd.-Class A 0 35,715 n/a n/a 35,715
Kazuko Ross 0 14,286 n/a n/a 14,286
Robert M. Stilson 0 10,500 n/a n/a 10,500
Dr. Brian Billard 0 21,429 n/a n/a 21,429
Jeanette I. Preston 0 7,143 n/a n/a 7,143
Richard Windle 0 10,000 n/a n/a 10,000
George V. Envall 0 3,572 n/a n/a 3,572
Thomas J & Lois McDonnell 0 3,572 n/a n/a 3,572
Irving Berke, MD 0 14,286 n/a n/a 14,286
George S. Weart 0 7,143 n/a n/a 7,143
Richard A. Wood 0 7,143 n/a n/a 7,143
James & Dorothy
Horalek TTEE 0 21,429 n/a n/a 21,429
Patrick Stanton 0 14,286 n/a n/a 14,286
Donald E. Green 0 7,143 n/a n/a 7,143
Elmer L. Christiansen 0 25,000 n/a n/a 25,000
Chris S. Lee 0 3,575 n/a n/a 3,575
Ronald W. Milbourn 0 7,000 n/a n/a 7,000
Julia M. Wong 0 10,000 n/a n/a 10,000
Vahe M. Hovsepian 0 7,143 n/a n/a 7,143
John Ganim 0 10,000 n/a n/a 10,000
Annuit Coeptis Corp 0 1,786 n/a n/a 1,786
Kenneth/Evelyn Lovelace 0 1,786 n/a n/a 1,786
Stephen M. Spurrier 0 5,000 n/a n/a 5,000
Williams & Patsy Gardiner 0 7,143 n/a n/a 7,143
Peter V. Wagner 0 15,000 n/a n/a 15,000
Michael D. Rapperport 0 32,144 n/a n/a 32,144
Homer Chan 0 20,000 n/a n/a 20,000
Robert E. Shafarman 0 5,000 n/a n/a 50,000
Bonnie Parlee 0 7,143 n/a n/a 7,143
Jessica Mayer 0 24,286 n/a n/a 24,286
Jason H. Wilensky 0 7,143 n/a n/a 7,143
Richard Nibbe 0 21,429 n/a n/a 21,429
Kenneth Knight 0 7,143 n/a n/a 7,143
Fred Kazzouti 0 14,286 n/a n/a 14,286
P&M Marketing Group, Inc. 0 160,000 0 2.4 160,000
First York Partners, Inc. 125,000 275,000 1.9 4.2 150,000
Alex Mendez 143,500 203,500 2.2 3.1 60,000
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
Class A Class A Percent of Percent of
Common Common Class A Class A
Shares Shares Common Common Class A
Held Held Shares Held Shares Held Common
After Before After Before Shares
Name Offering Offering Offering Offering Offered
- ---- ------------ ------------ ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Peter Stonebridge 143,500 203,500 2.2 3.1 60,000
Jon Goldstein 35,875 50,875 n/a n/a 15,000
Scott Carter 35,875 50,875 n/a n/a 15,000
Herbert Davis 0 35,000 n/a n/a 35,000
</TABLE>
The Selling Stockholders may effect the distribution of the shares in
one or more transactions that may take place through the over-the-counter Pink
Sheets, including block trades or ordinary broker's transactions, through
privately negotiated transactions, in an underwritten offering, or a combination
of any such methods of sale. Sales of the shares will be made at market prices
prevailing at the time of sale or at negotiated prices. Selling Stockholders may
pay usual customary or specifically negotiated brokerage fees or commissions in
connection with such sales, as well as the fees of their attorneys and
accountants. We have agreed to pay all expenses, including filing fees, relating
to preparation of this registration statement, and the fees of our attorneys and
accountants.
USE OF PROCEEDS
All net proceeds from the sale of the shares will go to the stockholders
who offer and sell them. We will not receive any proceeds from the sale of
shares by the Selling Stockholders.
WHERE YOU CAN GET MORE INFORMATION
This Prospectus is part of a Registration Statement on Form SB-2 filed
by us with the SEC under the Securities Act of 1933. As permitted by SEC rules,
this Prospectus does not contain all of the information included in the
Registration Statement and the accompanying exhibits filed with the SEC. You may
refer to the Registration Statement and its exhibits for more information.
At your request, we will provide you, without charge, a copy of any
exhibits to our Registration Statement. If you would like more information,
write or call us at:
POP N GO, INC.
12429 East Putnam Street
Whittier, California 90602
Telephone: (562) 945-9351
Facsimile: (562) 945-6341
Our fiscal year ends on September 30. We intend to provide annual
reports containing audited financial statements and other appropriate reports to
our shareholders. In addition, we intend to become a reporting company and file
annual, quarterly and current reports, proxy statements and other information
with the SEC. You may read and copy any reports, statements or other information
we file in the future at the SEC's public reference room in
14
<PAGE> 17
Washington, D.C. You can request copies of such documents, upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference rooms. Our
future SEC filings will also be available to the public on the SEC Internet site
at http\\www.sec.gov.
You should rely on the information provided in this Prospectus. We have
not authorized anyone to provide you with different information. You should not
assume that the information in this Prospectus is accurate as of any date other
than the date on the first page of the Prospectus. No offer of securities is
being made in any state or country in which the offer or sale is not permitted.
NET TANGIBLE BOOK VALUE PER SHARE
As of June 30, 1999, the net tangible book value of our common stock
was $241,615 or $0.04 per share of common stock, based upon 5,413,508 shares
outstanding. "Net tangible book value" per share represents the amount of our
total tangible assets reduced by our total liabilities divided by the number of
shares of common stock outstanding.
MARKET PRICE OF THE COMMON STOCK
As of the date of this prospectus, our common stock is traded in the
over-the-counter market through the "Pink Sheets" under the symbol "POPN", and
has traded publicly since April 26, 1999. The market for our common stock on the
Pink Sheets is sporadic, and the quarterly average daily volume of shares traded
since our listing in the Pink Sheets on April 26, 1999, ranged from a low of 200
shares to a high of 400 shares. The following table presents the range of the
high and low bid and estimated average daily volume information for our common
stock for the periods indicated, which information was provided by the NASDAQ
Stock Market, Inc. The quotations reflect inter-dealer prices, without retail
mark-up, markdown or commission, and may not represent actual transactions.
<TABLE>
<CAPTION>
Estimated
Average Daily
High Low Volume (Shares)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Third Quarter of Fiscal Year
Ending 9/30/99 2.50 1.50 200
Second Quarter of Fiscal Year
Ending 9/30/99 2.50 1.50 400
</TABLE>
Records of our stock transfer agent indicate that as of September 1,
1999, there were 264 record holders of our common stock.
15
<PAGE> 18
DIVIDEND POLICY
We have not paid any cash dividends to date, and do not anticipate or
contemplate paying cash dividends in the foreseeable future. We intend to
utilize all available funds for the purposes set forth above under "Use of
Proceeds."
16
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the Company's
consolidated financial statements and accompanying notes. This prospectus
contains certain forward-looking information, which involves risks and
uncertainties. The actual results could differ from the results we anticipate.
See "Special Note Regarding Forward-Looking Statements."
NINE MONTHS ENDED JUNE 30, 1999 VERSUS NINE MONTHS ENDED JUNE 30, 1998
RESULTS OF OPERATIONS
The Company incurred a net loss of $1,478,393 for the nine months ended
June 30,1999, as compared to a net loss of $847,541 for the nine months ended
June 30, 1998. This loss represents a loss from operations of $1,444,303 and
$669,365 for the nine months ended June 30, 1999 and 1998, respectively. The net
loss also includes interest expense totaling $32,275 and $177,273 for the nine
months ended June 30,1999 and 1998, respectively.
Total revenues for the nine months ended June 30, 1999 were $499,244 as
compared to $342,820 for the nine months ended June 30, 1998. This represents an
increase in revenues of 46% over the same period in the prior year. This
increase was primarily due to additional popcorn machine sales during 1999.
Total cost of goods sold for the nine months ended June 30,1999 was
$404,721 as compared to $269,709 for the nine months ended June 30, 1998. The
gross profit percent on the equipment sales went from 21.3% for the nine months
ended June 30, 1998 to 18.9% for the nine months ended June 30, 1999. This
decrease in the gross profit percent was primarily caused by higher costs
associated with producing the popcorn machines.
Total operating expenses consist primarily of development expenses and
general and administrative expenses. For the nine months ended June 30, 1999,
total operating expenses were $1,538,826. For the nine months ended June 30,
1998, total operating expenses were $742,476. This represents a 107% increase
over the same period in the prior year.
General and administrative expenses for the nine months ended June 30,
1999 was $1,311,066 as compared to $537,495 for the nine months ended June 30,
1998. This represents an increase of 144% over the same period in the prior
year. This increase was caused by higher professional fees due to various
filings and business activities of the Company, increases in salaries and wages
due to hiring of additional employees, increases
17
<PAGE> 20
in travel and trade show expenses, amortization of costs relating to acquiring
the proprietary software, and the issuance of stock for services.
Interest expense went from $177,273 for the nine months ended June 30,
1998 to $32,375 for the nine months ended June 30, 1999. This represents a
decrease in interest expense of 82% from the prior period. This decrease was due
to the issuance of common stock in exchange for convertible debentures which had
an interest rate of 15%. As of June 30,1999, the Company had exchanged all of
its convertible debentures for shares of its common stock.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30,1999, the Company had cash and cash equivalents of $90,987
as compared to cash and cash equivalents of $128,152 as of June 30, 1998. As
June 30,1998, the Company had working capital (total current assets in excess of
total current liabilities) of $210,008 as compared to a working capital
deficiency of ($446,877) as of June 30, 1998. Net cash used in operating
activities was $1,538,712 for the nine months ended June 30,1999 and $338,210
for the nine months ended June 30, 1998. The principal use of cash for the nine
months ended June 30, 1999 was to fund the net loss from operations for the
period. The Company raised a total of $1,665,960 from the issuance of common
stock, net of stock issuance costs, during the nine months ended June 30, 1999,
and this was used to fund the net loss from operations, as well as to purchase
furniture and equipment and pay off a loan from a shareholder.
Net cash used in investing activities was $18,499 and $178,828 for the
nine months ended June 30,1999 and 1998, respectively. This decrease in net cash
used in investing activities was as a result of a significant decrease in
expenditures for proprietary technology during the nine months ended June 30,
1999, for which the research and development was completed during the prior
period.
Net cash from financing activities was $1,630,960 for the nine months
ended June 30,1999 as compared to $524,545 for the nine months ended June 30,
1998. The large increase during the nine months ended June 30, 1999 was
primarily caused by the company raising additional equity capital through the
issuance of common stock in a private placement.
YEAR ENDED SEPTEMBER 30,1998 VERSUS PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO
SEPTEMBER 30, 1997
RESULTS OF OPERATIONS
The Company incurred a net loss of $1,338,148 for the year ended
September 30, 1998 as compared to a net loss of $297,218 for the period from
October 21, 1996 (inception) to September 30, 1997. This loss represents a loss
from operations of
18
<PAGE> 21
$1,150,439 and $262,272 for the year ended September 30, 1998 and from October
21, 1996 (inception) to September 30,1997, respectively. The net loss also
includes interest expense totaling $186,630 and $32,067 for respective periods.
Total revenues for the year ended September 30, 1998 were $504,222 as
compared to $250,000 for the period from October 21,1996 (inception) to
September 30, 1997. This represents an increase in revenues of 102% over the
prior period. This increase was primarily to the development and sale of popcorn
machines during the year ended September 30,1998. Total revenues for the period
from October 1, 1996 (inception) September 30, 1997 were solely from the sale of
franchises as the popcorn machines were in development and were not offered for
sale during that period.
Total cost of goods sold for the year ended September 30, 1998 was
$415,609 as compared to $0 for the period from October 21, 1996 (inception) to
September 30,1997. The gross profit percent on the equipment sales went from
17.6% for the year ended September 30, 1998. There was no cost of sales for the
period from October 21, 1996 (inception) to September 30, 1997 due to the fact
that no popcorn machines were sold or available for sale and that the revenues
were solely from the sale of franchises.
Total operating expenses consist primarily of development expenses and
general and administrative expenses. For the year ended September 30, 1998,
total operating expenses were $1,239,052. For the period from October 21,1996
(inception) to September 30, 1996, total operating expenses were $512,272. This
represents a 142% increase over the same period in the prior year. The increase
was caused by a large increase in general and administrative expenses and the
issuance of stock options and stock for services valued at a total of $341,570.
General and administrative expenses for the year ended September 30,
1998 were $726,096 as compared to $305,386 for the period from October 21, 1996
(inception) to September 30,1997. This represents and increase of 138% over the
same period in the prior year. This increase was caused by a large writeoff of a
trade receivable and the issuance of stock and stock options for services during
the year ended September 30,1998.
Interest expense went from$32,067 for the period from October 21, 1996
(inception) to September 30, 1997 to $186,630 for the year ended September
30,1998. This represents an increase in interest expense of 482% from the prior
period. This increase was due primarily from the interest on the convertible
debentures issued during the period.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30,1998, the Company had cash and cash equivalents of
$17,238 as compared to cash and cash equivalents of $120,646 as of September
30,1997. At September 30,1998, the Company had a working capital deficiency
(total current liabilities in excess of total current assets) of ($386,186) as
compared to a working capital deficiency
19
<PAGE> 22
of ($179,825) as of September 30, 1997. Net cash used in operating activities
was $577,661 for the year ended September 30, 1998 and $373,997 for the period
from October 21,1996 (inception) to September 30, 1997.
The principal use of cash for the year ended September 30,1998 was to
fund the net loss from operations for the period. The Company raised a total of
$235,040 from the issuance of common stock and an additional $420,000 from the
sale of convertible debentures during the year ended September 30, 1998, and
this was used to fund the net loss from operations, as well as to purchase
furniture and equipment and the expenditures for the development of proprietary
technology.
Net cash used in investing activities was $265,607 and $90,857 for the
year ended September 30,1998 and for the period from October 21, 1996
(inception) to September 30, 1997, respectively. This increase in net cash used
for investment activities was as a result of significant expenditures for
proprietary technology and furniture and equipment during the year ended
September 30, 1998.
Net cash flows from financing activities was $739,860 for the year ended
September 30,1998 as compared to $585,000 for the period from October 21, 1996
(inception) to September 30,1997. This increase during the year ended September
30, 1998 was primarily caused by the Company's sale of common stock convertible
debentures.
The Company believes, but can not assure, that revenues from operations
will be sufficient to fund current operational requirements. However, the
Company will likely need to raise additional capital within four to six months
from this date, particularly if sales increase sufficiently; of which there is
no guarantee. If additional capital is needed, it is uncertain such capital will
be available on acceptable terms.
INFLATION
Although we cannot accurately anticipate the effect of inflation on our
operations, we do not believe that inflation has had, or is likely in the
foreseeable future to have, a material effect on our results of operations or
financial condition.
YEAR 2000 ISSUE
The widespread use of computer programs that rely on two-digit dates to
perform computations and decision making functions may cause computer systems to
malfunction prior to or in the year 2000 and lead to significant business delays
and disruptions in the U.S.
and internationally.
We cannot assure you that Year 2000 compliance plans of our vendors and
customers will be completed on a timely manner. With respect to vendors, we
believe that there are sufficient numbers of vendors of parts that any Year 2000
problems encountered by a particular vendor will not adversely impact our
ability to purchase inventory. In the event that any particular customer
encounters Year 2000 difficulties, it may impact our sales to, or collection of
receivables from, that customer until the problems are resolved. We believe that
our sales are sufficiently diversified that this would not result in a material
adverse impact on operating results. In addition, any such disruption is likely
to be temporary and result in a
20
<PAGE> 23
delay, rather than loss, of sales to that customer. However, if a number of
customers experience problems resulting in significant delays in payment on
outstanding accounts receivable, we could experience material cash flow
difficulties until such problems are resolved.
21
<PAGE> 24
BUSINESS
A. INTRODUCTION
Pop N Go, Inc. (the "Company") is a Delaware corporation, organized in
October of 1996, for the purpose of conducting a business in the development,
manufacturing, marketing and distribution of a new line of specialty food
service and food vending machine equipment.
The Company began operations in October 1996 and began shipping its
first product, the Pop N Go Hot Air Popcorn Vending Machine during the 4th
quarter of 1997.
The Company acquired all of the outstanding shares of Nuts to Go, Inc.
in February of 1997, and thereby technology under development for a hot nuts
vending machine, which management intends to be the Company's second vending
machine product. The Company has carried on development of this technology in
Pop N Go, Inc., Nuts to Go, Inc. is currently an inactive subsidiary without
assets or activities. The Company estimates, although it cannot assure, that it
may introduce this second product, the "Hot Nuts" vending machine, during the
second quarter of 2000.
Profit streams are anticipated to be generated in the future from (1)
the sale of the Pop N Go vending machines (2); and the operation of Company
owned machines on revenue share basis. There is of course no assurance that the
Company will be successful or will realize profits from its activities.
B. PRODUCTS
Pop N Go is a unique hot air based popcorn vending machine which
delivers a fresh cup of popcorn on demand, with butter flavoring or plain. Pop N
Go contains the Company's proprietary microprocessor technology which provides a
closed-loop feedback popping process and generates an audit trail for each cup
vended. The attractive design is geared for the retail environment in an effort
to generate a higher volume of cups vended than a factory lunchroom environment.
The popcorn unit has a moving color LED display that instructs the
customer on how to use the vending machine, neon lights, and an open
"see-through" cooking system that allows the customer to watch and take in the
aroma as the machine pops the popcorn on demand. The neon lights and a moving
color LED display provide for maximum visibility and customer entertainment. The
46 ounce cup of popcorn is popped with hot air during a two- minute vend cycle,
and the customer has a choice of oil-free or butter-flavored popcorn. The latter
is sprayed with butter-flavored oil during the pop cycle.
Pop N Go can be operated in automatic vend mode, manual mode or via
remote control in manual locations where the machine is not located in close
proximity to the cashier. It is
22
<PAGE> 25
available in counter top or floor models. Both models feature a napkin and salt
dispenser and a waste drawer. The vender features fully programmable system
parameters, including cook time, temperature and butter dispenser. All
subsystems can be easily removed for cleaning and maintenance. The machine's
computerized audit system allows for easy access to vend history.
To install the machine, the operator need only remove the fully
assembled unit from its box, and plug it in at a location. Once the operator
stocks the unit with popcorn and flavoring and has verified the kernel and
flavoring dispenser level, he or she must only restock the machine every 100
vends.
The Company's focus on serving the general public in addition to the
office and factory workplace expands the market for fresh popped popcorn
significantly.
In addition to the United States, where the Company has pilot programs
in Chevron, Food Lion and Wilson Farms, the Company also has targeted the
international market for the sale of popcorn units. The Company currently has
distributors in Mexico, France, China, Argentina and South Africa.
Management plans to aggressively develop new niche markets from other
vending equipment. The next vending machine will be Go Nuts, a specialty hot
nuts vender incorporating many of the unique features of the Pop N Go popcorn
vender.
C. THE MARKET
Vending is estimated to be a $30 billion industry according to the Trade
Publication 1998 Vending Times, and worldwide popcorn sales are in excess of 1
billion pounds annually according to the 1998 Popcorn Institute estimate.
Management believes the ability to deliver hot fresh popcorn popped right in
front of the customer with all of the smell and sound of fresh popping corn
presents a powerful attract mode to the consumer. The vend price of $1 for a 46
ounce cup of popcorn represents significant value to the consumer and allows the
owner/operator to net up to $.85 for each cup vended, before paying any location
commissions.
Pop N Go popcorn machines are currently located in convenience stores,
supermarkets, bowling alleys, car washes, military bases and a wide range of
other retail, industrial and office locations.
Management believes there is a trend toward eating healthy, which gives
Pop N Go a significant advantage over microwave and other kettle popped
products, since Pop N Go is the only popcorn that can be delivered totally
oil-free. The customer who enjoys butter flavoring can choose that option by
making that selection during the vend process. The total vend cycle takes
approximately 2 minutes, which is shorter than the microwave or kettle popped
process.
23
<PAGE> 26
D. DISTRIBUTORS & MARKETING
The Company has entered into oral or written distribution agreements
with 10 distributors as follows:
VTR Services
Michigan Carbonics
New Brunswick Saw Service
Diasa S.A.
R&J of Norfolk
Carib Latin World Trading Inc.
Starvend
Credivest, C.C.
Ten Hoeve
KAM International
The Company's President is a minority shareholder in VTR Services, Inc.,
one of the Company's distributors for the mid-Atlantic region. The terms by
which the Company does business with VTR are the same as with the Company's
other distributors.
The Company management estimates there may be over one million potential
locations for its popcorn machine in the U.S., including 100,000 convenience
stores, and thousands of other retail stores, schools, hospitals, offices and
military bases.
E. CUSTOMERS
We have over 120 customers, which include Diasa, Kam International and
R&J Norfolk. During the twelve month period ended September 30, 1998, Pop N Go's
top 10 customers accounted for approximately 75% of net sales, and one customer,
Dadas, accounted for more than 33%of net sales. During the six month period
ended June 30, 1999, the top 10 customers accounted for approximately 63% of net
sales, and one customer, Kam International, accounted for 26%of net sales.
F. COMPETITION
Consumers of popcorn outside of the home heretofore have had two options
available to them. First is the kettle popped popcorn which is typically
available in movie theaters and concession stands. The popcorn is cooked in oil
in large batches and is subject to waste, labor and cleanliness issues. Kettle
popped corn will grow stale quickly if not consumed.
24
<PAGE> 27
The second option typically available in the lunchroom environment is
microwave cooked popcorn. The consumer purchases a bag of microwave popcorn from
a snack vending machine and cooks it in a microwave oven.
These traditional ways of serving popcorn are the major competition for
Pop N Go's popcorn machine. These methods do not allow for delivery of a fresh
cup popped on demand in an oil free manner.
Management believes there may be perhaps two competitors that produce
hot air popcorn vending machines. Neither have the features of Pop N Go that
combine the programmable cook process with the attract mode LED display.
Management believes it has significant market advantages over these competitors
in that (1) it is the only company with a programmable cooking process popcorn
vending machine, and (2) management believes the popcorn machine unit price at
$2995, is perhaps 30% lower in price than competitive units.
G. DEBT FINANCING AND CREDIT FACILITIES
As of September 1, 1999, the Company had no debt financing or credit
facilities.
H. INVENTORY.
The company subcontracts out the manufacture of its circuit boards and
other parts of the popcorn unit to outside manufacturers who produce parts to
its specifications. Parts inventories consist primarily of small parts and
supplies to be used in the manufacturing process of machines held for resale.
Parts are valued at the lower or cost of market. Cost is determined by the
first-in, first-out (FIFO) method.
I. INTANGIBLE ASSETS
Intangible assets consist primarily of the costs of acquiring a patent
and related technology from the two principal shareholders and deferred
development costs which will be amortized over a 5 year period. The patent
assets are being amortized on a straight line basis over the remaining life of
the patent, which expires in April of 2007.
J. RESEARCH AND DEVELOPMENT
The Company has continued to refine, retrofit, and improve the popcorn
unit, and the unit's overall production and manufacturing processes. The Company
has also initiated development on its Hot Nuts Machine. The Company is exploring
the possible development of other food service and vending machines in the
future.
25
<PAGE> 28
K. FACILITIES
The Company occupies 6000 square feet in Whittier, California, where the
corporate office and manufacturing facility for the Company is located.
The Company rents its Whittier office and manufacturing facility from
the father of the Company's Director of Manufacturing. The Company believes it
is paying below market rates for the facility. Management believes that other
comparable space is available at similar rent and terms should the Company be
required to move to another location.
L. SEASONAL FACTOR
The consumption of popcorn is not subject to seasonality except in those
locations that are dependent on tourism for much of their business.
M. EMPLOYEES
Pop N Go has 18 full time employees and consultants and 1 part-time
software development consultant. None of its employees belong to a union.
N. LITIGATION
The Company has no pending litigation.
O. GOVERNMENT REGULATIONS
Although the Company believes there are no "Government" regulations
which apply to the mechanical electrical safety aspects of Pop N Go machines,
the Company has obtained certification for the European Community (CE) and for
Mexico, Normas Oficiales Mexicanas (NOM). The Company has applied for listing,
but not yet obtained listing with Underwriters Laboratory (UL) for the United
States and with Canadian Underwriters Laboratory (CUL).
26
<PAGE> 29
MANAGEMENT
Directors and Executive Officers
The Directors and executive officers of Pop N Go, Inc. and their ages
and positions are set forth below:
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
Melvin Wyman 61 Chief Executive Officer, Secretary and a Director
Vernon Brokke 47 President and a Director
</TABLE>
MELVIN WYMAN is Chief Executive Officer and a Director. Dr. Wyman holds a BA and
Ph.D. from the University of California, Los Angeles. He has over 15 years of
experience in the design and marketing of specialty vending and video game
products. He has served as the CEO of Pop N Go since the Company's inception in
1996. Prior to his involvement with Pop N Go, Dr. Wyman was the Director of US
Operations for Sport Active, Inc. Sport Active is a Canadian based developer of
an interactive game system developed for the hospitality industry.
VERNON BROKKE is President and a Director. Mr. Brokke has a distinguished sales
career encompassing over 20 years with 8 President's Club Winner Awards. Prior
to his appointment as President of Pop N Go in 1996, Mr. Brokke was Area Sales
Manager for Stratacom, a telecommunications network company with sales in excess
of $500 million. Mr. Brokke is responsible for developing the Company's
worldwide marketing strategy.
Director Compensation
Our Directors do not receive any compensation for their services as
Directors.
Executive Compensation
The following table reflects compensation paid or accrued during the
indicated fiscal years, which end on September 30 of the indicated year with
respect to compensation paid or accrued by Pop N Go, Inc.
27
<PAGE> 30
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Awards Payouts
--------------------------------------------- ------------ ------------------------
Other
Annual Restricted Securities All Other
Compen- Stock Underlying LTIP Compen-
Name and Salary Bonus sation Award(s) Options/ Payouts sation
Principal Position Year $ $ $ $ SARs(#) $ $
------- ------- ------- ------- ----------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Melvin Wyman, 1999 104,000 6,000 0 83,250 n/a n/a n/a
Chief Executive Shares
Officer, Secretary
and a Director
Vernon Brokke, 1999 104,000 6,000 0 83,250 n/a n/a n/a
President and Shares
a Director
</TABLE>
(1) Does not include perquisites and other personal benefits, securities or
property if the aggregate amount of such compensation for each of the persons
listed did not exceed the lesser of (i) $50,000 or (ii) ten percent of the
combined salary and bonus for such person during the applicable year.
Options/SAR granted in last fiscal year.
The following table contains information concerning stock options
granted to officers and directors through August 1, 1999.
<TABLE>
<CAPTION>
No. Of Sec.
% of Total Potential Realized Value
Underlying Options/SARs At Assumed Rates of
Options/ Granted to Exercise Stock Price Appreciation
SARs Employees or Base for Option Term(a)
Granted In Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
----------- ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Melvin Wyman 100,000 100,000 .05 12/31/01 2.10 2.20
Vernon Brokke 100,000 100,000 .05 12/31/01 2.10 2.20
</TABLE>
Options vest as follows: Fully vested as of 9/1/99
(a) These amounts, based on assumed appreciation rates of 5% and 10% rates
prescribed by the Securities and Exchange Commission rules are not
intended to forecast possible future appreciation, if any, of the
Company's stock price. The closing price at September 30, 1999 of the
Company's Common Stock was $2.00 per share.
No options were exercised in the preceding fiscal year.
Employment Agreements
Under long term consulting agreements with each of the officers (through
their personal corporation or limited partnership), monthly compensation is
currently $10,000 per month and increases to $12,500 per month beginning January
1, 2000, for each officer. In addition, they are each entitled to an annual
bonus equal to 1% of the Company's gross annual sales each year.
Their consulting agreements terminate December 31, 2000, and may be
terminated earlier upon payment of a termination sum equal to six months'
consulting fees.
In addition to direct remuneration, Pop N Go reimburses all employees
and consultants for business-related expenses, and provides medical insurance
benefits for certain consultants.
28
<PAGE> 31
Stock Option Plan
On August 31, 1998, the Board of Directors of Pop N Go, Inc. adopted a
Stock Option Plan (the "Plan"). This Plan provides for the grant of Incentive
Non-qualified Stock options to employees selected by the Board of Directors of
Pop N Go, Inc. To date, 394,000 options have been granted under the Plan,
including 100,000 to Dr. Wyman, and 100,000 to Mr. Brokke, at an exercise price
of $0.05 per share.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the common stock (including common stock acquirable
within 60 days pursuant to options, warrants, conversion privileges or other
rights) of the Company as of September 30, 1999 (i) by each of the Company's
directors and executive officers, (ii) all executive officers and directors as a
group, and (iii) all persons known by the Company to own beneficially more than
5% of the common stock. All persons listed have sole voting and investment power
over the indicated shares unless otherwise indicated.
<TABLE>
<CAPTION>
PERCENT
------------------------------------
NAME SHARES Before Offering After Offering
<S> <C> <C> <C>
Melvin Wyman 912,800(1) 14.0% 10.9%
Vernon Brokke 1,200,000(2) 18.4% 15.4%
All officers and directors as a group 2,112,800 32.4% 26.3%
</TABLE>
The addresses for Messrs. Wyman and Brokke is c/o Pop N Go, Inc. 12429
East Putnam Street, Whittier, California 90602.
(1) Includes 100,000 shares subject to options presently exercisable.
(2) Includes 100,000 shares subject to options presently exercisable.
(3) Held through a wholly-owned corporation, Calblue, Inc.
(4) Held personally and through his personal corporation, Gwendolyn
Investments, LLC.
29
<PAGE> 32
CERTAIN TRANSACTIONS
1. In October of 1996, the Company issued 1,387,500 (equivalent post split)
shares of its common stock to Messrs. Wyman (through his professional
corporation, Calblue Inc.) and Brokke (through his limited liability
corporation, Gwendolyn Investments, LLC) the Company's founders, in
consideration for assignment of a patent and certain proprietary
technology. The patent was originally granted on April 20, 1993.
Management of the Company sets an arbitrary value on the contributed
patent and related technology of $100,000.
2. In August 1997, the Company entered into an agreement with Nuts to Go,
Inc., to design and develop a hot nuts vending machine. The contract
price was fixed at $260,000, which has been paid. In February 1998, the
Company acquired all of the stock of Nuts to Go, Inc., in a tax free
stock for stock reorganization, wherein the Company issued 481,000
(equivalent post split) shares of its common stock, in exchange for all
of the outstanding common stock of Nuts to Go, Inc., thereby acquiring
all of the technology.
The Company's President, Vernon Brokke, was a minority shareholder in
Nuts to Go, Inc.
3. In December 1997, outstanding debenture holders converted a total of
$385,000 in convertible debentures into 712,250 (equivalent post split)
shares of the Company's common stock.
4. In March, 1998, the Company issued a convertible promissory note for
$250,000, which was convertible into 508,750 shares of the Company's
common stock at maturity. The note was unsecured, bore interest at a
rate of 15% per annum, and was due on December 31, 1998. The maturity
date was extended, and then the Note was converted into 508,750 Shares
of the Company's Common Stock effective June 1, 1999. In connection with
the conversion into stock, the Company issued a "put" to the converting
debt holders, providing that if the per share price of the Company's
stock was not at least $2.10 on December 31, 1999, the debt holders
could "put" 150,000 shares of their stock back to the Company at a "put"
price of $2.10 per share, for a total of $315,000. If this put is
exercised, the Company will pay the put price and cancel and return
these shares to Treasury.
5. During the nine months ended June 30, 1998, the Company issued a total
of $420,000 in convertible debentures, of which $170,000 were converted
into 220,150 (equivalent post split) shares of the Company's common
stock as of June 30, 1998
6. In July 31, 1998, the Company split its 1730 then outstanding shares of
common stock in a 1850 for one stock split, into 3,200,500 shares of
common stock, and
30
<PAGE> 33
concurrently amended its Articles of Incorporation to increase
authorized capital to 20,000,000 shares of common stock, par value
$0.001 per share (post split). The share numbers used in this Memorandum
all represent post stock split shares.
7. During the year ended September 30,1998, the Company issued 111,000
shares of its common stock to consultants for services. These
consultants were related parties of the Company. In connection with the
issuance, $85,470 was charged to operations as consulting fees
(including 55,500 shares to Mel Wyman and 55,500 shares to Vernon
Brokke).
8. The Company issued in December, 1998, to Pacific Acquisition Group, Inc.
("Pacific") in a private placement transaction exempt from registration
under the Securities Act of 1933, 308,070 restricted shares of the
Company's common stock, in consideration for services as a "Finder".
9. During the nine months ended June 30,1999, the Company initiated three
private placements of its common stock in which it placed an aggregate
of 1,261,138 shares of its common stock and realized gross proceeds of
$1,800,369.
DESCRIPTION OF SECURITIES
General
We are authorized to issue 20,000,000 shares of common stock, $.001 par
value per share, of which 6,508,290 shares are outstanding. An additional
500,000 shares of common stock are reserved for issuance pursuant to our Stock
Option Plan.
Common Stock
Holders of common stock have equal rights to receive dividends when, as
and if declared by the board of directors, out of funds legally available
therefor. Holders of common stock have one vote for each share held of record
and do not have cumulative voting rights.
Holders of common stock are entitled upon our liquidation to share
ratably in the net assets available for distribution, subject to the rights, if
any, of holders of any preferred stock then outstanding. Shares of common stock
are not redeemable and have no preemptive or similar rights. All outstanding
shares of common stock are fully paid and non-assessable.
Transfer Agent
Liberty Transfer Company, 123 Green Street, P. O. Box 558, Huntington,
New York 11743, serves as transfer agent for the common stock of Pop N Go, Inc.
31
<PAGE> 34
PROSPECTUS
We have not authorized any dealer, salesperson or other person to give
any information or represent anything contained in this Prospectus. You must not
rely on any unauthorized information. This Prospectus does not offer to sell nor
does it solicit to buy any shares of Common Stock in any jurisdiction where it
is unlawful. The information in this Prospectus is current as of September 30,
1999.
EXPERTS
The consolidated financial statements of the Company for the fiscal
year ended September 30, 1998 included in this prospectus have been audited by
Singer, Lewak, Greenbaum and Goldstein, LLP, independent auditor, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
The financial statements of the Company for the period from October 21,
1996 (inception) to September 30, 1997 included in this prospectus have been
audited by Tanner, Mainstain, Hoffer & Peyrot, independent auditor, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
32
<PAGE> 35
Financial Statements
Index to Financial Statements
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Independent Auditor's Report F-2
Financial Statements
Consolidated Balance Sheets - As of September 30, 1998
and June 30, 1999 (unaudited) F-4
Consolidated Statements of Operations - Years Ended
September 30, 1998 and 1997 and nine months
ended June 30, 1999 and 1998 (unaudited) F-6
Consolidated Statements of Stockholders' Equity - Years
Ended September 30, 1998 and 1997 and nine months
ended June 30, 1999 (unaudited) F-7
Consolidated Statements of Cash Flows - Years Ended
September 30, 1998 and 1997 and nine months
ended June 30, 1999 and 1998 (unaudited) F-9
Notes to Consolidated Financial Statements F-12
</TABLE>
F-1
<PAGE> 36
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Pop N Go, Inc. and subsidiary
We have audited the accompanying consolidated balance sheet of Pop N Go, Inc.
and subsidiary (the "Company") as of September 30, 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Pop N
Go, Inc. and subsidiary as of September 30, 1998, and the consolidated results
of their operations and cash flows for the year then ended in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. During the year ended
September 30, 1998 and the period from October 21, 1996 (inception) to September
30, 1997, the Company incurred a net loss of $1,338,148 and $297,198,
respectively. In addition, the Company's net cash used in operating activities
was $(577,661) and $(373,997) for the year ended September 30, 1998 and the
period from October 21, 1996 (inception) to September 30, 1997, respectively,
and the Company's accumulated deficit was $1,635,366 as of September 30, 1998.
Recovery of the Company's assets is dependent upon future events, the outcome of
which is indeterminable. In addition, successful completion of the Company's
transition, ultimately, to the attainment of profitable operations is dependent
upon obtaining adequate financing to fulfill its development activities and
achieving a level of sales adequate to support the Company's cost structure.
These factors, among others, as discussed in Note 2 to the consolidated
financial statements, raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
February 5, 1999
F-2
<PAGE> 37
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
POP N GO, INC.
We have audited the accompanying statements of operations, stockholders' equity,
and cash flows of POP N GO, INC. for the period from October 21, 1996
(inception) to September 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations of POP N GO, INC. for the
period from October 21, 1996 (inception) to September 30, 1997, in conformity
with generally accepted accounting principles.
TANNER, MAINSTAIN, HOFFER & PEYROT
AN ACCOUNTANCY CORPORATION
Los Angeles, California
November 18, 1997
F-3
<PAGE> 38
POP N GO, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
-------- -------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 90,987 $ 17,238
Accounts receivable, net of allowance for doubtful accounts
of $92,100 (unaudited) and $92,100 124,875 16,066
Inventories 233,487 163,051
Other current assets 21,177 --
-------- --------
Total current assets 470,526 196,355
FURNITURE AND EQUIPMENT, net 31,607 17,643
PROPRIETARY SOFTWARE, net of accumulated amortization
of $152,588 (unaudited) and $38,148 152,587 267,028
OTHER ASSETS, net of allowance for doubtful accounts of
$12,900 (unaudited) and $12,900 81,879 90,029
-------- --------
TOTAL ASSETS $736,599 $571,055
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 39
POP N GO, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (CONTINUED)
SEPTEMBER 30, 1998 AND JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
----------- -------------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 101,554 $ 169,487
Accrued liabilities 138,268 39,446
Loan payable - stockholder -- 35,000
Customer deposits 20,696 88,608
Convertible debentures -- 250,000
----------- -----------
Total current liabilities 260,518 582,541
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value
20,000,000 shares authorized
5,413,508 (unaudited) and 3,335,552 shares
issued and outstanding 5,414 3,336
Additional paid-in capital 3,584,426 1,620,544
Accumulated deficit (3,113,759) (1,635,366)
----------- -----------
Total stockholders' equity (deficit) 476,081 (11,486)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 736,599 $ 571,055
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 40
POP N GO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended For the Periods Ended
June 30, September 30,
---------------------------- ----------------------------
1999 1998 1998 1997
----------- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUE $ 499,244 $ 342,820 $ 504,222 $ 250,000
COST OF GOODS SOLD 404,721 269,709 415,609 --
----------- ----------- ----------- -----------
GROSS PROFIT 94,523 73,111 88,613 250,000
----------- ----------- ----------- -----------
OPERATING EXPENSES
Development expenses 150,060 119,511 171,386 206,886
General and administrative
expenses 1,311,066 537,495 726,096 305,386
Issuance of stock options to
employees -- -- 256,100 --
Issuance of stock for services 77,700 85,470 85,470 --
----------- ----------- ----------- -----------
Total operating expenses 1,538,826 742,476 1,239,052 512,272
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (1,444,303) (669,365) (1,150,439) (262,272)
----------- ----------- ----------- -----------
INTEREST EXPENSE
Interest expense (32,375) (34,823) (44,180) (32,067)
Interest expense on convertible debt -- (142,450) (142,450) --
----------- ----------- ----------- -----------
Total interest expense (32,375) (177,273) (186,630) (32,067)
----------- ----------- ----------- -----------
LOSS BEFORE PROVISION FOR INCOME
TAXES (1,476,678) (846,638) (1,337,069) (294,339)
PROVISION FOR INCOME TAXES 1,715 903 1,079 2,879
----------- ----------- ----------- -----------
NET LOSS $(1,478,393) $ (847,541) $(1,338,148) $ (297,218)
=========== =========== =========== ===========
BASIC LOSS PER SHARE $ (0.36) $ (0.36) $ (0.48) $ (0.17)
=========== =========== =========== ===========
DILUTED LOSS PER SHARE $ (0.36) $ (0.36) $ (0.48) $ (0.17)
=========== =========== =========== ===========
WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING 4,039,380 2,361,028 2,795,384 1,769,224
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 41
POP N GO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Retained
Common Stock Additional Earnings
--------------------------- Paid-in (Accumulated
Shares Amount Capital Deficit) Total
---------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
BALANCE, OCTOBER 21, 1996 -- $ -- $ -- $ -- $ --
ISSUANCE OF COMMON
STOCK FOR CASH 481,000 481 199,519 200,000
ISSUANCE OF COMMON
STOCK FOR INTANGIBLE
ASSETS 1,387,500 1,388 98,612 100,000
NET LOSS (297,218) (297,218)
--------- ---------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1997 1,868,500 1,869 298,131 (297,218) 2,782
ISSUANCE OF COMMON
STOCK FOR CASH 423,652 424 234,616 235,040
CAPITAL CONTRIBUTION 60,000 60,000
ISSUANCE OF COMMON
STOCK FOR SERVICES 111,000 111 85,359 85,470
CONVERSION OF
CONVERTIBLE
DEBENTURES 932,400 932 554,068 555,000
ISSUANCE OF STOCK
OPTIONS TO EMPLOYEES 256,100 256,100
INTEREST CHARGES
RELATED TO CONVERTIBLE
DEBENTURES 142,450 142,450
STOCK ISSUANCE COST (10,180) (10,180)
NET LOSS (1,338,148) (1,338,148)
--------- ---------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1998 3,335,552 3,336 1,620,544 (1,635,366) (11,486)
ISSUANCE OF COMMON
STOCK FOR CASH
(unaudited) 1,261,136 1,261 1,799,108 1,800,369
ISSUANCE OF COMMON
STOCK FOR STOCK
ISSUANCE COSTS
(unaudited) 308,070 308 (308) --
STOCK ISSUANCE COSTS
(unaudited) (134,409) (134,409)
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE> 42
POP N GO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Retained
Common Stock Additional Earnings
--------------------------- Paid-in (Accumulated
Shares Amount Capital Deficit) Total
---------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
CONVERSION OF
CONVERTIBLE
DEBENTURES 508,750 $ 509 $ 299,491 $ $ 300,000
NET LOSS (unaudited) (1,478,393) (1,478,393)
--------- ----------- ----------- ----------- -----------
BALANCE, JUNE 30,
1999 (UNAUDITED) 5,413,508 $ 5,414 $ 3,584,426 $(3,113,759) $ 476,081
========= =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE> 43
POP N GO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended For the Periods Ended
June 30, September 30,
-------------------------- --------------------------
1999 1998 1998 1997
----------- --------- ----------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,478,393) $(847,541) $(1,338,148) $(297,218)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation 4,534 2,171 3,147 --
Amortization 122,592 7,500 38,148 8,731
Bad debt expense -- 105,000 105,000 --
Stock issued for services -- 85,470 85,470 --
Stock options issued to
employees -- -- 256,100 --
Interest on convertible
debentures -- 142,450 142,450 --
(Increase) decrease in
Accounts receivable (108,809) (17,788) 78,934 (200,000)
Other current assets (91,613) (109,540) (88,083) (44,968)
Other assets -- -- 1,240 --
Increase (decrease) in
Accounts payable (67,933) 169,570 134,563 34,923
Accrued liabilities 148,822 36,861 (47,996) 87,462
Customer advance (67,912) 87,637 51,514 37,073
----------- --------- ----------- ---------
Net cash used in operating activities (1,538,712) (338,210) (577,661) (373,997)
----------- --------- ----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment (18,499) (10,488) (50,788) --
Expenditures for proprietary
technology -- (168,340) (214,819) (90,357)
----------- --------- ----------- ---------
Net cash used in investing activities (18,499) (178,828) (265,607) (90,357)
----------- --------- ----------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE> 44
POP N GO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended For the Periods Ended
June 30, September 30,
------------------------- -----------------------
1999 1998 1998 1997
----------- -------- --------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loan payable to
stockholder $ -- $ 45,000 $ 35,000 $ --
Principal payments on loan payable
to stockholder (35,000) -- -- --
Proceeds from sale of convertible
debentures -- 420,000 420,000 385,000
Proceeds from issuance of common
stock 1,800,369 -- 235,040 200,000
Stock issuance costs (134,409) -- (10,180) --
Cash contribution by stockholders -- 59,545 60,000 --
----------- -------- --------- --------
Net cash provided by financing
activities 1,630,960 524,545 739,860 585,000
----------- -------- --------- --------
Net increase (decrease) in cash 73,749 7,507 (103,408) 120,646
CASH, BEGINNING OF PERIOD 17,238 120,645 120,646 --
----------- -------- --------- --------
CASH, END OF PERIOD $ 90,987 $128,152 $ 17,238 $120,646
=========== ======== ========= ========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
INTEREST PAID $ 32,375 $ 34,823 $ 44,180 $ 32,067
=========== ======== ========= ========
INCOME TAXES PAID $ 1,715 $ 903 $ 1,079 $ 2,879
=========== ======== ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE> 45
POP N GO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
The Company entered into the following non-cash transactions during the year
ended September 30, 1998, the period from October 21, 1996 (inception) to
September 30, 1997, and the nine months ended June 30, 1999 and 1998
(unaudited):
o In October 1996, the Company issued 1,387,500 shares of common stock to its
two stockholders in consideration of the stockholders donating a patent and
certain proprietary technology valued at $100,000.
o During the year ended September 30, 1998, the Company issued 111,000 shares
of stock to consultants of the Company for services valued at $85,470.
o During the year ended September 30, 1998, debenture holders exercised their
right to convert $555,000 of debentures to 932,400 shares of common stock.
o During the year ended September 30, 1998, the Company charged to operations
$142,450 of interest expense related to the issuance of convertible
debentures.
o During the year ended September 30, 1998, the Company issued options to
purchase stock to employees of the Company. The options were valued at
$256,100.
o During the nine months ended June 30, 1999, the Company issued 308,070 shares
(unaudited) of stock for stock issuance costs related to a private placement
of common stock.
o During the nine months ended June 30, 1999, debenture holders exercised their
right to convert $250,000 of debentures and $50,000 of related interest to
508,750 shares of common stock.
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE> 46
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
Pop N Go, Inc., incorporated in the State of Delaware on October 21,
1996, and its subsidiary, Nuts to Go, Inc. (collectively, the "Company")
manufacture and develop coin-operated popcorn machines which they sell
to distributors and retail establishments. The Company also intends to
own and operate these machines for its own account on a revenue-sharing
basis. In addition, the Company has developed prototype coin-operated
machines for outside customers on a contract basis. Effective October
1998, Nuts to Go, Inc. became a dormant corporation.
NOTE 2 - GOING CONCERN MATTERS
The accompanying financial statements have been prepared on a going
concern basis which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown
in the financial statements, during the year ended September 30, 1998,
the period from October 21, 1996 (inception) to September 30, 1997, and
the nine months ended June 30, 1999 and 1998, the Company incurred
losses of $1,338,148, $297,218, $1,478,393 (unaudited), and $847,541
(unaudited), respectively. In addition, the Company's cash flow
requirements have been met by the generation of capital through private
placements of the Company's common stock. No assurance can be given that
this source of financing will continue to be available to the Company
and demand for the Company's equity instruments will be sufficient to
meet its capital needs. If the Company is unable to generate profits and
unable to continue to obtain financing for its working capital
requirements, it may have to curtail its business sharply or cease
business altogether.
The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The
Company's continuation as a going concern is dependent upon its ability
to generate sufficient cash flow to meet its obligations on a timely
basis, to retain its current financing, to obtain additional financing,
and ultimately to attain profitability.
To meet these objectives, the Company has instituted the following plan
(unaudited):
o The Company offered 1,428,573 shares of common stock for $1.40
per share beginning June 15, 1999. Management expects funding from
the offering to sustain the Company through December 31, 1999.
o During the period ending June 30, 1999, the convertible
debentures were converted to 508,750 shares of common stock.
F-12
<PAGE> 47
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 2 - GOING CONCERN MATTERS (CONTINUED)
o The Company has increased marketing activities to help generate
sales sufficient to meet its cash flow obligations.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Pop N Go,
Inc. and its wholly-owned subsidiary, Nuts to Go, Inc. All significant
intercompany transactions and balances have been eliminated in
consolidation.
Basis of Presentation
As described in Note 2, the accompanying financial statements have been
prepared in conformity with generally accepted accounting principles
which contemplate the continuation of the Company as a going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts
and classification of liabilities that might be necessary should the
Company be unable to continue in existence.
Accounts Receivable
Accounts receivable consist primarily of short- and long-term amounts
due from customers and franchisees. The Company has provided for an
allowance in the aggregate of $105,000 for accounts it considers
uncollectible as described in Note 5.
Inventories
Inventories consist primarily of small parts and supplies to be used in
the manufacturing process of machines held for resale. Inventories are
valued at the lower of cost or market. Cost is determined by the
first-in, first-out method.
Furniture and Equipment
Furniture and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the
related assets as follows:
Furniture and equipment 5 to 7 years
Demonstration units 5 years
F-13
<PAGE> 48
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Proprietary Software
Proprietary software represents expenditures for development of software
related to ongoing efforts to refine, enrich, and improve the prototype
and pre-production units. These amounts have been capitalized and are
being amortized over a twenty-four-month period on the straight-line
method. Amortization expense for the year ended September 30, 1998 and
for the nine months ended June 30, 1999 and 1998 was $38,148, $152,588
(unaudited), and $0 (unaudited), respectively. No amortization was
incurred related to proprietary software during the period from October
21, 1996 (inception) through September 30, 1997, as sales of the product
had not begun in earnest.
Other Assets
Other assets consist primarily of the costs of acquiring a patent and
related technology. This amount is being amortized on the straight-line
basis over the remaining life of the patent, which expires in April
2007.
Customer Deposits
As of September 30, 1998 and June 30, 1999, customers had paid deposits
totaling $88,608 and $20,696 (unaudited), respectively, to the Company
for machines which had not been delivered as of those dates. Revenue on
the sale of these machines is recognized when the equipment is shipped.
Income Taxes
The Company utilizes Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes," which requires the
recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred income
taxes are recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their
financial reporting amounts at each period end based on enacted tax laws
and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the
amount expected to be realized. The provision for income taxes
represents the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
F-14
<PAGE> 49
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net Loss per Share
The Company adopted SFAS No. 128, "Earnings per Share." Basic loss per
share is computed by dividing loss available to common stockholders by
the weighted-average number of common shares available. Diluted loss per
share is computed similar to basic loss per share except that the
denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common shares
had been issued and if the additional common shares were dilutive. Loss
per share for 1997 has been restated using the methodologies of SFAS No.
128. Since the Company incurred a net loss for all periods presented,
basic loss per share and diluted loss per share are the same.
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 the disclosures of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance
with generally accepted accounting principles. For certain of the
Company's financial instruments, including cash, accounts receivable,
accounts payable, and accrued liabilities, the carrying amounts
approximate fair value due to their short maturities. The amounts shown
for loan payable - stockholder also approximate fair value because
current interest rates offered to the Company for loans of similar
maturities are substantially the same.
Risk Concentrations
Substantially all of the Company's revenues are generated from the sale
of one product. The loss of, or an economic event related to this
product, most likely would have a substantial impact on the Company's
revenues. As of June 30, 1999, accounts receivable from two significant
customers were 42% (unaudited) and 23% (unaudited) of the Company's
total accounts receivable. As of June 30, 1998, accounts receivable from
two significant customers were 57% (unaudited) and 23% (unaudited) of
the Company's total accounts receivable. As of June 30, 1999, accounts
payable from two significant suppliers were 20% (unaudited) and 10%
(unaudited) of the Company's total accounts payable. As of June 30,
1998, accounts payable from one significant supplier were 18%
(unaudited) of the Company's total accounts payable.
F-15
<PAGE> 50
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Comprehensive Income
For the year ended September 30, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income." This statement establishes standards
for reporting comprehensive income and its components in a financial
statement. Comprehensive income as defined includes all changes in
equity (net assets) during a period from non-owner sources. Examples of
items to be included in comprehensive income, which are excluded from
net income, include foreign currency translation adjustments and
unrealized gains and losses on available-for-sale securities.
Comprehensive income is not presented in the Company's financials
statements since the Company did not have any of the items of
comprehensive income in any period presented.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information,"
effective for fiscal years beginning after December 15, 1997. SFAS No.
131 requires a company to report certain information about its operating
segments including factors used to identify the reportable segments and
types of products and services from which each reportable segment
derives its revenues. The Company does not anticipate any material
change in the manner that it reports its segment information under this
new pronouncement.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," is effective for financial statements with fiscal years
beginning after June 15, 1999. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. The Company does not expect adoption of SFAS No. 133 to have
a material effect, if any, on its financial position or results of
operations.
SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after
the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise," is effective for financial statements with the first fiscal
quarter beginning after December 15, 1998. This statement is not
applicable to the Company.
SFAS No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections," is effective for financial statements with fiscal years
beginning February 1999. This statement is not applicable to the
Company.
In June 1999, the FASB issued SFAS No. 136, "Transfer of Assets to a
Not-for-Profit Organization or Charitable Trust that Raises or Holds
Contributions for Others." This statement is not applicable to the
Company.
F-16
<PAGE> 51
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting Pronouncements (Continued)
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities." The Company does not expect
adoption of SFAS No. 137 to have a material impact, if any, on its
financial position or results of operations.
NOTE 4 - FURNITURE AND EQUIPMENT
Furniture and equipment consisted of the following:
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
-------- -------------
(unaudited)
<S> <C> <C>
Furniture and equipment $30,989 $12,790
Demonstration units 8,300 8,000
------- -------
39,289 20,790
Less accumulated depreciation 7,682 3,147
------- -------
TOTAL $31,607 $17,643
======= =======
</TABLE>
Depreciation expense was $3,147, $0, $4,535 (unaudited), and $2,171
(unaudited) for the year ended September 30, 1998, for the period from
October 21, 1996 (inception) to September 30, 1997, and for the nine
months ended June 30, 1999 and 1998, respectively.
F-17
<PAGE> 52
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 5 - LONG-TERM RECEIVABLE
The Company has a $105,000 long-term receivable from a franchisee
located overseas. The receivable is due in the following installments at
September 30, 1998:
<TABLE>
<CAPTION>
Years Ending
September 30,
-------------
<S> <C>
1999 $ 92,100
2000 12,900
--------
105,000
Less allowance for doubtful accounts 105,000
--------
NET RECEIVABLE $ --
========
</TABLE>
The Company does not expect to collect the receivable. As such, the
Company has fully allowed for the receivable.
NOTE 6 - RELATED PARTY TRANSACTIONS
During the period from October 21, 1996 (inception) to September 30,
1997, one of the Company's officers/stockholders loaned the Company
$50,000. As of June 30, 1999, the balance outstanding on the loan was
$0. The loan was unsecured, with interest accruing at a rate of 15% per
annum, and was payable on demand.
During the year ended September 30, 1998, the period from October 21,
1996 (inception) to September 30, 1997, and the nine months ended June
30, 1999 and 1998, the Company paid officers and stockholders of the
Company approximately $300,000, $78,000, $133,328 (unaudited), and
$78,000 (unaudited), respectively, related to consulting fees and other
services. A portion of these amounts has been capitalized as proprietary
software.
During the year ended September 30, 1998, the period from October 21,
1996 (inception) to September 30, 1997, and the nine months ended June
30, 1999 and 1998, the Company paid rent of $15,400, $15,400, $13,800
(unaudited), and $11,700 (unaudited), respectively, to a family member
of a Company employee for its primary place of operations.
F-18
<PAGE> 53
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 7 - CONVERTIBLE DEBENTURES
During the period from October 21, 1996 (inception) to September 30,
1997, the Company raised capital through the placement of a series of
convertible notes, bearing interest at a rate of 15%. The debentures
were immediately convertible into 18,900 shares of common stock for each
$10,000 of principal amount of debenture. These notes expired on
December 1, 1997. The debentures were issued at a conversion rate
equivalent to the fair market value of the Company's common stock at the
issuance date. As such, the Company did not record interest expense
related to the conversion features of the debentures during the period
from October 21, 1996 (inception) to September 30, 1997.
In March 1998, the Company raised capital through the placement of a
convertible promissory note, bearing interest at a rate of 15% and
maturing on June 30, 1999. This note was immediately convertible into
508,750 shares of common stock. In accordance with generally accepted
accounting principles, the Company recognized interest expense in the
amount of $142,450 due to conversion rates being below current market
rates for the Company's common stock at the date of issuance.
During the year ended September 30, 1998, the Company raised capital
through the placement of a series of convertible notes, bearing interest
at a rate of 15%. These notes were immediately convertible into 12,950
shares of common stock for each $10,000 of principal. The expiration
dates of these notes were September 1, 1998 and June 1, 1999 and were
issued at a conversion rate equivalent to the fair market value of the
Company's common stock at the issuance date. As such, the Company did
not record interest expense related to the conversion features of the
debentures.
F-19
<PAGE> 54
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 7 - CONVERTIBLE DEBENTURES (CONTINUED)
The terms associated with each series and the related amounts raised and
converted during the year ended September 30, 1998 were as follows:
<TABLE>
<CAPTION>
Outstanding Outstanding
as of Raised Converted as of
September 30, During During September 30,
1997 1998 1998 1998
------------- -------- --------- -------------
<S> <C> <C> <C> <C>
15% notes(a) $385,000 $ -- $385,000 $ --
15% notes(b) -- 170,000 170,000 --
15% notes(c) -- 250,000 -- 250,000
-------- -------- -------- --------
TOTAL $385,000 $420,000 $555,000 $250,000
======== ======== ======== ========
</TABLE>
(a) 15% notes, due December 1, 1997 (712,250 shares)
(b) 15% notes, due September 1, 1998 (220,150 shares)
(c) 15% notes, due June 30, 1999 (508,750 shares)
The terms associated with each series and the related amounts raised and
converted during the nine months ended June 30, 1999 were as follows:
<TABLE>
<CAPTION>
Outstanding Outstanding
as of Raised Converted as of
September 30, During During June 30,
1998 the Period the Period 1999
------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
15% notes(a) $250,000 $ -- $250,000 $ --
======== ======== ======== ========
</TABLE>
(a) 15% notes, due June 30, 1999 (508,750 shares)
NOTE 8 - ACQUISITION OF NUTS TO GO, INC.
On February 7, 1998, the Company exchanged 481,000 shares of the
Company's common stock for all the outstanding stock of Nuts to Go, Inc.
Nuts to Go, Inc. primarily operates as a marketer of nut vending
machines.
F-20
<PAGE> 55
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 8 - ACQUISITION OF NUTS TO GO, INC. (CONTINUED)
This transaction has been accounted for as a pooling of interests.
Accordingly, the financial statements for all periods presented have
been restated to include the accounts and operations of Nuts to Go, Inc.
The combined entities' separate operating results for the period from
October 21, 1996 (inception) to September 30, 1997 were as follows:
<TABLE>
<CAPTION>
<S> <C>
Net revenues
The Company $ 250,000
Nuts to Go, Inc. --
---------
COMBINED $ 250,000
=========
Net loss
The Company $ (97,218)
Nuts to Go, Inc. (200,000)
---------
COMBINED $(297,218)
=========
Net loss per common share
AS PREVIOUSLY REPORTED $ (0.07)
=========
AS RESTATED $ (0.17)
=========
</TABLE>
Separate operating results for the period from October 1, 1997 to
consummation of the combination included in the 1998 statement of
operations are as follows:
<TABLE>
<CAPTION>
Net
Revenues Net Loss
-------- ---------
<S> <C> <C>
The Company $210,093 $(523,806)
Nuts to Go, Inc. -- (60,000)
-------- ---------
COMBINED $210,093 $(583,806)
======== =========
</TABLE>
F-21
<PAGE> 56
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 9 - INCOME TAXES
Significant components of the provision for income taxes for the year
ended September 30, 1998, the period from October 21, 1996 (inception)
to September 30, 1997, and the nine months ended June 30, 1999 and 1998
are as follows:
<TABLE>
<CAPTION>
For the Nine Months Ended For the Periods Ended
June 30, September 30,
------------------------- ---------------------
1999 1998 1998 1997
------ ------ ------ ------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Current
Federal $ 65 $ -- $ 175 $1,710
State 1,650 903 904 1,169
------ ------ ------ ------
1,715 903 1,079 2,879
------ ------ ------ ------
Deferred
Federal -- -- -- --
State -- -- -- --
------ ------ ------ ------
-- -- -- --
------ ------ ------ ------
PROVISION FOR
INCOME TAXES $1,715 $ 903 $1,079 $2,879
====== ====== ====== ======
</TABLE>
F-22
<PAGE> 57
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 9 - INCOME TAXES (CONTINUED)
A reconciliation of the provision for (benefit from) income tax expense
with the expected income tax computed by applying the federal statutory
income tax rate to income before provision for income taxes for the year
ended September 30, 1998, the period from October 21, 1996 (inception)
to September 30, 1997, and the nine months ended June 30, 1999 and 1998
is as follows:
<TABLE>
<CAPTION>
For the Nine Months Ended For the Periods Ended
June 30, September 30,
------------------------- ---------------------
1999 1998 1998 1997
----- ----- ----- -----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Income tax provision
computed at federal
statutory tax rate 34.0% 34.0% 34.0% 34.0%
State taxes, net of
federal benefit 6.0 6.0 6.0 6.0
Interest charges related
to convertible
debentures -- (6.0) (4.0) --
Change in deferred
income tax valuation
reserve and other (40.0) (34.0) (36.0) (39.0)
----- ----- ----- -----
TOTAL --% --% --% 1.0%
===== ===== ===== =====
</TABLE>
As of September 30, 1998, the Company had federal and state net
operating loss carryforwards of approximately $1,379,000 and $689,000,
respectively, which expire through 2013.
Significant components of the Company's deferred tax assets and
liabilities for federal and state income taxes as of September 30, 1998
and June 30, 1999 consisted of the following:
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
----------- ---------
(unaudited)
<S> <C> <C>
Deferred tax asset
Net operating loss carryforwards $ 1,131,009 $ 631,238
Valuation allowance (1,131,009) (631,238)
----------- ---------
NET DEFERRED TAX ASSET $ -- $ --
=========== =========
</TABLE>
F-23
<PAGE> 58
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 9 - INCOME TAXES (CONTINUED)
During the year ended September 30, 1998, the Company did not utilize
its federal net operating loss carryforwards.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases its facilities under a month-to-month lease from a
related party. The lease requires monthly payments of $1,300 and is
cancelable at the Company's option.
Rent expense was $18,204, $15,400, $19,929 (unaudited), and $13,562
(unaudited) for the year ended September 30, 1998, the period from
October 21, 1996 (inception) to September 30, 1997, and the nine months
ended June 30, 1999 and 1998, respectively.
Consulting Agreements
In November 1996, the Company entered into a contract with two
individuals to design, develop, and manufacture a popcorn vending
machine. Under the terms of the agreement, the Company paid the
individuals approximately $53,000, plus an amount of the Company's
common stock to be agreed upon after satisfactory completion of the
project. At September 30, 1998, the individuals had been paid in excess
of the contractual amount due, and management of the Company has orally
agreed with the individuals that there will be no stock issuance due
upon the completion of the project.
In May 1997, the Company entered into an agreement with a marketing
consultant, whereby the Company has granted the consultant the
non-exclusive rights to market the Company's franchise business on a
worldwide basis. Under the terms of the agreement, the Company is
obligated to pay the marketing consultant a commission of 40% of the
total franchise fees generated from franchise sales initiated by the
marketing consultant. The term of the agreement is for one year and can
be renewed annually for additional one-year terms.
During the year ended September 30, 1998, the period from October 21,
1996 (inception) to September 30, 1997, and the nine months ended June
30, 1999 and 1998, the marketing consultant had been paid $10,000,
$20,000, $14,000 (unaudited), and $20,000 (unaudited), respectively.
F-24
<PAGE> 59
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 10 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
Consulting Agreements (Continued)
On January 1, 1998, the Company entered into a three-year agreement with
two officers (through their personal corporation or trust) for
consulting services. The agreement calls for aggregate payments of
$192,000 during the first year, $240,000 during the second year, and
$300,000 during the final year. In addition, the Company is required to
issue 55,500 shares of its common stock per quarter until the agreement
expires.
Litigation
The Company may become involved in various litigation arising in the
normal course of business. Management believes the outcome of such
litigation would not have a material effect on the Company.
NOTE 11 - STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock
In October 1996, the Company issued 1,387,500 shares of common stock to
its two stockholders in consideration of the stockholders donating a
patent and certain proprietary technology. One of the stockholders is a
corporation owned by the Chief Executive Officer of the Company, who
also invented the technology. The patent was granted to the inventor on
April 20, 1993. The inventor assigned the rights to the patent to the
corporation and to another individual, which then ultimately assigned
the rights to the patent to the Company. The inventor had incurred
substantial costs prior to 1993 in developing the technology which led
to the patent. Management of the Company estimates that the value of the
contributed patent and related technology is $100,000.
In February 1998, the Company acquired the entity that developed the hot
nuts vending machines. Under the terms of the purchase agreement, the
Company issued 481,000 shares of common stock for 100% of the stock of
the entity. All of the operations of the entity have been combined with
the Company's operations (see Note 8).
During the year ended September 30, 1998, the Company issued 712,250
shares of common stock to convertible debenture holders that purchased
the Company's convertible debentures subsequent to September 30, 1997,
all of which exercised their conversion rights prior to September 30,
1998 (see Note 7).
During the year ended September 30, 1998, the Company issued 220,150
shares of common stock to convertible debenture holders that purchased
the debentures during the year (see Note 7).
F-25
<PAGE> 60
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 11 - STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
Common Stock (Continued)
During the year ended September 30, 1998, the Company issued 423,652
shares of its common stock for $235,040.
During the year ended September 30, 1998, stockholders of Nuts to Go,
Inc., prior to its acquisition, contributed $60,000 in cash to the
Company.
During the year ended September 30, 1998, the Company issued 111,000
shares of its common stock to consultants for services. These
consultants were related parties of the Company. In connection with the
issuance, $85,470 was charged to operations as consulting fees.
During the nine months ended June 30, 1999, the Company initiated a
private placement of its common stock in which it placed 1,261,136
shares (unaudited) of its common stock for $1,800,369 (unaudited). In
connection with the private placement, $134,409 (unaudited) was charged
to additional paid-in capital as commissions.
During the nine months ended June 30, 1999, the Company issued 308,070
shares (unaudited) of stock as stock issuance costs related to a private
placement of common stock.
NOTE 12 - STOCK OPTIONS AND WARRANTS
Stock Option Plan
The Company adopted the 1998 Non-Qualified Stock Option Plan (the "1998
Plan") on August 31, 1998. The purpose of the 1998 Plan is to promote
the growth and profitability of the Company by enabling the Company to
attract and retain the best available personnel for positions of
substantial responsibility, to provide employees with an opportunity for
investment in the Company, and to give employees an additional incentive
to increase their efforts on behalf of the Company. Each employee or
consultant as determined by the Board of Directors of the Company is
eligible to be considered for the grant of awards under the 1998 Plan.
The maximum number of shares of common stock that may be issued pursuant
to awards granted under the 1998 Plan is 500,000. Any shares of common
stock subject to an award, which for any reason expires or terminates
unexercised, are again available for issuance under the 1998 Plan. Under
the 1998 Plan, no incentive stock option will be less than the per share
par or stated value of the shares on the date the stock option is
granted, subject to certain provisions.
F-26
<PAGE> 61
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 12 - STOCK OPTIONS AND WARRANTS (CONTINUED)
Stock Option Plan (Continued)
During the year ended September 30, 1998, the Company granted 394,000
incentive stock options to certain employees and consultants. These
options expire upon certain events.
The following summarizes the Company's stock option transactions:
<TABLE>
<CAPTION>
Weighted-
1998 Stock Average
Option Plan Exercise
and Other Price
------- -----
<S> <C> <C>
Options outstanding, September 30, 1997 -- $ --
Granted 394,000 $0.05
-------
OPTIONS OUTSTANDING, SEPTEMBER 30, 1998 394,000 $0.05
=======
OPTIONS EXERCISABLE, SEPTEMBER 30, 1998 394,000 $0.05
=======
OPTIONS EXERCISABLE, JUNE 30, 1999 (UNAUDITED) 394,000 $0.05
=======
</TABLE>
At September 30, 1998, the Company's options outstanding had a
weighted-average contractual life of two years.
The Company has adopted only the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." It applies Accounting
Principles Bulletin ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," and related interpretations in accounting for its plans
and does not recognize compensation expense for its stock-based
compensation plans. If the Company had elected to recognize compensation
expense based upon the fair value at the grant date for awards under
these plans consistent with the methodology prescribed by SFAS No. 123,
the Company's net loss and loss per share would be reduced to the pro
forma amounts indicated below:
<TABLE>
<CAPTION>
For the Periods Ended
September 30,
--------------------------
1998 1997
----------- ---------
<S> <C> <C>
Net loss
As reported $(1,338,148) $(297,218)
Pro forma $(1,369,397) $(297,218)
Loss per share
As reported $ (0.48) $ (0.17)
</TABLE>
F-27
<PAGE> 62
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Pro forma $ (0.49) $ (0.17)
</TABLE>
F-28
<PAGE> 63
POP N GO, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1998,
THE PERIOD FROM OCTOBER 21, 1996 (INCEPTION) TO SEPTEMBER 30, 1997,
AND THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
(THE INFORMATION WITH RESPECT TO JUNE 30, 1999 AND 1998 IS UNAUDITED.)
- --------------------------------------------------------------------------------
NOTE 12 - STOCK OPTIONS AND WARRANTS (CONTINUED)
Stock Option Plan (Continued)
As permitted by SFAS No. 123, the fair value of these options was
estimated at the date of grant using the minimum value method with the
following weighted-average assumptions for the year ended September 30,
1998: dividend yield of 0%; risk-free interest rate of 4.37%; exercise
price of $0.77; and expected life of 3.3 years.
The following table summarizes information about the options outstanding
at September 30, 1998:
<TABLE>
<CAPTION>
Weighted-
Number Average Number
Outstanding at Remaining Exercisable at
Exercise September 30, Contractual September 30,
Price 1998 Life 1998
----- ------- ---------- -------
<S> <C> <C> <C> <C>
$0.05 394,000 3.25 years 394,000
----- ------- ---------- -------
</TABLE>
NOTE 13 - YEAR 2000 ISSUE
The Company is conducting a comprehensive review of its computer systems
to identify the systems that could be affected by the Year 2000 Issue
and is developing an implementation plan to resolve the Issue.
The Issue is whether computer systems will properly recognize
date-sensitive information when the year changes to 2000. Systems that
do not properly recognize such information could generate erroneous data
or cause a system to fail. The Company is dependent on computer
processing in the conduct of its business activities.
Based on the review of the computer systems, management does not believe
the cost of implementation will be material to the Company's financial
position and results of operations.
F-29
<PAGE> 64
DEALER PROSPECTUS DELIVERY OBLIGATION
Until ( ), all dealers that effect transactions in these
securities whether or not participating in this offering, may be
required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
<PAGE> 65
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an estimate of the expenses which will be incurred by
Pop N Go, Inc. in connection with the issuance and distribution of the
securities being registered.
<TABLE>
<S> <C>
SEC Filing Fee $ 1,108.97
Legal Fees and Expenses $45,000.00
Accounting Fees and Expenses $10,000.00
Miscellaneous Expenses $ 3,500.00
----------
Total $59,608.97
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides in general
that a corporation may indemnify its directors, offices, employees or agents
against expenditures (including judgments, fines, amounts paid in settlement and
attorneys' fees) made by them in connection with certain lawsuits to which they
may be made parties by reason of their being directors, officers, employees or
agents and shall so indemnify such persons against expenses (including
attorneys' fees) if they have been successful on the merits or otherwise. The
bylaws of Pop N Go, inc. provide for indemnification of the officers and
directors of Pop N Go, Inc. to the full extent permissible under Delaware law.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
<TABLE>
<CAPTION>
Exhibit No. Reference
- ----------- ---------
<S> <C>
3.(i) Certificate of Incorporation of Pop N Go, Inc.
3.(ii) Bylaws
10. (a) Pop N Go, Inc. 1998 Stock Option Plan
10. (b) Employment Contract with Calblue, Inc.
10. (c) Employment Contract with Gwendolyn Investments, LP.
</TABLE>
II-1
<PAGE> 66
<TABLE>
<S> <C>
23(i) Consent of Singer, Lewak, Greenbaum & Goldstein LLP with
respect to consolidated financial statements of Pop N Go,
Inc. and subsidiary.
23(ii) Consent of Tanner, Mainstain, Hoffer & Peyrot, with
respect to financial statements of Pop N Go, Inc.
</TABLE>
ITEM 17. UNDERTAKINGS
(a) Rule 415 Offering
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events
arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed
in the Registration Statement or any material
change to such information in the Registration
Statement; provided, however, that paragraphs
(1)(i) and (1)(ii) above do not apply if the
Registration Statement is on Form SB-2, Form S-3 or
Form S-8, and the information required to be
included in a post-effective amendment by those
paragraphs is contained in periodic reports filed
by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and
that 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.
II-2
<PAGE> 67
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the Registrant's Annual Report pursuant to Section 13(a) of Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's Annual Report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement 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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities
Act of 1933, as amended, 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 of whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 68
SIGNATURES
Pursuant to 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 this Registration Statement on Form SB-2 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Los Angeles, State of
California, on the 30th day of September, 1999.
POP N GO, INC.
By /s/ Melvin Wyman
--------------------------------
Melvin Wyman,
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
SIGNATURES DATE TITLE
- ---------- ---- -----
<S> <C> <C>
/s/ Melvin Wyman September 30, 1999 Chief Executive Officer,
- --------------------- ------------------ Chief Financial Officer,
Melvin Wyman Secretary and Director
/s/ Vernon Brokke October 1, 1999 President and Director
- ---------------------- ---------------
Vernon Brokke
</TABLE>
II-4
<PAGE> 69
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Reference
- ----------- ---------
<S> <C>
3.(i) Certificate of Incorporation of Pop N Go, Inc.
3.(ii) Bylaws
10. (a) Pop N Go, Inc. 1998 Stock Option Plan
10. (b) Employment Contract with Calblue, Inc.
10. (c) Employment Contract with Gwendolyn Investments, LP
23. (i) Consent of Singer, Lewak, Greenbaum & Goldstein LLP
with respect to consolidated financial statements of Pop N
Go, Inc. and subsidiary.
23. (ii) Consent of Tanner, Mainstain, Hoffer & Peyrot with
respect to financial statements of Pop N Go, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 3.(i)
STATE OF DELAWARE PAGE
OFFICE OF THE SECRETARY OF STATE
--------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY "POP N GO, INC." IS DULY INCORPORATED UNDER THE LAWS OF THE STATE OF
DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE SO FAR AS
THE RECORDS OF THIS OFFICE SHOW, AS OF THE TWENTY-THIRD DAY OF SEPTEMBER, A.D.
1997.
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TO
DATE.
AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE BEEN PAID TO
DATE.
/s/ EDWARD J. FREEL
-----------------------------------
[SEAL] Edward J. Freel, Secretary of State
2673863 8300 AUTHENTICATION: 8663193
971317091 DATE: 09-23-97
<PAGE> 2
STATE OF CALIFORNIA
SECRETARY OF STATE
CERTIFICATE OF QUALIFICATION
I, BILL JONES, Secretary of State of the State of California, hereby certify:
That on the 7th day of October, 1997, POP N GO, INC., a corporation organized
and existing under the laws of Delaware, complied with the requirements of
California law in effect on that date for the purpose of qualifying to transact
intrastate business in the State of California, and that as of said date said
corporation became and now is qualified and authorized to transact intrastate
business in the State of California, subject however, to any licensing
requirements otherwise imposed by the laws of this State.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal
of the State of California this 9th
day of October, 1997
[SEAL] /s/ BILL JONES
Secretary of State
<PAGE> 3
[CORPORATE AGENTS, INC. LOGO]
CERTIFICATE OF INCORPORATION
OF
POP N GO, INC.
---------------------------------------
FIRST. The name of this corporation shall be:
POP N GO, INC.
SECOND. Its registered office in the State of Delaware is to be located
at 1013 Centre Road, in the City of Wilmington, County of New Castle, 19805, and
its registered agent at such address is CORPORATE AGENTS, INC.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is:
One Thousand Five Hundred (1,500) shares without par value.
FIFTH. The name and mailing address of the incorporator is as follows:
Kathleen Crowley
Corporate Agents, Inc.
1013 Centre Road
Wilmington, DE 19805
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
IN WITNESS WHEREOF, The undersigned, being the incorporator
hereinbefore named, has executed, signed and acknowledged this certificate of
incorporation this twenty-first day of October, A.D. 1996.
/s/ KATHLEEN CROWLEY
------------------------------------
Kathleen Crowley
Incorporator
<PAGE> 4
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "POP N GO, INC.", FILED IN THIS OFFICE ON THE TWENTY-EIGHTH DAY OF AUGUST,
A.D. 1998, AT 12 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ EDWARD J. FREEL
-----------------------------------
[SEAL] EDWARD J. FREEL, SECRETARY OF STATE
2673863 6100 AUTHENTICATION: 9282026
981338097 DATE: 09-01-96
<PAGE> 5
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
POP N GO, INC.
POP N GO, INC., a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows:
The amendment of this corporation's Certificate of Incorporation set
forth in the following resolution approved by this corporation's Board of
Directors and stockholders was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware:
"FOURTH: The total number of shares of stock which this
corporation shall have authority to issue is 20,000,000 shares
of Common Stock, par value $0.001 per share.
On the amendment of this Article FOURTH to read as hereinabove
set forth, each outstanding share of the capital stock of this
corporation is split, and converted into 1860 "Common
Shares"."
IN WITNESS WHEREOF, POP N GO, INC., has caused this Certificate of
Amendment to be duly executed by its President and attested to by its Secretary
this 25th day of August, 1998.
POP N GO, INC. ATTEST:
By /s/ VERNON BROKKE /s/ MELVIN WYMAN
-------------------------------- ------------------------------------
Vernon Brokke, President Melvin Wyman, Secretary
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:00 PM 08/28/1998
981338097 - 2673863
<PAGE> 6
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "POP N GO, INC." FILED IN THIS OFFICE ON THE TWENTY-SIXTH DAY OF FEBRUARY,
A.D. 1998, AT 9 O'CLOCK A.M.
[SEAL]
/s/ EDWARD J. FREEL
-----------------------------------
[SEAL] EDWARD J. FREEL, SECRETARY OF STATE
2673863 8100 AUTHENTICATION: 9610139
991084620 DATE: 03-04-99
<PAGE> 7
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 02/26/1998
981075063 - 2673863
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
POP N GO, INC.
---------------------------------------------
POP N GO, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of said corporation at a meeting
duly convened and held, adopted the following resolution:
RESOLVED that the Board of Directors hereby declares it advisable and
in the best interest of the Company that Article Fourth of the Certificate of
Incorporation be amended to read as follows:
FOURTH: The total number of shares of stock which this corporation is
authorized to issue is:
Three Thousand (3,000) shares of Common Stock with no par value.
SECOND: That the said amendment has been consented to and authorized by
the holders of a majority of the issued and outstanding stock entitled to vote
by written consent given in accordance with the provisions of Section 228 of the
General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by Melvin Wyman this 16th day of February A.D. 1998.
/s/ MELVIN WYMAN
------------------------------------
Authorized Officer
<PAGE> 1
EXHIBIT 3.(ii)
BYLAWS
OF
POP N GO, INC.
(a Delaware corporation)
---------
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in
the corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the President
or a Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may provide
by resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any
<PAGE> 2
uncertificated shares. The corporation shall send to the registered owner
thereof any written notice prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a
<PAGE> 3
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which date shall not be more than ten days after
the date upon which the resolution fixing the record date is adopted by the
Board of Directors. If no record date has been fixed by the Board of Directors,
the record date for determining the stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by the General Corporation Law, shall be the first date
on which a signed written consent setting forth the action taken or proposed to
be taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date his been fixed by the Board of Directors and prior
action by the Board of Directors is required by the General Corporation Law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action. In
order that the corporation may determine the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.
<PAGE> 4
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date within thirteen months after the organization of
the corporation, and each successive annual meeting shall be held on a date
within thirteen months after the date of the preceding annual meeting. A special
meeting shall be held on the date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information, or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at his record address or at such other
address which he may have furnished by request in writing to the Secretary of
the corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States Mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or to another place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
directors, after adjournment, fix a new record date for the adjourned meeting.
Notice need not be given to any stockholder who submits a written waiver of
notice signed by him before or after the time stated therein. Attendance of a
stockholder at a meeting of stockholders shall constitute a waiver of notice of
such meeting, except when the stockholder attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice.
<PAGE> 5
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the stockholders.
The Secretary of the corporation, or in his absence, an Assistant Secretary,
shall act as secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present the Chairman of the meeting shall appoint a
secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy may
be made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the corporation generally.
- INSPECTORS. The directors, in advance of any meeting, may, but need
not, appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before
<PAGE> 6
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspectors at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots, or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots, or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question, or matter determined by him or them and execute a
certificate of any fact found by him or them. Except as otherwise required by
subsection (e) of Section 231 of the General Corporation Law, the provisions of
that Section shall not apply to the corporation.
- QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to one
vote. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors. Any other action shall be authorized by a majority of
the votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
8. STOCKHOLDERS ACTION WITHOUT MEETINGS. Any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Action taken pursuant to this paragraph shall be
subject to the provisions of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
of the corporation. The
<PAGE> 7
Board of Directors shall have the authority to fix the compensation of the
members thereof. The use of the phrase "whole board" herein refers to the total
number of directors which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of persons. Thereafter the number
of directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of Directors, such number
may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be . The number
of directors may be increased or decreased by action of the stockholders or of
the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or removal. Except
as the General Corporation Law may otherwise require, in the interim between
annual meetings of stockholders or of special meetings of stockholders called
for the election of directors and/or for the removal of one or more directors
and for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the Board of Directors, including unfilled
vacancies resulting from the removal of directors for cause or without cause,
may be filled by the vote of a majority of the remaining directors then in
office, although less than a quorum, or by the sole remaining director.
<PAGE> 8
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, of the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by him
before or after the time stated therein. Attendance of any such person at a
meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors need be specified in any
written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein otherwise provided, and
except as otherwise provided by the General Corporation Law, the vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board. The quorum and voting provisions herein stated
shall not be construed as conflicting with any provisions of the General
Corporation Law and these Bylaws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board or action of
disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
<PAGE> 9
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman
of the Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the exception of
any authority the delegation of which is prohibited by Section 141 of the
General Corporation Law, and may authorize the seal of the corporation to be
affixed to all papers which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the
Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board, an
Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
with such titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing him, no officer other than the Chairman or Vice-Chairman of
the Board, if any, need be a director. Any number of offices may be held by the
same person, as the directors may determine.
<PAGE> 10
Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the Board
of Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform
such duties in the management and operation of the corporation as shall be
prescribed in the resolutions of the Board of Directors designating and choosing
such officers and prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office except to the
extent that such resolutions may be inconsistent therewith. The Secretary or an
Assistant Secretary of the corporation shall record all of the proceedings of
all meetings and actions in writing of stockholders, directors, and committees
of directors, and shall exercise such additional authority and perform such
additional duties as the Board shall assign to him. Any officer may be removed,
with or without cause, by the Board of Directors. Any vacancy in any office may
be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject
to change, by the Board of Directors.
<PAGE> 11
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or repeal
these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors
or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy
of the Bylaws of POP N GO, INC., a Delaware corporation, as in effect on the
date hereof.
Dated:
/s/ MELVIN WYMAN
---------------------------------
Secretary of
(SEAL)
<PAGE> 1
EXHIBIT 10.(a)
POP N GO, INC.
NON-QUALIFIED STOCK OPTION PLAN
1. DEFINITIONS
(A) "Employee" shall mean a key person employed by the Company as an
"Employee" or as an "Independent Consultant", on a full or part time basis,
(including a director or officer) or a subsidiary on a full-time basis at the
time of a grant and who is compensated for such employment by a regular salary.
(B) "Fair Market Value" shall mean the last sales price of the Common
Stock on any Exchange or in any market in which it trades, or if it does not
trade, at its estimated fair market value as set by the Board of Directors on
the date of grant of an Option.
(C) "The Company" shall mean Pop N Go, Inc., a corporation organized and
existing under the laws of the State of Delaware, and any successor, or
successors thereto.
(D) "Option" shall mean a right to purchase shares of Common Stock
granted by the Company pursuant to the Plan.
(E) "Optionee" shall mean an eligible person, as described herein, to
whom an Option or Stock Appreciation Right, as the case may be, is granted
pursuant to the Plan.
(F) "Option Price" shall mean the per share price to be paid for the
shares of Common Stock being purchased pursuant to this Stock Option Agreement.
(G) "Option Period" shall mean the period from the date of grant of an
Option to the date after which such Option may no longer be exercised. Nothing
in this Plan shall be construed to extend the termination date of any Option
Period beyond the termination date of such Option Period set forth in the Stock
Option Agreement.
(H) "Plan" shall mean the Pop N Go, Inc. Nonqualified Stock Option Plan,
as amended from time to time.
(I) "Stock Option Agreement" shall mean the written agreement between
1
<PAGE> 2
the Company and the Optionee confirming the grant of the Option and setting
forth the terms and conditions upon which it may be exercised.
(J) Subsidiary shall mean any corporation in which the Company owns
directly, or indirectly through Subsidiaries, at least 50% of the total
combined voting power of all classes of stock.
2. PURPOSES
The purposes of the Plan are to promote the growth and profitability of the
Company and its Subsidiaries by enabling the Company to attract and retain the
best available personnel for positions of substantial responsibility, and to
provide Employees with an opportunity for investment in the Common Stock and to
give them an additional incentive to increase their efforts on behalf of the
Company and its Subsidiaries.
3. EFFECTIVE DATE AND TERMINATION
The effective date of the Plan is August 31, 1998, the date on which the Plan
was adopted by the Board of Directors. No options may be granted under the Plan
after December 31, 2008.
4. ADMINISTRATION
The Plan shall be administered by the Committee, which shall consist of not
less than two directors of the Company. Committee members shall be appointed by
the Board of Directors, shall serve at the Pleasure of the Board of Directors
and any vacancies occurring in the membership of the Committee shall be filled
by appointment by the Board of Directors. A majority of the Committee shall
constitute a quorum at any meeting thereof and the Acts of a majority of members
present at any meeting of the Committee at which a quorum is present, or acts
unanimously approved in writing by the entire Committee, shall be the acts of
the Committee. The Board of Directors shall appoint the Chairman of the
Committee.
The Committee shall have a plenary authority in its discretion, but subject to
the express provisions of the Plan:
(a) To determine which of the eligible Employees of the Company and its
Subsidiaries shall be granted Options and the number to be granted to
each. In making such determination, the Committee shall consider the
position and responsibilities of the Employees being considered, the
2
<PAGE> 3
nature and value to the Company or a Subsidiary of his services and
accomplishments, his present and potential contribution to the success
of the Company or a Subsidiary and such other factors as the Committee
may deem relevant;
(b) To determine the dates of grant of Options;
(c) To prescribe the form of the instruments evidencing the Options
granted under the Plan (which forms need not be identical and may be
evidenced by a single instrument);
(d) To adopt, amend, and rescind rules and regulations for the
administration of the Plan and for its own acts and proceedings; and
(e) To decide all questions and settle all controversies and disputes of
general applicability which may arise in connection with the Plan.
All decisions, determinations and interpretations with respect to the foregoing
matters shall be made by the Committee and shall be final and binding upon all
persons. The Committee may designate any officers or other employees of the
Company to assist the Committee in the administration of the Plan and may grant
authority to such persons to execute instruments evidencing options or other
documents on behalf of the Committee.
The Committee may, in its discretion and with the consent of Optionee, adjust
or reduce the Option Price for shares of Common Stock subject to such Optionee's
Option, whether by way of cancellation of an outstanding Option and the
substitution therefor of a new Option at a lower Option Price, or by
modification, extension or renewal of the outstanding Option. The Committee may
grant to an Optionee an additional option exercisable at an Option Price lower
than the option Price called for by the outstanding Option.
5. ELIGIBILITY
Options may be granted only to Employees and Consultants.
6. NUMBER OF SHARES SUBJECT TO OPTIONS
Under the Plan, the maximum number and kind of shares as to which options may
be granted, subject to adjustment in accordance with the provisions of this
Agreement, is 500,000 shares of Common Stock. The Common Stock to be offered
3
<PAGE> 4
under the Plan may be either authorized and unissued shares or issued shares
reacquired by the Company and presently or hereafter hold as treasury shares.
The Board of Directors has reserved for the purpose of the Plan a total of
500,000 of the authorized shares of Common Stock, subject to adjustment in
accordance with this Agreement. If any shares to which an Option granted under
the Plan shall remain unexercised at the expiration thereof or if the Option
shall be terminated unexercised, such shares may be the subject of the grant of
a further Option or Options.
7. TERMS OF OPTIONS
The grant of each Option shall be confirmed by Stock Option Agreement (in the
form prescribed by the Committee) which shall be executed by the Company and
delivered to the Optionee as promptly as practicable after such grant. Each
such agreement shall expressly state or incorporate by reference the provisions
of this Plan.
A. Option Price
The Option Price shall be determined by the Committee at the time the
Option is granted, subject to adjustment; provided, however, that in no
event shall the Option Price be less than the per share par or stated
value of the Common Stock on the date of the grant.
B. Option Periods
The term of each Option granted under this Plan shall be for such period
as the Committee shall determine, but not more than ten years from the
date of adoption of this Plan and subject to earlier termination as
hereinafter provided herein.
C. Exercise of Options
Each Option granted under this Plan shall be exercisable on such date or
dates during the Option Period for such number of shares of Common Stock
as shall be determined by the Committee as evidenced by the provisions of
the Stock Option Agreement evidencing such Option, subject, however, to
the provisions of this Agreement.
(1) An Option my be exercised by the Optionee or a Successor only by
written notice to the Company specifying the extent to which
such Option is to be exercised.
(2) The Committee in its discretion may, at any time prior to the
date
4
<PAGE> 5
of exercise of an Option, determine whether the Option Price of some
or all of the shares subject to the Option shall, (a) be paid in full
in cash or by check at the time of exercise, or (b) subject to any
applicable restrictions imposed by law, be paid in such installments,
and upon such terms and conditions, including provision for securing
the payment of the same, as the Committee, in its discretion, shall
provide. In no event, however, shall the Committee provide for the
installment payment of any Option Price unless at the time of exercise
of the Option to which such Option Price relates the Optionee pays in
cash or by certified or official bank check an amount equal to not
less than the aggregate par or stated value of the shares being
acquired;
(3) As soon as practicable after receipt by the Company of notice of
exercise and of payment, as required by this Agreement, the Option
Price for all shares with respect to which an Option has been
exercised, a certificate or certificates representing such shares
shall be registered in the name or names of the Optionee or his
Successor and shall be delivered to the Optionee or his Successor at
the Optionee's address as it appears in the payroll records of the
Company or its Subsidiary or such other address as may be designated
by the Optionee.
D. Termination of Employment or Consulting Arrangement.
The effect of termination of an optionee's employment or consulting arrangement
with the Company or a Subsidiary shall be as follows:
(1) Termination Other Than for Cause.
If the employment or consulting arrangement of an Optionee is terminated
other than for cause (as hereinafter defined), any outstanding Option held
by such Optionee may be exercised at any time prior to the expiration of
the Option, provided that such Optionee shall have been an Employee or
Consultant for a continuous period of 6 months from the date of grant of
the Option and any such Option shall only be exercisable to the extent
exercisable on the date the relevant employment or consulting arrangement
shall have terminated.
(2) Death.
If an Optionee shall die while he is an Employee or Consultant or within
three months after the termination without Cause of his employment or
5
<PAGE> 6
consulting arrangement, any outstanding Option may be exercised to the
extent exercisable on the date of death, by the person or persons entitled
to do so under the Optionee's will or, if the Optionee shall have failed to
make testamentary disposition of such Option or shall have died intestate,
by the Optionee's legal representative or representatives. In either case
at any time prior to the expiration date of the Option or within one year
of the date of the Optionee's death, whichever shall be the longer period,
provided that such Optionee, at the time of death, shall have been an
Employee or Consultant for a continuous period of 6 months from the date of
grant of the Option. Such person, persons, representative or
representatives are hereinbefore and hereinafter referred to as the
"Successor" or "Successors" of an Optionee.
(3) Termination for Cause.
If the employment or consulting arrangement of an individual holding an
Option shall be terminated for Cause, his right under any then outstanding
Option shall terminate at the time of such termination of employment or
consulting arrangement.
(4) Cause.
As used herein, in the case of any Employee or Consultant not subject to a
written employment or consulting agreement, "Cause" shall mean any willful
or intentional act having the effect of injuring the reputation, business
or business relationships of the Company, or any of its Subsidiaries, or
any repeated or continuous failure, neglect or refusal to perform in a
satisfactory manner duties assigned to such Employee. In the case of an
Employee or Consultant subject to a written employment or consulting
agreement, "Cause" shall mean any action giving the Company the right to
terminate such person's employment or consulting agreement for cause.
E. Non-Transferability of Option
Each Option granted under the Plan shall, by its terms, be nontransferable
except by will or the laws of descent and distribution, and each Option shall
be exercisable during the holder's lifetime only by him.
F. Agreement to Continue Employment
The granting of an Option shall not be construed as conferring upon any holder
the right to remain in the employ of the Company or any "Subsidiary".
6
<PAGE> 7
G. Other Terms
Options granted pursuant to the Plan shall contain such other terms,
provisions and conditions not inconsistent herewith as shall be determined
by the Committee.
6. ADJUSTMENTS
If there is any change in the Common Stock by reason of the declaration of a
stock dividend or a subdivision, combination or reclassification of shares, the
number of shares available for the grant of options and the number of shares
subject to outstanding options will be appropriately adjusted by the Committee.
If there is any change in the Common Stock by reason of any reorganization,
liquidation, merger, consolidation or sale of assets of the Company, each
Option shall be converted into an Option for the same number and kind of Common
Stock or other property as the Optionee would have been entitled to receive had
he exercised his Option immediately prior to the record date of the meeting of
stockholders called to consider such event. The exercise price of the Option
will be appropriately adjusted so that the total consideration upon exercise of
the Option will remain constant. No adjustment provided for in this Section
shall require the Company to sell or issue a fractional share of Common Stock,
and the total substitution or adjustment with respect to each outstanding
Option shall be limited accordingly.
Upon any adjustment made pursuant to this Section, the Company will, upon
request, deliver to the Optionee, or his Successor or Successors, a certificate
of the Company's Secretary or an Assistant Secretary setting forth the Option
Price thereafter in effect and the number and kind of shares, other securities
or other property thereafter purchasable on the exercise of such Option.
9. INTERPRETATION, AMENDMENTS AND TERMINATION
The Committee may make such rules and regulations and establish such procedures
for the administration of the Plan as it deems appropriate. In the event of any
dispute or disagreement as to the interpretation of this Plan or of any rule,
regulation or procedure arising from or related to the Plan, as the same may
apply in general to persons affected thereby, the decision of the Committee
shall be final and binding upon all such persons. The Board of Directors may
amend this Plan as it may deem advisable, except that the Board of Directors
may not, without further approval of the stockholders of the Company, (a)
increase the total number of shares which may be made the subject of Options
granted under the Plan, either in the aggregate or to any
7
<PAGE> 8
Individual Employee, except as provided herein; (b) change the manner of
determining the Option Price set forth herein; (c) extend the maximum period
during which Options may be granted or exercised; or (d) change the criteria for
determining eligibility under the Plan. Notwithstanding the foregoing, neither
the Board of Directors nor the Committee may amend, without the consent of the
Optionee, the terms of any Option in any manner which would adversely affect any
such previously granted Option. The Board of Directors may, in its discretion,
terminate this Plan at any time. Termination of the Plan shall not affect the
rights of Optionees or their Successors under any Options outstanding and not
exercised in full on the date of termination.
10. NOTICES
All notices under the Plan shall be in writing, and if to the Company, shall be
delivered to the Secretary of the Company, or mailed to its principal office,
12429 East Putnam Street, Whittier, California 90602, addressed to the attention
of the Secretary; and if to the Optionee, shall be delivered personally or
mailed to the Optionee at his address appearing in the payroll records of the
Company or a Subsidiary. Such address may be changed at any time by written
notice to the other party given in accordance with this Section.
11. NON-EXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors nor the submission
of the Plan to the stockholders of the Company for approval shall be construed
as creating any limitation on the power of the Board of Directors to adopt such
other incentive arrangements as it may deem desirable, including without
limitation, the granting of stock options otherwise than under the Plan, and
Such arrangements may be either generally applicable or applicable only in
specific cases.
12. EXCLUSION FROM PENSION COMPUTATIONS
By acceptance of a grant of an Option under the Plan, each Employee shall be
deemed to agree that income realized upon the receipt or exercise thereof is
special incentive compensation will not be taken into account as "wages",
"salary," or "compensation" in determining the amount of any payment under any
pension, retirement, incentive, profit sharing or deferred compensation plan of
the Company or any Subsidiary.
8
<PAGE> 9
13. PLAN GOVERNED BY CALIFORNIA LAW
The Plan and the rights of all persons hereunder shall be governed by the laws
of the State of California.
Undersigned certifies that this
Non-Qualified Stock Option Plan
was Adopted by the Board of
Directors of this Corporation
Effective as of August 31, 1998.
POP N GO, INC.
/s/ MELVIN WYMAN
- -----------------
Secretary
<PAGE> 1
EXHIBIT 10.(b)
CONSULTING AGREEMENT
This Agreement is made effective as of January 1, 1998 by and between POP N GO,
INC., of 12429 East Putnam Street, Whittier, California 90602, and Calblue, Inc.
In this Agreement, the party who is contracting to receive services shall be
referred to as "PNG", and the party who will be providing the services shall be
referred to as "Calblue".
Calblue has an extensive background in the creation of start-up companies and
in the management and development of start-up companies and is willing to
provide services to PNG based on this background.
PNG desires to have services provided by Calblue.
Therefore, the parties agree as follows:
1. DESCRIPTION OF SERVICES. Beginning on January 1, 1998, Calblue will provide
the following services (collectively, the "Services"):
A. Serve as Chief Executive Officer and a member of the Board of Directors of
PNG.
B. Oversee the day to day operations of PNG.
C. Develop the strategic plan for PNG.
D. Consult with PNG's President on the overall strategic direction of PNG.
2. PERFORMANCE OF SERVICES. The manner in which the Services are to be
performed and the specific hours to be worked by Calblue shall be determined by
Calblue. PNG will rely on Calblue to work as many hours as may be reasonably
necessary to fulfill Calblue's obligations under this Agreement.
3. PAYMENT. PNG will pay a fee to Calblue for the Services based on $96,000 per
year during the first year, $120,000 per year during the second year and
$150,000 per year during the third year of this Agreement. This fee shall be
payable twice monthly, no later than 5 days after the end of each applicable
period during which Services were performed.
4. BONUS PAYMENTS. In addition to the payments under the preceding paragraph,
PNG will make bonus payments to Calblue based on 1.00% of PNG gross sales.
a. Payment Schedule. The bonus payments shall be payable, no later than
the tenth day of the month following the end of PNG's fiscal year.
b. Accounting. PNG shall maintain records in sufficient detail for purposes
of determining the amount of the bonus. PNG shall provide to Calblue a
written accounting that sets forth the manner in which the bonus payment
was calculated.
c. Stock Bonus. A stock bonus of 15 shares of PNG common stock will be paid
to Calblue for each quarter that Calblue serves as a consultant during the
term of this Agreement. Each 15 share bonus will be considered earned as of
the last day of each quarterly period.
<PAGE> 2
5. TERM/TERMINATION. This Agreement shall terminate automatically on December
31, 2000. PNG and Calblue may agree to terminate this Agreement at any time
only by mutual consent of the parties and by payment to Calblue of 6 months of
consulting fees. Any accrued cash and stock bonus will be payable upon
termination.
7. RELATIONSHIP OF PARTIES. It is understood by the parties that Calblue is
an independent contractor with respect to PNG, and not an employee of PNG.
8. DISCLOSURE. Calblue is required to disclose any outside activities or
interests, including ownership or participation in the development of prior
inventions, that conflict or may conflict with the best interests of PNG.
Prompt disclosure is required under this paragraph if the activity or interest
is related, directly or indirectly, to:
- a product or product line of PNG
- a manufacturing process of PNG
- any activity that Calblue may be involved with on behalf of PNG
9. ASSIGNMENT. Calblue's obligations under this Agreement may not be assigned
or transferred to any other person, firm, or corporation without the prior
written consent of PNG.
10. NOTICES. All notices required or permitted under this Agreement shall be
in writing and shall be deemed delivered when delivered in person or deposited
in the United States mail, postage prepaid, addressed as follows:
IF for PNG:
POP N GO, INC.
12429 East Putnam Street
Whittier, California 90602
IF for Calblue, Inc.:
Calblue, Inc.
1154 Palms Blvd.
Venice, Ca. 90291
Such address may be changed from time to time by either party by providing
written notice to the other in the manner set forth above.
-2-
<PAGE> 3
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties and there are no other promises or conditions in any other agreement
whether oral or written. This Agreement supersedes any prior written or oral
agreements between the parties.
12. AMENDMENT. This Agreement may be modified or amended if the amendment is
made in writing and is signed by both parties.
13. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, the remaining provisions shall continue
to be valid and enforceable. If a court finds that any provision of this
Agreement is invalid or unenforceable, but that by limiting such provision it
would become valid and enforceable, then such provision shall be deemed to be
written, construed, and enforced as so limited.
14. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver or limitation of
that party's right to subsequently enforce and compel strict compliance with
every provision of this Agreement.
15. APPLICABLE LAW. This Agreement shall be governed by the laws of the State
of California.
Party receiving services:
POP N GO, INC.
By: /s/ VERNON BROKKE, PRESIDENT
----------------------------------------
POP N GO, INC.
Party providing services:
Calblue, Inc.
By: /s/ MEL WYMAN
----------------------------------------
Mel Wyman
-3-
<PAGE> 1
EXHIBIT 10.(c)
CONSULTING AGREEMENT
This Agreement is made effective as of January 1, 1998 by and between POP N GO,
INC., of 12429 East Putnam Street, Whittier, California 90602, and Gwendolyn
Investments, LP.
In this Agreement, the party who is contracting to receive services shall be
referred to as "PNG", and the party who will be providing the services shall be
referred to as "Consultant".
Consultant has an extensive background in the creation of start-up companies
and in the development of marketing strategies for the introduction of new
products into the marketplace and is willing to provide services to PNG based
on this background.
PNG desires to have services provided by Consultant.
Therefore, the parties agree as follows:
1. DESCRIPTION OF SERVICES. Beginning on January 1, 1998, Consultant will
provide the following services (collectively, the "Services"):
A. Serve as President and a member of the Board of Directors of PNG.
B. Oversee the raising of capital for PNG pursuant to PNG's Convertible
Debenture Offerings.
C. Oversee PNG's Sales Director in the development of PNG's strategic sales
plan.
D. Consult with PNG's CEO on the overall strategic direction of PNG.
E. Consult on key personnel and administrative decisions.
2. PERFORMANCE OF SERVICES. The manner in which the Services are to be
performed and the specific hours to be worked by Consultant shall be determined
by Consultant. PNG will rely on Consultant to work as many hours as may be
reasonably necessary to fulfill Consultant's obligations under this Agreement.
3. PAYMENT. PNG will pay a fee to Consultant for the Services based on $96,000
per year during the first year, $120,000 per year during the second year and
$150,000 per year during the third year of this Agreement. This fee shall be
payable monthly, no later than 5 days after the end of each applicable month
during which Services were performed.
4. BONUS PAYMENTS. In addition to the payments under the preceding paragraph,
PNG will make bonus payments to Consultant based on 1.00% of PNG gross sales.
a. Payment Schedule. The bonus payments shall be payable, no later than
the tenth day of the month following the end of PNG's fiscal year.
b. Accounting. PNG shall maintain records in sufficient detail for
purposes of determining the amount of the bonus. PNG shall provide to
Consultant a written accounting that sets forth the manner in which the bonus
payment was calculated.
c. Stock Bonus. A stock bonus of 15 shares of PNG common stock will be
paid to Consultant for each quarter that Consultant serves as a consultant
during the term of this Agreement. Each 15
<PAGE> 2
share bonus will be considered earned as of the last day of each quarterly
period.
5. TERM/TERMINATION. This Agreement shall terminate automatically on December
31, 2000. PNG and Consultant may agree to terminate this Agreement at any time
only by mutual consent of the parties and by payment to Consultant of 6 months
of consulting fees. Any accrued cash and stock bonus will be payable upon
termination.
7. RELATIONSHIP OF PARTIES. It is understood by the parties that Consultant is
an independent contractor with respect to PNG, and not an employee of PNG.
8. DISCLOSURE. Consultant is required to disclose any outside activities or
interests, including ownership or participation in the development of prior
inventions, that conflict or may conflict with the best interests of PNG.
Prompt disclosure is required under this paragraph if the activity or interest
is related, directly or indirectly, to:
- a product or product line of PNG
- a manufacturing process of PNG
- any activity that Consultant may be involved with on behalf of PNG
9. ASSIGNMENT. Consultant's obligations under this Agreement may not be
assigned or transferred to any other person, firm, or corporation without the
prior written consent of PNG.
10. NOTICES. All notices required or permitted under this Agreement shall be in
writing and shall be deemed delivered when delivered in person or deposited in
the United States mail, postage prepaid, addressed as follows:
IF for PNG:
POP N GO, INC.
12429 East Putnam Street
Whittier, California 90602
IF for Consultant:
/s/ VERNON BROKKE, GP
Gwendolyn Investments, LP
1111 Vineyard Hill Road
Baltimore, MD 21228
-2-
<PAGE> 3
Such address may be changed from time to time by either party by providing
written notice to the other in the manner set forth above.
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties and there are no other promises or conditions in any other agreement
whether oral or written. This Agreement supersedes any prior written or oral
agreements between the parties.
12. AMENDMENT. This Agreement may be modified or amended if the amendment is
made in writing and is signed by both parties.
13. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, the remaining provisions shall continue
to be valid and enforceable. If a court finds that any provision of this
Agreement is invalid or unenforceable, but that by limiting such provision it
would become valid and enforceable, then such provision shall be deemed to be
written, construed, and enforced as so limited.
14. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver or limitation of
that party's right to subsequently enforce and compel strict compliance with
every provision of this Agreement.
15. APPLICABLE LAW. This Agreement shall be governed by the laws of the State
of California.
Party receiving services:
POP N GO, INC.
By: /s/ MEL WYMAN
---------------------------
Party providing services:
GWENDOLYN INVESTMENTS, LP
By: /s/ VERNON BROKKE, GP
---------------------------
-3-
<PAGE> 1
EXHIBIT 23.(i)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form SB-2 of our
report, dated February 5, 1999, which includes an emphasis paragraph relating to
an uncertainty as to the Company's ability to continue as a going concern, on
the consolidated financial statements of Pop N Go, Inc. and subsidiary. We also
consent to the reference to our firm under the caption "Experts".
SINGER, LEWAK, GREENBAUM & GOLDSTEIN, LLP
Los Angeles, California
October 7, 1999
<PAGE> 1
EXHIBIT 23.(ii)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form SB-2 of our
report, dated November 18, 1997, on the financial statements of POP N GO, INC.
We also consent to the reference to our Firm under the caption "Experts."
TANNER, MAINSTAIN, HOFFER & PEYROT
AN ACCOUNTANCY CORPORATION
Los Angeles, California
October 6, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<CASH> 17,238
<SECURITIES> 0
<RECEIVABLES> 108,166
<ALLOWANCES> 92,100
<INVENTORY> 163,051
<CURRENT-ASSETS> 196,355
<PP&E> 20,790
<DEPRECIATION> 3,147
<TOTAL-ASSETS> 571,055
<CURRENT-LIABILITIES> 582,541
<BONDS> 0
0
0
<COMMON> 3,336
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 571,055
<SALES> 504,222
<TOTAL-REVENUES> 504,222
<CGS> 415,609
<TOTAL-COSTS> 415,609
<OTHER-EXPENSES> 1,239,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 186,630
<INCOME-PRETAX> (1,337,069)
<INCOME-TAX> 1,079
<INCOME-CONTINUING> (1,338,148)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,338,148)
<EPS-BASIC> (.48)
<EPS-DILUTED> (.48)
</TABLE>
