UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-27945
ASD SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Texas 75-2737041
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3737 Grader Street, Suite 110, Garland, Texas 75041
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 214.348.7200
-------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90
days. YES [ ] NO [ ]
At April 28, 2000, 21,149,400 shares of common stock were
outstanding.
<PAGE
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASD SYSTEMS, INC.
Unaudited Balance Sheets as of March 31, 2000 and
December 31, 1999......................................... 2
Unaudited Statements of Operations for the
Three Months Ended March 31, 2000 and 1999................ 3
Unaudited Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999................ 4
Notes to Interim Financial Statements........................ 5
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ASD SYSTEMS, INC.
BALANCE SHEETS
(000's Omitted)
(Unaudited)
March 31, December 31,
2000 1999
-------------- ------------
Assets
Current assets:
Cash and cash equivalents $ 31,062 $ 37,278
Accounts receivable, less allowance
for doubtful accounts of $37,495
at March 31, 2000 and
$100,00 at December 31, 1999 2,220 2,379
Prepaid expenses 47 $ 63
-------- --------
Total current assets 33,329 39,720
Property and equipment, net 5,040 4,680
Other assets 142 53
-------- --------
Total assets $ 38,511 $ 44,453
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 745 $ 1,648
Accrued liabilities 599 737
Current portion of long-term debt 340 340
-------- --------
Total current liabilities 1,684 2,725
Long term debt 595 680
Contingencies -- --
Stockholders' equity (deficit):
Preferred stock, $.0001 par value:
Authorized shares -- 7,500,000
Issued and outstanding -- none -- --
Common stock, $.0001 par value:
Authorized shares--50,000,000
Issued and outstanding shares-
21,142,400
at March 31, 2000 and
21,097,400 at
December 31, 1999 2 2
Additional paid-in capital 59,629 59,604
Accumulated deficit (23,399) (18,558)
-------- --------
Total stockholders' equity 36,232 41,048
-------- --------
Total liabilities and $ 38,511 $ 44,453
stockholders equity ======== ========
See accompanying notes.
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ASD SYSTEMS, INC.
STATEMENTS OF OPERATIONS
(000's Omitted, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
Revenues $ 1,621 $ 2,200
Cost of revenues 1,780 1,669
-------- --------
Gross profit (loss) (159) 531
Operating expenses:
Selling, general, and administrative 4,695 1,291
expenses
Depreciation and amortization 464 321
-------- --------
Total operating expenses 5,159 1,612
-------- --------
Operating (loss) (5,318) (1,081)
Interest income (expense), net 477 (38)
-------- --------
Net loss $(4,841) $(1,119)
======== ========
Basic and diluted net loss per share $ (0.23) $ (0.12)
======== =========
Average shares used in computing
basic and 21,104 8,961
diluted net loss per share
See accompanying notes.
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ASD SYSTEMS, INC.
STATEMENTS OF CASH FLOW
(000's Omitted)
(Unaudited)
Three Months Ended
March 31,
-------------------------
2000 1999
------------ ------------
Net cash used in operating activities $(5,332) $ (458)
------- -------
Investing Activities
Purchases of property and equipment (824) (330)
Cash acquired through stock issuances -- 96
-------- -------
Net cash used in investing activities (824) (234)
-------- -------
Financing Activities
Payments on revolving line of credit -- (2,400)
Proceeds from issuances of Common Stock -- 4,068
Conversion of common stock options 45 --
Payments of long-term debt (85) (106)
Other (20) --
-------- -------
Net cash provided by (used in) (60) 1,562
financing activities -------- -------
Net increase (decrease in cash and (6,216) 870
cash equivalents
Cash and cash equivalents at 37,278 --
beginning of year -------- -------
Cash and cash equivalents at end of
quarter $ 31,062 $ 870
======== =======
See accompanying notes.
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ASD SYSTEMS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
1. Basis of Presentation:
The unaudited financial statements included herein reflect
all adjustments, consisting only of normal recurring adjustments,
which in the opinion of management are necessary to fairly state
the company's financial position, results of operations and cash
flows for the periods presented. These financial statements
should be read in conjunction with the company's audited
financial statements included in the company's Form 10-K for the
year ended December 31, 1999 as filed with the Securities and
Exchange Commission. The results of operations for the period
ended March 31, 2000 are not necessarily indicative of the
results to be expected for any subsequent quarter or for the
entire fiscal year ending December 31, 2000. The December 31,
1999 balance sheet was derived from audited financial statements,
but does not include all disclosures required by generally
accepted accounting principles.
2. Computation of Basic and Diluted Net Loss Per Common Share
Three Months Ended
---------------------------
March 31, March 31,
2000 1999
------------- -------------
Net loss $4,841,000 $1,119,000
Weighted average number of shares
outstanding 21,104,000 8,961,000
Basic and diluted loss per share ($.23) ($.12)
3. Contingent Liability
On April 21, 2000, the Original Honey Baked Ham Company of
Georgia, Inc. ("HBH") filed suit against the company to recover
damages for breach of contract related to services performed by
the company for HBH in 1999. The lawsuit seeks compensatory
damages, incidental and consequential damages and other costs,
fees and expenses including attorneys' fees and legal expenses in
excess of $10.0 million. Management is actively exploring a
number of possible counterclaims against HBH. Management denies
plaintiff's allegations and intends to vigorously defend the
lawsuit. Since this claim is at a very early stage, the company
is unable to predict with any certainty what the outcome with
respect to any claim might be, and therefore the company has not
provided a reserve for potential claims, nor has it provided a
reserve against its receivable from HBH.
4. Subsequent Events
On May 12, 2000 the Company announced the launch of a new
technology platform and service offering named Omnigy. Omnigy is
a unique services platform that management believes will meet the
demands of future clients sooner than what was expected from the
continued development of its internal software development
program, known internally as Mercury. In connection with the
introduction of Omnigy, the Company has elected to abandon the
Mercury project. By virtue of the abandonment of Mercury, the
Company anticipates that it will write off approximately
$1,300,000 of capitalized costs related to the Mercury project
during the second quarter of 2000.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the
matters discussed below contain forward-looking statements which
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements
of the company, or industry results, to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. The company
expressly disclaims any obligation to update this information or
publicly release any revision or reflect events or circumstances
after the date of this report. Such factors include among
others: our ability to achieve or sustain profitability; our
limited operating history; the risks associated with the failure
of our systems and services to achieve widespread market
acceptance or meet specific client needs; significant client
concentration; the fact that our client contracts are either
short-term or terminable with minimal notice; systems risks and
uncertainties, including rapid technological change; the risks
related to the possible inability of our system to connect to and
manage a larger number of clients; business conditions in the
fulfillment industry generally; the impact of market competitors
and their service offerings; and such other factors that are more
fully described in the company's Form 10-K for the year ended
December 31, 1999.
The Company
ASD Systems, Inc. is a Texas corporation with principal
executive offices located at 3737 Grader Street, Suite 110,
Garland, Texas 75041. The company's telephone number is
214.348.7200.
Overview
We offer software and service solutions that enable Internet
retailers and direct marketing businesses to outsource their
order management and fulfillment operations. Our systems automate
and integrate in real-time Web sites, call centers, fulfillment
centers and vendors. We have assembled a network of call centers
and fulfillment centers which, at March 31, 2000, consisted of
one company-owned call center, four third-party call centers, one
company-owned fulfillment center and seven third-party
fulfillment centers. Our network can increase or decrease in size
and services offered to meet the specific needs of our clients.
We derive our revenues from systems services, call center
services, fulfillment services and, to a much lesser extent,
other services, consisting of client management services, Web
site related services and consulting services. For the quarter
ended March 31, 2000, the percentage of total revenues by service
category was as follows:
% of Total Revenue for
Three Months Ended
Service Category March 31, 2000
---------------- --------------------------
Systems services 32%
Call center services 40%
Fulfillment services 28%
Other services Less than 1%
------------
TOTAL 100%
============
We typically charge on a per-transaction basis for systems
processing, on a per-minute basis for call center services and on
a per-item basis for fulfillment services. Additional fees are
billed for other services. We price our services based on a
variety of factors including the depth and complexity of the
services provided, the amount of required systems customization,
length of contract and other factors. Our revenues are recognized
as our services are rendered and the majority of our clients are
billed on a weekly basis. Our client contracts can be cancelled
on a 180 or fewer days notice.
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Our expenses are comprised of:
* cost of revenues, which consists primarily of
compensation and related expenses of our call center
and fulfillment center and the variable costs of third-
party call center and fulfillment center services;
* selling, general and administrative, which consists
primarily of compensation and related expenses for our
executive group; our sales and marketing staff; our
client service and administrative personnel and
software development technicians; occupancy costs;
software development costs; marketing programs; other
administrative personnel; and bad debt expense; and
* depreciation and amortization expense.
Results of Operations
Revenues. Our revenues decreased 26% to $1.6 million for
the three months ended March 31, 2000 from $2.2 million for the
three months ended March 31, 1999. The decrease in revenue over
the period was due primarily to a decrease in the number of
clients from 8 at March 31, 1999 to 5 at March 31, 2000. Sears
accounted for 85% of total revenues for the three months ended
March 31, 2000 and 73% of total revenues for the three months
ended March 31, 1999.
Cost of Revenues. Cost of revenues increased 7% to $1.8
million for the three months ended March 31, 2000 from $1.7
million for the three months ended March 31, 1999. The increase
in cost of revenues resulted primarily from the addition
throughout the latter part of 1999 and first quarter of 2000 of
call center, fulfillment center and technical service personnel
to support our anticipated growth. As a percentage of revenues,
cost of revenues was 110% for the three months ended March 31,
2000 and 76% for the three months ended March 31, 1999.
Selling, General and Administrative Expense. For the three
months ended March 31, 2000, our selling, general and
administrative, or SG&A, expense was $4.7 million compared to
$1.3 million for the same period of 1999, an increase of 264%.
Approximately $2.1 million of this increase in total SG&A expense
was associated with the salaries and related benefits of
additional personnel in the executive, financial, sales and
marketing departments necessary to build our infrastructure to
support our anticipated growth as well as to meet the
administrative needs of a public company. In addition,
approximately $600,000 of this increase in total SG&A expense was
associated with increased advertising. SG&A expense increased to
290% of revenues for the three months ended March 31, 2000 from
59% for the three months ended March 31, 1999.
Depreciation and Amortization. For the three months ended
March 31, 2000, depreciation and amortization expense was
approximately $460,000 compared to $320,000 for the same period
of 1999, an increase of 45%. The increase corresponds with the
increase in computer equipment purchased for internal and client
use.
Interest income (expense), net. For the three months ended
March 31, 2000 interest income, net of expense, was approximately
$480,000 compared to approximately $40,000 in net interest
expense for the prior year. The interest income for the three
months ended March 31, 2000 is attributed to investment income on
proceeds from our initial public offering completed in the fourth
quarter of 1999.
Factors Affecting Operating Results
We have experienced significant fluctuations in our results
of operations from quarter to quarter. As a result of these
fluctuations, period-to-period comparison of our operating
results is not necessarily meaningful and should not be relied
upon as an indicator of future performance. We expect our future
operating results to fluctuate. Factors that are likely to cause
these fluctuations include:
* demand for and market acceptance of our order
management and fulfillment systems and services;
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* client retention;
* fluctuations in third-party call center and fulfillment
center costs;
* timing and magnitude of capital expenditures;
* costs relating to the expansion of our operations and
the development and/or acquisition of additional
software applications;
* introduction of new systems and services or
enhancements by us or our competitors;
* the ability to meet the technological demands of our
clients;
* changes in our pricing policies or those of our
competitors;
* economic conditions specific to the order management
and fulfillment industry, as well as generally; and
* the effect of potential strategic acquisitions or
alliances.
As a result of these and other factors, our future operating
results may fall below the expectations of securities analysts
and investors. In this event, the price of our common stock could
decrease, perhaps significantly.
Seasonality
Our revenues and business are seasonal. We expect to
continue to experience seasonal fluctuation of revenues and
operating results in the future which, we believe, will cause
period-to-period comparisons of our results of operations to be
inappropriate as indicators of future performance. Many retail
businesses, including Sears and other clients, sell more products
during the holiday season than in any other portion of the year.
For example, the Sears Wish Book catalog is mailed only twice per
year during the third and fourth calendar quarters. Accordingly,
because we generate the vast majority of our revenue on a per-
transaction basis, we recognize a disproportionate portion of our
annual revenue in the last three months of the year. As a result
of our seasonal business, we also have additional risks in
processing a large volume of transactions in short time periods.
Liquidity and Capital Resources
Since inception in January 1998, we have financed our
operations principally through funds from the private and public
placement of equity securities. We completed our initial public
offering of 5,750,000 shares of common stock in November 1999,
which yielded net proceeds of approximately $41.9 million. Prior
to the initial public offering, we also supplemented our capital
needs with short-term borrowings under a credit facility
maintained with Comerica Bank-Texas. As of March 31, 2000, we had
working capital of approximately $31.7 million.
For the three months ended March 31, 2000, net cash used in
operating activities was approximately $5.3 million compared to
approximately $500,000 for the three months ended March 31, 1999.
Significant uses of cash in operations for the three months ended
March 31, 2000, in addition to our net loss, was cash used to
reduce payables and accrued liabilities.
Our capital expenditures amounted to approximately $820,000
for the three months ended March 31, 2000 and approximately
$330,000 for the three months ended March 31, 1999. For the three
months ended March 31, 2000 capital expenditures included
software development costs as well as the purchase of technical
equipment.
We maintain a $2.0 million revolving line of credit with
Comerica Bank which is secured by our assets. This facility
expires on May 13, 2000. At March 31, 2000 we did not have any
debt outstanding under the revolving
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credit facility. Our credit agreement requires us to comply with
some standard financial covenants such as a minimal amount of
tangible net worth, a minimal quick ratio and a maximum amount of
debt to tangible net worth. We pay a quarterly commitment fee
under the terms of our credit agreement equal to 0.25% of the
daily available borrowings there under.
We are currently negotiating with Comerica Bank to extend
this facility and, alternatively, with other lenders to replace
the current facility. No assurances can be made that we will be
able to successfully extend or replace the existing facility or
that any new facility can be obtained on terms and in an amount
acceptable to the company.
We believe that the proceeds from our initial public
offering closed in November 1999 will be sufficient to meet our
working capital and capital expenditure requirements for at least
the next 12 months. However, the execution of our business plan
will require substantial additional capital to fund our operating
losses, working capital needs, sales and marketing expenses,
lease payments and capital expenditures thereafter. In the event
our plans or assumptions change or prove to be inaccurate we may
be required to seek additional sources of capital. In addition,
although no significant acquisitions were planned or reasonably
likely at the time of filing this report, we may need to seek
additional sources of capital to the extent any materializes
during that period. Sources of additional capital may include
public and private equity and debt financings, sales of
nonstrategic assets and other financing arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
We currently do not engage in commodity futures trading or
hedging activities and do not enter into derivative financial
instrument transactions for trading or other speculative
purposes. We also do not currently engage in transactions in
foreign currencies or in interest rate swap transactions that
could expose us to market risk.
We may be exposed, in the normal course of doing business,
to market risk through changes in interest rates. We currently
minimize such risk by investing our temporary cash primarily in
repurchase obligations collateralized by commercial mortgages. As
a result, we do not believe that we have a material interest rate
risk to manage.
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PART II.
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 21, 2000, the Original Honey Baked Ham Company of
Georgia, Inc. filed a claim against the company in the U.S.
District Court for the Northern District of Georgia, Atlanta
Division (Cause No. 100CV1040), that alleges breach of contract
under the Call Center and System Services Agreement between the
parties. The lawsuit seeks compensatory damages, incidental and
consequential damages and other costs, fees and expenses
including attorneys' fees and legal expenses in excess of $10.0
million. Management of the company denies the plaintiff's
allegations and intends to vigorously defend against the
lawsuit. In addition, management is actively exploring a number
of possible counterclaims against Honey Baked Ham.
The above-mentioned litigation with Honey Baked Ham is at a
very early stage. Consequently, at this time it is not possible
to predict whether the company will incur any liability or to
estimate the damages, or the range of damages, that the company
might incur in connection with such action.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Use of Proceeds
(1) On November 10, 1999, the Securities and Exchange
Commission declared effective the Registration Statement on Form
S-1 (File No. 333-85983) relating to our initial public
offering. Net offering proceeds to us from this offering were
approximately $41,880,000.
(2) Unchanged since originally reported in our Annual
Report on Form 10-K for the year ended December 31, 1999.
(3) Unchanged since originally reported in our Annual
Report on Form 10-K for the year ended December 31, 1999.
(4)(i)-(vi) Unchanged since originally reported in our
Annual Report on Form 10-K for the year ended December 31, 1999.
(vii) From November 10, 1999 (the effective date of the
Registration Statement) to March 31, 2000 (the ending date of
this report), we expended net offering proceeds for the
following uses:
* Construction of plant, building and $ 0
facilities
* Purchase and installation of machinery $ 940,000
and equipment
* Purchase of real estate $ 0
* Acquisition of other businesses $ 0
* Repayment of indebtedness $ 3,490,000
* Working capital $ 6,150,000
* Temporary investments $31,300,000*
All of the payments referenced above were direct or indirect
payments to others.
- -------------------
* Pending final application of the net proceeds of the
offering, we have invested such proceeds primarily in cash
and cash equivalents.
(viii) Material change in the use of proceeds: Not
applicable.
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We have not yet determined the actual use of the proceeds
derived from the offering, and thus cannot estimate the amounts
to be used for each purpose discussed above. The amounts and
timing of these expenditures will vary significantly depending
on a number of factors, including such factors as the amount, if
any, of cash generated by our operations and the market response
to our service offerings. Accordingly, our management will have
broad discretion in the application of the net proceeds. Our
stockholders will not have the opportunity to evaluate the
economic, financial or other information on which we base our
decisions on how to use the proceeds.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
Name. On May 12, 2000, we announced that we will begin
doing business under the name Ascendant Solutions.
Recent Events
Systems Platform and Related Matters. As previously
announced, we have been considering several strategies
concerning our software technology assets to achieve improved
customer service capabilities in our existing market and enable
future entry into potential new markets. As a result, on May 12,
2000, we announced the planned implementation of a new
technology platform and service offering named "Omnigy." The new
platform results from the combination of several licensed
programs and a proprietary framework that together produce a
unique systems offering that we expect to permit us to take
advantage of new and emerging technologies. We believe that
Omnigy will provide a solution capable of meeting or exceeding
industry standards prior to the time that we would have been in
a position to commercially introduce Mercury, the company's
internal software development effort. In connection with the
introduction of Omnigy, we have elected to abandon future
development of Mercury. The combination of these actions is
expected to improve our long-term competitive position; however,
no assurances can be made that we will be successful in
deploying Omnigy in the future.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.17 Offer Letter, dated
December 13, 1999, by and between ASD
Systems, Inc. and Gregg L. Young.
10.18 Amendment No. 1 to Offer
Letter, dated January 11, 2000, by and
between ASD Systems, Inc. and Gregg L.
Young.
10.19 Pledge Agreement, dated
January 11, 2000, by and between ASD
Systems, Inc. and Gregg L. Young.
10.20 $80,000 Promissory Note,
dated January 11, 2000, by Gregg L. Young in
favor of ASD Systems, Inc.
10.21 $65,000 Promissory Note,
dated January 11, 2000, by Gregg L. Young in
favor of ASD Systems, Inc.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Date: May 12, 2000 ASD SYSTEMS, INC.
By: /s/ DAVID E. BOWE
-----------------------------
David E. Bowe
President and Chief Financial
Officer
EXHIBIT INDEX
No. Description
------- -----------
10.17 Offer Letter, dated December 13, 1999,
by and between ASD Systems, Inc. and Gregg L.
Young.
10.18 Amendment No. 1 to Offer Letter, dated
January 11, 2000, by and between ASD Systems,
Inc. and Gregg L. Young.
10.19 Pledge Agreement, dated January 11,
2000, by and between ASD Systems, Inc. and Gregg
L. Young.
10.20 $80,000 Promissory Note, dated
January 11, 2000, by Gregg L. Young in favor of
ASD Systems, Inc.
10.21 $65,000 Promissory Note, dated
January 11, 2000, by Gregg L. Young in favor of
ASD Systems, Inc.
27.1 Financial Data Schedule
13
EXHIBIT 10.17
December 13, 1999
Mr. Gregg L. Young
4827 Sandestin Drive
Dallas, TX 75287
Dear Gregg,
This letter will serve as a confirmation of our discussions to
employ you as a full time employee. Your title will be Chief
Information Officer and you will be responsible to assist the
executive management team to develop and implement strategy to
build ASD Systems. You will manage a group of technical sales
support people that will help the sales force sign on new
business. You will also be responsible to evaluate buy vs. Build
decisions for new technology products and services. You will not
be involved in day to day call center, systems or fulfillment
operations of the Company, so as to provide you with the time to
assist in developing new business, new partnerships and evaluate
new technologies. This is a key position in our Company and you
will need to be committed to the building of our business.
Your reimbursement will be:
* $160,000 in salary
* $15,000 sign on bonus 30 days after staring at ASD
* $10,000 bonus to be paid as soon as June 30, 2000 numbers
are released if ASD hits revenues o f$7.5 million for the
first six months of 2000.
* $50,000 bonus to be paid based on each of December 31,
2000, 2001, and 2002 financials if ASD hits annual revenue
of $30.0 million, $60.0 million and $100.0 million
respectively.
* $80,000 tax free bonus paid December 31, 2003 to relieve
loan advanced to purchase Dallas home.
* Loan of $80,000 to reimburse Client Logic for down payment
of Dallas home. If you terminate employment for any reason
prior to December 31, 2003, you will owe ASD this amount.
ASD will need a second lien on the Dallas house as
collateral or a legal document to describe this.
* To reimburse you for the Buffalo house, ASD will offer you
up to $65,000 house reimbursement expenses. ASD will pay
$3,000 per month to cover our of pocket expenses included
in the above $65,000. The house cost is approximately
$322,000 and is expected to sell for $285,000 less $18,000
real estate expenses. If the selling price is higher than
$285,000, the $65,000 will be reduced proportionately.
* The Company will give you 40,000 stock options described in
our Long Term Incentive Plan. These vest over 5 years and
will be granted at the fair market value on the first day
of your employment.
* The Company will also award you an additional 20,000 stock
option for each of the next five years vesting over 2 years
(1/2 after one year and 1/2 after the second year). These
options are contingent on the Company meeting its projected
revenue projections of $30 million for year 2000, $60
million for 2001, $100 million for year 2002 and $150
million for 2003. Any merger or acquisitions will not be
taken into account for these projections vs. Actual
comparisons.
Once you have accepted this employment offer, I will forward
this offer to the ASD Systems Board of Directors for their
approval.
<PAGE>
We are excited to have you join ASD and look forward to working
with you.
Sincerely,
/s/ Norm Charney
Norm Charney
President and CEO
NC:jc
EXHIBIT 10.18
[ASD LETTERHEAD]
January 11, 2000
Mr. Gregg L. Young
4827 Sandestin Drive
Dallas, Texas 75282
Dear Gregg:
This letter serves to clarify certain aspects of the offer
of employment made to you in my letter dated December 13, 1999
(the "Offer Letter"). As such, this letter shall be deemed to
supplement, amend and clarify the Offer Letter for all purposes
and, to the extent there is any inconsistency between this letter
and the Offer Letter, this letter shall control.
1. Until June 30, 2001, you agree that your employment
will be "at-will." Accordingly, you agree that until
such date ASD Systems, Inc. (the "Company") has the
absolute and continuing right to terminate you at any
time, with or without cause and whether or not you have
performed under the terms of the Offer Letter or
otherwise. On or prior to June 30, 2001 we will
negotiate in good faith the terms of your continuing
employment with the Company based on your performance
with the Company to that date.
2. We have agreed not to take a second lien on your home
as collateral for the $80,000 loan referenced in the
Offer Letter at this time; however, you have agreed
that if at any time in the future our then existing
collateral is insufficient to secure any obligations
you may have to the Company, we may at that time demand
such a second lien whereupon you hereby agree to take
such further action and execute such further documents
as we deem necessary to document and perfect such
second lien.
3. You have agreed to provide us with a security interest
in any shares of common stock of the Company you may
hereinafter hold or may hereinafter have the right to
acquire upon conversion or exercise of any right,
including, but not limited to, any right under a stock
option granted to you by the Company.
4. We have agreed that you will execute a promissory note
to the Company for $80,000 (the "80K Note") which will
be payable on the earlier of:
* December 31, 2003; or
* the date on which you cease to be employed by the
Company for any reason.
However, we hereby agree that we will pay you a bonus
on the date that the 80K Note is due unless your
employment is terminated "for cause." We have agreed
that "for cause" means: the Chief Executive Officer of
the Company has reasonably determined that you have:
* been habitually negligent or substandard in the
performance of your duties;
* breached or failed to perform properly any
reasonable and proper duty or obligation imposed
upon you;
* breached any fiduciary duty owed to the Company;
* pled guilty or no contest or been convicted of a
felony crime or a crime involving moral turpitude;
* committed any dishonest, unethical, fraudulent,
disloyal or felonious act in respect of your
duties to the Company;
* engaged in any conduct significantly detrimental
to the Company or its reputation; or
* you have resigned from the Company for any reason
whatsoever other than as a result of a breach of
an agreement by the Company, including the
agreement to pay you the salary and bonuses
described.
The bonus payable under this paragraph shall be the
amount required to fully repay the 80K Note (which such
amount shall be sufficient to repay all unpaid
principal and accrued interest thereon), together with
such amount as is necessary to pay any applicable
federal income tax liability incurred as a result of
such bonus.
5. We have also agreed that you will execute a promissory
note to the Company for $65,000 (or such lesser amount
as is advanced to you under the terms of the Offer
Letter) (the "65K Note") which will be payable on the
earlier of:
* June 30, 2001; or
* the date on which you cease to be employed by the
Company for any reason.
However, we hereby agree that we will pay you a bonus
on the date that the 65K Note is due unless your
employment is terminated "for cause." We agree that
"for cause" for this purpose shall have an identical
meaning as that set forth above.
The bonus payable under this paragraph shall be equal
to the amount required to fully repay the 65K Note
(which such amount shall be sufficient to repay all
unpaid principal and accrued interest thereon),
together with such amount as is necessary to pay any
applicable federal income tax liability incurred as a
result of such bonus.
6. In no event shall the arrangements set forth in this
letter be deemed to be an employment agreement or
otherwise evidence an obligation of the Company, in any
way whatsoever, to employ you in any capacity for any
period of time.
To the extent this letter accurately reflects our
understanding regarding the matters noted herein, please execute
where indicated and return the original to me for my files.
Very truly yours,
/s/ Norm Charney
Norm Charney
Chief Executive Officer and
President
AGREED AND ACKNOWLEDGED
THE DATE AND YEAR SET FORTH
ABOVE
/s/ Gregg L. Young
- ----------------------
Gregg L. Young
EXHIBIT 10.19
PLEDGE AGREEMENT
----------------
THIS PLEDGE AGREEMENT ("Agreement") is made as of the 11th
day of January 2000, by GREGG L. YOUNG (hereinafter called
"Pledgor"), in favor of ASD SYSTEMS, INC. ("Lender"). Pledgor
hereby agrees with Lender as follows:
A. Definitions. As used in this Agreement, the following terms
shall have the meanings indicated below:
(a) The term "Borrower" shall mean Pledgor.
(b) The term "Code" shall mean the Uniform Commercial
Code as in effect in the State of Texas on the date of this
Agreement or as it may hereafter be amended from time to
time.
(c) The term "Collateral" shall mean all property
specifically described on Schedule "A" attached hereto and
made a part hereof. The term Collateral, as used herein,
shall also include (i) all certificates, instruments and/or
other documents evidencing the foregoing, (ii) all renewals,
replacements and substitutions of all of the foregoing, and
(iii) all PRODUCTS and PROCEEDS of all of the foregoing.
The designation of proceeds does not authorize Pledgor to
sell, transfer or otherwise convey any of the foregoing
property. The delivery at any time by Pledgor to Secured
Party of any property as a pledge to secure payment or
performance of any indebtedness or obligation whatsoever
shall also constitute a pledge of such property as
Collateral hereunder.
(d) The term "Indebtedness" shall mean (i) all
indebtedness, obligations and liabilities of Borrower to
Secured Party pursuant to that certain promissory note dated
January 11, 2000 in the principal amount of $80,000, (ii)
all indebtedness, obligations and liabilities of Borrower to
Secured Party pursuant to that certain promissory note dated
January 11, 2000 in the principal amount of up to $65,000,
(iii) all accrued but unpaid interest on any of the
indebtedness described in (i) and (ii) above, (iv) all
obligations owing to Secured Party under any documents
evidencing, securing, governing and/or pertaining to all or
any part of the indebtedness described in (i), (ii) and
(iii) above, (v) all costs and expenses incurred by Secured
Party in connection with the collection and administration
of all or any part of the indebtedness and obligations
described in (i), (ii), (iii) and (iv) above or the
protection or preservation of, or realization upon, the
collateral securing all or any part of such indebtedness and
obligations, including without limitation all reasonable
attorneys' fees, and (vi) all renewals, extensions,
modifications and rearrangements of the indebtedness and
obligations described in (i), (ii), (iii), (iv) and (v)
above.
(e) The term "Loan Documents" shall mean all
instruments and documents evidencing, securing, governing,
guaranteeing and/or pertaining to the Indebtedness.
(f) The term "Secured Party" shall mean Lender, its
successors and assigns, including without limitation, any
party to whom Lender, or its successors or assigns, may
assign its rights and interests under this Agreement.
All words and phrases used herein which are
expressly defined in Section 1.201, Chapter 8 or Chapter 9
of the Code shall have the meaning provided for therein.
Other words and phrases defined elsewhere in the Code shall
have the meaning specified therein except to the extent such
meaning is inconsistent with a definition in Section 1.201,
Chapter 8 or Chapter 9 of the Code.
<PAGE>
2. SECURITY INTEREST. As security for the Indebtedness,
Pledgor, for value received, hereby grants to Secured Party a
continuing security interest in the Collateral.
3. MAINTENANCE OF COLLATERAL. Other than the exercise of
reasonable care to assure the safe custody of any Collateral in
Secured Party's possession from time to time, Secured Party does
not have any obligation, duty or responsibility with respect to
the Collateral. Without limiting the generality of the
foregoing, Secured Party shall not have any obligation, duty or
responsibility to do any of the following: (a) ascertain any
maturities, calls, conversions, exchanges, offers, tenders or
similar matters relating to the Collateral or informing Pledgor
with respect to any such matters; (b) fix, preserve or exercise
any right, privilege or option (whether conversion, redemption or
otherwise) with respect to the Collateral unless (i) Pledgor
makes written demand to Secured Party to do so, (ii) such written
demand is received by Secured Party in sufficient time to permit
Secured Party to take the action demanded in the ordinary course
of its business, and (iii) Pledgor provides additional
collateral, acceptable to Secured Party in its sole discretion;
(c) collect any amounts payable in respect of the Collateral
(Secured Party being liable to account to Pledgor only for what
Secured Party may actually receive or collect thereon); (d) sell
all or any portion of the Collateral to avoid market loss; (e)
sell all or any portion of the Collateral (or exercise any option
granted pursuant to the terms of the Collateral) unless and until
(i) Pledgor makes written demand upon Secured Party to sell the
Collateral, and (ii) Pledgor provides additional collateral,
acceptable to Secured Party in its sole discretion; or (f) hold
the Collateral for or on behalf of any party other than Pledgor.
4. REPRESENTATIONS AND WARRANTIES. Pledgor hereby
represents and warrants the following to Secured Party:
(a) Enforceability. This Agreement and the other Loan
Documents constitute legal, valid and binding obligations of
Pledgor, enforceable in accordance with their respective
terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the
enforcement of creditors' rights and except to the extent
specific remedies may generally be limited by equitable
principles.
(b) Ownership and Liens. Pledgor has good and
marketable title to the Collateral free and clear of all
liens, security interests, encumbrances or adverse claims,
except for the security interest created by this Agreement.
Pledgor has not executed any other security agreement
currently affecting the Collateral and no financing
statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording
office except as may have been executed or filed in favor of
Secured Party.
(c) Security Interest. Pledgor has and will have at
all times full right, power and authority to grant a
security interest in the Collateral to Secured Party in the
manner provided herein, free and clear of any lien, security
interest or other charge or encumbrance. This Agreement
creates a legal, valid and binding security interest in
favor of Secured Party in the Collateral.
(d) Location. Pledgor's residence is located at its
address set forth on the signature page hereof.
(e) Solvency of Pledgor. As of the date hereof, and
after giving effect to this Agreement and the completion of
all other transactions contemplated by Pledgor at the time
of the execution of this Agreement, (i) Pledgor is and will
be solvent, (ii) the fair saleable value of Pledgor's assets
exceeds and will continue to exceed Pledgor's liabilities
(both fixed and contingent), and (iii) Pledgor is paying and
will continue to be able to pay his debts as they mature.
5. AFFIRMATIVE COVENANTS. Pledgor will comply with the
covenants contained in this Section at all times during the
period of time this Agreement is effective unless Secured Party
shall otherwise consent in writing.
(a) Ownership and Liens. Pledgor will maintain good
and marketable title to all Collateral free and clear of all
liens, security interests, encumbrances or adverse claims,
except for the security
- -2-
<PAGE>
interest created by this Agreement and the security
interests and other encumbrances expressly permitted by the
other Loan Documents. Pledgor will not permit any dispute,
right of setoff, counterclaim or defense to exist with
respect to all or any part of the Collateral. Pledgor will
cause any financing statement or other security instrument
with respect to the Collateral to be terminated, except as
may exist or as may have been filed in favor of Secured
Party. Pledgor will defend at its expense Secured Party's
right, title and security interest in and to the Collateral
against the claims of any third party.
(b) Adverse Claim. Pledgor covenants and agrees to
promptly notify Secured Party of any claim, action or
proceeding affecting title to the Collateral, or any part
thereof, or the security interest created hereunder and, at
Pledgor's expense, defend Secured Party's security interest
in the Collateral against the claims of any third party.
Pledgor also covenants and agrees to promptly deliver to
Secured Party a copy of all written notices received by
Pledgor with respect to the Collateral.
(c) Delivery of Instruments and/or Certificates.
Contemporaneously herewith, Pledgor covenants and agrees to
deliver to Secured Party any certificates, documents or
instruments representing or evidencing the Collateral, with
Pledgor's endorsement thereon and/or accompanied by proper
instruments of transfer, assignment, or exercise (in the
case of options to purchase stock) duly executed in blank.
(d) Further Assurances. Pledgor will contemporaneously
with the execution hereof and from time to time thereafter
at his expense promptly execute and deliver all further
instruments and documents and take all further action
necessary or appropriate or that Secured Party may request
in order (i) to perfect and protect the security interest
created or purported to be created hereby and the first
priority of such security interest, (ii) to enable Secured
Party to exercise and enforce its rights and remedies
hereunder in respect of the Collateral, and (iii) to
otherwise effect the purposes of this Agreement, including
without limitation executing and filing any financing or
continuation statements, or any amendments thereto. Pledgor
further agrees to execute such additional documents as
Lender may request to grant a security interest in
additional collateral to the extent necessary to reasonably
secure Pledgor's obligation to make payment on the
Indebtedness.
6. NEGATIVE COVENANTS. Pledgor will comply with the
covenants contained in this Section at all times during the
period of time this Agreement is effective, unless Secured Party
shall otherwise consent in writing.
(a) Transfer or Encumbrance. Pledgor will not (i)
sell, assign (by operation of law or otherwise) or transfer
Pledgor's rights in any of the Collateral, (ii) grant a lien
or security interest in or execute, file or record any
financing statement or other security instrument with
respect to the Collateral to any party other than Secured
Party, or (iii) deliver actual or constructive possession of
any certificate, instrument or document evidencing and/or
representing any of the Collateral to any party other than
Secured Party.
(b) Restrictions on Securities. Pledgor will not
enter into any agreement creating, or otherwise permit to
exist, any restriction or condition upon the transfer,
voting or control of any securities pledged as Collateral,
except as consented to in writing by Secured Party.
7. RIGHTS OF SECURED PARTY. Secured Party shall have the
rights contained in this Section at all times during the period
of time this Agreement is effective.
(a) Power of Attorney. Solely for purposes of this
Agreement Pledgor hereby irrevocably appoints Secured Party
as Pledgor's attorney-in-fact, such power of attorney being
coupled with an interest, with full authority in the place
and stead of Pledgor and in the name of Pledgor or
otherwise, to take any action and to execute any instrument
which Secured Party may from time to time in Secured Party's
discretion deem necessary or appropriate to accomplish the
purposes of this Agreement, including without limitation,
the following action: (i) transfer any securities,
instruments, documents or certificates
- -3-
<PAGE>
pledged as Collateral in the name of Secured Party or its
nominee; (ii) use any interest, premium or principal
payments, conversion or redemption proceeds or other cash
proceeds received in connection with any Collateral to
reduce any of the Indebtedness; (iii) exchange any of the
securities pledged as Collateral for any other property upon
any merger, consolidation, reorganization, recapitalization
or other readjustment of the issuer thereof, and, in
connection therewith, to deposit and deliver any and all of
such securities with any committee, depository, transfer
agent, registrar or other designated agent upon such terms
and conditions as Secured Party may deem necessary or
appropriate; (iv) exercise or comply with any conversion,
exchange, redemption, subscription or any other right,
privilege or option pertaining to any securities pledged as
Collateral, including, without limitation, exercising
Pledgor's stock options to purchase Lender's stock;
provided, however, except as provided herein, Secured Party
shall not have a duty to exercise or comply with any such
right, privilege or option (whether conversion, redemption
or otherwise) and shall not be responsible for any delay or
failure to do so; and (v) file any claims or take any action
or institute any proceedings which Secured Party may deem
necessary or appropriate for the collection and/or
preservation of the Collateral or otherwise to enforce the
rights of Secured Party with respect to the Collateral.
(b) Performance by Secured Party. If Pledgor fails to
perform any agreement or obligation provided herein, Secured
Party may itself perform, or cause performance of, such
agreement or obligation, and the expenses of Secured Party
incurred in connection therewith shall be a part of the
Indebtedness, secured by the Collateral and payable by
Pledgor on demand.
Notwithstanding any other provision herein to the
contrary, Secured Party does not have any duty to exercise
or continue to exercise any of the foregoing rights and
shall not be responsible for any failure to do so or for any
delay in doing so.
8. EVENTS OF DEFAULT. Each of the following constitutes
an "Event of Default" under this Agreement:
(a) Failure to Pay Indebtedness. The failure, refusal
or neglect of Borrower to make any payment of principal or
interest on the Indebtedness, or any portion thereof, as the
same shall become due and payable; or
(b) Non-Performance of Covenants. The failure of
Borrower to timely and properly observe, keep or perform any
covenant, agreement, warranty or condition required herein
or in any of the other Loan Documents; or
(c) Default Under other Loan Documents. The
occurrence of an event of default under any of the other
Loan Documents.
(d) False Representation. Any representation
contained herein or in any of the other Loan Documents made
by Borrower is false or misleading in any material respect;
or
(e) Default to Third Party. The occurrence of any
event which permits the acceleration of the maturity of any
indebtedness owing by Borrower to any third party under any
agreement or undertaking; or
(f) Bankruptcy or Insolvency. If Borrower: (i)
becomes insolvent, or makes a transfer in fraud of
creditors, or makes an assignment for the benefit of
creditors, or admits in writing his inability to pay his
debts as they become due; (ii) generally is not paying his
debts as such debts become due; (iii) has a receiver,
trustee or custodian appointed for, or take possession of,
all or substantially all of the assets of such party or any
of the Collateral, either in a proceeding brought by such
party or in a proceeding brought against such party and such
appointment is not discharged or such possession is not
terminated within sixty
- -4-
<PAGE>
(60) days after the effective date thereof or such party
consents to or acquiesces in such appointment or possession;
(iv) files a petition for relief under the United States
Bankruptcy Code or any other present or future federal or
state insolvency, bankruptcy or similar laws (all of the
foregoing hereinafter collectively called "Applicable
Bankruptcy Law") or an involuntary petition for relief is
filed against such party under any Applicable Bankruptcy Law
and such involuntary petition is not dismissed within sixty
(60) days after the filing thereof, or an order for relief
naming such party is entered under any Applicable Bankruptcy
Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter
existing is requested or consented to by such party; (v)
fails to have discharged within a period of sixty (60) days
any attachment, sequestration or similar writ levied upon
any property of such party; or (vi) fails to pay within
thirty (30) days any final money judgment against such
party; or
(g) Action by Other Lienholder. The holder of any
lien or security interest on any of the assets of Pledgor,
including without limitation, the Collateral (without hereby
implying the consent of Secured Party to the existence or
creation of any such lien or security interest on the
Collateral), declares a default thereunder or institutes
foreclosure or other proceedings for the enforcement of its
remedies thereunder; or
(h) Liquidation, Death and Related Events. The death
or legal incapacity of any Pledgor.
9. REMEDIES AND RELATED RIGHTS. If an Event of Default
shall have occurred, and without limiting any other rights and
remedies provided herein, under any of the other Loan Documents
or otherwise available to Secured Party, Secured Party may
exercise one or more of the rights and remedies provided in this
Section.
(a) Remedies. Secured Party may from time to time at
its discretion, without limitation and without notice except
as expressly provided in any of the Loan Documents:
(i) exercise in respect of the Collateral
all the rights and remedies of a secured party under
the Code (whether or not the Code applies to the
affected Collateral);
(ii) reduce its claim to judgment or
foreclose or otherwise enforce, in whole or in part,
the security interest granted hereunder by any
available judicial procedure;
(iii) sell or otherwise dispose of, at its
office, on the premises of Pledgor or elsewhere, the
Collateral, as a unit or in parcels, by public or
private proceedings, and by way of one or more
contracts (it being agreed that the sale or other
disposition of any part of the Collateral shall not
exhaust Secured Party's power of sale, but sales or
other dispositions may be made from time to time until
all of the Collateral has been sold or disposed of or
until the Indebtedness has been paid and performed in
full), and at any such sale or other disposition it
shall not be necessary to exhibit any of the
Collateral;
(iv) buy the Collateral, or any portion
thereof, at any public sale;
(v) buy the Collateral, or any portion
thereof, at any private sale if the Collateral is of a
type customarily sold in a recognized market or is of a
type which is the subject of widely distributed
standard price quotations;
(vi) apply for the appointment of a receiver
for the Collateral, and Pledgor hereby consents to any
such appointment; and
(vii) at its option, retain the Collateral in
satisfaction of the Indebtedness whenever the
circumstances are such that Secured Party is entitled
to do so under the Code or otherwise.
- -5-
<PAGE>
Pledgor agrees that in the event Pledgor is entitled to
receive any notice under the Uniform Commercial Code, as it
exists in the state governing any such notice, of the sale or
other disposition of any Collateral, reasonable notice shall be
deemed given when such notice is deposited in a depository
receptacle under the care and custody of the United States Postal
Service, postage prepaid, at Pledgor's address set forth on the
signature page hereof, five (5) days prior to the date of any
public sale, or after which a private sale, of any of such
Collateral is to be held. Secured Party shall not be obligated
to make any sale of Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) Private Sale of Securities. Pledgor recognizes
that Secured Party may be unable to effect a public sale of
all or any part of the securities pledged as Collateral
because of restrictions in applicable federal and state
securities laws and that Secured Party may, therefore,
determine to make one or more private sales of any such
securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such
securities for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor
acknowledges that each any such private sale may be at
prices and other terms less favorable then what might have
been obtained at a public sale and, notwithstanding the
foregoing, agrees that each such private sale shall be
deemed to have been made in a commercially reasonable manner
and that Secured Party shall have no obligation to delay the
sale of any such securities for the period of time necessary
to permit the issuer to register such securities for public
sale under any federal or state securities laws. Pledgor
further acknowledges and agrees that any offer to sell such
securities which has been made privately in the manner
described above to not less than five (5) bona fide offerees
shall be deemed to involve a "public sale" for the purposes
of Section 9.504(c) of the Code, notwithstanding that such
sale may not constitute a "public offering" under any
federal or state securities laws and that Secured Party may,
in such event, bid for the purchase of such securities.
(c) Application of Proceeds. If any Event of Default
shall have occurred, Secured Party may at its discretion
apply or use any cash held by Secured Party as Collateral,
and any cash proceeds received by Secured Party in respect
of any sale or other disposition of, collection from, or
other realization upon, all or any part of the Collateral as
follows in such order and manner as Secured Party may elect:
(i) to the repayment or reimbursement of the
reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses)
incurred by Secured Party in connection with (A) the
administration of the Loan Documents, (B) the custody,
preservation, use or operation of, or the sale of,
collection from, or other realization upon, the
Collateral, and (C) the exercise or enforcement of any
of the rights and remedies of Secured Party hereunder;
(ii) to the payment or other satisfaction of
any liens and other encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as
Collateral;
(v) to the payment of any other amounts
required by applicable law (including without
limitation, Section 9.504(a)(3) of the Code or any
other applicable statutory provision); and
(vi) by delivery to Pledgor or any other
party lawfully entitled to receive such cash or
proceeds whether by direction of a court of competent
jurisdiction or otherwise.
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<PAGE>
(d) Deficiency. In the event that the proceeds of any
sale of, collection from, or other realization upon, all or
any part of the Collateral by Secured Party are insufficient
to pay all amounts to which Secured Party is legally
entitled, Borrower shall be liable for the deficiency,
together with interest thereon as provided in the Loan
Documents.
(e) Non-Judicial Remedies. In granting to Secured
Party the power to enforce its rights hereunder without
prior judicial process or judicial hearing, Pledgor
expressly waives, renounces and knowingly relinquishes any
legal right which might otherwise require Secured Party to
enforce its rights by judicial process. Pledgor recognizes
and concedes that non-judicial remedies are consistent with
the usage of trade, are responsive to commercial necessity
and are the result of a bargain at arm's length. Nothing
herein is intended to prevent Secured Party or Pledgor from
resorting to judicial process at either party's option.
(f) Other Recourse. Pledgor waives any right to
require Secured Party to proceed against any third party,
exhaust any Collateral or other security for the
Indebtedness, or to have any third party joined with Pledgor
in any suit arising out of the Indebtedness or any of the
Loan Documents, or pursue any other remedy available to
Secured Party. Pledgor further waives any and all notice of
acceptance of this Agreement and of the creation,
modification, rearrangement, renewal or extension of the
Indebtedness. Pledgor further waives any defense arising by
reason of any disability or other defense of any third party
or by reason of the cessation from any cause whatsoever of
the liability of any third party. Until all of the
Indebtedness shall have been paid in full, Pledgor shall
have no right of subrogation and Pledgor waives the right to
enforce any remedy which Secured Party has or may hereafter
have against any third party, and waives any benefit of and
any right to participate in any other security whatsoever
now or hereafter held by Secured Party. Pledgor authorizes
Secured Party, and without notice or demand and without any
reservation of rights against Pledgor and without affecting
Pledgor's liability hereunder or on the Indebtedness, to (i)
take or hold any other property of any type from any third
party as security for the Indebtedness, and exchange,
enforce, waive and release any or all of such other
property, (ii) apply such other property and direct the
order or manner of sale thereof as Secured Party may in its
discretion determine, (iii) renew, extend, accelerate,
modify, compromise, settle or release any of the
Indebtedness or other security for the Indebtedness, (iv)
waive, enforce or modify any of the provisions of any of the
Loan Documents executed by any third party, and (v) release
or substitute any third party.
(g) Voting Rights. Upon the occurrence of an Event of
Default, Pledgor will not exercise any voting rights with
respect to securities pledged as Collateral. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-
fact (such power of attorney being coupled with an interest)
and proxy to exercise any voting rights with respect to
Pledgor's securities pledged as Collateral upon the
occurrence of an Event of Default.
10. INDEMNITY. Pledgor hereby indemnifies and agrees to
hold harmless Secured Party, and its officers, directors,
employees, agents and representatives (each an "Indemnified
Person") from and against any and all liabilities, obligations,
claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature
(collectively, the "Claims") which may be imposed on, incurred
by, or asserted against, any Indemnified Person arising in
connection with the Loan Documents, the Indebtedness or the
Collateral (including without limitation, the enforcement of the
Loan Documents and the defense of any Indemnified Person's
actions and/or inactions in connection with the Loan Documents).
WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH
INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS WHICH IN WHOLE OR
IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH
AND/OR ANY OTHER INDEMNIFIED PERSON, except to the limited extent
the Claims against an Indemnified Person are proximately caused
by Such Indemnified Person's gross negligence or willful
misconduct. If Pledgor or any third party ever alleges such
gross negligence or willful misconduct by any Indemnified Person,
the indemnification provided for in this Section shall
nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent
jurisdiction enters a final judgment as
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<PAGE>
to the extent and effect of the alleged gross negligence or
willful misconduct. The indemnification provided for in this
Section shall survive the termination of this Agreement and shall
extend and continue to benefit each individual or entity who is
or has at any time been an Indemnified Person hereunder.
11. MISCELLANEOUS.
(a) Entire Agreement. This Agreement contains the
entire agreement of Secured Party and Pledgor with respect
to the Collateral. If the parties hereto are parties to any
prior agreement, either written or oral, relating to the
Collateral, the terms of this Agreement shall amend and
supersede the terms of such prior agreements as to
transactions on or after the effective date of this
Agreement, but all security agreements, financing
statements, guaranties, other contracts and notices for the
benefit of Secured Party shall continue in full force and
effect to secure the Indebtedness unless Secured Party
specifically releases its rights thereunder by separate
release.
(b) Amendment. No modification, consent or amendment
of any provision of this Agreement or any of the other Loan
Documents shall be valid or effective unless the same is in
writing and signed by the party against whom it is sought to
be enforced.
(c) Actions by Secured Party. The lien, security
interest and other security rights of Secured Party
hereunder shall not be impaired by (i) any renewal,
extension, increase or modification with respect to the
Indebtedness, (ii) any surrender, compromise, release,
renewal, extension, exchange or substitution which Secured
Party may grant with respect to the Collateral, or (iii) any
release or indulgence granted to any endorser, guarantor or
surety of the Indebtedness. The taking of additional
security by Secured Party shall not release or impair the
lien, security interest or other security rights of Secured
Party hereunder or affect the obligations of Pledgor
hereunder.
(d) Waiver by Secured Party. Secured Party may waive
any Event of Default without waiving any other prior or
subsequent Event of Default. Secured Party may remedy any
default without waiving the Event of Default remedied.
Neither the failure by Secured Party to exercise, nor the
delay by Secured Party in exercising, any right or remedy
upon any Event of Default shall be construed as a waiver of
such Event of Default or as a waiver of the right to
exercise any such right or remedy at a later date. No
single or partial exercise by Secured Party of any right or
remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right
or remedy hereunder may be exercised at any time. No waiver
of any provision hereof or consent to any departure by
Pledgor therefrom shall be effective unless the same shall
be in writing and signed by Secured Party and then such
waiver or consent shall be effective only in the specific
instances, for the purpose for which given and to the extent
therein specified. No notice to or demand on Pledgor in any
case shall of itself entitle Pledgor to any other or further
notice or demand in similar or other circumstances.
(e) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT
PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF
THE SECURITY INTEREST GRANTED HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF TEXAS.
(f) Venue. This Agreement has been entered into in
the county in Texas where Lender's address for notice
purposes is located, and it shall be performable for all
purposes in such county. Courts within the State of Texas
shall have jurisdiction over any and all disputes arising
under or pertaining to this Agreement and venue for any such
disputes shall be in the county or judicial district where
this Agreement has been executed and delivered.
- -8-
<PAGE>
(g) Severability. If any provision of this Agreement
is held by a court of competent jurisdiction to be illegal,
invalid or unenforceable under present or future laws, such
provision shall be fully severable, shall not impair or
invalidate the remainder of this Agreement and the effect
thereof shall be confined to the provision held to be
illegal, invalid or unenforceable.
(h) No Obligation. Nothing contained herein shall be
construed as an obligation on the part of Secured Party to
extend or continue to extend credit to Borrower.
(i) Notices. All notices, requests, demands or other
communications required or permitted to be given pursuant to
this Agreement shall be in writing and given by (i) personal
delivery, (ii) expedited delivery service with proof of
delivery, or (iii) United States mail, postage prepaid,
registered or certified mail, return receipt requested, sent
to the intended addressee at the address set forth on the
signature page hereof or to such different address as the
addressee shall have designated by written notice sent
pursuant to the terms hereof and shall be deemed to have
been received either, in the case of personal delivery, at
the time of personal delivery, in the case of expedited
delivery service, as of the date of first attempted delivery
at the address and in the manner provided herein, or in the
case of mail, upon deposit in a depository receptacle under
the care and custody of the United States Postal Service.
Either party shall have the right to change its address for
notice hereunder to any other location within the
continental United States by notice to the other party of
such new address at least thirty (30) days prior to the
effective date of such new address.
(j) Binding Effect and Assignment. This Agreement (i)
creates a continuing security interest in the Collateral,
(ii) shall be binding on Pledgor and the heirs, executors,
administrators, personal representatives, successors and
assigns of Pledgor, and (iii) shall inure to the benefit of
Secured Party and its successors and assigns. Without
limiting the generality of the foregoing, Secured Party may
pledge, assign or otherwise transfer the Indebtedness and
its rights under this Agreement and any of the other Loan
Documents to any other party. Pledgor's rights and
obligations hereunder may not be assigned or otherwise
transferred without the prior written consent of Secured
Party.
(k) Termination. Upon (i) the satisfaction in full of
the Indebtedness, and (ii) written release delivered by
Secured Party to Pledgor, this Agreement and the security
interests created hereby shall terminate. Upon termination
of this Agreement and Pledgor's written request, Secured
Party will, at Pledgor's sole cost and expense, return to
Pledgor such of the Collateral as shall not have been sold
or otherwise disposed of or applied pursuant to the terms
hereof and execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence such
termination.
(l) Cumulative Rights. All rights and remedies of
Secured Party hereunder are cumulative of each other and of
every other right or remedy which Secured Party may
otherwise have at law or in equity or under any of the other
Loan Documents, and the exercise of one or more of such
rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of any other rights or
remedies.
(m) Gender and Number. Within this Agreement, words
of any gender shall be held and construed to include the
other gender, and words in the singular number shall be held
and construed to include the plural and words in the plural
number shall be held and construed to include the singular,
unless in each instance the context requires otherwise.
(n) Descriptive Headings. The headings in this
Agreement are for convenience only and shall in no way
enlarge, limit or define the scope or meaning of the various
and several provisions hereof.
- -9-
<PAGE>
EXECUTED as of the date first written above.
Pledgor's Address: PLEDGOR:
4827 Sandestin Drive /s/ Gregg L. Young
Dallas, Texas 75282 -------------------------
Gregg L. Young
Secured Party's Address:
ASD SYSTEMS, INC.
3737 Grader Street, Suite 110
Garland, Texas 75041
-10-
<PAGE>
SCHEDULE "A"
TO
PLEDGE AGREEMENT
DATED JANUARY 11, 2000
BY AND BETWEEN
ASD SYSTEMS, INC.
AND
GREGG L. YOUNG
The following property is a part of the Collateral as defined in
Subsection 1(c):
1. Any securities of ASD Systems, Inc.
2. Any options to purchase shares of ASD Systems, Inc.
common stock (the "Options"), including, without
limitation, Options granted pursuant to that offer
letter dated December 13, 1999 by the Company and
addressed to Gregg L. Young, together with any and all
other Options granted by the Company after the date
hereof to or for the benefit of Mr. Young.
3. Any securities of ASD Systems, Inc. obtained by
exercise of the Options.
4. All right, title and interest of Pledgor in, to and
under the agreements, contracts or other documents
evidencing the Collateral hereinabove described.
EXHIBIT 10.20
PROMISSORY NOTE
$80,000 January 11, 2000
FOR VALUE RECEIVED, on or before December 31, 2003
("Maturity Date"), the undersigned (hereinafter referred to as
"Borrower"), promises to pay to the order of ASD Systems, Inc.
("Lender") at its offices in Dallas County, Texas at 3737 Grader
Street, Suite 110, Garland, Texas 75041 the principal amount of
EIGHTY THOUSAND AND NO/100 DOLLARS ($80,000) (the "Total
Principal Amount) together with interest on the Total Principal
Amount at a fixed rate per annum equal to seven percent (7%)
calculated on the basis of actual days elapsed but computed as if
each year consisted of 365 days.
The principal of, and all accrued interest on, this
Promissory Note ("Note") shall be due and payable on the earlier
of the Maturity Date or the date that the Borrower ceases to be
employed by the Lender (the "Termination"), whether the
Termination is initiated by the Borrower or the Lender, or
whether the Termination is initiated for "cause" or "without
cause." In no event shall this Note or any Loan Document (as
hereafter defined), taken singly or together, be deemed to be an
employment agreement or otherwise evidence an obligation of
Lender, in any way whatsoever, to employ Borrower in any capacity
for any period of time.
Borrower may from time to time prepay all or any portion of
the principal of this Note without premium or penalty. Unless
otherwise agreed to in writing, or otherwise required by
applicable law, payments will be applied first to unpaid accrued
interest, then to principal, and any remaining amount to any
unpaid collection costs, delinquency charges and other charges;
provided, however, upon delinquency or other Event of Default (as
hereafter defined), Lender reserves the right to apply payments
among principal, interest, delinquency charges, collection costs
and other charges, at its discretion. All prepayments shall be
applied to the indebtedness owing hereunder in such order and
manner as Lender may from time to time determine in its sole
discretion. All payments and prepayments of principal of or
interest on this Note shall be made in lawful money of the United
States of America in immediately available funds, at the address
of Lender indicated above, or such other place as the holder of
this Note shall designate in writing to Borrower.
This Note is secured by a Pledge Agreement dated January
11, 2000 ("Pledge Agreement"), creating a security interest in
certain securities of the Lender held by Borrower and more
particularly described therein.
This Note, the Pledge Agreement, and all other documents
evidencing, securing, governing, guaranteeing and/or pertaining
to this Note, are hereinafter collectively referred to as the
"Loan Documents." The holder of this Note is entitled to the
benefits and security provided in the Loan Documents.
Borrower agrees that upon the occurrence of any one or more
of the following events of default ("Event of Default"):
(a) failure of Borrower to pay any installment of
principal of or interest on this Note or on any
other indebtedness of Borrower to Lender when due;
or
(b) the occurrence of any event of default specified
in any of the other Loan Documents; or
(c) the bankruptcy or insolvency of, the assignment
for the benefit of creditors by, or the
appointment of a receiver for any of the property
of, or the liquidation, termination, dissolution
or death or legal incapacity of, any party liable
for the payment of this Note, whether as maker,
endorser, guarantor, surety or otherwise;
<PAGE>
the holder of this Note may, at its option, without further
notice or demand, (i) declare the outstanding principal balance
of and accrued but unpaid interest on this Note at once due and
payable, (ii) refuse to advance any additional amounts under this
Note, (iii) foreclose all liens securing payment hereof, (iv)
pursue any and all other rights, remedies and recourses available
to the holder hereof, including but not limited to any such
rights, remedies or recourses under the Loan Documents, at law or
in equity, or (v) pursue any combination of the foregoing.
The failure to exercise the option to accelerate the
maturity of this Note or any other right, remedy or recourse
available to the holder hereof upon the occurrence of an Event of
Default hereunder shall not constitute a waiver of the right of
the holder of this Note to exercise the same at that time or at
any subsequent time with respect to such Event of Default or any
other Event of Default. The rights, remedies and recourses of
the holder hereof, as provided in this Note and in any of the
other Loan Documents, shall be cumulative and concurrent and may
be pursued separately, successively or together as often as
occasion therefore shall arise, at the sole discretion of the
holder hereof. The acceptance by the holder hereof of any
payment under this Note which is less than the payment in full of
all amounts due and payable at the time of such payment shall not
(i) constitute a waiver of or impair, reduce, release or
extinguish any right, remedy or recourse of the holder hereof, or
nullify any prior exercise of any such right, remedy or recourse,
or (ii) impair, reduce, release or extinguish the obligations of
any party liable under any of the Loan Documents as originally
provided herein or therein.
In no event shall Chapter 346 of the Texas Finance Code
(which regulates certain revolving loan accounts and revolving
tri-party accounts) apply to this Note. To the extent that
Chapter 303 of the Texas Finance Code, is applicable to this
Note, the "weekly ceiling" specified in such Chapter 303 is the
applicable ceiling; provided that, if any applicable law permits
greater interest, the law permitting the greatest interest shall
apply.
If this Note is placed in the hands of an attorney for
collection, or is collected in whole or in part by suit or
through probate, bankruptcy or other legal proceedings of any
kind, Borrower agrees to pay, in addition to all other sums
payable hereunder, all costs and expenses of collection,
including but not limited to reasonable attorneys' fees.
Borrower and any and all endorsers and guarantors of this
Note severally waive presentment for payment, notice of
nonpayment, protest, demand, notice of protest, notice of intent
to accelerate, notice of acceleration and dishonor, diligence in
enforcement and indulgences of every kind and without further
notice hereby agree to renewals, extensions, exchanges or
releases of collateral, taking of additional collateral,
indulgences or partial payments, either before or after maturity.
In the event that there is any inconsistency between the
terms set forth in this Note and any other document, specifically
including that certain letter from Lender offering employment to
Borrower and dated December 13, 1999, then the provisions set
forth in this Note shall prevail and be controlling.
THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS,
EXCEPT AS SUCH LAWS ARE PREEMPTED BY APPLICABLE FEDERAL LAWS.
BORROWER:
/s/ Gregg L. Young
--------------------------
Gregg L. Young
EXHIBIT 10.21
PROMISSORY NOTE
Up to $65,000 January 11, 2000
FOR VALUE RECEIVED, on or before June 30, 2001 ("Maturity
Date"), the undersigned (hereinafter referred to as "Borrower"),
promises to pay to the order of ASD Systems, Inc. ("Lender") at
its offices in Dallas County, Texas at 3737 Grader Street, Suite
110, Garland, Texas 75041 the principal amount of SIXTY FIVE
THOUSAND AND NO/100 DOLLARS ($65,000) (the "Total Principal
Amount) or such amount less than Total Principal Amount which has
been advanced to Borrower by Lender if the total amount advanced
under this Promissory Note ("Note") is less than the Total
Principal Amount, together with interest on such portion of the
Total Principal Amount which has been advanced to Borrower from
the date advanced until paid at a fixed rate per annum equal to
seven percent (7%) calculated on the basis of actual days elapsed
but computed as if each year consisted of 365 days.
The principal of, and all accrued interest on, this Note
shall be due and payable on the earlier of the Maturity Date or
the date that the Borrower ceases to be employed by the Lender
(the "Termination"), whether the Termination is initiated by the
Borrower or the Lender, or whether the Termination is initiated
for "cause" or "without cause." In no event shall this Note or
any Loan Document (as hereafter defined), taken singly or
together, be deemed to be an employment agreement or otherwise
evidence an obligation of Lender, in any way whatsoever, to
employ Borrower in any capacity for any period of time.
Borrower may from time to time prepay all or any portion of
the principal of this Note without premium or penalty. Unless
otherwise agreed to in writing, or otherwise required by
applicable law, payments will be applied first to unpaid accrued
interest, then to principal, and any remaining amount to any
unpaid collection costs, delinquency charges and other charges;
provided, however, upon delinquency or other Event of Default (as
hereafter defined), Lender reserves the right to apply payments
among principal, interest, delinquency charges, collection costs
and other charges, at its discretion. All prepayments shall be
applied to the indebtedness owing hereunder in such order and
manner as Lender may from time to time determine in its sole
discretion. All payments and prepayments of principal of or
interest on this Note shall be made in lawful money of the United
States of America in immediately available funds, at the address
of Lender indicated above, or such other place as the holder of
this Note shall designate in writing to Borrower.
This Note is secured by a Pledge Agreement dated January
11, 2000 ("Pledge Agreement"), creating a security interest in
certain securities of the Lender held by Borrower and more
particularly described therein.
This Note, the Pledge Agreement, and all other documents
evidencing, securing, governing, guaranteeing and/or pertaining
to this Note, are hereinafter collectively referred to as the
"Loan Documents." The holder of this Note is entitled to the
benefits and security provided in the Loan Documents.
Borrower agrees that upon the occurrence of any one or more
of the following events of default ("Event of Default"):
(a) failure of Borrower to pay any installment of principal
of or interest on this Note or on any other
indebtedness of Borrower to Lender when due; or
(b) the occurrence of any event of default specified in any
of the other Loan Documents; or
(c) the bankruptcy or insolvency of, the assignment for the
benefit of creditors by, or the appointment of a
receiver for any of the property of, or the
liquidation, termination, dissolution or death or legal
<PAGE>
incapacity of, any party liable for the payment of this
Note, whether as maker, endorser, guarantor, surety or
otherwise;
the holder of this Note may, at its option, without further
notice or demand, (i) declare the outstanding principal balance
of and accrued but unpaid interest on this Note at once due and
payable, (ii) refuse to advance any additional amounts under this
Note, (iii) foreclose all liens securing payment hereof, (iv)
pursue any and all other rights, remedies and recourses available
to the holder hereof, including but not limited to any such
rights, remedies or recourses under the Loan Documents, at law or
in equity, or (v) pursue any combination of the foregoing.
The failure to exercise the option to accelerate the
maturity of this Note or any other right, remedy or recourse
available to the holder hereof upon the occurrence of an Event of
Default hereunder shall not constitute a waiver of the right of
the holder of this Note to exercise the same at that time or at
any subsequent time with respect to such Event of Default or any
other Event of Default. The rights, remedies and recourses of
the holder hereof, as provided in this Note and in any of the
other Loan Documents, shall be cumulative and concurrent and may
be pursued separately, successively or together as often as
occasion therefore shall arise, at the sole discretion of the
holder hereof. The acceptance by the holder hereof of any
payment under this Note which is less than the payment in full of
all amounts due and payable at the time of such payment shall not
(i) constitute a waiver of or impair, reduce, release or
extinguish any right, remedy or recourse of the holder hereof, or
nullify any prior exercise of any such right, remedy or recourse,
or (ii) impair, reduce, release or extinguish the obligations of
any party liable under any of the Loan Documents as originally
provided herein or therein.
In no event shall Chapter 346 of the Texas Finance Code
(which regulates certain revolving loan accounts and revolving
tri-party accounts) apply to this Note. To the extent that
Chapter 303 of the Texas Finance Code, is applicable to this
Note, the "weekly ceiling" specified in such Chapter 303 is the
applicable ceiling; provided that, if any applicable law permits
greater interest, the law permitting the greatest interest shall
apply.
If this Note is placed in the hands of an attorney for
collection, or is collected in whole or in part by suit or
through probate, bankruptcy or other legal proceedings of any
kind, Borrower agrees to pay, in addition to all other sums
payable hereunder, all costs and expenses of collection,
including but not limited to reasonable attorneys' fees.
Borrower and any and all endorsers and guarantors of this
Note severally waive presentment for payment, notice of
nonpayment, protest, demand, notice of protest, notice of intent
to accelerate, notice of acceleration and dishonor, diligence in
enforcement and indulgences of every kind and without further
notice hereby agree to renewals, extensions, exchanges or
releases of collateral, taking of additional collateral,
indulgences or partial payments, either before or after maturity.
In the event that there is any inconsistency between the
terms set forth in this Note and any other document, specifically
including that certain letter from Lender offering employment to
Borrower and dated December 13, 1999, then the provisions set
forth in this Note shall prevail and be controlling.
THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS,
EXCEPT AS SUCH LAWS ARE PREEMPTED BY APPLICABLE FEDERAL LAWS.
BORROWER:
/s/ Gregg L. Young
----------------------------
Gregg L. Young
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL FINANCIAL DATA INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS OF ASD SYSTEMS, INC. FOR THE QUARTER ENDED MARCH
31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 31,062
<SECURITIES> 0
<RECEIVABLES> 2,257
<ALLOWANCES> (37)
<INVENTORY> 0
<CURRENT-ASSETS> 33,329
<PP&E> 7,833
<DEPRECIATION> (2,793)
<TOTAL-ASSETS> 38,511
<CURRENT-LIABILITIES> 1,684
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> 36,230
<TOTAL-LIABILITY-AND-EQUITY> 38,511
<SALES> 1,621
<TOTAL-REVENUES> 1,621
<CGS> 1,780
<TOTAL-COSTS> 1,780
<OTHER-EXPENSES> 5,159
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (477)
<INCOME-PRETAX> (4,841)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,841)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,841)
<EPS-BASIC> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
