U.S. Securities and Exchange Commission
Washington, D.C. 20549
Amendment No. 1 to
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
UNder Section 12(B) or (G) of the Securities Exchange Act of 1934
DYNAMIC IMAGING GROUP, INC.
---------------------------
(Name of Small Business Issuer in its charter)
FLORIDA 65-0903895
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(State of incorporation) (I.R.S. Employer Identification No.)
3418 NORTH OCEAN BOULEVARD,
FORT LAUDERDALE, FLORIDA 33308
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(Address of principal executive offices) (Zip Code)
ISSUER'S TELEPHONE NUMBER (954) 564-1133
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SECURITIES TO BE REGISTERED PURSUANT TO 12(B) OF THE ACT: NONE
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Securities to be registered pursuant to 12(g) of the ACT:_______________________
COMMON STOCK $.001 PAR VALUE
----------------------------
(Title of Class)
<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
ITEM 1. DESCRIPTION OF BUSINESS
-----------------------
BACKGROUND
Dynamic Imaging Group, Inc. was incorporated under the laws of the
State of Florida in January 1999. Through our wholly-owned subsidiary, Dynamic
Imaging Group, Inc., a Colorado corporation, we are engaged in the sale and
rental of portable show displays, accessories and graphics, all of which are
used in the trade show and trade exhibition industry.
During January 1999, all of the issued and outstanding common stock of
Dynamic Imaging Group, Inc. (Colorado) was exchanged for all of the issued and
outstanding common stock of Dynamic Imaging Group, Inc. (Florida). Dynamic
Imaging Group, Inc. (Colorado) was incorporated under the laws of Colorado in
March 1998. The purpose of the stock exchange was to have the parent company
organized under Florida laws.
THE TRADE SHOW AND EXHIBITION INDUSTRY
Our market analysis shows that during the past decade companies have
realized the importance of displaying their products through trade shows,
conventions and company meetings. As a result, our management believes that the
show and exhibition display industry has substantial growth potential both
domestically and internationally.
According to the Center for Exhibition Industry Research, the
exhibitions, conventions and meetings industry contributed $79 billion to the
U.S. economy, $9.57 billion of which was directly related to the design,
associated services, shipping and promotion of trade show displays. The same
source confirms the show and exhibition display system and accessory market is a
rapidly growing industry, both domestically and internationally. Between 1980
and 1989, the exhibition industry reportedly grew at a rate of 72%. In 1989
there were a total of 3,289 shows. Customer base for rental of the show display
systems was 5% of the direct exhibit design dollars spent in 1996. Out of the
11,000 shows, the average show has 200 exhibitors and 60% or 1,320,000 of the
exhibitors rent a show booth size that conforms to Dynamic Imaging's display. We
estimate that in 1999 a total of 11,000 trade shows are scheduled. By year 2001,
the average exhibition is projected to span 131,900 net square feet of exhibit
space, draw 470 exhibiting firms and 27,560 attendees. This projection includes
both business-to-business and consumer shows. Over 500 new shows are expected to
be launched by the end of 2001. Management believes the growth in the trade show
and exhibits industry has created a significant demand for companies to either
invest in their own show display or rent a display through convention centers or
local show display companies.
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<PAGE>
THE SHOW DISPLAY MARKET
Recently, several companies have commenced manufacturing portable show
displays and marketing the displays directly to the end user. Analysis conducted
by our management revealed that the average company would use a show display
only two to three times a year and that in some cases, it was cost prohibitive
to purchase, transport and assemble its own show displays. Also, our analysis
indicated that most companies participated in one trade show lasting three to
four days per year, placing a burden on them as they incurred an initial
purchase cost and additional follow-up storage charges. We also determined that
many companies will pass up the opportunity to participate in smaller regional
shows and exhibitions due to the prohibitive cost of transporting and assembling
the display systems.
Based on these findings, we created a new approach in renting show
displays. We believe we can create a business niche catering to the trade show
participant who does not want the burden of purchasing, shipping and assembling
its own display units. Our rental units can be priced below the current daily
rental market price, which we believe promotes repeated rentals by existing
exhibitors. We anticipate the favorable pricing based on our ability to locate
exhibitors through our own network of distributors who can secure rentals from
other exhibitors on a periodic basis. In addition, this network should enable us
to provide rental opportunities for our customers.
We believe the market for these rental units includes both large and
small companies. For the smaller company, renting a display system should be far
more economical than purchasing a display system, especially if the company
participates in exhibits once or twice a year. For the larger company
experienced in exhibiting in large trade shows, renting a display system
facilitates its participation in small and medium sized trade shows. The smaller
shows may have been uneconomical to participate in due to the size and costs of
shipping and assembling inherent in the company's system, which is typically a
bulky and elaborate system reserved for major shows.
Through June 30, 1999, approximately 95% of our total sales was
attributable to direct sales and 5% was attributable to rentals. For the
remainder of the 1999 fiscal year, we expect rental sales to increase to
approximately 60% of total sales and to 40% for the 2000 fiscal year.
DYNAMIC IMAGING'S SHOW DISPLAYS AND GRAPHICS
Dynamic Imaging's name brand displays are manufactured for us by Jemco
Displays. Our displays are lightweight and can be easily assembled without tools
in approximately 15 minutes. The display system is an aluminum frame structure
which is designed to expand to an overall width of 100 inches by a height of 89
inches. Our frame includes a self-aligning magnetic set of plastic bars designed
to attach to the frame for handing the center and radius end caps. The three
center panels of our frame are approximately 27" wide and 89" high and are made
of plastic with a fabric covering. The radius end caps are approximately 29"
wide by 89" high. The center panels and end caps are attached to the frame by
plastic panel hooks and magnetic strips. The display's frame also supports
lighting, shelves, signage and various other interchangeable lightweight
products.
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<PAGE>
Dynamic Imaging produces large format photographic imaging on the Durst
Lambda system, a specialized processing system. Our clients include wholesalers,
resellers and advertising agencies. Our photo images are produced not only for
use on our trade show display systems, but are also used for wall advertisements
and lightbox fixtures for permanent usage, as well as book covers and handouts
associated with these displays.
Fabric, photo panels and various graphics, which are also supplied by
us, easily attach to the display's frame by magnetic strips strategically
located on the panels. Our graphics available for use with our displays are
laser generated, true photographic, continuous tone process, which create the
capability to transform a 24" by 24" poster into a 10' X 10' foot mural while
keeping the image sharp and clear. Management believes this process improves on
the inkjet and electrostatic process at a much-reduced cost and turnaround time.
The displays come with molded plastic shipping cases with built-in wheels for
easy transporting. The shipping cases convert to a matching podium table for the
display.
WARRANTIES
Dynamic Imaging warrants to the purchaser, on a no time limit basis, to
repair or replace (at our option), the frame provided. This warranty is provided
only with sales and not with rentals. All electrical parts and components are
covered for a period of one year from the date of purchase. The conditions of
the warranty are that the unit shall have been employed under conditions of
normal use and service, there can be no evidence of tampering and improper
handling and that other relevant information relating to the unit be provided to
Dynamic Imaging. Graphics are excluded from our warranty. Our primary supplier
of frame displays is Jemco Displays, which provides us and our customers with a
comparable product warranty. Other display suppliers provide similar warranties.
In view of the sturdy nature of the materials provided, we do not believe that
full replacement would be necessary for a majority of circumstances as repairs
could be handled by either us, our distribution personnel or Jemco Display or
other suppliers. We intend to have up to five support outlets strategically
located in the United States for quick 24-hour turnaround repair service as
required. To date, we have not received requests for any returns to date or
requests under our warranty.
DISTRIBUTION
We distribute our goods and services through our network of authorized
dealers which have franchise affiliations with Speedy Sign*A*Rama, USA, Inc.,
referred to in this report as SignARama. SignARama has approximately 400
franchised dealers in North America. In April 1998, we entered into a
co-marketing agreement with SignARama which provides that we and SignARama shall
jointly market and promote our exhibit products worldwide. This agreement
provides that SignARama is obligated to encourage its franchisees to lease, sell
and distribute our display systems. Our display systems are exclusively marketed
through SignARama's franchisees to the retail sign industry without any minimum
requirements placed on the franchisees. The term of this agreement is for one
year, renewable automatically for one year terms unless 30 days' written notice
of termination is received by either party at least 30 days prior to the
expiration of the term.
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<PAGE>
We will jointly participate in trade shows, conventions and other activities and
will co-brand our advertising in various media. We are to bear all costs of
marketing under this agreement. We are also to cooperate with SignARama in the
areas of sales and training. Eight percent (8%) of all gross revenues received
by us for sales to SignARama's franchisees are to be earmarked to fund a
national advertising campaign of SignARama franchises. In addition, SignARama
has affiliations in Australia, New Zealand, Puerto Rico, United Kingdom,
Venezuela, Guam, Canada, Dominican Republic, Portugal, Northern Island, Uruguay
and China.
In addition, we have oral distribution arrangements with independent
distributors for the sale of our products in Argentina, Bolivia and Peru, which
are intended to be exclusive (except where pre-empted by our co-marketing
agreement with SignARama). We will engage solely in direct sales for
international operations outside of North America, and direct sales and leasing
for North America.
Display products to be sold will be either manufactured to order or
shipped from available inventory directly to the dealer. Display products
subject to rental will be supplied from inventory and shipped to the dealer for
the term of the rental. Upon the conclusion of the rental term, the display will
be picked up and returned to inventory.
MARKETING PHILOSOPHY AND STRATEGY
We intend to focus our show display marketing efforts on smaller
companies which participate in major trade shows, conventions, grand openings,
weddings and company meetings. We also will gear our operations to local
companies with display needs and small trade shows that cater to individuals, as
well as to create product awareness to enhance sales and rentals through our
existing distribution network.
We market the sales of our display systems through telemarketing. We
market rentals of our display systems through worldwide retail outlets that
presently cater to the equipment rental, printing and graphics and trade show
markets. Convention centers, hotels and civic centers are also a major source of
rentals for the display systems. Each display system we rent through our
authorized dealers result in a fee or commission paid to the authorized dealer
on a per unit basis.
Dynamic Imaging has its own public relations division that reaches over
21,000 potential clients through mass mailing, telemarketing and direct contact.
Management believes that in-house public relations is a reliable way to market
the Dynamic Imaging brand but will evaluate opportunities to contract with
outside public relation firms.
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<PAGE>
COMPETITION
We estimate that there are approximately 15 major manufactures of
pop-up display systems worldwide. Our leading competitors are Skyline, Nomadic,
Abex and Expo Design, all of which are engaged in direct sales. We believe that
there are presently no nationally organized competitors offering rental service
other than independents in local areas.
Traditionally, the display system industry has been fragmented, largely
because companies within it cater to distinct customer bases with specialized
needs. We believe that Dynamic Imaging is one of the first companies to
standardize its product line so that it can be marketed to a broader customer
base throughout the United States as well as in international markets. We also
believe that Dynamic Imaging is one of the few suppliers of display systems and
accessories which offers a national marketing network to bring products and
related services to the public. We believe that our distribution system provides
us with cost-efficiencies as well as convenience and ease of use for our
customers.
Our strengths include our efficient network of dealers and outlets
which makes our products and services available to the consumer in a broad range
of geographic markets. In addition, we believe that departmental arrangements
give us the opportunity to provide a broader range of services as well as
cost-efficiencies to our customers. In our judgment, the greater challenge we
face is the unpredictable fluctuation in demand for rental or direct purchases
of display systems. This unpredictability imposes a strain on our ability to
maintain an adequate inventory to satisfy the needs of the marketplace
especially during peak periods.
EMPLOYEES
Dynamic Imaging currently has 12 employees, eight of whom are involved
in sales and clerical and four of whom are involved in management.
YEAR 2000 DISCLOSURE
Dynamic Imaging has investigated the potential impact the Year 2000
could have on its internal software and operating systems. This potential
problem will result from computers and computer systems' inability to recognize
the year 2000 due to their coding. We believe that Dynamic Imaging's operating
system is Year 2000 compliant. Additional, integral software that will be
purchased will be Year 2000 compliant. Dynamic Imaging has made efforts to
determine its vulnerability should any of its vendors experience Year 2000
difficulties. Should certain vendors become materially unable to meet Dynamic
Imaging's needs, production could be interrupted, which would in turn adversely
affect operations. Dynamic Imaging has identified multiple vendor sources for
product to limit our exposure to vendor's Year 2000 problems. We believe that
the anticipated costs of our Year 2000 initiative will not be material. While we
believe that every effort is being taken to address all Year 2000 concerns, we
cannot guarantee that the systems of other companies will be compliant and will
not have a material adverse effect on Dynamic Imaging.
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<PAGE>
ITEM 2. DESCRIPTION OF PROPERTY
-----------------------
Dynamic Imaging maintains its executive office, sales and warehouse
facility at 3418 North Ocean Boulevard, Fort Lauderdale, Florida 33308. Dynamic
Imaging leases its executive offices, sales facility and warehouse facility at
the rate of $3,400 per month, $1,200 per month and $800 per month, respectively.
ITEM 3. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND SIGNIFICANT EMPLOYEES
------------------------------------------------------------------
The following table sets forth the names, ages and positions with
Dynamic Imaging and ages of our executive officers and directors. Directors will
be elected at our annual meeting of shareholders and serve for one year or until
their successors are elected and qualify. Officers are elected by the board of
directors and their terms of office are, except to the extent governed by
employment contract, at the discretion of the board of directors.
NAME AGE POSITIONS HELD
---- --- --------------
Gary R. Morgan 55 Chief Executive Officer, Chairman
of the Board and Treasurer
Roland L. Breton 50 President and director
Sharon Hovater 45 Secretary
GARY R. MORGAN has served as Chairman of the Board and Treasurer since
inception in March 1998 and Chief Executive Officer since December 1998. Between
July 1996 and March 1998, Mr. Morgan served as Chief Executive Officer of
Olympus Ventures, Inc., a garment contractor and manufacturing company. Between
March 1994 and July 1996, Mr. Morgan served as President of Horizon
International Associates, Inc., a pre-owned aircraft marketing company.
ROLAND L. BRETON has served as President and director since March 1998.
Between September 1996 and December 1998 Mr. Breton served as Director and
President of Olympus Ventures, Inc. Between November 1995 and September 1996,
Mr. Breton was President of Olympus Mills, Inc., the manufacturing division of
Olympus Ventures, Inc. Between October 1993 and November 1995 he served as
Executive Vice President of Madison Group Associates, Inc., an entertainment and
fitness company.
SHARON HOVATER has served as Secretary since November 1999. From 1995
to the present, Ms. Hovater has served in various managerial positions in the
food and beverage industry in San Francisco, California and south Florida. Ms.
Hovater received her Associate of Art degree from Wichita State University.
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<PAGE>
EMPLOYMENT AGREEMENTS
In February 1998, each of Messrs. Morgan and Breton entered into five
year employment agreements with Dynamic Imaging, which entitled each of them to
receive an annual base salary of $120,000 plus a bonus equal to 2.5% of Dynamic
Imaging's total revenues for each year of the agreement with a maximum of 10% of
gross profit. Each of the employment agreements also provides for the grant of
options to purchase an aggregate of 1,500,000 shares at an exercise price of
$.80 per share in five equal annual installments each year of employment
commencing February 28, 2000 (for an aggregate of 3,000,000 shares). The options
expire seven years from their date of vesting. Each of the employment agreements
also provide for an expense allowance equal to 10% of the base salary. The
agreements further provide for an increase of at least 10% per year in the base
salary amounts, and include non-compete and confidentiality provisions.
ITEM 4. EXECUTIVE COMPENSATION
----------------------
The following table sets forth information relating to the compensation
paid by Dynamic Imaging during the past fiscal year (Dynamic Imaging was not in
existence during any other fiscal year) to its Chief Executive Officer and
President. Each of the executives agreed to accrue his salary and, consequently,
did not earn more than $100,000 during the fiscal year ended December 31, 1998.
This table includes options to purchase an aggregate of 3,000,000 shares of
Dynamic Imaging's common stock granted under the employment agreements described
above in Item 3.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- --------------------------- ------- ------------------------------- ----------------------------------- -----------
Annual Compensation Long-Term Compensation
--------- --------- ----------- -------------------------- --------
Awards
------------ ------------- --------
Securities
Other Under-
Annual Restricted Lying All Other
Name and Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus sation Award(s) SARs Payouts sation
($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- --------------------------- ------- --------- --------- ----------- ------------ ------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary Morgan, Chief 1998 $15,000 -0- -0- -0- 1,500,000 -0- -0-
Executive Officer
and Treasurer
- --------------------------- ------- --------- --------- ----------- ------------ ------------- -------- -----------
Roland Breton, President 1998 $15,000 -0- -0- -0- 1,500,000 -0- -0-
- --------------------------- ------- --------- --------- ----------- ------------ ------------- -------- -----------
- --------------------------- ------- --------- --------- ----------- ------------ ------------- -------- -----------
- --------------------------- ------- --------- --------- ----------- ------------ ------------- -------- -----------
- --------------------------- ------- --------- --------- ----------- ------------ ------------- -------- -----------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
STOCK OPTIONS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ---------------------------------------------------------------------------------------------------- --------------
Individual Grants Potential Realizable Alternative
Value At To
Assumed Annual Rates Of (f) and (g):
Stock Grant Date
Price Appreciation For Value
Option
Term
- -----------------------------------------------------------------------------
Percent of
Number Of Total
Securities Options/
Underlying SARs Granted Exercise Of Grant Date
Options/SARs To Employees Base Price Expiration Present
Name Granted (#) In Fiscal (S/Sh) Date 5% ($) 10% ($) Value $
(a) (b) Year (d) (e) (f) (g) (h)
(c)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary Morgan 1,500,000 33.33% .80 2005/2010 N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------
Roland Breton 1,500,000 33.33% .80 2005/2010 N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Each of these individuals were granted options to purchase an aggregate
amount of 1,500,000 shares of Dynamic Imaging's common stock pursuant to
employment agreements. The options are exercisable at $.80 per share, and vest
in five equal annual installments of 300,000 shares beginning on February 28,
2000 and are exercisable for a period of seven years from the date of vesting.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the exercise
of options to purchase shares of common stock during the fiscal year ended
December 31, 1998, of each person named in the summary compensation table and
the unexercised options held as of the end of the 1998 fiscal year.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
- --------------------------------------------------------------------------------------------------------------------
Number of Value Of
Securities Unexercised
Underlying In-The-Money
Unexercised Options/SARs
Options/SARs At Fiscal Year-
Shares At Fiscal Year-End End
Acquired On Value Exercisable/ Exercisable/
Exercise Realized Unexercisable Unexercisable
Name
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gary Morgan, Chief Executive N/A N/A 0/1,500,000 N/A
Officer and Treasurer
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Roland Breton, President N/A N/A 0/1,500,000 N/A
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
ITEM 5. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table sets forth information as of October 31, 1999, with
respect to the beneficial ownership of shares of common stock by (i) each
officer and director, (i) each person or entity known by Dynamic Imaging to be
the owner of more than 5% of the outstanding shares of common stock, or to be
and (iii) all officers and directors as a group. The address of each person is
c/o Dynamic Imaging Group, Inc., 3418 North Ocean Boulevard, Fort Lauderdale,
Florida 33308. There were 5,609,710 shares of Dynamic Imaging's common stock
issued and outstanding as of October 31, 1999.
Approximate
Percentage of
No. of Outstanding Shares
Name Shares Beneficially Owned
- ---- ------ ------------------
Gary R. Morgan 500,000 8.9%
Roland L. Breton 3,000,000 53.5%
Sharon Hovater -0- -0-
Howard Storfer 500,000 8.9%
========= =====
All Officers and Directors 3,500,000 63.61%
as a Group (3 persons)
- -------------------
Gary Morgan is Chief Executive Officer and Chairman of the Board of
Dynamic Imaging. Includes 500,000 shares of common stock held by Horizon
Associates, Inc., a corporation which Mr. Morgan controls. Does not include
options to purchase an aggregate of 1,500,000 shares of common stock,
exercisable at $.80 per share, which vest in five equal annual installments
commencing February 28, 2000 and are exercisable for a period of seven years
from the date of vesting.
Roland Breton is President and director. Includes shares of common
stock held by his spouse and 2,500,000 shares of the Company's common stock held
by A.R. Fortune, a corporation controlled by his spouse. Mr. Breton disclaims
beneficial ownership of the shares owned by his spouse and A.R. Fortune. Does
not include options to purchase an aggregate of 1,500,000 shares of common
stock, exercisable at $.80 per share, which vest in five equal annual
installments commencing February 28, 2000, and are exercisable for a period of
seven years from the date of vesting.
Sharon Hovater is Secretary and holds no common stock or options to
purchase common stock.
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<PAGE>
Howard Storfer's holdings include 500,000 shares of common stock held
by his spouse, but do not include options to purchase an aggregate of 1,500,000
shares of common stock, exercisable at $.80 per share, which vest in five equal
annual installments commencing February 28, 2000 and are exercisable for a
period of seven years from the date of vesting. Mr. Storfer disclaims beneficial
ownership of his spouse's shares.
ITEM 6. INTEREST OF MANAGEMENT AND CERTAIN TRANSACTIONS
-----------------------------------------------
Between March 1998 and January 1999, Horizon Associates, Inc., a
company controlled by Messrs. Morgan and Breton, loaned Dynamic Imaging $7,400.
The loan was non-interest bearing and repaid in June 1999.
Between January 1, 1999, and September 30, 1999, Dynamic Imaging
advanced certain funds aggregating $227,786 to Messrs. Morgan, Breton and
Storfer. The advances are non-interest bearing and are payable upon demand.
ITEM 7. DESCRIPTION OF SECURITIES
-------------------------
Dynamic Imaging is authorized to issue 50,000,000 shares of common
stock, par value $.001 per share, and 5,000,000 shares of preferred stock, par
value $.001 per share. As of October 31, 1999, there were 5,609,710 shares of
common stock issued and outstanding and no shares of preferred stock
outstanding.
COMMON STOCK
The authorized capital stock of Dynamic Imaging currently includes
50,000,000 shares of common stock, par value $.001 per share. The holders of
common stock: have equal ratable rights to dividends from funds legally
available therefor, when, as and if declared by the board of directors of
Dynamic Imaging; are entitled to share ratably in all of the assets of Dynamic
Imaging available for distribution and upon liquidation, dissolution or winding
up of the affairs of Dynamic Imaging. There are no do not have preemptive
subscription or conversion rights or redemption or sinking fund provisions
applicable thereto. Holders of common stock are entitled to one vote per share
on all matters on which stockholders may vote at all meetings of stockholders.
The holders of common stock of Dynamic Imaging do not have cumulative voting
rights, which means that the holders of more than 51% of such outstanding
shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose and in such event, the holders of the remaining
shares will not be able to elect any of the directors.
PREFERRED STOCK
Dynamic Imaging is authorized to issue 5,000,000 shares of preferred
stock with designations, rights and preferences as may be determined from time
to time by the board of directors. Accordingly, the board of directors is
empowered, without shareholder approval, to issue
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<PAGE>
preferred stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or other rights of the holders of
common stock. In the event of issuance, the preferred stock could be used, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of Dynamic Imaging.
CERTAIN FLORIDA LEGISLATION
Florida has enacted legislation that may deter or frustrate takeovers
of Florida corporations. The Florida Control Share Act generally provides that
shares acquired in excess of certain specified thresholds will not possess any
voting rights unless such voting rights are approved by a majority of a
corporation's disinterested shareholders. The Florida Affiliated Transactions
Act generally requires super majority approval by disinterested shareholders of
certain specified transactions between a public corporation and holders of more
than 10% of the outstanding voting shares of the corporation (or their
affiliates). Florida law and Dynamic Imaging's Articles and Bylaws also
authorize Dynamic Imaging to indemnify Dynamic Imaging's directors, officers,
employees and agents. In addition, Dynamic Imaging's Articles and Florida law
presently limit the personal liability of corporate directors for monetary
damages, except where the directors (i) breach their fiduciary duties; and (ii)
such breach constitutes or includes certain violations of criminal law, a
transaction from which the directors derived an improper personal benefit,
certain unlawful distributions or certain other reckless, wanton or willful acts
or misconduct.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF DYNAMIC IMAGING'S ARTICLES OF
INCORPORATION AND BYLAWS
The paragraphs above under the section entitled "Preferred Stock",
could have an anti-takeover effect and may delay, defer or prevent a tender
offer or takeover attempt, including attempts that might result in a premium
being paid over the market price for the shares held by shareholders. Despite
the belief of Dynamic Imaging as to the benefits to shareholders of these
provisions of our Articles of Incorporation, these provisions may also have the
effect of discouraging a future takeover attempt which would not be approved by
Dynamic Imaging's board, but pursuant to which the shareholders may receive a
substantial premium for their shares over then current market prices. As a
result, shareholders who might desire to participate in such a transaction may
not have any opportunity to do so. These provisions will also render the removal
of Dynamic Imaging's Board of Directors and management more difficult and may
tend to stabilize Dynamic Imaging's stock price, thus limiting gains which might
otherwise be reflected in price increases due to a potential merger or
acquisition. The board of directors, however, has concluded that the potential
benefits of these provisions outweigh the possible disadvantages. Pursuant to
applicable regulations, at any annual or special meeting of its shareholders,
Dynamic Imaging may adopt additional Articles of Incorporation provisions
regarding the acquisition of its equity securities that would be permitted to a
Florida corporation.
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<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON DYNAMIC IMAGING'S COMMON EQUITY AND
--------------------------------------------------------------------
OTHER STOCKHOLDER MATTERS
-------------------------
There is currently no public trading market for Dynamic Imaging's
common stock. As at October 31, 1999, there were 57 holders of record of our
Common Stock.
As at October 31, 1999, we had outstanding options to purchase
4,500,000 shares of our common stock, none of which had vested. We have no
shares currently eligible for sale under Rule 144 and no shares outstanding
which include registration rights. However, we have outstanding 575,660 shares
which were previously issued under Rule 504, and which are able to be traded
currently if a market were to develop for our shares.
Dynamic Imaging expects to engage Corporate Stock Transfer as the
transfer agent for its common stock. Corporate Stock Transfer is located at 370
17th Street, Suite 2350, Denver, Colorado 80202.
Dynamic Imaging has never paid cash dividends on its common stock and
presently intends to retain future earnings, if any, to finance the expansion of
business. Dynamic Imaging does not anticipate that any cash dividends will be
paid in the foreseeable future. The future dividend policy will depend on our
earnings, capital requirements, expansion plans, financial condition and other
relevant factors.
ITEM 2. LEGAL PROCEEDINGS
-----------------
There are no material legal proceedings filed, or to Dynamic Imaging's
knowledge, threatened against it.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
---------------------------------------------
Not Applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
---------------------------------------
In March 1998, Dynamic Imaging granted options to purchase an aggregate
of 3,000,000 shares of common stock at a purchase price of $.80 per share to its
officers and directors and options to purchase 1,500,000 shares of common stock
at a purchase price of $.80 per share to an individual who was serving as an
officer and director at that time. The options are exercisable in five equal
annual installments beginning on February 28, 2000 are exercisable for a period
of seven years from the date of vesting. Because these individuals, as officers
and directors, had access to all information pertaining to Dynamic Imaging, the
issuance was exempt from the registration requirements of the Act under Section
4 (2) of the Securities Act of 1933.
-12-
<PAGE>
In March 1998, Dynamic Imaging issued an aggregate of 5,000,000 shares
of common stock to affiliates or family members of the officers and directors of
Dynamic Imaging for aggregate consideration of $5,000. These investors were
founders of Dynamic Imaging, and therefore, had access to all information
pertaining to Dynamic Imaging. As a result, the issuance was exempt from the
registration requirements of the Act under Section 4(2) of the Securities Act of
1933.
In January 1999, Dynamic Imaging issued an aggregate of 250,300 shares
of common stock at $.50 per share to 17 investors in accordance with Rule 504 of
Regulation D under the Securities Act of 1933. Between February and March 1999,
Dynamic Imaging issued an aggregate of 299,410 shares of common stock at $2.50
per share to 37 investors in accordance with Rule 504 of Regulation D under the
Securities Act of 1933. Net proceeds from these two offerings, exclusive of
subscription receivables, were $425,485. As of October 31, 1999, we had still
outstanding subscription receivables of $146,750 from the latter offering.
Approximately two-thirds of the purchasers were friends or relatives of Dynamic
Imaging's executive officers (but not household numbers of the executives) and
the remaining one-third were various business associates of Dynamic Imaging.
In June 1999, Dynamic Imaging issued an aggregate of 20,000 shares of
common stock in exchange for professional services rendered. These shares were
valued at $.10 per share.
In October 1999, Dynamic Imaging issued in a private transaction an
aggregate of 40,000 shares of common stock to an individual, receiving net
proceeds of $25,000. Inasmuch as this individual had access to all information
pertaining to Dynamic Imaging, and is an accredited or otherwise sophisticated
investor, this transaction was exempt from the registration requirements of the
Securities Act of 1933.
ITEM 4. INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
The Florida Business Corporation Act permits the indemnification of
directors, employees, officers and agents of Florida corporations. Dynamic
Imaging's Articles of Incorporation and Bylaws provide that Dynamic Imaging
shall indemnify its directors and officers to the fullest extent permitted by
the Corporation Act. Insofar as indemnification for liabilities arising under
the Act may be permitted to directors, officers or persons controlling Dynamic
Imaging pursuant to the foregoing provisions, Dynamic Imaging has been informed
that, in the opinion of the Commission, this indemnification is against public
policy as expressed in the Securities Act of 1933 and is therefore
unenforceable.
PART F/S
The financial statements and supplementary data are included herein.
-13-
<PAGE>
FINANCIAL STATEMENTS AND EXHIBITS
- ---------------------------------
The following audited Financial Statements for Dynamic Imaging, include
the audited balance sheet at December 31, 1998, and the related audited
statements of operations, changes in capital deficiency and cash flows for each
of the years in the period from March 27, 1998 (inception) to December 31, 1998
and the interim financial statements as of June 30, 1999 (unaudited).
-14-
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
EXHIBITS DESCRIPTION OF DOCUMENT
- -------- -----------------------
3.1 Articles of Incorporation of Dynamic Imaging Group, Inc.*
3.2 Bylaws of Dynamic Imaging Group, Inc.*
10.1 Employment Agreement between Dynamic Imaging Group, Inc. and Gary
Morgan dated March 2, 1998.*
10.2 Employment Agreement between Dynamic Imaging Group, Inc. and Roland
Breton dated March 2, 1998.*
10.3 Agreement between Dynamic Imaging Group, Inc. and Howard Storfer
dated March 2, 1998.*
10.4 Lease Agreement between Dynamic Imaging Group, Inc. and Patricia
Cheris dated June 1998.
10.5 Lease Agreement between Dynamic Imaging Group, Inc. and
Luisa Certain and Maria Certain dated November 19, 1998.
10.6 Lease Agreement between Dynamic Imaging Group, Inc. and Luisa
Certain and Maria Certain dated May 1, 1998.
10.7 Co-Marketing Agreement with Sign*A*Rama USA, Inc.
23. Subsidiaries.*
27. Financial Data Schedule.
* Previously filed.
-15-
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
Dynamic Imaging Group, Inc. caused this amendment to its registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
DYNAMIC IMAGING GROUP, INC.
Date: November 15, 1999 By: /s/ Gary R. Morgan
----------------------------
Gary R. Morgan
Date: November 15, 1999 By: /s/ Roland L. Breton
----------------------------
Roland L. Breton
-16-
<PAGE>
DYNAMIC IMAGING GROUP, INC.
FINANCIAL STATEMENTS
For the Period from Inception (March 27, 1998) to December 31, 1998
<PAGE>
DYNAMIC IMAGING GROUP, INC.
FINANCIAL STATEMENTS
For the Period from Inception (March 27, 1998) to December 31, 1998
and for the Six Months Ended June 30, 1999
CONTENTS
Report of Independent Certified Public Accountants.......................F-2
Financial Statements:
Balance Sheet........................................................F-3
Statement of Operations..............................................F-4
Statement of Stockholders' Equity....................................F-5
Statement of Cash Flows..............................................F-6
Notes to Financial Statements............................................F-7-10
Balance Sheet........................................................F-11
Statement of Operations..............................................F-12
Statement of Stockholders' Equity....................................F-13
Statement of Cash Flows..............................................F-14
Notes to Financial Statements............................................F-15-17
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders
Dynamic Imaging Group, Inc.
Fort Lauderdale, Florida
We have audited the accompanying balance sheet of Dynamic Imaging Group, Inc. as
of December 31, 1998 the related statements of operations, stockholders' equity,
and cash flows for the period from inception (March 27, 1998) to December 31,
1998. 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 financial position of Dynamic Imaging Group, Inc. as
of December 31, 1998, and the results of its operations and its cash flows for
the period from inception (March 27, 1998) to December 31, 1998, in conformity
with generally accepted accounting principles.
Millward & Co. CPAs
Fort Lauderdale, Florida
February 15, 1999
F-2
<PAGE>
DYNAMIC IMAGING GROUP, INC.
BALANCE SHEET
December 31, 1998
ASSETS
CURRENT ASSETS:
Cash $ 10,047
Accounts Receivable 4,507
--------
Total Current Assets 14,554
Property and Equipment, at Cost (Net of Accumulated
Depreciation of $560 ) 33,126
Security Deposit 1,590
--------
Total Assets $ 49,270
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses $ 31,848
Deferred Income Taxes 1,620
Due to Affiliated Company 7,408
--------
Total Liabilities 40,876
--------
STOCKHOLDERS' EQUITY:
Preferred Stock (No Par Value; 5,000,000 Shares
Authorized; No Shares Issued and Outstanding) --
Common Stock ($.001 Par Value; 50,000,000 Shares Authorized;
5,000,000 Shares Issued and Outstanding ) 5,000
Additional Paid-in Capital 45,000
Accumulated Deficit (41,606)
--------
Total Stockholders' Equity 8,394
--------
Total Liabilities and Stockholders' Equity $ 49,270
========
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
DYNAMIC IMAGING GROUP, INC.
STATEMENT OF OPERATIONS
For the Period from Inception (March 27, 1998) to December 31, 1998
REVENUES:
Graphic Sales $ 21,626
Display Sales 186,535
Display Rental Income 1,618
---------
Total Revenues 209,779
COST OF SALES 68,370
---------
GROSS PROFIT 141,409
---------
OPERATING EXPENSES:
Advertising 19,446
Bank Charges 6,344
Depreciation 560
Dues and Subscriptions 402
Licenses and Permits 316
Office Supplies 6,581
Other 485
Postage and Delivery 5,479
Printing and Reproduction 7,294
Professional Fees 34,378
Rent 25,465
Repairs and Maintenance 1,701
Salaries 45,000
Telephone 11,272
Travel and Entertainment 11,613
Utilities 5,059
---------
Total Operating Expenses 181,395
---------
LOSS BEFORE PROVISION FOR INCOME TAXES (39,986)
---------
PROVISION FOR INCOME TAXES:
Current --
Deferred 1,620
---------
1,620
---------
NET LOSS $ (41,606)
=========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
DYNAMIC IMAGING, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from Inception (March 27, 1998) to December 31, 1998
<TABLE>
<CAPTION>
Common Stock
Preferred Stock $.001 Par Value
------------------------ -----------------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares Issued to Shareholders at Inception -- $ -- 5,000,000 $ 5,000
Recognition of Officers Compensation on Donated Services
Net Loss for the Period from Inception (March 27, 1998) to
December 31, 1998 -- -- -- --
--------- --------- --------- ---------
Balance at December 31, 1998 -- $ -- 5,000,000 $ 5,000
========= ========= ========= =========
</TABLE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
Total
Additional Accumulated Stockholders'
Paid-in Capital Deficit Equity
--------------- ------- ------
<S> <C> <C> <C>
Shares Issued to Shareholders at Inception $ -- $ -- $ 5,000
Recognition of Officers Compensation on Donated Services 45,000 45,000
Net Loss for the Period from Inception (March 27, 1998) to
December 31, 1998 -- (41,606) (41,606)
--------- --------- ---------
Balance at December 31, 1998 $ 45,000 $ (41,606) $ 8,394
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
DYNAMIC IMAGING GROUP, INC.
STATEMENT OF CASH FLOWS
For the Period from Inception (March 27, 1998) to December 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(39,986)
Adjustments to Reconcile Net Loss to Net Cash Flows
Provided by Operating Activities:
Depreciation 560
Recognition of Officers Compensation on Donated Services 45,000
(Increase) Decrease in:
Accounts Receivable (4,507)
Security Deposits (1,590)
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 31,848
Due to Affiliated Company 7,408
--------
Net Cash Flows Provided by Operating Activities 38,733
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Property and Equipment (33,686)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock 5,000
--------
Net Increase in Cash 10,047
Cash - Beginning of Period --
--------
Cash - End of Period $ 10,047
========
SUPPLEMENTAL INFORMATION:
Cash Paid During Year for:
Interest $ --
========
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
DYNAMIC IMAGING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Dynamic Imaging Group, Inc. (Colorado) (the "Colorado Company") was incorporated
on March 27, 1998 under the laws of the State of Colorado. The Colorado Company
is authorized to issue 5,000,000 shares of its no par common stock
Dynamic Imaging Group, Inc. (Florida) (The "Florida Company") was organized
under the law of the State of Florida during January 1999. The Florida Company's
articles of incorporation provide for the issuance of 5,000,000 shares of its
$.001 par value common stock and 5,000,000 shares of its no par value preferred
stock.
During January 1999, all of the issued and outstanding stock of the Colorado
Company was exchanged for all of the shares of the issued and outstanding common
stock of the Florida Company. The accompanying financial statements give
retroactive effect to the exchange of common stock. The Colorado Company and the
Florida Company are hereinafter referred to collectively as the Company.
The Company is engaged in the sale, marketing and rental of portable show
displays, accessories and graphics through an independent network of outlets
though out the United States. The Company maintains its principal business
operations in Fort Lauderdale, Florida.
REVENUE RECOGNITION
Revenues from product sales and display rentals are recognized when earned.
FAIR MARKET VALUE OF FINANCIAL INSTRUMENTS
The carrying amount reported in the balance sheet for cash, other receivables,
accounts payable, and accrued liabilities approximates fair market value due to
the immediate or short-term maturity of these financial instruments.
USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period to prepare these consolidated financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates and assumptions.
PROPERTY AND EQUIPMENT
Property and equipment are stated on the basis of cost less accumulated
depreciation and amortization. The Company provides for depreciation on a
straight-line basis over the following estimated useful lives: equipment,
furniture and fixtures, 5 to 7 years.
When assets are retired or otherwise disposed of, the costs and accumulated
depreciation are removed from the respective accounts and any related gain or
loss is recognized. Maintenance and repair costs are charged to expense as
incurred, and renewals and improvements that extend the useful lives of assets
are capitalized.
F-7
<PAGE>
DYNAMIC IMAGING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
For the purpose of the balance sheet and statement of cash flows, the Company
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.
STOCK- BASED COMPENSATION
The Company uses SFAS No. 123, "Stock-Based Compensation," which permits
entities to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of grant.
INCOME TAXES
The Company utilizes the asset and liability method of accounting for deferred
income taxes. Under this method, deferred tax assets and liabilities are
established based on the differences between financial statement and income tax
bases of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse.
The Company provides a valuation allowance against deferred tax assets if, based
on the weight of available evidence, it is more likely than not that some or all
of the deferred tax assets will not be realized.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment and related accumulated depreciation consisted of the
following:
Furniture and fixtures $ 4,000
Machinery and Equipment 8,212
Displays 20,819
Leasehold Improvements 655
---------------
33,686
Less: Accumulated depreciation (560)
---------------
Total $ 33,126
===============
For the period from inception (March 27, 1998) to December 31, 1998,
depreciation expense amounted to $560.
NOTE 3 - INCOME TAXES
Income taxes are computed at statutory rates on pretax income. Deferred taxes
are recorded based on differences in financial statements and taxable income.
The tax effect of the temporary difference that gives rise to the deferred tax
liability at December 31 related to depreciation and amounted to $1,620.
F-8
<PAGE>
DYNAMIC IMAGING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 4 - RELATED PARTY TRANSACTIONS
A company related through common ownership advanced funds to Company for
operations. These amounts are non-interest bearing, non-collateralized, and are
payable on demand. As of December 31, 1998, amounts due to this related company
amounted to $7,408.
NOTE 5 - STOCKHOLDERS' EQUITY
PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of Preferred Stock with such
designations, rights and preferences as may be determined from time to time by
the Board of Directors.
COMMON STOCK
During March 1998, the Company issued 5,000,000 shares of its $.001 par value
common shares for $5,000.
During March 1998, the Company granted options to three officers to acquire an
aggregate of 4,500,000 restricted shares of common stock at an exercise price of
$.80 per share. The options have been granted to these officers at a price equal
to the market value of the shares at date of grant, become exercisable in five
annual installments of 900,000 shares beginning on February 28, 2000, and expire
not more than seven years after the date of grant. The fair value of the option
grant was estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions: dividend yield of 0%; expected volatility
of 100%; risk-free interest rate of 5.5%, and an expected live of 7 years. The
fair value of options granted was minimal.
For the period ended December 31, 1998, the Company recorded officers'
compensation expense of $45,000 relating to services donated to the Company.
NOTE 6 - COMMITMENTS
EMPLOYMENT AGREEMENTS
During March 1998, the Company entered into five (5) year employment agreements
with three officers of the Company. The agreements are effective beginning on
February 28, 1999 and provide for (i) an annual base salary of $120,000, plus a
discretionary expense account equal to 10% of the base pay and (ii) a bonus
equal to 2.5% of the Company's gross receipts for each year of the agreement, to
a maximum of 10% of the gross profits. The base salary shall increase not less
than 10% of the previous years base salary. Additionally, these officers were
granted options to acquire 300,000 shares of common stock of the Company per
calendar year in each year of employment at an exercise price of $.80 per share
(See Note 5).
F-9
<PAGE>
DYNAMIC IMAGING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE 6 - COMMITMENTS (CONTINUED)
OPERATING LEASE
The Company leases office space in Fort Lauderdale, Florida pursuant to
operating leases. The leases generally provide for fixed monthly rental payments
aggregating approximately $4,800 plus sales tax through July 2001. The Company
has the option of renewing these leases for up to three years. For the period
from inception (March 27, 1998) to December 31, 1998, rent expense amounted to
$25,465.
At December 31, 1998, the future minimum annual rental payment under the
non-cancelable operating lease is as follows:
YEAR
----
1999 $ 56,100
2000 39,600
2001 21,450
----------
$ 117,150
==========
NOTE 7 - SUBSEQUENT EVENT
During January 1999, the Company issued 250,300 shares of common stock at a
price of $0.50 per share in accordance with Rule 504 under Regulation D
promulgated under the Securities Act of 1933 for net proceeds of $120,000 to be
used for the operations of the Company.
During February 1999, the Company issued 25,950 shares of common stock at a
price of $2.50 per share in accordance with Rule 504 under Regulation D
promulgated under the Securities Act of 1933 for net proceeds of $61,631 to be
used for the operations of the Company.
F-10
<PAGE>
DYNAMIC IMAGING GROUP, INC.
BALANCE SHEET
June 30, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 2,386
Accounts Receivable 12,745
Subscriptions Receivable 235,250
Due from Related Parties 159,607
---------
Total Current Assets 409,988
Property and Equipment, at Cost (Net of Accumulated
Depreciation of $3,560 ) 156,412
Security Deposit 2,590
---------
Total Assets $ 568,990
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses $ 254,695
Deferred Income Taxes 1,620
Customer Deposits 5,082
---------
Total Liabilities 261,397
---------
STOCKHOLDERS' EQUITY:
Preferred Stock (No Par Value; 5,000,000 Shares
Authorized; No Shares Issued and Outstanding) --
Common Stock ($.001 Par Value; 50,000,000 Shares Authorized;
5,569,710 Shares Issued and Outstanding ) 5,570
Additional Paid-in Capital 943,915
Accumulated Deficit (495,142)
Subscription Receivables (146,750)
---------
Total Stockholders' Equity 307,593
---------
Total Liabilities and Stockholders' Equity $ 568,990
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
DYNAMIC IMAGING GROUP, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999
NET SALES $ 190,272
COST OF SALES 108,443
-----------
GROSS PROFIT 81,829
-----------
OPERATING EXPENSES:
Advertising 9,077
Auto expense 30,962
Contract Labor 80,208
Depreciation 3,000
Insurance 11,107
Licenses and Permits 1,274
Office Supplies 11,420
Other 18,380
Postage and Delivery 9,572
Printing and Reproduction 10,305
Professional Fees 15,566
Rent 31,878
Repairs and Maintenance 5,160
Salaries 234,575
Telephone 18,152
Travel and Entertainment 38,029
Utilities 6,700
-----------
Total Operating Expenses 535,365
-----------
LOSS BEFORE PROVISION FOR INCOME TAXES (453,536)
-----------
PROVISION FOR INCOME TAXES:
Current --
Deferred --
-----------
-----------
-----------
NET LOSS $ (453,536)
===========
BASIC NET LOSS PER COMMON SHARE $ (0.08)
===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 5,431,369
===========
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
DYNAMIC IMAGING, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 1999
<TABLE>
<CAPTION>
Common Stock
$.001 Par Value
------------------------- Additional
Shares Amount Paid-in Capital
------ ------ ---------------
<S> <C> <C> <C>
Balance at December 31, 1998 5,000,000 $ 5,000 $ 45,000
Shares Issued in Connection with Offerings 505,210 505 725,730
Shares Issued for Services 64,500 65 113,185
Recognition of officers compensation on donated services -- -- 60,000
Net Loss for the Six Months Ended June 30, 1999 -- -- --
--------- --------- ---------
Balance at June 30, 1999 5,569,710 5,570 943,915
========= ========= =========
</TABLE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
Total
Accumulated Subscription Stockholders'
Deficit Receivables Equity
------- ----------- ------
<S> <C> <C> <C>
Balance at December 31, 1998 $ (41,606) $ -- $ 8,394
Shares Issued in Connection with Offerings -- (65,500) 660,735
Shares Issued for Services -- (81,250) 32,000
Recognition of officers compensation on donated services -- 60,000
Net Loss for the Six Months Ended June 30, 1999 (453,536) -- (453,536)
--------- --------- ---------
Balance at June 30, 1999 (495,142) (146,750) 307,593
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE>
DYNAMIC IMAGING GROUP, INC.
STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 1999
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(453,536)
Adjustments to Reconcile Net Loss to Net Cash Flows
Used in Operating Activities:
Depreciation 3,000
Common Stock Issued for Services 2,000
Recognition of Officers Compensation on Donated Services 60,000
(Increase) Decrease in:
Accounts Receivable (8,238)
Due from Related Parties (159,607)
Security Deposits (1,000)
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 222,847
Due to Related Parties (7,408)
Customer Deposits 5,082
---------
Net Cash Flows Used in Operating Activities (336,860)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Property and Equipment (96,286)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds from Issuance of Common Stock 425,485
---------
Net Increase in Cash (7,661)
Cash - Beginning of Period 10,047
---------
Cash - End of Period $ 2,386
=========
SUPPLEMENTAL INFORMATION:
Cash Paid During Year for:
Interest $ --
=========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of Common Stock for Subscription Receivable $ 382,000
=========
Common Stock Issued for Leasehold Improvements $ 30,000
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
DYNAMIC IMAGING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). The accompanying financial statements for the interim period
are unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the period
presented. These financial statements should be read in conjunction with the
financial statements and notes for the year ended December 31, 1998. The results
of operations for the six months ended June 30, 1999 are not necessarily
indicative of the results for the full fiscal year ending December 31, 1999.
NOTE 2 - PROPERTY AND EQUIPMENT
At June 30, 1999, property and equipment and related accumulated depreciation
consisted of the following:
Furniture and fixtures $ 10,257
Machinery and Equipment 14,255
Displays 97,277
Leasehold Improvements 38,183
---------------
159,972
Less: Accumulated depreciation (3,560)
---------------
Total $ 156,412
===============
For the six months ended June 30, 1999, depreciation expense amounted to $3,000.
NOTE 3- LOSS PER SHARE
The Company uses Statement of Financial Accounting Standards No. 128 - "Earnings
Per Share" ("FAS 128") which requires the dual representation of basic and
diluted earnings per share for the periods ending after December 15, 1997. Basic
earnings per share is computed by dividing net income, after deducting preferred
stock dividends accumulated during the period, by the weighted average number of
shares of common stock outstanding during each period. Diluted earnings per
share is computed by dividing net income by the weighted average number of
shares of common stock, common stock equivalents and other potentially dilutive
securities outstanding during each period.
NOTE 4- DUE FROM RELATED PARTIES
The Company advanced funds to certain officers of the Company. The advances are
non-interest bearing and are payable on demand.
F-15
<PAGE>
DYNAMIC IMAGING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1999
NOTE 5- SHAREHOLDERS' EQUITY
PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of Preferred Stock with such
designations, rights and preferences as may be determined from time to time by
the Board of Directors.
COMMON STOCK
During March 1998, the Company issued 5,000,000 shares of its $.001 par value
common shares for $5,000.
During March 1998, the Company granted options to three officers to acquire an
aggregate of 4,500,000 restricted shares of common stock at an exercise price of
$.80 per share. The options have been granted to these officers at a price equal
to the market value of the shares at date of grant, become exercisable in five
annual installments of 900,000 shares beginning on February 28, 2000, and expire
not more than seven years after the date of grant. The fair value of the option
grant was estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions: dividend yield of 0%; expected volatility
of 100%; risk-free interest rate of 5.5%, and an expected life of 7 years. The
fair value of options granted was minimal.
For the period ended December 31, 1998, the Company recorded officers'
compensation expense of $45,000 relating to services donated to the Company.
During the six months ended June 30, 1999, the Company recorded officers'
compensation expense of $60,000 relating to services donated to the Company.
During January 1999, the Company issued 250,300 shares of common stock at a
price of $0.50 per share in accordance with Rule 504 under Regulation D
promulgated under the Securities Act of 1933 for net proceeds of $125,150 to be
used for the operations of the Company.
During February and March 1999, the Company issued 299,410 shares of common
stock at a price of $2.50 per share in accordance with Rule 504 under Regulation
D promulgated under the Securities Act of 1933 for net proceeds of $300,335 to
be used for the operations of the Company and leasehold improvements amounting
to $30,000. As of June 30, 1999, the Company had a subscription receivable
amounting to $382,000 of which $235,250 was collected subsequent to the period.
During June 1999, the Company issued 20,000 shares of restricted common stock in
exchange for professional services rendered. These shares were valued at
approximately $.10 per share, the fair values, and charged to operations.
Subsequent to the period, the Company issued 40,000 shares of restricted common
stock for proceeds of $25,000.
F-16
<PAGE>
DYNAMIC IMAGING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1999
NOTE 6 - COMPREHENSIVE INCOME
During the first quarter of fiscal 1999, the company adopted Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income."
This pronouncement sets forth requirements for disclosure of the Company's
comprehensive income and accumulated other comprehensive items. In general,
comprehensive income combines net income and "other comprehensive items," which
represent certain amounts that are reported as components of shareholders'
investment in the accompanying balance sheets, including foreign currency
translation adjustments. For the six months ending June 30, 1999, the Company
had no comprehensive income.
NOTE 7 - FUTURE EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNNCEMENTS
SFAS No. 131 "Disclosures about Segments of an Enterprise and Related
Information" was issued in June 1997. This statement changes the way public
companies report information about segments of their business in their annual
financial statements. This statement is effective for the Company's fiscal year
ending December 31, 1999. However, information is not to be presented for
interim financial statements in the first year of implementation. Adoption of
SFAS No. 131 is not expected to have a material effect on the Company's
financial statement disclosure.
F-17
Business Lease
THIS AGREEMENT, entered into this day of June 1998 between PATRICIA
CHERIS, hereinafter called the lessor, party of the first part, and DYNAMIC
IMAGING GROUP, INC. of the County of Broward and State of Florida hereinafter
called the lessee or tenant, party of the second part:
WITNESSETH, That the said lessor does this day lease unto said lessee,
and said lessee does hereby hire and take as tenant under said lessor both
stories in the two-story office building located at 3418 North Ocean Boulevard,
Fort Lauderdale, Florida 33308 to be used and occupied by the lessee as an
office building and for no other purposes or uses whatsoever, for the term of
three (3) years, beginning the 15th day of July 1998, and ending the 14th day of
July, 2001 at and for the agreed rental as provided in Paragraph of the Rider to
this Lease.
all payments to be made to the lessor on the first day of each and
every month in advance without demand at the office of Lessor, 2400 Park Lane,
in the City of Hollywood, FL 33021 or at such other place and to such other
person, as the lessor may from time to time designate in writing.
The following express stipulations and conditions are made a part of this
lease and are hereby assented to by the lessee:
FIRST: The lessee shall not assign this lease, nor sub-let the
premises, or any part thereof nor use the same or any part thereof, nor permit
the same, or any part thereof, to be used for any other purpose than as above
stipulated, nor make any alterations therein, and all additions thereto, without
the written consent of the lessor, and all additions, fixtures or improvements
which may be made by lessee, except movable office furniture, shall become the
property of the lessor and remain upon the premises as a part thereof, and be
surrendered with the premises at the termination of this lease.
SECOND: All personal property placed or moved in the premises above
described shall be at the risk of the lessee or owner thereof, and lessor shall
not be liable for any damage to said personal property, or to the lessee arising
from the bursting or leaking of water pipes, or from any act of negligence of
any co-tenant or occupants of the building or of any other person whomsoever.
THIRD: That the tenant___________shall promptly execute and comply with
all statutes, ordinances, rules, orders, regulations and requirements of the
Federal, State and City Government and of any and all their Departments and
Bureaus applicable to said premises, for the correction, prevention, and
abatement of nuisance forcibly or otherwise, and the lessee or other grievances,
in, upon or connected with said premises during said term; and shall also
promptly comply with and execute all rules, orders and regulations of the
Southeastern Underwriters Association for the prevention of fires, at its own
cost and expense.
FOURTH: In the event the premises shall be destroyed or so damaged or
injured by fire or other casualty during the life of this agreement the same
shall be rendered untenantable, then the lessor shall have the right to render
said premises tenantable by repairs within ninety days therefrom. If said
premises are not rendered tenantable within said time, it shall be optional with
either party hereto to cancel this lease, and in the event of such cancellation
the rent shall be paid only to the date of such fire or casualty. The
cancellation herein mentioned shall be evidenced in writing.
<PAGE>
SIXTH: If the less hall abandon or vacate said premises before the- end
of the term of this lease, or shall suffer the rent to be in arrears, the
lessor may, at his option, forthwith cancel this lease or he may enter said
premises as the agent of the lessee, by force or otherwise, without being liable
in any way therefor, and relet the premises with or without any furniture that
may be therein, as the agent of the lessee, at such price and upon such terms
and for such duration of time as the lessor may determine, and receive the rent
therefor, applying the same to the payment of the rent due by these presents,
and if the full rental herein provided shall not be realized by lessor over and
above the expenses to lessor in such re-letting, the said lessee shall pay any
deficiency, and if more than the full rental is realized lessor will pay over to
said lessee the excess of demand.
SEVENTH: Lessee agrees to pay the cost of collection and ten per cent
attorney's fee on any part of said rental that may be collected by suit or by
attorney, after the same is past due.
EIGHTH: The lessee agrees that he will pay all charges for rent, gas,
electricity or other illumination, and for all water used on said premises, and
should said charges for rent, light or water herein provided for at any time
remain due and unpaid for the space of five days after the same shall have
become due, the lessor may at its option consider the said lessee tenant at
sufferance and immediately re-enter upon said premises and the entire rent for
the rental period then next ensuing shall at once be due and payable and may
forthwith be collected by distress or otherwise.
NINTH: The said lessee hereby pledges and assigns to the lessor all the
furniture, fixtures, goods and chattels of said lessee, which shall or may be
brought or put on said premises as security for the payment of the rent herein
reserved, and the lessee agrees that the said lien may be enforced by distress
foreclosure or otherwise at the election of the said lessor, and does hereby
agree to pay attorney's fees of ten percent of the amount so collected or found
to be due, together with all costs and charges therefore incurred or paid by the
lessor.
It being further understood and agreed that the lessee will not be
required to vacate said premises during the winter season: namely, November
first to May first, by reason of the above paragraph.
<PAGE>
ELEVENTH: The lessor, or any of his agents, shall have the right to
enter said premises during all reasonable hours, to examine the same to make
such repairs, additions or alterations as may be deemed necessary for the
safety, comfort, or preservation thereof, or of said building, or to exhibit
said premises, and to put or keep upon the doors or window,% thereof a notice
"FOR RENT" at any time within' thirty (30) days before the expiration of this
lease. The right of entry shall likewise exist for the purpose of removing
placards, signs, fixtures, alterations, or additions, which do not conform to
this agreement, or to the rules and regulations of the building.
TWELFTH: Lessee hereby accepts the premises in the condition they are
in at the beginning of this lease and agrees to maintain said premises in the
same condition, order and repair as they are at the commencement of said term,
excepting only reasonable wear and tear arising from the use thereof under this
agreement, and to make good to said lessor immediately upon demand, any damage
to water apparatus, or electric lights or any fixture, appliances or
appurtenances of said premises, or of the building, caused by any act or neglect
of lessee, or of any person or persons in the employ or under the control of the
lessee.
THIRTEENTH: It is expressly agreed and understood by and between the
parties to this agreement, that the landlord shall not be liable for any damage
or injury by water, which may be sustained by the said tenant or other person or
for any other damage or injury resulting from the carelessness, negligence, or
improper conduct on the part of any other tenant or agents, or employees, or by
reason of the breakage, leakage, or obstruction of the water, sewer or soil
pipes, or other leakage in or about the said building.
FOURTEENTH: If the lessee shall become insolvent or if bankruptcy
proceedings shall be begun by or against the lessee, before the end of said term
the lessor is hereby irrevocably authorized at its option, to forthwith cancel
this lease, as for a default. Lessor may elect to accept rent from such
receiver, trustee, or other Judicial officer during the term of their occupancy
in their fiduciary capacity without effecting lessor's rights as contained in
this contract, but no receiver, trustee or other judicial officer shall ever
have any eight, title or interest in or to the above described property by
virtue of this contract.
FIFTEENTH: Lessee hereby waives and renounces for himself and family any
and all homestead and exemption rights he may have now, or hereafter, under or
by virtue of the constitution and laws of the State of Florida, or of any other
State, or of the United States, as against the payment of said rental or any
portion hereof, or any other obligation or damage that may accrue under the
terms of this agreement.
SIXTEENTH: This contract shall bind the lessor and its assigns or
successors, and the heirs, assigns, administrators, legal representatives,
executors or successors as the case may be, of the lessee.
SEVENTEENTH: It Is understood and agreed between the parties hereto
that time is of the essence of this contract and this applies to all terms and
conditions contained herein.
EIGHTEENTH: It Is understood and agreed between the parties hereto that
written notice mailed or delivered to the premises leased hereunder shall
constitute sufficient notice to the lessee and written notice mailed or
delivered to the office of the lessor shall constitute sufficient notice to the
Lessor, to comply with the terms of this contract.
NINETEENTH: The rights of the lessor under the foregoing shall be
cumulative, and failure on the part of the lessor to exercise promptly any
rights given hereunder shall not operate to forfeit an of the said rights.
TWENTIETH: It is further understood and agreed between the parties
hereto that any charges against the lessee by the lessor for services or for
work done on the premises by order of the lessee or otherwise accruing under
this contract shall be considered as rent due and shall be included in any lien
for rent due and unpaid.
TWENTY-FIRST: It is hereby understood and agreed that any signs or
advertising to be used, including awnings, in connection with the premises
leased hereunder shall be first submitted to the lessor for approval before
installation of same.
SEE RIDER ATTACHED HERETO AND MADE A PART HEREOF.
<PAGE>
Lessee: Dynamic Imaging Group, Inc. 3418 North
Ocean Boulevard Fort Lauderdale, FL 33308
Telephone: 954-564-1133
Telefax: 954-565-8894
DATED this ________________ day of _______________________________, 1998.
LESSOR:
----------------------------- (SEAL)
PATRICIA CHERIS
LESSEE:
DYNAMIC IMAGING GROUP, INC.
By: /s/ Roland L. Breton
-----------------------------
Title: President
--------------------------
Authorized Signatory
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto executed this
instrument for the purpose hereto expressed, the day, and year above written.
Signed, sealed and delivered in the presence of:
/s/ (illegible) /s/ Patricia Cheris
- ---------------------------------- -----------------------------(Seal)
PATRICIA CHERIS
- ---------------------------------- -----------------------------(Seal)
As to Lessor Lessor
/s/ (illegible) DYNAMIC IMAGING GROUP, INC
- ---------------------------------- -----------------------------(Seal)
By: /s/ Roland Breton, President
- ---------------------------------- -----------------------------(Seal)
As to Lessor Lessor
STATE OF FLORIDA,
}
County of ________________________________}
Before me, a Notary Public in and for said State and County, personally
came
- --------------------------------------------------------------------------------
to me well known and known to be the person___ named in the foregoing lease, and
acknowledged that ________________ executed the same for the purpose therein
expressed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the ___________________ day of __________________, 19___.
_________________________________________
My commission expires__________ _________________________________________
Notary Public, State of Florida at Large.
<PAGE>
RIDER TO BUSINESS LEASE BETWEEN PATRICIA CHERIS, AS THE
LESSOR, AND DYNAMIC IMAGING GROUP, INC., AS THE LESSEE, FOR
THE PREMISES LOCATED AT 3418 NORTH OCEAN BOULEVARD, FORT
LAUDERDALE, FLORIDA 33308
*******************************************************
The Lessor and the Lessee agree that the following terms and conditions
shall control over any contrary provision of the Business Lease dated July 15,
1998 to which this Rider is attached:
1. Rent.
(a) The monthly fixed rent, subject to adjustment as provided
in subparagraph (b) below, shall be Three Thousand Three Hundred ($3,300.00)
Dollars per month, plus sales tax, payable in advance. For the period from July
15, 1998 to July 31, 1998, the Lessee shall pay One Thousand Six Hundred Fifty
($1,650.00) Dollars, plus sales tax, representing one-half (1/2) month's rent.
Thereafter, the monthly fixed rent as provided herein shall be due on the 1st
day of each month for the entire term hereof beginning on August 1, 1998. If
this Lease runs for its full term, then notwithstanding the foregoing provisions
regarding monthly rent due on the 1st of each month, the rent due for the period
from July 1, 2001 through July 14, 2001 shall be One Thousand Six Hundred Fifty
($1,650.00) Dollars, plus CPI increase as provided in paragraph (b) below, plus
sales tax.
(b) Beginning fifteen (15) days after the beginning of the
second year of the term of this Lease (August 1, 1999) and continuing through
the initial term, and thereafter through each renewal year if the Lessee
exercises the option to extend the term of this Lease as provided in paragraph 2
of this Rider, the monthly fixed rent shall be based upon an increase as
determined in accordance with the provisions set forth below:
(i) The parties agree that for the purposes of this
Lease the adjustments to the monthly fixed rent based upon an increase in the
cost of living shall be based upon an increase in the cost of living as
determined for the month of May, 1998 so as to provide the Lessor with adequate
time in which to calculate any increases for the second and subsequent years of
the term of this
1
<PAGE>
Lease which begin on August lst. As promptly as practical after May 31st of the
initial and each subsequent year of the term of this Lease, the Lessor shall
compute any increase in the cost of living based upon the revised Consumers
Price Index ("CPI") published by the Bureau of Labor Statistics of the United
States Department of Labor.
(ii) In each year in which the CPI for the month of
May shows an increase over the CPI for the month of May, 1998, the Lessee shall
pay to the Lessor such a percentage increase in the fixed rent as is
proportional to the rise in the CPI from its level for May, 1998 to its level
for May in the current year. Each increase shall not be less than three (3%)
percent in any one year and shall not exceed five (5%) percent in any one year.
(iii) The Lessor shall give the Lessee notice of any
such increase within a reasonable time after obtaining the necessary data for
computation. Thereafter, the rent adjustment shall be effective with the payment
due on the following August 1st. For example, if the CPI for the month of May,
1999 shows a five (5%) percent increase over the CPI for the month of May, 1998,
then the adjusted rent based upon said increase shall be paid beginning with the
rent due on August 1, 1999. Thereafter, on each succeeding August lst, the rent
shall be increased based upon the CPI increase, if any, during the preceding one
year period from may to May.
(iv) If, at the time required for the determination
of any increase in rent, the CPI is no longer published or issued, the parties
shall each use such similar index as then generally recognized and accepted for
similar determinations of purchasing power.
2. Term; Option to Renew.
(a) The initial term of this Lease shall be for three (3)
years, beginning July 15, 1998 and continuing until July 14, 2001, unless
earlier terminated as provided in paragraph 3 below.
(b) The Lessor hereby grants to the Lessee the option to renew
and extend the original term for an additional term of three
2
<PAGE>
(3) years after the expiration of the present Lease term, provided that the
Lease is then in good standing. The Lessee shall exercise this option to renew
the Lease by giving at least three (3) month's prior written notice to the
Lessor by registered or certified mail, addressed to the Lessor at the place
where the rent is then being paid; provided, however, that all the terms,
covenants and conditions of this Lease shall remain the same except that rent
shall be based upon increases in the CPI over what that index was on May 1,
1998, subject to the limitations otherwise set forth in paragraph l(b) above.
Rent during the extended term shall be paid in equal monthly installments on the
1st of each and every month as previously provided in this Lease except with
regard to the last two weeks of the Lease in which only one-half (1/2) of the
fixed monthly rent for the preceding month shall be due and payable, plus sales
tax.
3. Lessor's Right to Terminate. If, at any time during the term of this
Lease (as extended, if applicable), the Lessor enters into a bona fide contract
to sell the demised premises to a third party, then the Lessor shall have the
option to terminate this Lease by giving at least sixty (60) days prior written
notice to the Lessee by registered or certified mail, addressed to the demised
premises. Immediately upon receipt of said notice, the Lessee shall begin the
process of vacating the demised premises. If the Lessee decides to relocate its
business to another location and such relocation cannot be accomplished within
said sixty (60) day period, then the Lessor grants the Lessee an additional
thirty (30) days in which to vacate the demised premises provided the Lessee is
diligently pursuing relocation. After receipt of the notice herein provided, the
parties agree that the fixed monthly Lease payments shall permanently; provided,
however, that the Lessee shall still be responsible for the payment of all
utilities and to otherwise keep the premises fully insured as hereinafter
provided.
4. Security Deposit. The security deposit required under this Lease
shall be Three Thousand ($3,000.00) Dollars, of which
3
<PAGE>
sum the Lessor acknowledges receipt of One Thousand Five Hundred ($1,500.00)
Dollars. On or before September 15, 1998, the Lessee shall post with the Lessor
an additional deposit of one Thousand Five Hundred ($1,500.00) Dollars. The
security deposit shall be held by the Lessor to secure the full and faithful
performance by the Lessee of all of the terms, covenants and conditions of this
Lease. Upon the termination of this Lease and the Lessee delivering possession
of the demised premises in the same condition as originally rented, less
customary wear and tear, and all trash or garbage being removed from the demised
premises, the Lessor will refund to the Lessee the entire security deposit less
any funds which the Lessor may have expended to cure any default by the Lessee
herein, including nonpayment of rent. The security deposit may be commingled by
the Lessee with other funds of the Lessor and the security deposit will not bear
interest.
5. Liability Insurance.
(a) The Lessee shall, at its expense, during the entire term
and extended term hereof, carry and maintain public liability insurance,
commonly known as owner, landlord and tenant insurance, with respect to the
demised premises having coverage limits of not less than $500,000. The Lessee
shall also carry and maintain plate glass insurance in an amount sufficient to
replace the plate glass located on the demised premises. The Lessor will be
named as an additional named insured and loss payee under all insurances
required under this paragraph. Furthermore, all of such policies shall be
written on reliance insurance companies authorized to do business in the State
of Florida by the Florida Department of Insurance. The Lessee will provide proof
of insurance coverage to the Lessor upon each renewal of the Lessee's insurance
policies. All policies shall be noncancellable as to the Lessor without at least
thirty (30) days written notice of cancellation.
(b) If the Lessee extends the term of this Lease for an
additional three (3) year period as provided in paragraph 2 below, then the
Lessee agrees to increase the coverage limits of such liability insurance to
$1,000,000.
4
<PAGE>
(c) The Lessee shall, at its option, secure contents coverage
for its personal property located upon the demised premises. The Lessor shall
not be responsible for any damage to the Lessee's personal property located upon
the demised premises.
(d) The Lessor shall, at her option, secure fire, hazard and
windstorm insurance protecting the demised premises.
6. Use of Demised Premises. The Lessee agrees that the demised
premises shall be used only as an office building in which the Lessee may
display products that are manufactured at another location. No manufacturing
will be conducted on the demised premises. Furthermore, the Lessee agrees that
no hazardous substances will be used or stored on the demised premises. The
Lessee agrees to strictly comply with all environmental regulations regarding
the use, storage and disposal of hazardous substances. The Lessee agrees to
fully indemnify, hold harmless and defend the Lessor against any and all adverse
environmental conditions which the Lessee may create, cause to be created or
allow to be created on the demised premises during the term of this Lease and
any renewal hereof.
7. Utilities. The Lessee shall pay for all utilities which it uses in
connection with its occupancy of the demised premises, including electric,
telephone, water, refuse and garbage collection and burglar alarm service. The
Lessee's obligation to pay for such utilities shall begin on July 1, 1998.
Accordingly, the Lessee shall take such steps as are necessary to contact all
utility providers to set up appropriate accounts in the name of the Lessee with
such utility providers and to pay for same.
8. Repairs.
(a) Except as provided in subparagraphs (b) and (c) below, the
Lessee shall be responsible for all maintenance, repairs, service or replacement
to any part or component of the improvement upon the demised premises caused by
the negligence of the Lessee or any of its employees, customers, or anyone else
claiming by, through or under the Lessee and for any other repairs
5
<PAGE>
not caused by the negligence of the Lessee having a cost of repair of One
Hundred ($100.00) Dollars or less.
(b) The Lessor shall be responsible for all structural repairs
or replacements, including repair and replacement of such structural components
as the roof, the air conditioning system and all internal structural
improvements (including plumbing and electric wiring) which have a cost of
repair in excess of One Hundred ($100.00) Dollars.
(c) The Lessor may (but shall not be required to) maintain a
service contract for the air conditioning system in which event any and all
repairs to the air conditioning system will be made by the Lessor's service
provider under the service contract.
(d) The Lessee may (but shall not be required to) provide
exterminating service to the demised premises. If the Lessor provides such
service, the Lessee agrees to make the demised premises accessible to the
exterminating technician.
9. Lessor's Improvements. The Lessor agrees to make the following
improvements to the demised premises:
(a) On or before July 15, 1998, the Lessee shall replace the
carpet on the first floor with commercial grade carpet acceptable to the Lessor
after consulating with the Lessee. Furthermore, the Lessor shall cause the
damaged tile in the first floor reception area to be repaired, replaced or
carpeted-over. All of these improvements shall be at the Lessee's expense.
(b) On or before July 15, 1999, the Lessor shall carpet the
stairway and the second floor of the demised premises with commercial grade
carpet acceptable to the Lessor after consultation with the Lessee.
10. Lessee's Alterations.
(a) The Lessee shall not make any structural alterations to
the demised premises without the Lessor's express written consent.
6
<PAGE>
(b) The Lessee may make non-structural alterations to the
demised premises after consultation with the Lessor and issuance of any required
building permits.
(c) If any mechanic's laborer's or materialman's lien shall at
any time be filed against the demised premises or any part thereof, then within
ten (10) days after the filing thereof, the Lessee shall cause same to be
discharged of record or transferred to a substitute security. A breach of the
provisions of this paragraph shall be considered a material default under this
lease.
(d) The Lessee shall have no power to do any act or make any
contract which would create or be the foundation of any lien, mortgage or other
encumbrance upon the interest of the Lessor in the demised premises.
11. Downstairs Storage. The Lessor and the Lessee agree that the Lessor
may continue to store certain items of her personal property in the downstairs
storage area in which those items are presently stored. The Lessor will
cooperate with the Lessee in arranging the storage of such items of personal
property so as to allow the Lessee to also utilize that space for the storage of
cleaning supplies and personal property of the Lessee.
12. Furniture Removal. The Lessor agrees to remove certain furniture
which the Lessee has deemed to be obsolete. The Lessee will cooperate with such
person or charity as the Lessor may designate to remove the furniture.
13. Notices. Any notice required under this Lease shall be given in
writing, by registered or certified mail, or by telefax as follows:
Lessor: Ms. Patricia Cheris
2400 Park Lane
Hollywood, Florida 33021
Telephone: 954-989-9532
With a copy to: David S. Romanik, Esq.
Romanik Huss Paoli & Ivers
P.O. Box 1040
Hollywood, FL 33022
Telephone: 954-922-4656
7
LEASE AGREEMENT
This Agreement entered into this 11/19/98 by and between Luisa Certain
and Maria M. Certain, (hereinafter called the "Lessor"), and Dynamic Imaging
Group Inc.
WITNESSETH
That Lessor does hereby lease unto Lessee and Lessee does hereby take
as tenant, that Certain store building space commonly known as 3432 North Ocean
Boulevard, Fort Lauderdale, Broward County, Florida (consisting of 2700 square
feet more or less and three (3) parking spaces immediately adjacent to Lessee's
store) to be used and occupied by Lessee as or other approved business for the
term commencing December 1, 1998 through November 30, 1999. That the agreed
rental from December 1, 1998 Through November 30, 1999 will be at the agreed
rental of Fifteen Hundred Dollars ($1500.00) per month together with all
applicable Florida sales tax. The initial payment being made concurrently with
the execution of this agreement and subsequent payments being due on each
successive month on the first day of each and every month and every month
thereafter through and including. All payments to be made to the Lessor on the
first day of each and every month in advance, without demand, at 81 Bay Colony
Drive, Fort Lauderdale, Florida 33308, or any other place Lessor shall
designate.
The following express stipulations and conditions are made part of this
lease and are Hereby assented by Lessee:
FIRST: Except as hereinafter provided, Lessee shall not assign this
lease, sublet the premises, or any part thereof nor use the same, or any part
thereof, nor permit the same, or any part thereof, to be used for any other
purpose than as above stipulated, nor make any alterations therein, and any
additions thereto, without the written consent of the Lessor and all additions,
fixtures or improvements which may be made by Lessee, except movable office
furniture, shall become the property of Lessor and remain upon the premised as
part thereof, and be surrendered with premises at the termination of this lease.
All partitions for divisions of storage, and office partitions existing at the
commencement of this lease, a sale or transfer of more than fifty (50%) percent
of the corporate stock of the Lessee shall constitute an
1
<PAGE>
SECOND: All personal property placed or moved in the premises above
described shall be at the risk of Lessee or owner thereof, and Lessor shall not
be liable for any damages to said personal property, or to Lessee arising from
the bursting or leaking of water pipes, or from any act of negligence of any
co-tenant or occupants of the building or any other person whomsoever.
THIRD: That Lessee shall promptly execute and continuously comply with
all statutes, ordinances, rules, orders, regulations and requirements of the
Federal, State, and City government and of any and all their departments and
bureaus applicable to said premises, for the correction, prevention, and
abatement of nuisances or other grievances, in, upon, or connected with said
premises during said term; and shall also promptly comply with and execute all
rules, orders and regulations of the Southeastern Underwriters Association for
the prevention of fires, at its own costs and expense.
FOURTH: In the event the premises shall be destroyed or so damaged or
injured by Fire or other casualty not caused by Lessee or its agent during the
term of the Agreement, that the Same shall be rendered untenantable, then Lessor
shall have the right to render said premises tenantable by repairs within one
hundred twenty (120) days therefrom. If said premises are not rendered
tenantable within said time, it shall be optionable within either party hereto
to cancel this lease, and in the event of such cancellation then rent shall be
paid only to date of such fire or casualty. Rent abates during damage period.
FIFTH: The payment of the rent for said premises upon the dates named
and the faithful observance of the Agreement, are the conditions upon which the
Agreement is made and accepted upon any failure on the part of Lessee to comply
with the terms of said Agreement. Lessor shall serve notice of such failure upon
Lessee and shall allow. Lessee fifteen (15) days within which to effect a cure,
except in the case where the failure is a failure to pay rent as defined herein,
for more than five (5) days after same is due, in which event no notice is
required to Lessee. At the option of Lessor, a failure by Lessee to effect a
cure within the prescribed period may work a default of this Lease, and all of
the rights of Lessee hereunder, and thereupon Lessor, their agents or attorney
to enforce this Agreement in Court or to seek any rental payments due, the
Lessor shall be entitled to a reasonable attorney's fee and costs. A late fee is
charged to lessee in the amount of Five (5%) Percent if rent is not paid five
(5) days after the due date.
2
<PAGE>
SIXTH: If Lessee shall abandon or vacate said premises before the end
of the term of this Agreement, or shall suffer the rent to be in arrears, or in
the event of any act of default, Lessor may, at its election
a) Terminate and end this Lease; and /or
b) Re-enter upon the demised premises whereupon the term
hereby granted, and at the Lessor's option, all right title and interest under
it shall end and the Lessee shall become a tenant at sufferance; and/or
c) Elect to declare the entire rent for the balance of the
term, or any part thereof, due and payable forthwith, and may proceed to collect
the same either by distress of otherwise, and/or.
d) Take possession of the demised premises and re-let the same
for the account of the Lessee, at such price and upon such terms and for such
duration of time as the Lessor may determine, and receive the rent therefore,
applying the same to the payment of the rent due by these presence, and if the
full rental herein provided shall not be realized by Lessor over and above the
expense to Lessor in such re-letting, the said Lessee shall pay any delinquency.
SEVENTH: That assuming that Lessee is not in default under the terms of
the lease agreement, Lessee shall have the option to re-lease the premised for a
further period of One year at $1800 Plus all Applicable sales taxes. The option
must be executed by Lessee at least thirty (30) days before initial term of the
lease expires in writing.
EIGHT: Lessee also agrees that they will pay all charges for water,
gas, garbage, electricity, or other illumination.
NINE: Lessee Hereby pledges and assigns to Lessor all the furniture,
fixtures, Goods and chattels of Lessee, which shall be brought or put on said
premises as security for the Payment of the rent herein reserved, and Lessee
agrees that the said lien may be enforced by Distress, foreclosure or otherwise
at the election of Lessor, and does hereby agree to pay Reasonable attorney's
fees, together with all costs and charges thereof incurred or paid by Lessor.
3
<PAGE>
TENTH: Lessor, or any of his agents, shall have the right to enter said
premises during all reasonable hours, to examine the same, to make such repairs,
additions, or alterations as may be deemed necessary or to exhibit said
premises, and to put or keep upon the doors or windows thereof a notice "FOR
RENT" at any time within sixty (60) days before the expiration of this lease.
The right of entry shall likewise exist for the purpose of removing placards,
signs, fixtures, alterations, or additions, which do not conform to this
Agreement, or to the rules and regulations of the building.
ELEVENTH: Lessee hereby accepts the premises in the condition they are
in at the beginning of this lease and agrees to maintain said premises in the
same condition, order and repair as they are at the commencement of said term,
including keeping the front of the premises free of all debris, and excepting
only reasonable wear and tear arising from the use thereof under this Agreement;
and Lessee agrees to maintain the area in front of the premises, including the
sidewalk, in a clean condition and swept clear of all debris. Furthermore,
Lessee agrees to make good to Lessor immediately upon demand any damage to water
apparatus, or electric lights or any fixture, appliances or appurtenances of
said premises, or of the building, caused by any act or neglect of Lessee, or of
any person or persons in employ of or under control for the Lessee.
TWELFTH: It is expressly agreed and understood by and between the
parties to this Agreement, that Lessor shall not be liable for any damages or
injury by water, which may be Sustained by Lessee, except where due to lessor,
its customers or other person or for any other damage or injury resulting from
the carelessness, negligence, or improper conduct on the part of any other
tenant or agents, or employees, or by reason of the breakage, leakage, or
obstruction of the water, sewer or said pipes, or other leakage in or about the
said building.
THIRTEENTH: This Contract shall bind Lessor and his executors,
administrators, assigns or successors, and the assigns, legal representatives,
or successors as the case may be, of the Lessee.
FOURTEENTH: It is understood and agreed between the parties hereto that
written notice mailed or delivered to the premises leased hereunder shall
constitute sufficient notice to Lessee and written notice delivered personally
to the Lessor shall constitute sufficient notice to the Lessor to comply with
the terms of this contract.
FIFTEENTH: It is understood and agreed between the parties hereto that
time is of the essence of this contract and this applies to all terms and
conditions contained herein.
SIXTEENTH: The rights of Lessor and Lessee under the foregoing shall be
cumulative and failure on the part of Lessor and Lessee to exercise promptly any
rights given hereunder shall not operate to forfeit any of said rights.
SEVENTEENTH: It is further understood agreed between the parties
hereto that any charges against Lessee by Lessor for services or for work done
on the premises by order of Lessee or otherwise accruing under this contract
shall be considered as rent due and unpaid.
4
<PAGE>
EIGHTEENTH: It is hereby understood and agreed that any signs or
advertising to be used, including awnings, in connection with the premises
leased hereunder shall be first submitted to Lesser for his approval before
installation of same. If approved by Lessor, the costs of the signs or
advertising, including awnings, together with the installation, shall be solely
the cost of the Lessee.
NINETEENTH: That lessee shall pay to the Lessor, a security deposit in
the amount of $1590.00 on or before. This payment will be held in an interest
bearing account by Lessor as chosen by Lessor. If the Lease is terminated before
the time of completion, the lessor will keep the deposit.
TWENTIETH: In the event Lessor consents in writing to any improvements
by the Lessee on the premises. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT THE
INTEREST OF THE LESSOR SHALL NOT BE SUBJECT TO LIENS OR IMPROVEMENTS MADE BY THE
LESSEE AND THAT LESSEE SHALL NOTIFY THE CONTRACTOR MAKING ANY SUCH IMPROVEMENTS
OF SAME. If any such lien is place on the premises through services or work done
by or for Lessee, then it will be a material default under the lease unless
Lessor has the lien removed and satisfied within ten (10) days of Lessee's
notification of the lien.
TWENTY-FIRST: That all payments required to be made hereunder shall be
considered rent.
TWENTY-SECOND: lessee shall maintain the roof air-conditioning unit at
their own expense and agrees to have the roof air-conditioning unit checked by a
qualified air-conditioning company at least once every twelve months. Lessee
agrees to pay for any repairs, replacements or maintenance.
TWENTY-THIRD: Lessee also agrees to be responsible for all plumbing
inside the premises and electrical repairs and to maintain their own fixtures
and carpeting at their own cost and expense. Lessee will also pay for its water
supply and plate glass insurance and will also pay for the maintenance in taking
down and putting up storm shutters for this location, if available.
TWENTY-FOUR: That assuming that Lessee is not in default under the
terms of the Lease Agreement, Lessee shall have an option to re-lease the
premises for an additional one (1) year at $1800.00 per month plus all
applicable sales taxes. Said option must be exercised by Lessee at least thirty
(30 ) days before the initial one year term, in writing, to the Lessor at
Lessor's address set forth herein.
5
<PAGE>
TWENTY-FIVE: Lessee shall procute and maintain in force during the
term of this lease any extension thereof at his expense, public liability
insurance in companies and through brokers approved by Lessor, adequate to
protect against liability for damage claims through public use of or arising out
of accidents occuring in or around the lease premises, in a minimum amount of
Three Hundred Thousand Dollars ($300,000.00) for any one accident, and Three
Hundred Thousand Dollars ($300,000.00) for property damage. Such insurance
policies shall provide coverage for Lessor's contingent liability on such claims
or losses. Certificate of proof of insurance shall be delivered to Lessor for
keeping. Lessee agrees that if such insurance policies are not kept in force
during the entire term of this lease and any extension thereof, Lessor may
procure the necessary insurance and pay the premium therefore, and that such
premium shall be repaid to Lessor as additional rent.
TWENTY-SIX: Lessee agrees that it will take over the maintenance and
minor repairs of tenants portion of the said building, plumbing, putting up and
taking down of storm shutters, walls, and carpeting. Not included in the above
are any roofing repairs or other major structural repairs which will be done by
the Lessor.
The Lessee will save the Lessor harmless from all claims on account of
the leased premises during the term of this lease, and for all costs, expenses
and reasonable attorney's fees in connection therewith resulting from and
occurring by reason of Tenants construction, us or occupancy of the premises.
TWENTY-SEVEN: Lessor will hold the sum of Three Thousand One Hundred
Eighty Dollars ($3180.00) as deposit for first and last months rent. If the
lease is broken before the term is up, the deposit and all monies on hand will
be forfeited to the Lessor.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto executed this
instrument for the purpose herein expressed, the day and year above written.
Signed, sealed and delivered In the presence of:
/s/ Roland Breton /s/ LUISA CERTAIN
- ------------------------------------ -------------------------
LUISA CERTAIN, LESSOR
- ------------------------------------ /s/ MARIA CERTAIN
-------------------------
MARIA CERTAIN, LESSOR
- ------------------------------------ /s/ Roland Breton
-------------------------
PRESIDENT
- ------------------------------------
LESSEE
- ------------------------------------ Individually As Guarantor
-------------------------
/s/ Howard Storfer
CEO
- ------------------------------------
7
LEASE AGREEMENT
This Agreement entered into this May 1, 1999 by and between Luisa
Certain and Maria M. Certain, (hereinafter called the "Lessor"), and Dynamic
Imaging Group Inc.
WITNESSETH
That Lessor does hereby lease unto Lessee and Lessee does hereby take
as tenant, that certain store building space commonly known as 3428 North Ocean
Boulevard, Fort Lauderdale, Broward County, Florida (consisting of 1375 square
feet more or less and three (3) parking spaces immediately adjacent to Lessee's
store) to be used and occupied by Lessee as Dynamic Imaging Group or other
approved business for the term commencing May 1, 1999 through April 30, 2000.
That the agreed rental from May 1, 1999 through April 30, 2000 will be at the
agreed rental of $1000 per month together with all applicable Florida sales
tax. The initial payment being made concurrently with the execution of this
agreement and subsequent payments being due on each successive month on the
first day of each and every month and every month thereafter through and
including April 1, 2000.
All payments to be made to the Lessor on the first day of each and
every month in advance, without demand, at 81 Bay Colony Drive, Fort Lauderdale,
Florida 33308; or any other place Lessor shall designate.
The following express stipulations and conditions are made part of this
lease and are hereby assented to by Lessee:
FIRST: Except as hereinafter provided, Lessee shall not assign this
lease, sublet the premises, or any part thereof nor use the same, or any part
thereof, nor permit the same, or any part thereof, to be used for any other
purpose than as above stipulated, nor make any alterations therein, and any
additions thereto, without the written consent of lessor and all additions,
fixtures or improvements which may be made by Lessee, except movable office
furniture, shall become the property of Lessor and remain upon the premised as
part thereof, and be surrendered with premises at the termination of this lease.
All partitions for divisions of storage, and office partitions existing at the
commencement of this lease, a sale or transfer of more than fifty (50%) percent
of the corporate stock of the Lessee shall constitute an attempt to assign or
sublet the premises. Consent cannot be unreasonably withheld.
1
<PAGE>
SECOND: All personal property placed or moved in the premises above
described shall be at the risk of Lessee or owner thereof, and Lessor shall not
be liable for any damages to said personal property, or to Lessee arising from
the bursting or leaking of water pipes, or from any act of negligence of any
co-tenant or occupants of the building or any other person whomsoever.
THIRD: That Lessee shall promptly execute and continuously comply with
all statues, ordinances, rules, orders, regulations and requirements of the
Federal, State, and City government and of any and all their departments and
bureaus applicable to said premises, for the correction, prevention, and
abatement of nuisances or other grievances, in, upon, or connected with said
premises during said term; and shall also promptly comply with and execute all
rules, orders and regulations of the Southeastern Underwriters Association for
the prevention of fires, at its own costs and expense.
FOURTH: In the event the premises shall be destroyed or so damaged or
injured by fire or other casualty not caused by Lessee or its agent during the
term of the Agreement, that the same shall be rendered untenantable, then Lessor
shall have the right to render said premises tenantable by repairs within one
hundred twenty (120) days therefrom. If said premises are not rendered
tenantable within said time, it shall be optionable within either party hereto
to cancel this lease, and in the event of such cancellation then rent shall be
paid only to date of such fire or casualty. Rent abates during damage period.
FIFTH: The payment of the rent for said premises upon the dates named
and the faithful observance of the Agreement, are the conditions upon which the
Agreement is made and accepted upon any failure on the part of Lessee to
comply with the terms of said Agreement. Lessor shall serve notice of such
failure upon Lessee and shall allow Lessee fifteen (15) days within which to
effect a cure, except in the case where the failure is a failure to pay rent as
defined herein, for more than five (5) days after same is due, in which event no
notice is required to Lessee. At the option of Lessor, a failure by Lessee to
effect a cure within the prescribed period may work a default of this Lease, and
all of the rights of Lessee hereunder, and thereupon Lessor, their agents or
attorney to enforce this Agreement in Court or to seek any rental payments due,
the Lessor shall be entitled to a reasonable attorney's fee and costs. A late
fee is charged to lessee in the amount of Five (5%) Percent if rent is not paid
five (5) days after the due date.
2
<PAGE>
SIXTH: If Lessee shall abandon or vacate said premises before the end
of the term of this Agreement, or shall suffer the rent to be in arrears, or in
the event of any act of default, Lessor may, at its election
a) Terminate and end this Lease; and/or
b) Re-enter upon the demised premises whereupon the term
hereby granted, and at the Lessor's option, all right title and interest under
it shall end and the Lessee shall become a tenant at sufferance; and/or
c) Elect to declare the entire rent for the balance of the
term, or any part thereof, due and payable forthwith, and may proceed to collect
the same either by distress of otherwise; and/or
d) Take possession of the demised premises and re-let the same
for the account of the Lessee, at such price and upon such terms and for such
duration of time as the Lessor may determine, and receive the rent therefore,
applying the same to the payment of the rent due by these presence, and if the
full rental herein provided shall not be realized by Lessor over and above the
expense to Lessor in such re-letting, the said Lessee shall pay any delinquency.
SEVENTH: That assuming that Lessee is not in default under the terms of
the lease agreement, Lessee shall have the option to re-lease the premised for a
further period of One year at terms to be renegotiated The option must be
executed by Lessee at least thirty (30) days before initial term of the lease
expires in writing.
EIGHT: Lessee also agrees that they will pay all charges for water,
gas, garbage, electricity, or other illumination.
NINE: Lessee Hereby pledges and assigns to Lessor all the furniture,
fixtures, goods and chattels of Lessee, which shall be brought or put on said
premises as security for the payment of the rent herein reserved, and Lessee
agrees that the said lien may be enforced by distress, foreclosure or otherwise
at the election of Lessor, and does hereby agree to pay reasonable attorney's
fees, together with all costs and charges thereof incurred or paid by Lessor.
3
<PAGE>
TENTH: Lessor, or any of his agents, shall have the right to enter
said premises during all reasonable hours, to examine the same, to make such
repairs, additions, or alterations as may be deemed necessary or to exhibit said
premises, and to put or keep upon the doors or windows thereof a notice "FOR
RENT" at any time within sixty (60) days before the expiration of this lease.
The right of entry shall likewise exist for the purpose of removing placards,
signs, fixtures, alterations, or additions, which do not conform to this
Agreement, or to the rules and regulations of the building.
ELEVENTH: Lessee hereby accepts the premises in the condition they are
in at the beginning of this lease and agrees to maintain said premises in the
same condition, order and repair as they are at the commencement of said term,
including keeping the front of the premises free of all debris, and excepting
only reasonable wear and tear arising from the use thereof under this Agreement;
and Lessee agrees to maintain the area in front of the premises, including the
sidewalk, in a clean condition and swept clear of all debris. Furthermore,
Lessee agrees to make good to Lessor immediately upon demand any damage to water
apparatus, or electric lights or any fixture, appliances or appurtenances of
said premises, or of the building, caused by any act or neglect of Lessee, or of
any person or persons in employ of or under control of the Lessee.
TWELFTH: It is expressly agreed and understood by an between the
parties to this Agreement, that Lessor shall not be liable for any damages or
injury by water, which may be sustained by Lessee, except where due to lessor,
its customers or other person or for any other damage or injury resulting from
the carelessness, negligence, or improper conduct on the part of any other
tenant or agents, or employees, or by reason of the breakage, leakage, or
obstruction of the water, sewer or said pipes, or other leakage in or about the
said building.
THIRTEENTH: This Contract shall bind Lessor and his executors,
administrators, assigns or successors, and the assigns, legal representatives,
or successors as the case may be, of the Lessee.
FOURTEENTH: It is understood and agreed between the parties hereto that
written notice mailed or delivered to the premises leased hereunder shall
constitute sufficient notice to Lessee and written notice delivered personally
to the lessor shall constitute sufficient notice to the Lessor to comply with
the terms of this contract.
FIFTEENTH: It is understood and agreed between the parties hereto that
time is of the essence of this contract and this applies to all terms and
conditions contained herein.
SIXTEENTH: The rights of Lessor and Lessee under the foregoing shall be
cumulative and failure on the part of Lessor and Lessee to exercise promptly any
rights given hereunder shall not operate to forfeit any of said rights.
SEVENTEENTH: It is further understood and agreed between the parties
hereto that any charges against Lessee by Lessor for services or for work done
on the premises by order of Lessee or otherwise accruing under this contract
shall be considered as rent due and unpaid.
4
<PAGE>
EIGHTEENTH: It is hereby understood and agreed that any signs or
advertising to be used, including awnings, in connection with the premises
leased hereunder shall be first submitted to Lessor for his approval before
installation of same. If approved by Lessor, the costs of the signs or
advertising, including awnings, together with the installation, shall be solely
the cost of the Lessee.
NINETEENTH: That lessee shall pay to the Lessor, a security deposit in
the amount of $1000. 00 on or before May 1, 1999 This payment will be held in
an interest bearing account by Lessor as chosen by Lessor. If the Lease is
terminated before the time of completion, the lessor will keep the deposit.
TWENTIETH: In the event Lessor consents in writing to any improvements
by the Lessee on the premises. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT THE
INTEREST OF THE LESSOR SHALL NOT BE SUBJECT TO LIENS OR IMPROVEMENTS MADE BY
THE LESSEE AND THAT LESSEE SHALL NOTIFY THE CONTRACTOR MAKING ANY SUCH
IMPROVEMENTS OF SAME. If any such lien is place on the premises through services
or work done by or for Lessee, then it will be a material default under the
lease unless Lessor has the lien removed and satisfied within ten (1O) days of
Lessee's notification of the lien.
TWENTY-FIRST: That all payments required to be made hereunder shall be
considered rent.
TWENTY-SECOND: Lessee shall maintain the roof air-conditioning unit at
their own expense and agrees to have the roof air-conditioning unit checked by a
qualified airconditioning company at least once every twelve months. Lessee
agrees to pay for any repairs, replacements or maintenance.
TWENTY-THIRD: Lessee also agrees to be responsible for all plumbing
inside the premises and electrical repairs and to maintain their own fixtures
and carpeting at their own cost and expense. Lessee will also pay for its
water supply and plate glass insurance, and will also pay for the maintenance in
taking down and putting up storm shutters for this location, if available.
TWENTY-FOUR: That assuming that Lessee is not in default under the
terms of the Lease Agreement, Lessee shall have an option to renegotiates the
lease for an additional one term. Said option must be exercised by Lessee at
least ninety (90) days before the initial one year term, in writing, to the
Lessor at Lessor's address set forth herein.
5
<PAGE>
TWENTY-FIVE: Lessee shall procure and maintain in force during the term
of this lease any extension thereof, at his expense, public liability insurance
in companies and through brokers approved by Lessor, adequate to protect against
liability for damage claims through public use of or arising out of accidents
occurring in or around the lease premises, in a minimum amount of Three Hundred
Thousand Dollars ($300,000.00) for any one accident, and Three Hundred Thousand
Dollars ($300,000.00) for property damage. Such insurance policies shall provide
coverage for Lessor's contingent liability on such claims or losses. Certificate
of proof of insurance shall be delivered to Lessor for keeping. Lessee agrees to
obtain a written obligation from the insurers to notify Lessor in writing at
least thirty (30) days prior to cancellation, modification or refusal to renew
any such policies. Lessee agrees that if' such insurance policies are not kept
in force during the entire term of this lease and any extension thereof, Lessor
may procure the necessary insurance and pay the premium therefore, and that such
premium shall be repaid to Lessor as additional rent.
TWENTY-SIX: Lessee agrees that it will take over the maintenance and
minor repairs of tenants portion of the said building, plumbing, putting up and
taking down of storm shutters, walls, and carpeting. Not included in the above
are any roofing repairs or other major structural repairs which will be done by
the lessor.
The Lessee will save the Lessor harmless from all claims on account of
the leased premises during the term of this lease, and for all costs, expenses
and reasonable attorney's fees in connection therewith resulting from and
occurring by reason of Tenants construction, us or occupancy of the premises.
TWENTY-SEVEN: Lessor will hold the sum of One Thousand Dollars
($1000.00) as a security deposit. If the lease is broken before the term is up,
the deposit and all monies on hand will be forfeited to the Lessor.
TWENTY-EIGHT: Lessee acknowledges he has received two (2) MEDCO Keys,
which lessee shall return to lessor at end of lease agreement.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto executed this
instrument for the purpose herein expressed, the day and year above written.
Signed, sealed and delivered
in the presence of
/s/ Carl Marzole /s/ LUISA CERTAIN
- ----------------------- ----------------------------
LUISA CERTAIN, LESSOR
/s/ MARIA CERTAIN
- ----------------------- ----------------------------
MARIA CERTAIN, LESSOR
/s/ Roland Breton
- ----------------------- ----------------------------
LESSEE
President
- ----------------------- ----------------------------
Individually As Guarantor
/s/ Roland Breton
- ----------------------- ----------------------------
7
Co-Marketing Agreement
This Co-Marketing Agreement ("Agreement") is entered into as of the
April, 1998 between Dynamic Imaging Group Inc., a Colorado Corporation, with its
principal place of business at 3418 Ocean Boulevard, Fort Lauderdale, Florida
33308 ("Company") and Speedy Sign*A*Rama USA Inc., a Florida Corporation with
its principal place of business at 1601 Belvedere Road, Suite 402 East, West
Palm Beach, Florida 33406, ("Franchisor").
General Information
The Company and the Franchisor desire to work cooperatively to realize
the opportunities that exist in the Territory (defined below) for the Products
(defined below); and,
the Company and the Franchisor desire to co-market the Products to the
Franchisor's Franchisees within the defined Territory.
In consideration for the mutual promises, covenants, and Agreements
made below, the parties, intending to be legally bound, agree as follows:
1. Definitions
For purposes of this Agreement, the following terms will have the
indicated definitions:
"Agreement." This Agreement is by and between the Company and the
Franchisor.
"Products." Includes only those products listed on Exhibit A. The
Company may, at its option, modify the products listed on Exhibit A from time to
time by providing written notice to the Franchisor not less than thirty (30)
days prior to any such change.
"Territory." The geographical territory covered by this Agreement is
Worldwide.
"Term." The duration of this Agreement as provided in Section 2.
"Information." Any documentation, customer information or other
information disclosed by the party to the other that the disclosing party
considers proprietary. Such information may include, but is not limited to,
engineering, hardware, software, or other information that is not generally
known relating to the Products, and other information concerning financial,
accounting or marketing reports, analysis, forecasts, predictions or projections
relating to the Products and/or to the business of either the Company or the
Franchisor.
<PAGE>
2. Term and Termination
2.1 Term. The initial term of this Agreement shall be for one (1) year
commencing on the date first set forth above. Thereafter, renewal of the term of
this Agreement will be automatic unless written notice of the termination is
received by either party at least thirty (30) days prior to expiration. This
Agreement shall continue in effect as set forth herein unless otherwise modified
or terminated.
2.2 Termination. Either party may terminate this Agreement with or without cause
upon thirty (30) days prior written notice without liability of any kind to the
other party.
3. Co-Marketing Agreement
3.1 Joint Cooperation. The Company and the Franchisor shall cooperate in the
areas of marketing, promotion, training and sales as follows:
3.2 Marketing. The Company and the Franchisor shall work cooperatively within
the Territory to assess viable market segments, applications, and potential
customers for trade show booth (display systems) needs, including planning to
meet future market needs. Franchisor will work with the Company to encourage
each of its Franchisees within the Sign*A*Rama Network to lease, sell and to
distribute the display systems. The Company hereby acknowledges that Franchisor
does not have the contractual right nor will it require any of its Franchisees
to lease, sell or to distribute the display systems.
3.3 Exclusivity. The Company's display systems shall be exclusively marketed
through and by Franchisor's Franchisees to the retail sign industry and with no
minimum requirements placed thereon. Franchisor shall exclusively co-market the
Products to Franchisor's Franchisees during the term of this Agreement and shall
not co-market with any other company the identical Products considered herein.
3.4 Promotion. The Company and the Franchisor shall plan and undertake joint
seminars, open houses, public relations events, press releases, testimonials,
demonstrations, and joint participation in trade shows, conventions and
conferences, when appropriate. The content of all promotional
materials/activities shall be subject to the advance written approval of both
parties. The Company will provide cobranded promotional marketing materials,
cobranded advertising in printed media as specified by Franchisor and institute
an active ongoing telemarketing effort to Franchisor's Franchisees and potential
customers. Cobranded is defined as baring the name and logo or trademark of
Franchisor and The Company. The Company shall solely bare the costs of all
marketing efforts contemplated in this Agreement. The Company shall dedicate
eight percent (8%) of all gross revenue received as a result of the activities
contemplated herein to an advertising fund for which these moneys will be used
to fund a National Advertising Campaign (National Advertising Campaign as used
herein shall refer exclusively to
2
<PAGE>
marketing to Sign*A*Rama Franchisees), the details for which shall be agreed to
by both parties prior to implementation. Of the National Advertising Campaign
fund, an amount to be later determined and agreed to at a later date shall be
used in a telemarketing effort for which there shall be dedicated employees. The
methods and operation of the telemarketing campaign as well as the National
Advertising Campaign shall be mutually agreed to in writing in advance of
implementation and the Company shall give to Franchisor a full accounting
quarterly of all revenues earned, moneys deposited in the National Advertising
Campaign fund and Moneys expended in the advertising effort as described herein.
The Company shall further provide and audited accounting annually within three
months of the end of the Company's fiscal year.
3.5 Training. As part of the sales and marketing effort established in this
Agreement, both the Company and the Franchisor shall provide training and
information to each party's assigned work force as well as to Franchisor's
Franchisees, to provide an understanding of its services/products, applications,
organization, and procedures that are relevant. The Management of each party
shall each have the sole discretion to determine the numbers, levels and skills
of its personnel assigned to the Co-Marketing program described in this
Agreement, and the types of support resources it shall make available. Expenses
for this program will be borne by the party incurring the expense unless
otherwise agreed.
3.6 Referrals and Presentations. The Company and the Franchisor shall engage in
the exchange of customer leads, joint demonstrations and joint customer visits,
presentations, and proposals, when appropriate.
4. Company responsibilities
4.1 Products. The Company shall sell or lease the Products to the Franchisor's
Franchisees pursuant to orders placed with the Company pursuant to the
Co-Marketing efforts of the parties under this Agreement in accordance with the
Company's standard documentation applicable to such a transaction, or any
special contracts agreed to by both parties in advance and in accordance with
the additional terms contemplated in. Exhibit B to this Co-Marketing Agreement
and attached hereto;
4.2 Information. The Company shall provide reasonable information and backup as
agreed to by the Company and the Franchisor in support of the customer
proposals, trials, pilot programs inquiries and service requests;
4.3 Maintain Products. The Company shall provide maintenance for Products sold
or leased as a result of the Franchisor's activities under this Agreement at the
Company's standard prices, if requested by the Franchisor;
3
<PAGE>
4.4 Demo Equipment. The Company shall provide the Products on a purchase or
lease basis to be used in customer demonstrations and pilot programs as part of
the marketing/sales process;
4.5 Training. The Company shall provide reasonable technical training on the
Products to the Franchisor's employees working with the Company at the Company's
facility at mutually agreed upon times;
4.6 Collateral Materials. The Company shall provide sample quantities of
collateral materials as identified and agreed to by the Company and the
Franchisor in writing, in advance in support of the sales/marketing process;
4.7 Additional Collateral Materials. The Company shall provide additional
quantities of collateral materials to the Franchisor and to Franchisor's
Franchisees, in excess of quantities agreed to by the parties in advance, at
cost, as reasonably requested.
5. Franchisor's Responsibilities
5.1 Support Obligation. The Franchisor shall train, deploy and otherwise
maintain a technical and marketing support group for display systems products
and services covered under this Agreement as appropriate to respond to the
Franchisor's Franchisee's requirements.
5.2 Market Services. The Franchisor shall market to its Franchisees:
(See Exhibit A)
to meet the Franchisor's Franchisees' requirements.
6. Non-Disclosure of Proprietary Information
6.1 Proprietary. Each party to this Agreement may find it beneficial to disclose
to the other party certain information. The parties understand and agree that
information disclosed pursuant to this Agreement shall be considered proprietary
because (1) it has been developed internally by the disclosing party, or (2) it
has been received by the disclosing party subject to a continuing obligation to
a third party to maintain the confidentiality of the information. Information
disclosed pursuant to this Agreement that either party considers proprietary and
that is provided in tangible form shall be marked confidential, proprietary or
private. If such information is orally disclosed, it shall be identified by the
disclosing party as being proprietary to that party in a writing sent to the
receiving party no more than five (5) days after disclosure.
4
<PAGE>
6.2 Confidentiality. With respect to such information, the party to whom the
information is disclosed and its employees, consultants and other agents shall:
(1) hold the information in confidence and protect it in accordance with the
security measures with which it protects its own proprietary or confidential
information, which it does not wish to disclose; (2) restrict disclosure of the
information solely to those employees, consultants and other agents with a need
to know, and not disclose such information to any other persons; (3) advise its
employees, consultants and other agents with access to the information of their
obligations with respect to the information; and (4) use the information only in
connection with the terms of this Agreement, except as may otherwise be agreed
to by the parties in writing.
6.3 Non-Proprietary Information. The party to whom information is disclosed
shall have no obligation to treat as proprietary any information that (1) was
previously known to the receiving party free of any confidentiality obligation;
(2) is disclosed to third parties by the disclosing party without restriction;
(3) is or becomes publicly available other than by the receiving party's breach
of its obligations; or (4) is independently developed by the receiving party.
6.4 Disclosure of Information. In the event a party to whom information has been
disclosed proposes to disclose that information to an outside consultant or
agent, it shall obtain the consent of the party from whom the information was
originally received and arrange for the execution by the consultant or agent of
a nondisclosure Agreement which has been approved by the party from whom the
information was originally received. Such approval shall not be unreasonably
withheld.
6.5 Return of Information. The information shall be deemed the property of the
disclosing party and, upon request, the other party will return all information
that is in tangible form to the disclosing party or destroy all such
information.
6.6 Disclosure to Affiliates. Except as specifically provided in this Agreement,
the parties agree not to provide information to any of their affiliated
companies, without the prior written consent of the party disclosing the
information.
7. General Provisions
7.1 Severability. If any provision of this Agreement is found invalid or
unenforceable under judicial decree or decision, the remainder shall remain
valid and enforceable according to its terms. Without limiting the previous, it
is expressly understood and agreed that each and every provision of this
Agreement that provides for a limitation of liability, disclaimer of warranties,
or exclusion of damages is intended by the parties to be severable and
independent of any other provision and to be enforced as such. Further, it is
expressly understood and agreed that if any remedy under this Agreement is
determined to have failed of its essential purpose, all other limitations of
liability and exclusion of damages set forth in this section shall remain in
full force and effect.
5
<PAGE>
7.2 Notices. All notices, demands or consents required or permitted under this
Agreement shall be in writing and shall be delivered or mailed certified return
receipt requested to the respective parties at the addresses set forth above or
at such other address as such party shall specify to the other party in writing.
Any notice required or permitted to be given by the provisions of this Agreement
shall be conclusively deemed to have been received on the day it is delivered to
that party by U.S. Mail with Acknowledgment of Receipt or by any commercial
courier providing equivalent acknowledgment of receipt.
7.3 Trademarks and Trade Names. Neither party shall use the name of the other
party in any news release, public announcement, advertisement or other form of
publicity without the prior written consent of the other party. The Company is
hereby granted permission to use the Franchisor's name in the Company's
promotional materials for the sole purpose of identifying the Franchisor as a
customer of the Company, with prior written approval. The Franchisor is hereby
granted permission to use during the term of this Agreement the trademarks and
trade names used by the Company in connection with the Products and services
covered by this Agreement. Such permission is expressly limited to uses by the
Franchisor necessary to the performance of the Franchisor's obligations under
this Agreement. The Franchisor hereby acknowledges the Company's exclusive
ownership of such marks and names and that the Company's marks and names are
renowned both worldwide and specifically in the Territory. The Franchisor agrees
not to take any action inconsistent with such ownership and further agrees to
take any action, including without limitation the conduct of legal proceedings
at the Company's expense, which the Company reasonably deems necessary to
establish and preserve the Company's exclusive rights in and to its trademarks
and trade names. Reproductions of the Company's trademarks, logos, symbols,
etc., shall be true photographic reproductions.
7.4 Labels. The Franchisor will not remove, make or permit any alterations in
any labels or other identifying markings placed by the Company on any of its
Products covered by this Agreement.
7.5 Waiver, Amendment, Modification. No waiver, amendment or modification,
including those by custom, usage of trade, or course of dealing, of any
provision of this Agreement will be effective unless in writing and signed by
the party against whom such waiver, amendment or modification is sought to be
enforced. No waiver by any party of any default in performance by the other
party under this Agreement or of any breach or series of breaches by the other
party of any of the terms or conditions of this Agreement shall constitute a
waiver of any subsequent default in performance under this Agreement or any
subsequent breach of any terms or conditions of that Agreement. Performance of
any obligation required of a party under this Agreement may be waived only by a
written waiver signed by a duly authorized officer of the other party, that
waiver shall be effective only with respect to the specific obligation described
in that waiver.
6
<PAGE>
7.6 No Warranties. The Franchisor hereby acknowledges that it has not entered
into this Agreement in reliance upon any warranty or representation by any
person or entity.
7.7 Entire Agreement. The parties acknowledge that this Agreement expresses
their entire understanding and Agreement, and that there have been no
warranties, representations, covenants or understandings made by either party to
the other except expressly set forth in this section. The parties further
acknowledge that this Agreement supersedes, terminates and otherwise renders
null and void any and all prior Agreements or contracts, whether written or
oral, entered into between the Company and the Franchisor with respect to the
matters expressly set forth in this Agreement.
7.8 Attorney Fees. If either party is required to retain the services of any
attorney to enforce or otherwise litigate or defend any matter or claim arising
out of or in connection with this Agreement, then the prevailing party shall be
entitled to recover from the other party, in addition to any other relief
awarded or granted, its reasonable costs and expenses (including attorney fees)
incurred in the proceeding.
7.9 No joint Venture. This Agreement is not intended to create, nor shall it be
construed as, a joint venture, association, partnership, franchise or other form
of business or relationship. Neither party shall have nor hold itself out as
having any right or power or authority to assume, create, or incur any expense,
liability or obligation, expressed or implied, on behalf of the other party,
except as expressly provided herein.
7.10 Governing Law. This Agreement shall be governed by the laws of the State of
Florida.
7.11 Limitation of Liability. Neither the Company nor the Franchisor shall be
liable to each other or any third party claiming under them for incidental,
special, consequential, or other damages, including but not limited to lost
profits arising from an alleged breach or actual breach of this Agreement.
We have carefully reviewed this contract and agree to and accept its
terms and conditions. We are executing this Agreement as of the day and year
first written above.
Company Franchisor
By: By:
----------------------------- ----------------------------------
Name: Name:
----------------------------- ---------------------------------
Title: Title:
----------------------------- --------------------------------
7
<PAGE>
Exhibit A
DESCRIPTION OF THE PRODUCTS
---------------------------
9 foot Curve Arise Units with Podiums
8 Panel Outline Units
6 foot Curve Table Top Units
Lights 10 foot by 10 foot Floor kits with Case
Arise 12 Section Arches
Sails
Arise Panel Set - 3 panels, 2 End-caps
Outline Panel Set, 8 Panels, 4 Headers
Adjustable Brochure Racks
Arise Shelves (Straight)
Arise Shelves (Curved)
Standards
Brackets
Outline Shelves
Outline Standards
Outline Brackets
Table with Front Panel
Arise Table
Chairs
8
<PAGE>
Exhibit B
ADDITIONAL TERMS CONTEMPLATED BETWEEN COMPANY AND FRANCHISOR'S FRANCHISEES
--------------------------------------------------------------------------
Summary:
o Dynamic Imaging Group, Inc. will supply Sign*A*Rama franchisees with trade
show booths, digital imaging (Graphics) and all products that are currently
in inventory and others that may be added in future. These products will be
rented and/or sold by Sign*A*Rama franchisees to their customers.
o Dynamic Imaging Group, Inc. will provide Sign*A*Rama franchisees with
marketing materials and instructional manuals free of charge upon the
franchisee's purchase or lease of a display unit.
o Dynamic Imaging Group, Inc. will provide all products as listed in Exhibit
"A" attached hereto to franchisee on a discounted or wholesale basis.
o Participating Sign*A*Rama franchisees will act as sales or rental agents
for all products inventoried by Dynamic Imaging Group, Inc.
o Sign*A*Rama franchisees will receive 25% off the gross receipt of all
rentals and sales of all products in Dynamic Imaging Group, Inc. inventory.
o Dynamic Imaging Group, Inc. has agreed to sell a sample package of display
systems at an additional discount for the "tour stores" as designated
periodically by Sign*A*Rama corporate.
o Sign*A*Rama franchisees will receive 25% off the gross on all insurance
purchased at the time of rental.
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Dynamic
Imaging Group, Inc.'s Form 10-SB Financial Statements for the six months ended
June 30, 1999
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,386
<SECURITIES> 0
<RECEIVABLES> 12,745
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 409,988
<PP&E> 156,412
<DEPRECIATION> (3,560)
<TOTAL-ASSETS> 568,990
<CURRENT-LIABILITIES> 261,397
<BONDS> 0
0
0
<COMMON> 5,570
<OTHER-SE> 302,023
<TOTAL-LIABILITY-AND-EQUITY> 568,990
<SALES> 190,272
<TOTAL-REVENUES> 190,272
<CGS> 108,443
<TOTAL-COSTS> 108,443
<OTHER-EXPENSES> 535,365
<LOSS-PROVISION> (453,536)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (453,536)
<INCOME-TAX> 0
<INCOME-CONTINUING> (453,536)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (453,536)
<EPS-BASIC> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
