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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities and Exchange
Act of 1934
GLOBAL DATATEL, INC.
(Exact name of Registrant in its charter)
NEVADA 87-0067813
(State of organization) (I.R.S. Employer Identification No.)
3333 CONGRESS AVENUE, SUITE 404, DELRAY BEACH, FL. 33445
(Address of principal executive offices) (zip code)
Registrant's Telephone Number, including area code: (561) 276-8260
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act: Common
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You should not rely on forward-looking statements in this
registration statement. This registration statement contains forward-looking
statements that involve risks and uncertainties. We use words such as
"anticipates," "believes," "plans," "expects," "future," "intends" and similar
expressions to identify these forward-looking statements. This registration
statement also contains forward-looking statements attributed to certain third
parties relating to their estimates regarding the growth of the Internet,
Internet advertising and online commerce markets and spending. You should not
place undue reliance on these forward-looking statements, which apply only as of
the date of this registration statement. Our actual results could differ
materially from those anticipated in these forward-looking statements for many
reasons.
Item 1. Business.
(A) DEVELOPMENT OF BUSINESS.
Global DataTel, Inc., was originally incorporated in the State of Utah in 1980,
as LaPlate Oil and Mining, Inc., and changed its name to Gold Coast Resources,
Inc. in 1982. The Company's state of incorporation was changed in December, 1996
to the State of Nevada. In December, 1998, the Company's name was changed to
Global DataTel, Inc. and the existing officers and directors of the Company
resigned, and new officers and directors were elected.
In 1998, a number of significant transactions took place. The Company, in
September 1998, acquired International Computer Resources, Inc. ("ICR"), a
Florida corporation, which does business as an IBM computer reseller, and
Mantenimiento Electronico de Systemas, Ltd., ("MES"), a Colombian corporation,
which does business as a computer integrator and service provider.
In November, 1998, Global acquired three additional Colombian corporations, Casa
Informatica, S.A., ("CASA"), DLR & CIA, Ltda., ("DLR") and Microstar, Ltda.,
("MICRO"). CASA, an IBM computer reseller, was acquired for $849,000.00 in cash
and promissory note and 392,000 restricted shares of the Company's common stock
valued at $1,960,000. DLR, an IBM computer reseller and system integrator, was
acquired for a total consideration of $600,000, which was paid $300,000 in cash
and promissory note and 60,000 restricted shares of the Company's common stock
valued at $300,000. MICRO, also a IBM computer reseller and system integrator,
was acquired for a total consideration of $500,000, which was paid $150,000 in
cash and promissory note and 70,000 restricted shares of the Company's common
stock valued at $350,000.
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Global now has three wholly owned or controlled operating subsidiaries:
Global DataTel de Colombia, S.A. (GDC), a Colombian Corp., a
subsidiary consisting of four acquired companies in Colombia,
MES, CASA, DLR and MICRO. These companies are involved in the
computer system integration business. Global owns 94.9% of the
capital stock of GDC, with 100% of the voting rights. Under
Colombian law, a foreign corporation cannot own more than 94.9%
of a Colombian corporation.
On Line Latin America, S.A., (OLA), a Colombian Corp., is in the
internet service business. Global owns 94.9% of the capital stock
of OLA, with 100% of the voting rights.
eHOLA.com, Inc, (eHOLA), a Nevada Corp., (formerly Electronic
Latin America On-Line, Inc.), a wholly owned subsidiary, is in
the internet service business.
The operations of International Computer Resources, Inc. ("ICR") are now
conducted under Global DataTel, Inc., and form the North American component of
the Information Systems Division.
On December 14, 1998, the Company sold its interest in a subsidiary, The Travel
Agent's Hotel Guide, Inc., a Nevada corporation, to Ameriresources Technologies,
Inc. in consideration for a convertible debenture in the face amount of
$3,350,000, bearing interest at the rate of seven (7%) percent per annum and
convertible in three years into common stock of Ameriresources.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
Global DataTel de Colombia, the South American component of our Information
Systems Division, presently accounts for approximately 95% of the Company's
revenues and profits, and the North American component of our Information
Systems Division presently accounts for approximately 5% of the Company's
revenues and profits. Our On Line Services Division presently does not have
revenues.
(C) NARRATIVE DESCRIPTION OF BUSINESS.
Global DataTel de Colombia, (GDC) is the largest operating subsidiary of Global,
with over 95% of its revenues and profits. This subsidiary is the South American
component of our Information Systems Division. GDC is a midrange to large system
integration computer solution provider. In Colombia, GDC is authorized by
various leading high tech companies as a reseller. GDC represents such firms as
IBM Corp., Compaq Computer, Microsoft, and Lotus. The primary focus is to
provide presale consulting to Colombia's largest national, government, and
international companies, to
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determine the best solution to their particular information system requirements.
Based upon this analysis, GDC can provide clients with a fully integrated
solution which may include hardware, software and services from various sources.
The Information Systems Division's main business is to provide system
consulting, resale of new micro, mini, or mainframe hardware, as well as
software and complementary contract services as needed. These services may
include help desk, contract programming, training, and hardware/software
maintenance contracts. Sale of new hardware typically may include wintel based
micro computers such as IBM desktops, IBM AS/400-RS/6000 mini computers, and IBM
S/390 mainframes. Software products may include Microsoft, Lotus, JBA, and
several other complimentary application software programs as may be deemed
necessary in order to provide satisfactory results. Services include various
supplemental after sale products such as executive training, employee
implementation, and long term contractual maintenance agreements. The division
operates across a broad horizontal marketplace and is not limited to any single
vertical market.
On Line Latin America, S.A., and eHOLA.com operate under our On Line Services
Division. This division's main business is to provide dial-up internet access in
the USA, Central, and South America, which is marketed under the eHOLA.com name.
On line operations commenced April 22, 1999, and are considered to be in the
testing phase. The division is marketed to both consumers and businesses in each
of the geographic locations in which it provides internet access. We have only
recently commenced advertising on our portal, and at present revenues are
negligible from subscriptions and advertising.
We presently offer internet access in the following countries: Argentina,
Bolivia, Brazil, Chile, Colombia, El Salvador, Equador, Guatemala, Mexico,
Paraguay, Peru, U.S.A. and Venezuela. We are in testing phase, and are actively
seeking subscribers.
eHOLA.com offers, for one basic yearly subscription price per country, unlimited
internet access in the countries listed above, the service also includes the
world wide web multilingual portal www.ehola.com. The service also includes free
e-mail and Microsoft Internet Explorer browser.
The eHOLA network is organized around 14 content specific channels. eHOLA.com is
a single point of entry to the eHOLA network of sites and is updated daily to
promote content and community, including channel highlights. We currently have
approximately 10 employees responsible for the content of our channels.
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(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES.
Global DataTel de Colombia, the South American component of our Information
Systems Division, presently accounts for approximately 95% of the Company's
sales, and the North American component of our Information Systems Division
presently accounts for approximately 5% of sales.
Item 2. Financial Information.
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data should be read in
conjunction with "Management's Discussion and Analysis" and the financial
statements appearing elsewhere in this prospectus. The statement of operations
data set forth below for the nine months ended December 31, 1997 and the year
ended December 31, 1998, and the balance sheet data at December 31, 1997 and
1998 are derived from our audited financial statements included elsewhere
herein. The historical results are not necessarily indicative of results to be
expected for any future period.
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CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 AND
THE NINE MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Net Sales $ 1,937,578 $ 14,973
Costs of goods sold 1,032,350 --
Gross profit ----------------- -----------------
905,228 14,973
----------- -----------
Selling, general, and administrative expenses 731,860 188,376
Payroll and related expenses 1,450,160 --
Interest expense 45,047 --
Other (income) expense (141,140) 1,908,263
----------- -----------
Total expenses 2,085,927 2,096,639
----------- -----------
Loss before provision for income taxes (1,180,699) (2,081,666)
----------- -----------
Provision for income taxes 503,725 --
Loss from continuing operations
before extraordinary items (1,684,424) (2,081,666)
----------- -----------
Discontinued operations:
Loss from operations from subsidiary sold (629,473) --
Gain on sale of subsidiary 1,999,813 --
Income from extraordinary items 1,370,340 --
Net Loss (314,084) (2,081,666)
Other comprehensive income:
Foreign currency translation 18,569 --
----------- -----------
Comprehensive Loss $ (295,515) $(2,081,666)
=========== ===========
Comprehensive loss per share
Loss per share from continuing operations $ (0.22) $ (0.82)
Income per share from extraordinary items 0.18 --
----------- -----------
Net loss per share $ (0.04) $ (0.82)
=========== ===========
Weighted average shares outstanding 7,586,815 2,533,238
</TABLE>
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CONSOLIDATED BALANCE SHEETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSETS
1998 1997
<S> <C> <C>
Current Assets:
Cash $ 101,743 $ --
Accounts receivable, net of allowance
for doubtful accounts of $389,880 2,720,363 --
Due from Stockbrokers 572,040 --
Inventories 1,152,746 --
Other current assets 117,292 134,649
------------ ------------
Total current assets 4,664,184 134,649
------------ ------------
Property, Plant, and Equipment, net 479,970 7,331
Other Assets:
Goodwill, net 10,918,780 --
Convertible debenture 3,350,000 --
Other assets - 923,082 2,427,495
------------ ------------
Total other assets 15,191,862 2,427,495
------------ ------------
Total Assets $ 20,336,016 $ 2,569,475
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 2,597,599 $ 27,101
Short term borrowings, banks 1,175,146 --
Deferred revenues 409,081 --
Other accrued liabilities 751,026 8,992
Notes payable to shareholders 1,021,667 --
------------ ------------
Total current liabilities 5,954,519 36,093
------------ ------------
Mortgage Payable - Bank 97,159 104,533
Deferred Barter Credits -- 123,900
Stockholders' Equity:
Common stock, 50,000,000 shares authorized
$.001 par value, 9,180,123 & 7,162 shared issued
and outstanding as of December 31, 1998 and 1997
respectively 9,180 7
Preferred stock 25,000,000 shares authorized
par value $.001,105,000 and 450,000 shares issued
as of respectively 105 4,500
Paid in Capital 17,781,557 5,821,448
Accumulated deficit (3,835,090) (3,521,006)
Foreign currency translation adjustment 328,586 --
Total Stockholders' Equity 14,284,338 2,304,949
------------ ------------
Total Liabilities and Stockholders' Equity $ 20,336,016 $ 2,569,475
============ ============
</TABLE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND ANALYSIS RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" (Item 2), "Selected Quarterly Financial
Data" (Item 13) and the Consolidated Financial Statements and Notes thereto
appearing elsewhere herein.
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING DISCUSSION
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH
FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, STATEMENTS REGARDING
FUTURE EVENTS AND OUR PLANS AND EXPECTATIONS. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED HEREIN.
OVERVIEW
The Company
The Company, Global DataTel, Inc. ("GDIS" or the "Company") is an international
information system integrator (ISI) of midrange computer products, networking
products, software and services. Global operates in two countries, the USA and
Colombia. Products sold by the Company are manufactured by approximately 5
vendors including IBM, Hewlett-Packard, Compaq, Microsoft, Lotus, and JBA Intl.
The Company recently was selected by IBM to be one of a limited number of Tier 1
Solution Providers in Latin America offering the complete IBM microcomputer and
Minicomputer product lines. The Company is an information system integration
(ISI) company, as opposed to a wholesale distributor, and represents vendors
within system integration projects in the largest national and multi-national
companies in Latin America. The Company believes the information system
integration industry is consolidating as access to financial resources and
economies of scale become more critical and as certain vendors limit the number
of authorized distributors and resellers of their respective products. The
Company's pan-regional presence strategically positions the Company to take
advantage of the consolidation trend in the information system integration
industry and increase its market share in Latin America. The majority portion of
the Company's sales are in the emerging market of South America, a region which
the Company believes is underserved relative to the entire industry and offer
substantial growth opportunities. International Data Corp. (IDC) projects
personal computer sales in South America (including Mexico and Central America)
will grow from $6.5 billion in 1998 to $7.8 billion in 1999, representing a
compound annual growth rate of 22.2%. This compares favorably to a 9.6% compound
annual growth rate projected by IDC for PC sales in the United States over the
same period. Global operates under a centralized structure. The corporation
delegates to country managers familiar with the customs and needs of a
particular country the authority to make daily operational decisions including
those necessary to satisfy the
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particular demands of their market. The Company believes that its business model
of a focused medium to large information system integration projects provides
operating advantages. The company also operates an internet access service
available in 13 countries in North, Central, and South America. The service is
operated under the "eHOLA.com" brandname, and includes a multi-lingual world
wide web site www.ehola.com that is available on the internet. The company was
formed as a wholly owned subsidiary in December of 1998. In or about May 1999,
the service went into testing as an internet portal service(IPS). Although still
in testing stage, we are actively signing up subscribers and are expected to
generate revenues in future.
The Company's objective is to strengthen its position as an information system
integrator of micro and mini computer products and services in Latin America. In
order to achieve this objective, Global intends to continue to implement the
following strategies:
OPERATE A FOCUSED PAN-REGIONAL MODEL. The Company's strategy is
to be a focused information system integrator by concentrating on a limited
number of products and services from a select group of high quality branded
vendors in each major product and service category. Additionally, the Company
seeks to be a significant integrator for each of its vendors and establish a
partnering relationship with them. For example, the Company believes that it is
one of the largest ISIs of IBM midrange products in Colombia. The Company
believes this focused strategy enables it to respond more quickly to customer
requests and gives it greater availability of products, enhanced access to new
products and better pricing. The Company believes this strategy also enables it
to develop greater expertise in the sale and servicing of the products of these
vendors. The Company believes that its focused integration model also results in
more effective asset management. Generally, products from leading vendors are in
greater demand, resulting in higher inventory turns and lower working capital
requirements.
FURTHER DEVELOP AND PENETRATE INTERNATIONAL MARKETS. The Company
has focused its activities on the emerging market of South America, a region
which it believes is underserved with respect to the distribution of micro /
mini and mainframe computer products and services and therefore provide
significant growth opportunities. The Company believes that the markets in South
America are complex due to the diversity of language, regulatory, technical and
other factors and provide increased opportunities for Global to add value to its
relationships with its vendors and customers because of the presence of its
knowledgeable local management.
GROW THROUGH ACQUISITIONS. A major portion of the Company's
growth is attributable to acquisitions and the Company intends to continue its
practice of making targeted purchases of high quality
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ISIs in selected markets in the future. The Company typically structures an
acquisition with an earnout component payable in shares of Common Stock one year
subsequent to the acquisition and based on the performance of the acquired
company. These local distributors generally are attracted to combining with
Global in order to gain personal financial liquidity, access to key product
lines provided by Global and enhanced vendor credit facilities. Over the past
year, the Company has acquired 3 companies. The Company seeks acquisition
candidates that have strong entrepreneurial management teams and experience in
the local market and that could benefit from the synergies arising out of the
Company's superior product line. After an acquisition, the new Global subsidiary
adopts the policies and financial reporting procedures of the Company this new
business unit is directly controlled by our corporate headquarters, consistent
with the Company's centralized structure. The Company believes its acquisition
strategy is advantageous to its vendors because, through their relationship with
Global, vendors gain entry into new clients with a pan-regional company. For the
three months ended March 31, 1999 compared to the three months ended March 31,
1998, the Company's net sales increased to $6.5 million from $5.1 million and
operating earnings increased to $620,000 from $410,000. On a pro forma basis,
assuming all 1998 acquisitions were made on January 1, 1998, the Company's 1998
net sales and operating earnings would have been $22.3 million and $480,000. See
"Selected Consolidated Financial Data".
LIQUIDITY AND CAPITAL RESOURCES
We have required substantial capital to finance accounts receivable,
inventories, capital expenditures and acquisitions. In the past, we have
financed these requirements primarily through internally generated cash from
operations and bank borrowings.
Product purchases from IBM are charged directly to the credit line.
Operating activities for 1998 provided cash in the amount of $101,000. For this
period, cash was provided primarily as a result of increases in accounts payable
of $2.5 million, partially offset by an increase in accounts receivable of $3.6
million.
Investing activities for 1998 used cash in the amount of $301,000. For this
period, cash was used for the purchase of CASA, DLR and Microstar and the
eHOLA.com development exceeding $1.5 million, continuing leasehold and computer
hardware and software investments made at the headquarters, sales office and
warehouse and integration center sites.
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Cash provided by financing activities for 1998 was $574,000,consisting of a sale
of common stock.
We believe we have sufficient funds, or alternate sources of funds, to carry on
our business as presently conducted through 1999.
YEAR 2000 COMPLIANCE ISSUES
GENERAL
We are in the process of conducting a Year 2000 compliance audit and developing
and implementing a company-wide Year 2000 Compliance Project (the "Project").
The Project addresses a broad range of issues affecting us as a result of the
programming code in existing computer, and computer related, systems as the year
2000 approaches. The Year 2000 problem is complex, as many computer systems will
be affected in some way by the rollover of the two-digit year value to 00.
Systems that do not properly recognize such information could generate erroneous
data or cause a system to fail. The Year 2000 issue creates risks for us from
problems in our own computer and embedded systems and from third parties with
whom we deal on financial and other transactions. Failure of our and/or third
parties' computer systems could have a material adverse impact on our ability to
conduct our business. The Project is being headed up by our Vice President of
Information Technology, who reports directly to the Chief Financial Officer.
INTERNAL SYSTEMS
Our business software system includes an enterprise-wide solution which was
upgraded to the most recent version in fiscal 1998. This system handles our most
critical functions, including, finance, inventory control, warehousing, shipping
and receiving, logistics, purchasing, sales and order taking. Over the last six
months, our business software system was upgraded to a more current version,
which we believe to be Year 2000 compliant. Certain of our offices are not yet
fully integrated into our enterprise-wide business software system. It is
expected that our offices in Colombia will be integrated over the next three
months. Since our most critical functions are run on the enterprise-wide
business software system, any Year 2000 problems at the hardware or software
level could have a material adverse effect on us. If the system failed to work
on January 1, 2000 it could prevent us from controlling our inventory, taking
orders, buying inventory and billing our customers. We are inventorying and
analyzing our remaining centralized computer and embedded systems, as well as
our WAN Data services, WAN hardware, networking equipment, voice-mail equipment
and access and alarm systems, to identify any potential Year 2000 issues and we
will
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take appropriate corrective action based on the results of such analysis. We
currently expect to substantially complete remediation and validation of our
internal systems, as well as to develop contingency plans, by mid-1999.
THIRD PARTY SUPPLIERS AND VENDORS
We are currently in the process of developing a plan for contacting our critical
suppliers, manufacturers, distributors and other vendors to determine if their
operations and the projects and services that they provide to us are Year 2000
compliant. Our largest supplier of product is IBM, with approximately 60% of our
revenue derived from sales of IBM products. As a result, we will devote
substantial effort in dealing with IBM in addressing any potential Year 2000
problems supplied by IBM. Absent written assurances of Year 2000 compliance by
such third parties, we will assume that such third parties will not be Year 2000
compliant and we will attempt to reduce our risks with respect to the failure of
such third parties to be Year 2000 compliant by developing contingency plans.
However, there can be no assurance that in all instances contingency plans can
be adopted or that they will adequately serve the needs of our customers and
other constituents.
PRODUCTS
Because we are a distributor of mid-range computers, software and peripheral
products, the Year 2000 issue is likely to have a substantial affect on the
products that we sell. We will deal directly with the manufacturers of our
products to determine whether such products are Year 2000 compliant. As a
distributor, we will not make representations and warranties to our customers
regarding Year 2000 compliance of the products we sell. Rather, we assign to our
customers the manufacturer's warranties. However, if there are year 2000
compliance issues it could increase our risk of product returns, increased
inventory and/or reduced sales. While we believe that our largest line of
products, IBM AS/400 and RS/6000 mid-range servers, are Year 2000 compliant,
there can be no assurance that the other products we distribute do not contain
undetected errors or defects associated with Year 2000 that may result in
material costs to us. Should the IBM AS/400 or RS/6000 mid-range servers fail to
be Year 2000 compliant or should IBM be unable to supply product because of Year
2000 issues, the effect on our results of operations, liquidity and financial
condition would be severe.
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YEAR 2000 COSTS
The total cost associated with the Year 2000 audit and required modifications to
become Year 2000 compliant is not expected to be material to our financial
position based on preliminary assessments resulting from the early phases of the
Project. The estimated total cost of the Project is approximately $100,000,
$50,000 of which has already been spent to upgrade some non-Year 2000 compliant
software and systems. It is possible that as we continue our audit and detect
problems that are not currently known to us, additional costs may be incurred,
which could be substantial.
The failure to correct a material Year 2000 problem could result in an
interruption in, or failure of, our normal business activities or operations.
Such failures could materially and adversely affect our results of operations,
liquidity and financial condition. Due to the inherent uncertainty in the Year
2000 problem, resulting in part from the uncertainty of the Year 2000 readiness
of third-party suppliers and customers, we are unable to determine at this time
whether the consequences of the Year 2000 failures will have a material impact
on our results of operations, liquidity or financial condition.
BACKLOG
Although we receive purchase orders for products to be delivered to customers
over a specified time period, there can be no assurance that such orders will
result in sales, as most orders are subject to revision or cancellation without
penalty. Consequently, we do not believe that backlog is a meaningful indicator
of sales for future periods.
RECENT PRONOUNCEMENTS
In March 1998, the Accounting Standards Executive Committee, or AcSEC, released
Statement of Position 98-1, or SOP 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER
SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE. SOP 98-1 requires companies to
capitalize certain costs of computer software developed or obtained for internal
use, provided that those costs are not research and development. SOP 98-1 is
effective for fiscal years beginning after December 15, 1998. We are evaluating
the requirements of SOP 98-1 and the effects, if any, on our current policies on
accounting for software costs.
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Item 3. Properties.
The Company presently maintains the following facilities:
Information Systems Division - North America
(a) Warehouse and sales office totaling approximately 2,500 sq.
ft. and an office suite totaling approximately 2,000 sq. ft. in Delray Beach,
Florida, which is leased through the year 2001. The amount of rent is
$37,200.00. The building is a commercial technical center with approximately 5
individual companies located directly adjacent.
Information Systems Division - South America
Bogota, Colombia- One sales office totaling 6,000 sq. ft.,
which is leased through May, 2000. The annual rent is $69,600.00.
One service office totalling 4,000 sq. ft., which is leased
through April, 2001. The annual rent is $19,200.00; and
One administration building totalling 5,000 sq. ft., which is a
standalone structure that is 75% utilized and has enough room for expected
growth. This building is owned by the Company without major encumbrances other
than a first mortgage.
Cali, Colombia- One sales/technical office totalling 1200 sq.
ft., which leased through January, 2000. The annual rent is
$10,200.00.
Medillen, Colombia- One sales/technical office totalling
sq. ft., which is leased through December, 1999. The annual rent
is $6,600.00.
Barranquilla, Colombia- One sales/technical office totalling
2,500 sq. ft., which is leased through August, 2000. The annual
rent is $19,200.00.
We are considering relocating to a central facility in Bogota,
Colombia in early 2000, which would replace the two rental offices there.
On Line Services Division - North America
The On Line Services Division shares the Information Systems
Division offices.
On Line Services Division - South America
One administrative/sales/technical office of 5,000 sq. ft. in
Barranquilla, Colombia, which is leased through January, 2001. The
annual rent is $43,200.00.
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Our present annual lease obligations for 1999 totals approximately $205,000.00.
Renewable leases provide for rental increases of 5%-10%.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information regarding the beneficial ownership,
as defined in applicable regulations, of our common stock as of June 30, 1999 by
the following individuals or groups: each person or entity who is known by our
to own beneficially more than 5% of our outstanding stock; each of the Named
Executive Officers; each director of Global; and, all directors and executive
officers as a group. Except as otherwise indicated, and subject to applicable
community property laws, the persons named in the table below have sole voting
and investment power with respect to all shares of common stock held by them.
Applicable percentage ownership in the following table is based on 22,495,623
shares of common stock outstanding as of June 30, 1999, after giving effect to
the conversion of Class A Preferred into 13,000,000 shares.
<TABLE>
<CAPTION>
Name/Address No. of Shares Percentage
Owner Class Beneficially Owned of Class
- - - - - ----- ----- ------------------ --------
<S> <C> <C> <C>
Richard Baker Common 5,779,143 25.7%
AVG Family Trust Common 4,792,928 21.0%
Gerald D'Ambrosio Common 10,000 less than 1%
Rafael Delgado Common 44,000 less than 1%
Mario Habib Common 80,000 less than 1%
Antonio Serrato Common 175,000 less than 1%
</TABLE>
These tables do not give effect to the potential exercise of option standard to
certain members of management (see Item 5), nor to the options granted to a
consultant, Steven Spitz, CPA, in April, 1999, in partial payment of services
rendered, to acquire 250,000 shares of common stock at an exercise price of
$5.75 per share.
Item 5. Directors and Executive Officers.
The following table sets forth certain information with respect to our executive
officers and directors as of June 1, 1999.
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<TABLE>
<CAPTION>
Name Age Position Held
---- --- -------------
<S> <C> <C>
Richard Baker 41 President, CEO, Director
Antonio Serrato 65 Vice-President, COO, Director
Rafael Tovar 50 CFO
Gerald D'Ambrosio 50 Secretary
Jerre Daye 50 Director
GLOBAL DATATEL DE COLOMBIA
Rafael Delgado 50 President
ON LINE LATIN AMERICA, S.A
AND eHOLA.com, INC.
Mario Habib 42 President
</TABLE>
RICHARD BAKER, PRESIDENT, CEO, CHAIRMAN OF THE BOARD OF DIRECTORS. Mr. Baker has
been President, CEO and Chairman of the Board of Directors of Global since
December, 1998. Mr. Baker founded International Computer Resources, Inc.
("ICR"), a U.S. IBM Business Partner specializing in the IBM AS/400 and RS/6000
mid-range platforms, and now a wholly owned subsidiary of Global. Mr. Baker was
also an owner of Mantenimiento Electronic de Systemas, Ltd. ("MES"), now also a
subsidiary of Global. Mr. Baker has approximately 10 years experience in Latin
America business operations. Mr. Baker attended Palm Beach Community College
from 1985 to 1987.
ANTONIO SERRATO, VICE-PRESIDENT, COO. Mr. Serrato has been Vice-President and
COO of Global since December 14, 1998. Prior to that time, and since 1993, Mr.
Serrato was General Manager of MES, now a wholly owned subsidiary of Global.
Prior to his employment with MES, Mr. Serrato was an IBM World Trade vice
president, with responsibility over an extensive sales force. Mr. Serrato has
extensive experience in Latin America computer sales and management. Mr. Serrato
received an engineering degree from the National University, Bogota, Columbia in
1959.
RAFAEL TOVAR, CFO - Mr. Tovar, who is a certified public accountant, has been
CFO of Global since December, 1998.
GERALD D'AMBROSIO, SECRETARY - Mr. D'Ambrosio, a licensed attorney, has been
Secretary of Global since December 14, 1998. Mr. D'Ambrosio, who has practiced
law since 1980, presently maintains his own law practice in Boca Raton, Florida.
He received a bachelor's degree from Bowling Green State University in 1981, and
a law degree from Ohio Northern University in 1965.
JERRE DAYE, DIRECTOR - Mr. Daye has been Director of Global since December,
1998.
15
<PAGE> 17
SUBSIDIARIES: OFFICERS
GLOBAL DATATEL DE COLOMBIA
RAFAEL DELGADO, PRESIDENT - Mr. Delgado has been President of Global DataTel De
Colombia, S.A., ("GDC"), a subsidiary of Global, since December, 1998. Prior to
that, Mr. Delgado was the founder of Casa Informatica, an IBM Business partner
in Colombia, which was acquired by Global. Mr. Delgado has extensive experience
in computer sales and management.
ON LINE LATIN AMERICA, S.A. AND EHOLA.COM, INC.
MARIO HABIB, PRESIDENT - Mr. Habib has been President of OnLine Latin America,
S.A. ("OLA") and eHOLA.com, Inc. ("eHOLA"), wholly owned subsidiaries of Global,
since December, 1998. From 1979 to 1998 Mr. Habib was the General Manager of
Yidi Industries, a manufacturing concern. Mr. Habib received a bachelor's degree
in mechanical engineering from Purdue University in 1979.
Item 6. Executive Compensation.
SUMMARY COMPENSATION TABLE
The table below summarizes the compensation earned for services rendered to
Global in all capacities for the fiscal years ended December 31, 1997 and
December 31, 1998, by each person serving as Global's Executive Officers in the
fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Awards
------------
Annual Securities
Compensation Underlying
--------------------------- Options/SARs
Name Year Salary($) Bonus($) (#)
- - - - - ---- ---- --------- --------
<S> <C> <C> <C> <C>
Richard Baker 98 $ 75,000 0 0
President & CEO 97 $ 75,000 0 0
96 $ 75,000 0 0
Antonio Serrato 98 $ 75,000 0 0
Vice-President, 97 $ 80,000 0 0
COO 96 $ 75,000 0 0
Rafael Delgado 98 $105,000 0 0
President of 97 $ 90,000 0 0
GDC 96 $ 60,000 0 0
Mario Habib 98 $135,000 0 0
President of OLA 97 0 0 0
and eHOLA 96 0 0 0
</TABLE>
16
<PAGE> 18
The above table reflects annual salaries for positions held in 1996, 1997 and
1998 with what are now our subsidiaries.
As of June 1, 1999, we have entered into employment agreements with the
following executive officers and key personnel:
RICHARD BAKER: A 3 year employment agreement as the President and
CEO of Global DataTel, Inc. with a base salary of $200,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $1,000,000.
ANTONIO SERRATO: A 3 year employment agreement as Vice President
and COO of Global DataTel, Inc. with a base salary of $150,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $100,000.
RAFAEL DELGADO: A 3 year employment agreement as the President of
Global DataTel de Colombia, with a base salary of $80,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $100,000.
MARIO HABIB: A 3 year employment agreement as the President of
eHOLA.com and On Line Latin America, S.A., with a base salary of $180,000 per
year, discretionary bonuses and reimbursement of business expenses, and life
insurance with a death benefit of $100,000.
The employment agreements discussed above contained grants of the following
options to purchase common stock:
<TABLE>
<S> <C>
RICHARD BAKER 350,000 options @ $ 7.12 each
ANTONIO SERRATO 200,000 options @ $ 7.12 each
RAFAEL DELGADO 100,000 options @ $ 7.12 each
MARIO HABIB 350,000 options @ $ 7.12 each
</TABLE>
The Company also has employment agreements with the following individuals:
ANTONIO HABIB: A 3 year employment agreement as the Regional
Sales Manager of Global DataTel de Colombia, at an annual salary of $60,000 per
year, discretionary bonuses and reimbursement of business expenses, and life
insurance with a death benefit of $100,000.
CARLOS MEJIA: A 3 year employment agreement as the General
Manager of Global DataTel de Colombia, at an salary of $65,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $100,000.
17
<PAGE> 19
DANIEL LOPEZ: A 3 year employment agreement as Sales Manager of
Global DataTel de Colombia, with a base salary of $60,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $100,000.
The employment agreements for these individuals also grant the following
options:
<TABLE>
<S> <C>
CARLOS MEJIA 25,000 options @ $7.12 each
DANIEL LOPEZ 15,000 options @ $7.12 each
ANTONIO HABIB 15,000 options @ $7.12 each
</TABLE>
Each of the above have also executed confidentiality, non-solicitation and
non-competition agreements, which restrict the individual's activities for one
year after they cease working for us.
The Company's directors currently serve without compensation.
Item 7. Certain Relationships and Related Transactions.
On September 30, 1998, the Company purchased 100% of the shares of International
Computer Resources, Inc. ("ICR") and Mantenimiento Electronico de Systemas, Ltd.
("MES"). ICR was formerly owned 33.3% by Richard Baker, Global's President, CEO
and Chairman of the Board, 33.3% by Dolphin Waves, Inc. and 33.3% by AVG Family
Trust. The consideration paid by Global to the former ICR shareholders,
consisted of 4,243,843 restricted shares of Global Common Stock, and 105,000
shares of Global Convertible Preferred Stock. MES was formerly owned 51% by Mr.
Baker and 49% by Antonio Serrato. The consideration paid by Global to the former
MES shareholders consisted of 357,153 restricted shares of Global Common Stock.
(See "Consolidated Financial Statements" and Notes thereto) eHOLA.com, Inc.,
previously owned by Mr. Baker, was also acquired by Global. In addition to the
shares of the company's common stock and preferred stock received by Mr. Baker,
he has the right to vote all of the other issued shares of the company's Series
A Convertible Preferred Stock.
In November, 1998, Casa Informatica, S.A., ("CASA") was acquired from Rafael
Delgado, President of our subsidiary, Global DataTel De Colombia, S.A., for a
total consideration of $2,800,000, which was paid $840,000 in cash and
restricted Global common stock valued at $1,960,000.
18
<PAGE> 20
In November, 1998, D.L.R. y Cia, Ltd., ("DLR") was acquired from Daniel Lopez,
Sales Manager of Global DataTel de Colombia, for a total consideration of
$600,000, which was paid $300,000 in cash and restricted Global common stock
valued at $300,000.
In November, 1998, Microstar, Ltd., ("MICRO"), was acquired from Mario Habib,
the President of eHOLA.com and On Line Latin America, S.A. and Antonio Habib,
the Regional Sales Manager of Global DataTel de Colombia, for a total
consideration of $500,000, which was paid $150,000 in cash and restricted Global
common stock valued at $350,000.
During Global's last fiscal year, and prior to change of control to present
management, the Company issued 1,198,500 shares of the Company's common stock to
certain former officers, directors and shareholders. Also, during the same
period, the Company issued 3,500,000 shares of the Company's Common Stock to a
former officer, director and principal shareholder of the Company, for his
minority interest in Travel Agent's Hotel Guide, Inc., a former subsidiary of
the Company. (See "Consolidated Financial Statements" and Notes thereto).
On February 5, 1999, Global sold 100,000 restricted shares of its Common Stock
to AJL Investments, Inc., for $3.00, per share. AJL Investments was at that time
a 5% shareholder of the Company.
In 1997, the Company engaged in various transactions wherein common and
preferred stock were issued; the preferred stock transactions were reversed in
1998 and the common stock transactions were partially reversed. (See
"Consolidated Financial Statements" and Notes thereto)
Item 8. Legal Proceedings.
The Company has been threatened with litigation in connection with the
reissuance of a stock certificate for approximately 400,000 shares. No action
has been instituted. The Company believes that in the event litigation were
instituted, that it has meritorious defenses to such action.
Item 9. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
Our common stock has had a limited market in the Over-The-Counter Bulletin Board
(OTC-BB), under the Symbols "GCRI" and "GDIS". the following is a summary of the
high and low bid for each quarter (with the volume traded in that quarter) since
commencement of trading in February, 1997:
19
<PAGE> 21
<TABLE>
<CAPTION>
QUARTER ENDING: HIGH/ASK LOW/BID
<S> <C> <C>
3/31/97 11 7 1/2
6/30/97 10 1/2 8
9/30/97 6 3/4
12/31/97 5 3/8 3 1/4
3/31/98 3 3/8 2
6/30/98 2 7/8 1 1/4
9/30/98 6 3/4 1/16
12/31/98 12 1/8 4
3/31/99 13 1/4 5 13/16
</TABLE>
Over-the-counter market quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not represent actual transactions.
The Company has never declared or paid any dividends on its common stock and
does not anticipate paying any dividends on its common stock in the foreseeable
future.
Item 10. Recent Sales of Unregistered Securities.
In August, 1998, the Company, then known as Gold Coast Resources, Inc., issued
2,870,000 shares of common stock for cash at $0.10 per share pursuant to Rule
504 of Regulation D.
On February 5, 1999, the Company sold 100,000 restricted shares of its Common
Stock to AJL Investments, Inc., for $3.00, per share, pursuant to Rule 504 of
Regulation D.
In March, 1999, the Company entered into a subscription agreement for the sale
of 43,750 restricted shares at $8.00 per share for the total consideration of
$350,000.
Each purchaser of the securities described above has represented that he/she/it
understands that the securities acquired may not be sold or otherwise
transferred absent registration under the Securities Act or the availability of
an exemption from the registration requirements of the Securities Act, and each
certificate evidencing the securities owned by each purchaser bears or will bear
upon issuance a legend to that effect.
Item 11. Description of Registrant's Securities to be Registered.
Our Certificate of Incorporation authorizes 50,000,000 shares of $0.001 par
value common stock. As of June 30, 1999, there were issued and outstanding
22,495,623 shares of common stock, after giving effect to the conversion of
Class A Preferred into 13,000,000 shares.
20
<PAGE> 22
The holders of common stock are entitled to one vote for each share held of
record on all matters to be voted on by the shareholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50 percent of the shares have the ability to elect the
directors. The holders of common stock are entitled to receive dividends when,
as, and if declared by the Board of Directors out of funds legally available
therefor. The Company has not, however, previously paid any cash dividends and
does not anticipate paying any cash dividends in the foreseeable future. In the
event of liquidation, dissolution or winding up of the Company the holders of
common stock are entitled to share ratably in all assets remaining available for
distribution to them after payment of liabilities and after provision has been
made for each class of stock, if any, having preference over the common stock.
Holders of shares of common stock, as such, have no conversion, preemptive or
other subscription rights, and there are no redemption provisions applicable to
the common stock. All of the outstanding shares of common stock are, when
issued, fully paid and nonassessable.
The Company's Transfer Agent is Signature Stock Transfer, Inc., 14675 Midway
Road, Suite 221, Dallas, TX 75244.
Item 12. Indemnification of Officers and Directors.
The Company's Bylaws do not contain a provision entitling any director or
executive officer to indemnification against liability under the Securities Act
of 1933 (the "33 Act"). Sections 78.751 et seq. of the Nevada Revised Statutes
allow a company to indemnify its officers, directors, employees, and agents from
any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, except under certain
circumstances. Indemnification may only occur if a determination has been made
that the officer, director, employee, or agent acted in good faith and in a
manner which such person believed to be in the best interests of the company. A
determination may be made by the shareholders; by a majority of the directors
who were not parties to the action, suit or proceeding confirmed by opinion of
independent legal counsel; or by opinion of independent legal counsel in the
event a quorum of directors who were not a party to such action, suit or
proceeding does not exist. Provided the terms and conditions of these provisions
under Nevada law are met, officers, directors, employees and agents of the
Company may be indemnified against any cost, loss, or expense arising out of any
liability under the '33 Act. Insofar as indemnification for liabilities arising
under the '33 Act may be permitted to directors, officers and controlling
persons of the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification for violations of the
'33 Act is against public policy and is, therefore, unenforceable.
21
<PAGE> 23
Item 13. Financial Statements and Supplementary Data.
SELECTED QUARTERLY FINANCIAL DATA
Our quarterly statement of operations data set forth below is derived from our
unaudited quarterly financial statements. In our opinion, these unaudited
financial statements have been prepared on the same basis as our audited
financial statements and reflect all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of our results of
operations and financial position for these periods. The historical results are
not necessarily indicative of results to be expected for any future period.
22
<PAGE> 24
GLOBAL DATATEL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
AS OF MARCH 31,
1999 1998
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 189,154 $ (126,376)
Marketable and Equity Securities -- 1,000
Trade Accounts Receivable 4,947,355 2,419,347
Inventories, Net 1,375,633 1,602,632
Due from Parent and Affiliates
Prepaid Expenses and Other Current Assets 886,829 724,593
------------ ------------
TOTAL CURRENT ASSETS 7,398,971 4,621,196
Property and Equipment, Net 511,054 603,238
Goodwill 10,918,780
Investment in Unconsolidated Subsidiary
Accounts Receivable Stockholders & Employees 17,918 46,430
Deferred Charges & Other Assets 5,520,351 3,719,588
------------ ------------
TOTAL ASSETS $ 24,367,074 $ 8,990,452
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short Term Borrowings, Banks 249,548 202,170
Accounts Payable 4,699,792 3,462,404
Accrued Expenses & Other Current Liabilities 195,337 60,975
------------ ------------
TOTAL CURRENT LIABILITIES 5,144,677 3,725,549
============ ============
Long Term Liabilities
Financial Obligations 1,178,631 1,100,959
Due to Parent Company 813,579 773,823
Deferred Revenues 501,306 402,022
Other Long Term Liabilities 1,501,529 746,609
------------ ------------
9,139,722 6,748,962
TOTAL LIABILITIES ============ ============
Stockholders' Equity
Common Stock 7,576 7,187
Preferred Stock -- --
Additional Paid In Capital 17,237,469 5,818,773
Retained Earnings (2,017,693) (3,584,470)
Accumulated Translation Adjustment -- --
Total Stockholders' Equity 15,227,352 2,241,490
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 24,367,074 $ 8,990,452
============ ============
</TABLE>
23
<PAGE> 25
GLOBAL DATATEL AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
UNAUDITED
<TABLE>
<CAPTION>
AS OF MARCH 31,
1999 1998
<S> <C> <C>
Revenues $ 6,502,012 $ 5,110,716
Cost of Sales:
Cost of goods sold 4,031,247 2,977,304
Other Costs of Sales 812,000 743,961
----------- -----------
4,843,247 3,721,265
----------- -----------
Gross Profit 1,658,765 1,389,461
Operating Expenses:
Personnel 294,000 371,706
Marketing & Promotion, Travel & Entertainment
Communications 125,000 --
Occupancy 126,611 174,781
Professional Fees 74,605 72,105
Provision for Doubtful Accounts
Depreciation & Amortization 13,408 75,682
Other Expenses 85,380 151,174
----------- -----------
Total Operating Expenses 719,004 845,448
Other Income/(Expense):
Interest Income 93,658 35,226
Interest Expense (144,676) (155,968)
Other (35,067) 48,017
----------- -----------
TOTAL OTHER INCOME/EXPENSES (86,085) (72,725)
Income Before Income Taxes 853,676 471,278
Provision for Income Taxes 240,000 53,235
----------- -----------
Income Before Effects of
Discontinued Operations 613,678 418,043
Discontinued Operations
----------- -----------
Net Income (Loss) 613,676 418,043
Other comprehensive Income:
Foreign currency translation, net of taxes 8,039 (7,596)
Comprehensive Income (Loss) $ 621,715 $ 410,447
=========== ===========
Earnings (Loss per share (Note)
</TABLE>
24
<PAGE> 26
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
In December, 1998, the Company retained as auditors, Infante, Lago & Company, as
this firm is familiar with dealing with Latin American companies. Prior thereto,
the Company's auditors were Schvaneveldt & Company. The change was not due to
any disagreement in accounting principles or practices followed by the Company.
Item 15. Financial Statements and Exhibits.
FINANCIAL STATEMENTS:
Consolidated Financial Statements of Global DataTel, Inc. and its
Subsidiaries:
Accountant's report of Infante, Lago & Company May 10, 1999
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Operations for the year ended December
31, 1998 and nine months ended December 31, 1997
Consolidated Statements of Shareholder's Equity for the year
ended December 31, 1998 and nine months ended December 31, 1997
Consolidated Statements of Cash Flows for the year ended December
31, 1998 and nine months ended December 31, 1997
Notes to Financial Statements
EXHIBITS:
3.1 Articles of Incorporation of Gold Coast Resources, Inc. a
Nevada corporation
3.2 Amendment to Articles of Incorporation
3.3 Amendment to Articles of Incorporation
3.4 By-Laws
10.1 Employment Agreement with Richard Baker
10.2 Employment Agreement with Antonio Serrato
10.3 Employment Agreement with Rafael Delgado
25
<PAGE> 27
10.4 Employment Agreement with Mario Habib
16.1 Letter of Schvaneveldt and Company re Change in Certifying
Accountant
27. FINANCIAL DATA SCHEDULE
(attached)
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Registrant: GLOBAL DATATEL, INC.
Date: July 22, 1999
By: /s/ Richard Baker
----------------------------------
Richard Baker, President & CEO
26
<PAGE> 28
GLOBAL DATATEL, INC.
AND ITS
SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
<PAGE> 29
C O N T E N T S
<TABLE>
<CAPTION>
<S> <C>
Accountants' Report ................................................... 2
Consolidated Balance Sheets ........................................... 3
Consolidated Statements of Operations ................................. 4
Consolidated Statements of Stockholders' Equity ....................... 5
Consolidated Statements of Cash Flows ................................. 6
Notes to the Consolidated Financial Statements ........................ 7 - 16
</TABLE>
<PAGE> 30
[I L C LETTERHEAD]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Global DataTel and its
Subsidiaries
We have audited the accompanying consolidated balance sheet of Global DataTel,
Inc. and its Subsidiaries (the "Company") as of December 31, 1998, and the
related consolidated statements of operations, cash flows and changes in
shareholders' equity for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements based on our audit. The consolidated
financial statements of Global DataTel, Inc. and its Subsidiaries (Formerly Gold
Coast Resources, Inc.) as of December 31, 1997 were audited by other auditors
whose report dated June 8, 1998, expressed an unqualified opinion on those
statements.
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, based on our audit, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Global DataTel, Inc. and its Subsidiaries as of December 31, 1998,
and the results of their operations and their cash flows for the year ended
December 31, 1998, in conformity with generally accepted accounting principles.
/s/ Infante, Lago & Company
- - - - - ---------------------------
Infante, Lago & Company
May 10, 1999
2
<PAGE> 31
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSETS
1998 1997
------------ -------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 101,743 $ --
Accounts receivable, net of allowance for doubtful accounts of $389,880 2,720,363 --
Due from stockholders 572,040 --
Inventories 1,152,746 --
Other current assets 117,292 134,649
------------ ------------
TOTAL CURRENT ASSETS 4,664,184 134,649
------------ ------------
PROPERTY,PLANT, AND EQUIPMENT,NET 479,970 7,331
OTHER ASSETS:
Goodwill, net 10,918,780 --
Convertible debenture 3,350,000 --
Other assets 923,082 2,427,495
------------ ------------
TOTAL OTHER ASSETS 15,191,862 2,427,495
------------ ------------
TOTAL ASSETS $ 20,336,016 $ 2,569,475
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,597,599 $ 27,101
Short term borrowings, banks 1,175,146 --
Deferred revenues 409,081 --
Other accrued liabilities 751,026 8,992
Notes payable to shareholders 1,021,667 --
------------ ------------
TOTAL CURRENT LIABILITIES 5,954,519 36,093
------------ ------------
MORTGAGE PAYABLE - BANK 97,159 104,533
DEFERRED BARTER CREDITS -- 123,900
STOCKHOLDERS' EQUITY:
Preferred stock 25,000,000 shares authorized, par
value $.001, 105,000 and 450,000 shares issued as of December 31, 1998 and 1997,
respectively 105 4,500
Common stock, 50,000,000 shares authorized, par value $.001,
9,180,123 and 7,162 shares issued and outstanding as of December
31, 1998 and 1997, respectively 9,180 7
Paid in capital 17,781,557 5,821,448
Accumulated deficit (3,835,090) (3,521,006)
Foreign currency translation adjustment 328,586 --
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 14,284,338 2,304,949
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,336,016 $ 2,569,475
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE> 32
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 AND
THE NINE MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Net Sales $ 1,937,578 $ 14,973
Costs of goods sold 1,032,350 --
----------- -----------
Gross profit 905,228 14,973
----------- -----------
Selling, general, and administrative expenses 731,860 188,376
Payroll and related expenses 1,450,160 --
Interest expense 45,047 --
Other (income) expense (141,140) 1,908,263
----------- -----------
Total expenses 2,085,927 2,096,639
----------- -----------
Loss before provision for income taxes (1,180,699) (2,081,666)
Provision for income taxes 503,725 --
----------- -----------
Loss from continuing operations before extraordinary items (1,684,424) (2,081,666)
----------- -----------
Discontinued operations:
Loss from operations from subsidiary sold (629,473) --
Gain on sale of subsidiary 1,999,813 --
----------- -----------
Income from extraordinary items 1,370,340 --
----------- -----------
Net Loss (314,084) (2,081,666)
Other comprehensive income:
Foreign currency translation 18,569 --
----------- -----------
Comprehensive Loss $ (295,515) $(2,081,666)
=========== ===========
Comprehensive loss per share
Loss per share from continuing operations $ (0.22) $ (0.82)
Income per share from extraordinary items 0.18 --
----------- -----------
Net loss per share $ (0.04) $ (0.82)
=========== ===========
Weighted average shares outstanding 7,586,815 2,533,238
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE> 33
GLOBAL DATATEL AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1998 AND
THE NINE MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Common Stock Preferred Stock
----------------------- -------------------------
Balances Shares Amount Share Amount
-------- ------ ------ ----- ------
<S> <C> <C> <C> <C>
Balance March 31, 1997 5,787 $ 6 -- $ --
Shares issued for service 125 -- -- --
Shares issued for investment 1,250 1 -- --
Class A Preferred Shares issued for Condor Insurance -- -- 500,000 500
Class B Preferred Shares issued for 800 Biostasis, inc -- -- 1,000,000 1,000
Class C Preferred Shares issued for Shoulder Shade -- -- 1,000,000 1,000
Class D Preferred Shares issued for Secure Bind, Inc. -- -- 1,000,000 1,000
Class F Preferred Shares issued for 80% of the -- -- -- --
Travel Agents Hotel Guide, Inc. -- -- 1,000,000 1,000
Net Loss for the period -- -- -- --
---------- ------------ ---------- ------------
Balance December 31, 1997 7,162 $ 7 4,500,000 $ 4,500
Rescinded Preferred -- -- (4,500,000) (4,500)
Shares issued for services 1,198,500 1,199 -- --
Shares issued for cash 2,870,000 2,870 -- --
Shares tendered by stockholders (3,518,525) (3,519) -- --
Shares issued to purchase subsidiaries 8,622,986 8,623 105,000 105
Foreign currency translation -- -- -- --
Net Loss for the period -- -- -- --
---------- ------------ ---------- ------------
9,180,123 $ 9,180 105,000 $ 105
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
Foreign
Additional Currency
Paid-in Accumulated Translation
Balances Capital Deficit Adjustments Total
-------- ------- ------- ----------- -----
<S> <C> <C> <C> <C>
Balance March 31, 1997 $ 3,207,203 $ (1,439,340) $ -- $ 1,767,869
Shares issued for service 50 -- -- 50
Shares issued for investment 494 -- -- 495
Class A Preferred Shares issued for Condor Insurance -- -- -- 500
Class B Preferred Shares issued for 800 Biostasis, inc 271,895 -- -- 272,895
Class C Preferred Shares issued for Shoulder Shade -- -- -- 1,000
Class D Preferred Shares issued for Secure Bind, Inc. -- -- -- 1,000
Class F Preferred Shares issued for 80% of the -- -- -- --
Travel Agents Hotel Guide, Inc. 2,341,806 -- -- 2,342,806
Net Loss for the period -- (2,081,666) -- (2,081,666)
------------ ------------ ------------ ------------
Balance December 31,1997 $ 5,821,448 $ (3,521,006) $ -- $ 2,304,949
Rescinded Preferred (271,895) -- -- (276,395)
Shares issued for services 198,001 -- -- 199,200
Shares issued for cash 571,130 -- -- 574,000
Shares tendered by stockholders 3,519 -- -- --
Shares issued to purchase subsidiaries 11,459,354 -- -- 11,468,082
Foreign currency translation -- -- 328,586 328,586
Net Loss for the period -- (314,084) -- (314,084)
------------ ------------ ------------ ------------
$ 17,781,557 $ (3,835,090) $ 328,586 $ 14,284,338
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 34
GLOBAL DATATEL AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998 AND
THE NINE MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (314,084) $ (2,081,666)
Adjustment to reconcile net loss
to net cash (used) provided by operations
Loss on impaired assets and sales of assets 13,547 --
Loss on sale of land -- 1,619,888
Other losses, net -- 288,425
Loss from operations from subsidiary sold 629,473 --
Gain on sale of division (1,999,813) --
Depreciation and amortization 287,023 120,885
Provision for bad debt expense 389,880 --
Deferred barter credits (123,900) --
Changes in assets and liabilities
Increase in accounts receivable and due from shareholders (3,682,283) --
Increase in inventories (1,152,746) --
Decrease in other assets and deferred costs 1,521,770 --
Increase in prepaid expenses -- (10,749)
Increase in accounts payable 2,570,498 27,101
Increase in accrued expenses 742,034 (35,175)
Increase in deferred revenues 409,081 --
Increase in notes payable to shareholders 1,021,667 --
------------ ------------
Net cash (used) provided by operating activities 312,147 (71,291)
------------ ------------
CASH FLOWS USED BY INVESTING ACTIVITIES
Purchase of net assets of acquired companies (301,102) (8,216)
------------ ------------
Net cash used by investing activities (301,102) (8,216)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in bank overdraft -- 6,776
(Increase) Decrease in mortgages payable, bank (7,374) 72,731
Proceeds from sale of subsidiary 1,370,340 --
Convertible debenture received for sale of subsidiary (3,350,000) --
Notes payable assumed in connection with acquisitions 1,175,146 --
Proceeds from issuance of common stock 574,000 --
------------ ------------
Net cash flows (used) provided by financing activities (237,888) 79,507
------------ ------------
Increase (decrease) in cash prior to effect
of exchange rate on cash (226,843) --
Effect of exchange rate on cash 328,586 --
------------ ------------
Net increase (decrease) in cash 101,743 --
Cash at beginning of year -- --
------------ ------------
Cash at end of year $ 101,743 $ --
============ ============
SUPPLEMENTAL INVESTING AND FINANCING NON-CASH TRANSACTIONS
Property plant and equipment acquired for stock $ (472,107) $ --
Rescinded preferred stock (276,395) --
Preferred shares issued to purchase subsidiaries 105 2,618,201
Common shares issued for services 199,200 545
Common shares issued to purchase subsidiaries 11,467,977 --
------------ ------------
$ 10,918,780 $ 2,618,746
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 35
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Global DataTel, Inc. ("the Company") was originally
incorporated under the laws of the State of Utah on April 17, 1980 as La
Plate Oil and Mining, Inc. On October 1, 1982 the company changed its name
to Gold Coast Resources, Inc. ("Gold Coast"). On September 30, 1998 Gold
Coast purchased 100% of the outstanding common stock of International
Computer Resources ("ICR") (a Florida corporation) and Mantenimiento
Electronico de Sistemas Limited ("MES") (a Colombian corporation) in a
transaction accounted for as a purchase. ICR and MES were both wholly owned
and majority-owned, respectively, by the majority shareholder of the
Company. On December 2, 1998 the company changed its name to Global DataTel,
Inc. The Company engages primarily in the sale and distribution of medium
and high-end computer and software products, including Enterprise Resource
Planning (ERP) suites, as well as, providing information technology
solutions and support to medium and large business clients. The Company has
distribution agreements with International Business Machines ("IBM"), Lotus,
Cisco Systems, and JBA.
On November 30, 1998, the Company purchased three unrelated companies in
Colombia, South America, DLR & CIA ("DLR"), Micro Star Ltda. ("Micro"), and
CASA Informatica ("Casa"). The companies acquired are also in the business
of providing software and hardware solutions to companies in their markets.
Previous to the acquisition by ICR and MES, Gold Coast Resources was a
development stage company that, through a wholly-owned subsidiary the Travel
Agents Hotel Guide, Inc. ("Hotel"), was engaged in the business of
developing a hotel guide that was to sell advertising space to the hotel and
travel industry. Gold Coast sold Hotel on December 14, 1998.
The following is summary of the significant policies followed in the
preparation of the consolidated financial statements.
Principles of Consolidation - The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Cash - For purposes of cash flows the company considers investments of three
months or less as cash equivalents. Revenues from services are recognized as
the services are performed. Revenues from the sales and installation of a
hardware package are recognized when the installation is substantially
completed and operational.
Inventories - Inventories are principally composed of finished goods and are
stated at the lower of cost or market.
Accounts Receivable - The Company periodically reviews the adequacy of the
allowance for doubtful accounts and maintains the allowance for doubtful
accounts at a level which management believes is sufficient to cover
potential credit losses.
Property, Plant and Equipment - Property, plant, and equipment is carried at
cost, less accumulated depreciation. Gains or losses from sales or
retirements are included in current operations. Maintenance, repairs and
renewals of a routine nature are charged to operations. Depreciation is
provided over the estimated useful lives of the related assets using the
straight-line method which range from five to ten years.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates.
Concentration of Credit Risk - Financial instruments that potentially
subject the Company to concentration of credit risk consists primarily of
accounts receivable and debt securities. Concentration of credit with
respect to
7
<PAGE> 36
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
accounts receivable as of December 31, 1998 was limited to an amount due
from an agency of the Colombian Government, which represented approximately
22% of the net accounts receivable. Subsequent to year-end this balance was
paid. The Company provides for estimated credit losses at time of sale based
upon factors surrounding the credit risk of specific customers, historical
trends and other information. The investment in debt securities represents
100% of the total category. This investment consists of a convertible
debenture in Ameriresources Technologies, Inc, a publicly traded entity. The
debenture is personally guaranteed by the majority stockholder of Lexington
Sales, Inc.
Fair Value of Financial Instruments - The carrying amount of cash and
short-term borrowings, banks are carried at costs, which based on
management's estimates approximates their fair values as of December 31,
1998.
Income Taxes - The Company and its U.S. subsidiary file a consolidated
income tax return. Foreign subsidiaries are not consolidated. The Company
has adopted SFAS 109 and this pronouncement caused no material changes on
the financial statements. The provision for income taxes is primarily
related to the reconciliation of the taxes paid and owed by the foreign
subsidiaries in accordance with the taxing rules and regulation promulgated
by the Colombian government as of December 31, 1998. Approximately $34,000
of the tax provision included in the accompanying statement of operations
relates to ICR, the U.S. subsidiary. The Company has approximately
$1,900,000 of net operating loss carryforwards, which are subject to certain
restrictions and limitations based on the Company's ownership changes during
1998.
Translation of Foreign Currency - The Company's Colombian subsidiaries are
translated in accordance with Statement of Financial Accounting Standards
No. 52 (SFAS No. 52), which requires that foreign currency assets and
liabilities be translated using the exchange rates in effect at the balance
sheet date. Results of operations are translated using the average exchange
rates prevailing during the period. For purposes of SFAS No. 52, the Company
considers the Colombian peso to be the functional currency. The effects of
unrealized exchange fluctuations on translating foreign currency assets and
liabilities into U.S. dollars are accumulated as the cumulative translation
adjustment in shareholders' equity. Realized gains and losses from foreign
currency transactions are included in the results of operation for the
period. Fluctuations arising from intercompany transactions are of long term
in nature and are accumulated as cumulative translation adjustments.
Comprehensive Income - In 1998 the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". SFAS No. 130
establishes standards for reporting and displaying of comprehensive income
and its components in the Company's consolidated financial statements.
Comprehensive income is defined in SFAS No. 130 as the change in equity (net
assets) of a business enterprise during a period from transactions and other
events and circumstances from non-owner sources. The primary difference from
net income as reported is the change in cumulative foreign currency
translation adjustment.
NOTE 2 - BUSINESS ACQUISITIONS
All acquisitions have been accounted for under the purchase method. The
results of operations of the acquired businesses are included in the
consolidated financial statements from the dates of acquisition. In all of
the acquisitions, 100% of the acquired companies were purchased.
On September 30, 1998 the Company purchased, in a stock transaction, ICR and
MES. On November 30, 1998 the company purchased three Colombian companies,
DLR, Casa, and Micro.
The Company acquired all of the stock of ICR for 105,000 shares of
convertible preferred stock valued at $0.001 per share and 4,243,843 shares
of common stock valued at $2.00 per share. The net assets acquired and
liabilities assumed approximated $90,000 and $190,000, respectively. The
purchase resulted in goodwill of approximately $8,600,000. The subsidiary of
ICR, eHOLA.com, an Internet service provider, is expected to generate the
future realizable income necessary to justify the resulting goodwill in this
transaction. The acquisition was recorded using a discounted price per share
due to the low volume of trading of the Company's common stock during the
period of the acquisition.
8
<PAGE> 37
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 2 - BUSINESS ACQUISITIONS (CONTINUED)
The Company acquired MES for 357,143 common stock shares of the Company,
valued at $2.00 per share. The net assets acquired and liabilities assumed
approximated $1,181,000 and $913,000, respectively. The purchase resulted in
goodwill of approximately $475,000.
The Company acquired DLR for $300,000 ($100,000 due at closing and five
monthly installments of $40,000 thereafter, as defined) in cash, and 60,000
shares of the Company's common stock, valued at $3.00 per share. The net
assets acquired and liabilities assumed approximated $1,536,000 and
$1,732,000, respectively. The acquisition resulted in goodwill of
approximately $502,000.
The Company acquired Casa for $840,000 ($93,333 at closing and eight monthly
installments of $93,333 thereafter, as defined) in cash, and 392,000 shares
of the Company's common stock, valued at $3.00 per share. The net assets
acquired and liabilities assumed approximated $3,527,000 and $1,786,000,
respectively. The acquisition resulted in goodwill of $808,000.
The Company acquired Micro for $150,000, payable in six consecutive monthly
payments from the date of closing, and 70,000 shares of the Company's common
stock, valued at $3.00 per share. The net assets acquired and liabilities
assumed approximated $926,000 and $748,000, respectively. The purchase
resulted in goodwill of $537,000.
The Company issued non-interest-bearing promissory notes to the shareholders
of DLR, Casa and Micro for the unpaid cash portion of the consideration for
the acquisitions. The terms of the notes for the individual companies
acquired are as presented in the preceding paragraphs and the amount due is
reflected as notes payable to stockholders in the accompanying consolidated
balance sheet as of December 31, 1998. As discussed in Note 15, the Company
is currently attempting to raise capital in connection with a proposed
public offering. The realization of a major portion of the assets in the
accompanying balance sheet as of December 31, 1998 is dependent upon
continued operations of the Company, and their ability to raise additional
capital. Management believes that actions presently taken to revise the
Company's operating and financial requirements will provide the opportunity
for the Company to continue as a going concern.
The following unaudited pro forma consolidated results of operations are
presented as if ICR, MES, DLR, Casa, and Micro Star acquisitions had been
made as of January 1, 1998. The unaudited consolidated pro forma information
is not necessarily indicative of the combined results that would have
occurred had the acquisitions occurred on those dates, nor is it indicative
of the results that may occur in the future.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, (unaudited) 1998
<S> <C>
Net sales $21,778,692
Net earnings (loss)* 480,117
-----------
Net earnings (loss) per share
Basic $ 0.063
</TABLE>
* Exclusive of extraordinary items
9
<PAGE> 38
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
The Company's property, plant, and equipment consist of the following:
YEARS ENDED DECEMBER 31, 1998 1997
- - - - - ------------------------ ---- ----
Land $ 73,807 $ --
Buildings 181,643 --
Office equipment 188,608 8,216
EDP equipment 387,859 --
-------- --------
Total property, plant, and equipment $831,917 $ 8,216
Less: accumulated depreciation 351,947 885
-------- --------
Property, Plant and Equipment net $479,970 $ 7,331
Depreciation expense for the year ended December 31, 1998 and 1997 was
$142,945 and $169, respectively. For the year 1998, depreciation included
the period from dates of acquisition to the end of the year (see Note 2
acquisitions).
During 1997, Gold Coast exchanged 165,876 shares of Synfuels Technology,
Inc. and assumed two short-term notes amounting to $1,848,348 for 17.2 acres
in Henderson, Nevada. The management of Gold Coast believed that the
over-the-counter trading value would not be representative of the fair value
of large blocks of shares. Since the predecessor costs was determined by a
non-cash transaction and the acquisition by Gold Coast is in part a non-cash
transaction Gold Coast valued Synfuels Technology, Inc., shares at $10.00
per share or $1,658,960. The value of the land used by Gold Coast is
$3,507,732. An appraisal of 2.2 acres of the property dated February 21,
1997, was $225,000 per acre. Gold Coast feels this is representative of the
entire 17.2 acres or a fair market value of $3,870,000. On April 19, 1997
the note of $1,673,348 became due, and on June 7, 1997 the note of $175,000
became due. Gold Coast was unable to meet the payments for the notes and the
accrued interest and property taxes associated with the note. In an attempt
to recover something from its investment in the land, Gold Coast sold the
property for the face amount of the notes payable and $25,000 contingency
due from the buyer, which was promised upon his ability to make arrangements
with the note holders to extend the payment date. The buyer failed in his
attempt to negotiate any extension and the note holder repossessed the
property. The loss from the sale of the land approximating $1,620,000 is
included in other expense in the accompanying statements of operations for
the nine months ended December 31, 1997.
NOTE 4 - GOODWILL
Goodwill, which represents the excess of acquisition costs over the net
assets acquired in the business combinations, is amortized on the
straight-line method over 20 years (See Note 2). The carrying amount of
goodwill is reviewed annually using estimated undiscounted cash flows for
the businesses acquired over the remaining amortization periods.
Amortization expense charged to operations amounted to approximately
$144,000 in 1998.
10
<PAGE> 39
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 5 - OTHER ASSETS
Other assets as of December 31, 1998 and December 31, 1997 were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1998 1997
- - - - - ------------------------ ---- ----
<S> <C> <C>
Travel Agents Hotel Guide $ -- $2,280,000
Taxes withheld at source 129,547 --
Advances to representatives 158,034 --
Deposits and advances 331,879 --
Deferred charges 28,767 --
Other receivables 22,584 --
Various 77,173 --
Other 175,098 141,980
---------- ----------
$ 923,082 $2,427,495
</TABLE>
NOTE 6 - SHORT TERM BORROWINGS, BANKS
The Colombian subsidiaries obtain short-term financing from banks and
financing companies. Interest on such obligations range between 34% and 44%
annually and is determined by the financing source subsequent to the
availability of funds. Most of these obligations are personally guaranteed
by officers of the companies and the balance owed as of December 31, 1998
approximated $1,132,000.
ICR has available a $100,000 line of credit, at 10% interest, personally
guaranteed by the majority stockholder of the company, for working capital
purposes. As of December 31, 1998, the balance owed on this line of credit
was approximately $43,000.
The Colombian subsidiaries have credit facilities from IBM for the purchase
of computer equipment which are guaranteed by certain shareholders and
officers of the Colombian subsidiaries. The credit facilities at December
31, 1998 approximated $1,200,000 for Casa, $600,000 for DLR, and $150,000
for Micro.
NOTE 7 - DEFERRED REVENUES
Deferred revenues are comprised mainly of customer deposits on orders. The
nature of the Colombian operations requires a delay between the time that an
order is placed and the completion of the contract. Consequently, the
Company requests deposits on such arrangements.
NOTE 8 - MORTGAGE PAYABLE - BANK
On March 14, 1996, DLR obtained a mortgage note from a bank for the purchase
of their office facility in Bogota, Colombia. The mortgage expires on March,
2012 and was for an initial principal balance of approximately $99,400. The
mortgage agreement allows for an increase in the outstanding principal
balance due to monetary adjustments as mandated by the Colombian Central
Bank, therefor, management of the Company can not reasonably determine
minimum future payments. Although payments are due currently, the entire
balance has been classified as long-term because management cannot
determine, at this time, the amount that is due and payable in the current
year.
11
<PAGE> 40
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 9 - COMMITMENTS AND CONTINGENCIES
On January 1, 1997, a subsidiary of the Company entered into a two-year
lease with an indefinite renewal option for office facilities in Bogota,
Colombia. The lease calls for an approximate negotiable increase of 18% at
renewal. The lease can be canceled by either party without prior
notification.
On December 9, 1996, a subsidiary of the Company entered into a one-year
lease for office facilities in Medellin, Colombia. The lease is personally
guaranteed by one of the officers of the Company and a bond for
approximately 50% of the annual lease was submitted to the lessor. The lease
can be terminated by either party without prior notification and calls for
negotiated annual increases.
On August 16, 1997, a subsidiary of the Company entered into a one-year
lease with an indefinite renewal option for office space in Cali, Colombia.
The lease is personally guaranteed by an officer of the Company. The lease
calls for negotiated annual increases and can be canceled by non-fulfillment
of the lease terms.
On May 4, 1998, a subsidiary of the Company entered into a six-month
agreement to rent office space in Medellin, Colombia. The lease calls for an
indefinite renewal with annual increases to be tied to the legal inflation
rate. The lease may be canceled upon non-fulfillment of the lease terms with
three months prior notification.
On March 1, 1993, a subsidiary of the Company entered into a lease agreement
expiring in April 2000 to rent office space in Bogota, Colombia. The lease
calls for an indefinite renewable option.
On January 1, 1999, a subsidiary of the Company entered into a three-year
lease for office and warehouse space in Delray Beach, Florida. The lease is
renewable for another three years with annual increases of 5%.
As of December 31, 1998, the minimum lease obligation for those leases that
management can determine to have a minimum obligation is as follows:
<TABLE>
<CAPTION>
YEAR 1999 2000 2001 Total
- - - - - ---- ---- ---- ---- -----
<S> <C> <C> <C> <C>
Minimum
Lease Obligation $ 66,396 $ 48,396 $ 44,796 $159,588
</TABLE>
In 1998, during the ordinary course of business, Gold Coast has incurred
expenses. Since its working capital has been limited, obligations and
commitments have gone unfulfilled. The operating subsidiary, Hotel,
committed to produce a hotel guide and received compensation for advertising
for that publication. The guide has not yet been published. The stock of
Hotel was sold during 1998, and management believes that any obligations
owed should be satisfied by the new owners.
NOTE 10 - CAPITAL STRUCTURE
At December 31, 1998 the Company has only one class of common stock
outstanding and a series A convertible preferred stock. The series A
convertible preferred has a liquidating value of no less than $35,000,000
and has preference over all other stock in a liquidation. The conversion
value is based on the liquidating value and a maximum share price of 111
shares of common stock for one share of preferred stock. There are no
arrearages in preferred dividends.
During 1998, Gold Coast issued 1,198,500 shares of its common stock to
officers, directors, employees and others for services rendered. The shares
were valued at $0.10 per share. During 1998, Gold Coast issued 2,870,000
shares of its common stock for cash at $0.10 per share pursuant to rule 504
of Regulation D. During 1998, Gold Coast issued 3,500,000 shares of its
common stock to an officer/director/major shareholder for his
12
<PAGE> 41
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 10 - CAPITAL STRUCTURE (CONTINUED)
minority interest in the Travel Agent's Hotel Guide, Inc. The shares were
valued at $0.10. During 1998, Gold Coast rescinded all preferred stock
transactions. The shares were canceled and the subsidiaries were disposed
of. On August 18, 1998 Gold Coast approved a 1 for 200 reverse split of its
common stock. On December 3, 1998 Gold Coast approved a 1 for 2 reverse
split of its common stock. All stock transactions have been restated to
reflect these reverse splits.
During 1997, Gold Coast acquired 135,751 free trading shares of Synfuels
Technology, Inc. by issuing 1,585,040 shares of its restricted common stock
pursuant to rule 144. An additional 30,125 shares were acquired by issuing
500,000 shares of its common stock pursuant to Regulation D exemption. These
shares were exchanged for 17.2 acres of land in Henderson, Nevada. This land
was subsequently lost through repossession. Gold Coast's former President is
also an officer of Synfuels Technology, Inc.
Former Officers and Directors of Gold Coast were issued 3,500,000 shares of
stock in exchange for their minority interest in Hotel.
During the period ending Dec. 31, 1997, Gold Coast issued Preferred shares
of various classes to acquire five subsidiaries:
500,000 Preferred class A to acquire 500,000 shares of Condor
Insurance Limited, of Basseterre, St. Kitts, West Indies
1,000,000 Preferred class B to acquire 80% of Biostasis Corp.
1,000,000 Preferred class C to acquire 100% of Shoulder Shade, Inc.
1,000,000 Preferred class D to acquire 100% of Secure Bind, Inc.
1,000,000 Preferred class F to acquire the Travel Agents Hotel
Guide, Inc.
Gold Coast issued 1,000,000 Class F Preferred shares for 80% of the
outstanding shares Hotel. The Class F shares are redeemable for common stock
based on the performance guidelines established by the exchange agreement of
October 7, 1997. The Agreement specifies that for each $15.00 of earnings by
Hotel, it may redeem one share of class F preferred for 10 shares of common
stock subject to the rules and regulations of Rule 144. In the event that no
earnings are produced within a five-year period the preferred shares shall
become non-convertible.
Biostasis Corporation is a Utah corporation with no assets or operations at
December 31, 1997. Biostasis Corporation disposed of its investment assets
and the resulting loss of $278,600 is reflected on the consolidated
statements of operations for that year. Biostasis Corporation defaulted on
its royalty payment for marketing rights for an herbal product known as
Dynaway. This asset of $9,775 has also been written off.
On August 14, 1998, Gold Coast rescinded the mergers of merit with the above
subsidiaries and canceled the Preferred shares previously issued to each of
these entities.
NOTE 11 - EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued SFAS No. 128,
Earnings per Share. SFAS No. 128 replaced the previously reported primary
and fully diluted earnings per share with basic and diluted earnings per
share, respectively. Unlike the previously reported primary earnings per
share, basic earnings per share exclude the dilutive effects of stock
options. Diluted earnings per share is similar to the previously reported
fully diluted
13
<PAGE> 42
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 11 - EARNINGS PER SHARE (CONTINUED)
earnings per share. Earnings per share amounts for all periods presented
have been calculated in accordance with and, where appropriate, restated to
conform to the requirements of SFAS No. 128.
The computation of basic loss per common shares for "Loss from continuing
operations" and "Gain per share from discontinued operations" is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1998 1997
- - - - - ------------------------ ---- ----
<S> <C> <C>
Loss from continuing operations $(1,684,424) $(2,081,666)
Income from discontinued operations 1,370,340 --
Weighted average number of common
shares outstanding - Basic 7,586,815 2,533,238
Net loss per common share - Basic $ (0.041) $ (0.820)
</TABLE>
The convertible preferred stock was not included in the computation of
diluted earnings per common share for 1998 since it would have resulted in
an anti-dilutive effect. Only basic earnings per share are shown since there
are no other securities that are convertible to common stock.
NOTE 12 - INDUSTRY SEGMENT AND OPERATIONS BY GEOGRAPHIC AREAS
The Company operates predominantly in one industry segment, that being
computer systems design and sale of hardware. The Company has two geographic
groups, the U.S. subsidiary and the Colombian subsidiaries. The geographic
distributions of the Company's identifiable assets, operating income and
revenues are summarized in the following table.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
- - - - - ----------------------- ----
<S> <C>
Revenues from unrelated entities:
United States $ 400,623
Colombia 1,536,915
------------
Total revenues: $ 1,937,538
Operating loss:
United States $ (717,261)
Colombia (462,938)
------------
Total operating loss: $ (1,180,699)
Assets:
United States $ 15,641,458
Colombia 6,336,410
------------
Total identifiable assets 21,977,868
Less: Corporate eliminations (1,641,852)
------------
Total assets $ 20,336,016
</TABLE>
14
<PAGE> 43
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 12 - INDUSTRY SEGMENT AND OPERATIONS BY GEOGRAPHIC AREAS (continued)
The Company has only one significant supplier in IBM de Colombia, which
accounted for approximately 60% of the total purchases made during 1998.
NOTE 13 - SALE OF SUBSIDIARY
The Travel Agents Hotel Guide (the "Guide") was a publication being
developed by Gold Coast and the former management of the Company for use by
travel agents in order to advertise and sell hotel rooms primarily
throughout the United States. Gold Coast acquired the publication rights,
logo, client lists and business concept from the former president of the
Guide by issuing 3,500,000 shares of common stock of Gold Coast.
On December 14, 1998, the Company sold Hotel for $3,350,000 in the form of a
convertible debenture issued by Ameriresources Technologies, Inc., a
publicly traded company, and guaranteed by Lexington Sales, Inc. The
accompanying statement of operations for the year ended December 31, 1998
reflect as extraordinary items, the loss from operations of approximately
$629,000 and the gain on sale of the subsidiary of approximately $2,000,000.
NOTE 14 - RELATED PARTY TRANSACTIONS
The Company is a member of a group of affiliated entities and, has extensive
transactions and relationships with members of the group. Because of these
relationships, it is possible that the terms of these transactions are not
the same as those that would result from transactions among wholly unrelated
parties.
NOTE 15 - SUBSEQUENT EVENTS
In February, 1999, the Company signed a letter of intent with Dirks &
Company to act as the Managing Underwriter in connection with a proposed
offering of shares of Cumulative Convertible Debentures of the Company.
Dirks & Company intends to underwrite, on a firm commitment basis, such
number of Debentures which will result in gross proceeds of approximately
$50 million. A firm commitment does not guarantee that the underwriter will
fund the proposed offering, since their commitment is not known until the
twenty day waiting period following the SEC approved registration has been
filed. As of this date no registration document relating to this proposed
offering has been filed and management cannot determine at this time the
eventual outcome of this proposed offering.
On February 5, 1999 the Company did an offering under Rule 504 of Regulation
D for 100,000 shares of its common stock at $3.00 per share. The offering
was subscribed to in full by a related party, and the Form D was timely
filed with the Securities and Exchange Commission.
In April 1999, the Company began negotiations to acquire 100% of the shares
of stock a computer solutions provider. As of this date, management cannot
determine with any degree of certainty whether this acquisition will occur
since it is dependent upon the success of the offering referred to
previously.
NOTE 16 - STOCK OPTION AGREEMENT
In April 1999, the Company entered into an option agreement with a
consultant, in partial payment of services rendered. The agreement grants
250,000 shares of the Company's common stock, at an exercise price of $5.75
per share. The options are non-dilutive. To date, no options have been
exercised.
15
<PAGE> 44
GLOBAL DATATEL, INC. AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 17 - OPERATING RISKS
As substantially all of the Company's operations are currently conducted in
Colombia, the Company is subject to special consideration and significant
risks not typically associated with Companies operating in North America and
Western Europe. These include risks associated with, among others, the
political, economic and legal environments and foreign currency exchange.
The Company's results may be adversely affected by changes in the political
and social conditions in Colombia, and by changes in governmental policies
with respect to laws and regulations, anti-inflationary measures, currency
conversion and remittance abroad, and rates and methods of taxation among
other things.
NOTE 18 - IMPACT OF YEAR 2000 - UNAUDITED
The Company is in the process of evaluating the effect of the year 2000 on
its computer systems. The Company believes that the cost of upgrading its
systems will not materially affect the operations but will constitute the
normal periodic ongoing cost of maintaining and improving its computer
system.
The Company has initiated communications with all of its significant
suppliers to determine the extent to which the Company's operations are
vulnerable to those third parties failure to remediate their own year 2000
issues. There can be no guarantee that the system of such companies or
payors will be timely converted and would not have an adverse impact on the
Company. Additionally, general problems such as electric power, water and
sewer etc., are beyond the ability of the Company to determine, and would
affect most other companies in the geographic area of Colombia.
16
<PAGE> 45
EXHIBITS INDEX
--------------
3.1 Articles of Incorporation of Gold Coast Resources, Inc. a
Nevada corporation
3.2 Amendment to Articles of Incorporation
3.3 Amendment to Articles of Incorporation
3.4 By-Laws
10.1 Employment Agreement with Richard Baker
10.2 Employment Agreement with Antonio Serrato
10.3 Employment Agreement with Rafael Delgado
10.4 Employment Agreement with Mario Habib
16.1 Letter of Schvaneveldt and Company re Change in Certifying
Accountant
27. FINANCIAL DATA SCHEDULE
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
GOLD COAST RESOURCES
The undersigned persons of the age of twenty one or more, acting as
incorporators under the general corporation law (Chapter 78 of the Nevada
Revised Statutes) of the State of Nevada, do hereby certify:
ARTICLE I
NAME
The name of the Corporation is GOLD COAST RESOURCES, INC.
ARTICLE II
DURATION
The resident agent and the resident office are:
Registered Agent: Roger B. Ellsworth
Registered Office: 3631 Seneca Lane
Las Vegas, NV 89109
ARTICLE III
The duration of this corporation is perpetual.
ARTICLE IV
The powers of this corporation shall be those enumerated, granted and
specified in general corporate law, or implied therefrom; and any and all powers
necessary or convenient to effect any or all of the purposes for which the
corporation is organized.
<PAGE> 2
ARTICLE V
The purpose for which this corporation is organized, are:
Sec. 1. To generally engage in the oil and gas business for profit, in
all its phases, including the purchase and sale of state, federal and private
leaseholds, contracts and royalties and to engage in joint ventures for further
exploration, recovery and marketing. To engage in all phases of mineral and
mining operations, properties, investments and other rights.
Sec. 2. To deal and invest in the securities of other public and
private corporations for profit, including mining entities and any an [sic] all
other lawful business corporations.
Sec. 3. To buy, sell, hold and deal in non-mineral real property,
particularly undeveloped acreage, and to improve and develop the same.
Sec. 4. To engage in any and all other lawful business endeavor.
ARTICLE VI
The aggregate number of shares which this corporation shall have
authority to issue shall be fifty million shares (50,000,000) with a par value
of one mill ($0.001) per share, for share value of $50,000.00.
ARTICLE VII
There shall be but one class of stock, namely common stock. Each share
shall be entitled to one vote in shareholder meetings
2
<PAGE> 3
and cumulative voting is denied. All shares shall be non-assessable with equal
rights and privileges. Shareholder pre-emptive rights are not accorded to
shareholders.
ARTICLE VIII
The Board of Directors shall consist of no less than three nor more
than eleven. The initial Board shall be three Directors, as follows:
Johnny E. Worthen
4485 Abinadi Road
Salt Lake City, UT 84124
Laura Olson
4485 Abinadi Road
Salt Lake City, UT 84124
Brad L. Smith
4485 Abinadi Road
Salt Lake City, UT 84124
ARTICLE IX
The names and address of the incorporators of this corporation are:
Johnny E. Worthen, Brad L. Smith and Laura Olson, with addresses as listed
immediately above.
ARTICLE X
This corporation shall not commence business until consideration of at
least ONE THOUSAND DOLLARS ($1,000.00) has been paid in to the corporation for
the issuance of shares. However, this requirement shall not preclude
transactions or the incurring of indebtedness which is incidental to its
organization or to be
3
<PAGE> 4
obtaining of subscriptions to or payment for its shares by the founding group or
individuals.
ARTICLE XI
The following provisions shall govern shareholder meetings:
Sec. 1. An annual meeting of the shareholders shall be held at time and
place within or without the State of Nevada, and in further manner as may be
provided in By-Laws or other action of the Board of Directors. Failure to hold
an annual meeting shall not work a forfeiture or dissolution of the corporation.
Sec. 2. Thirty percent (30%) of the shares of common stock entitled to
vote shall be necessary to constitute a quorum of shareholders. Affirmative vote
of the majority of shares represented shall be the act of the shareholders, at
any annual or special meeting -- unless a greater approval is required by law
concerning a specific subject matter of proposition.
Sec. 3. Special meetings of the shareholders may be called by the
Board, the Chairman of the Board, the President, or the holders of not less than
ten percent (10%) of the shares outstanding.
ARTICLE XII
Other provisions regulating the internal affairs of this corporation
are:
Sec. 1. Board of Directors. The business and affairs of the corporation
shall be managed by its Board of Directors. A Director need not be a share
holder. Directors' terms shall continue until
4
<PAGE> 5
proper stockholder meeting is called and successors are elected and qualify. A
majority of the Board is necessary to constitute a quorum. Board meetings may be
held within or without the state. Unless otherwise later required by By-Laws,
neither the purpose nor the business to be transacted at any regular or special
Board meeting, need be specified in the notice of meeting or waiver thereunto
appertaining.
Sec. 2. Officers. Corporate officers shall include a President, a
Vice-President, a Secretary and a Treasurer. The positions of Secretary and
Treasurer may, by the Directors, be at any time combined in one person. Officers
shall be elected by the Board in meeting immediately following annual
shareholder meeting, for each year-to-year period (unless replaced or removed by
the Board, which officer tenure being at the ultimate discretion of the Board).
Duties of the officers are those usually and normally incumbent upon holders of
office or that title, subject to specific direction of the Board of Directors
and as provided in By-Laws. The President shall be the principal executive
officer to put into effect the decisions of the Board of Directors, and he shall
supervise and control the business and affairs of the corporation subject to the
Board decisions, and shall preside at meeting of the shareholders and directors.
The Vice-President shall perform the duties of the President.
Sec. 3. Fiscal Year. Until changed by the Board of Directors, the
fiscal period shall end each year on the anniversary date (month and year) of
incorporation in Nevada.
5
<PAGE> 6
Sec. 4. By-Laws. The affairs of this corporation shall be governed by
these articles until By-Laws are adopted and thereafter shall be governed by
these articles and the By-Laws. The Board shall have the power to adopt By-Laws
and to amend same at any regular or special Board meeting.
Sec. 5. The Board of Directors may authorize any officer or agent to
enter into any contract or to execute any instrument for the corporation. Such
authority may be general or be confined to specific instances.
Sec. 6. Action Without Meeting. Any action required or permitted to be
taken by the Board of Directors or the shareholders at a meeting may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all directors or shareholders, as the case may be.
Sec. 7. Waiver of Notice. Whenever any notice is required to be given
to any shareholder or Director of the corporation under provisions of these
Articles, By-Laws, or Chapter 78 of the Nevada Revised Statutes, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XIII
No contract or other transaction between this corporation and any other
corporation or entity shall be affected or invalidated solely by the fact that
any director or officer of this corporation
6
<PAGE> 7
is interested in, or is a director or officer of such other corporation or
entity -- provided that the extent of the interest and connection of such
director or officer shall have been fully or satisfactorily disclosed to this
corporation Board of Directors, and no Board member disapproves of such contract
or transaction under the circumstances disclosed.
In WITNESS WHEREOF we, the undersigned, being all of the incorporators
of Gold Coast Resources, hereby certify that the facts herein above stated are
truly set forth and constitute our desire, and we do now accordingly hereunto
set our hands to same on this 2 day of December, at Salt Lake City, Utah.
s/
-----------------------------------
Johnny E. Worthen
s/
-----------------------------------
Brad L. Smith
s/
-----------------------------------
Laura Olson
STATE OF UTAH )
: ss
County of Sale Lake )
SUBSCRIBED AND SWORN to before me this 2nd day of December, 1996.
s/Lynne King
-----------------------------------
NOTARY PUBLIC
7
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION
OF
GOLD COAST RESOURCES
Johnny Worthen, Laura Olson and Brad Smith certify that:
1. They are the and President, Vice President and Secretary/Treasurer,
respectively of Gold Coast Resources.
2. Articles VI and VII of the Articles of Incorporation is amended to
read:
ARTICLE VI
STOCK
Capitalization: The aggregate number of shares which this Corporation shall have
the authority to issue is Fifty Million (50,000,000) shares of common stock each
having a par value of one-tenth of one cent ($0.001), and Twenty-Five Million
(25,000,000) shares of preferred stock with a par value of one-tenth of one cent
($0.001) par value, with such preferences, qualifications, limitations,
restrictions and special or relative rights fixed by the Board of Directors.
Upon the amendment of this Article each issued and outstanding share of common
stock is reverse split into one share for each 250 shares (0.001 share) of
common stock.
ARTICLE VII
There shall be two classes of stock, namely common stock and preferred stock.
Each share shall be entitled to one vote in shareholder meetings and cumulative
voting is denied. All shares shall be non-assessable with equal rights and
privileges. Shareholder pre-emptive rights are not accorded to shareholders.
<PAGE> 2
3. The amendments herein set forth have been duly approved by the required vote
of shareholders in accordance with the Nevada Domestic and Foreign Corporation
Laws. The total number of issued and outstanding shares represented by proxy or
in person accounted for at the meeting were 7,388,136 of the 13,028,506 issued
and outstanding shares. A majority of shares voted in favor of the amendments.
The percentage vote required for approval of the amendments. The percentage vote
required for approval of the amendment herein set forth was more than 50%.
Dated this 2nd day of December, 1996.
s/Brad Smith
---------------------------------------------
Brad Smith - Secretary/Treasurer
s/Johnny Worthen
---------------------------------------------
Johnny Worthen - President
Director
STATE OF UTAH )
:
COUNTY OF SALT LAKE )
I, the undersigned, a Notary Public duly commissioned to take
acknowledgements and administer oaths in the State of Utah, do hereby certify
that on this day, personally appeared before me Johnny Worthen and Brad Smith,
who being by me first duly sworn declared that they are the officers referred to
in paragraph 1 of the foregoing Certificate of Amendment to Articles of
Incorporation of Gold Coast Resources, and that they signed the articles as such
and the statements contained therein are true and correct of their own
knowledge.
WITNESS MY HAND AND NOTORIAL SEAL, this 2 day of December, 1996.
s/ Laurel Deane Gleue
---------------------------------------------
NOTARY PUBLIC
Residing at: Salt Lake City, Utah
My Commission Expires: 9-13-99
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
Gold Coast Resources, Inc.
- - - - - --------------------------------------------------------------------------------
Name of Corporation
the undersigned David Newren and
------------------------------------------------------------
President
Helen Napoleon of Gold Coast Resources, Inc.
- - - - - --------------------------------------- -------------------------------------
Secretary Name of Corporation
do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 3rd day of December, 1998 adopted a resolution to amend
the original articles as follows:
ARTICLE I is hereby amended to read as follows:
The name of the Corporation is Global Datatel, Inc.
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 15,150,867, that the
said change(s) and amendment have been consented to and approved by a majority
vote of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
s/
----------------------------------------
David Newren, President
s/
----------------------------------------
Helen Napoleon, Secretary
State of California )
) ss.
County of Sacramento )
On day of December, 1998, personally appeared before me, a Notary
Public, Helen Napoleon who acknowledged that she executed the above instrument.
----------------------------------------
Signature of Notary
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On the 3rd day of December, 1998, personally appeared before me a Notary Public,
David Newren, who acknowledged that he executed the above instrument.
s/Bonnie Jean C. Tippetts
----------------------------------------
Notary Public
<PAGE> 1
EXHIBIT 3.4
BY-LAWS
OF
GOLD COAST RESOURCES
ARTICLE I - OFFICES
The principal office of the corporation in the State of Utah shall be
located in the City of Sale Lake, County of Salt Lake. The corporation may have
such other offices, either within or without the State of incorporation as the
board of directors may designate or as the business of the corporation may from
time to time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the 17th day of
April in each year, beginning with the year 1981 at the hour three o'clock P.M.,
for the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual meeting
shall be a legal holiday such meeting shall be held on the next succeeding
business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the present at the request of the holders of
not less than ten percent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the
State unless otherwise prescribed by statute, as the place of meeting for any
annual meeting or for any special meeting called by the directors. A waiver of
notice signed by all stockholders entitled to vote at a meeting may designate
any place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
<PAGE> 2
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than thirty
days before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
the meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, addressed to the stockholder at his address as it appears on the
stock transfer books of the corporation, with postage thereon prepaid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD RATE.
For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, thirty days. If the stock transfer books shall
be closed for the purpose of determining stockholders entitled to notice of or
to vote at a meeting of stockholders, such books shall be closed for at least
ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the directors may fix in advance a date as the record date for
any such determination of stockholders, such date in any case to be not more
than thirty days and, in case of a meeting of stockholders, not less than ten
days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or stockholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of stockholders. When a determination of stockholders entitled to
vote at any meeting of stockholders has been made as provided in this section,
such determination shall apply to any adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for
shares of the corporation shall make, at least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten days prior
2
<PAGE> 3
to such meeting, shall be kept on file at the principal office of the
corporation and shall be subject to inspection by any stockholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting. The original stock transfer
book shall be prima facie evidence as to who are the stockholders entitled to
examine such list or transfer books or to vote at the meeting of stockholders.
7. QUORUM.
At any meeting of stockholders one-third of the outstanding shares of
the corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the secretary of the corporation before or
at the time of the meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled to
vote held by such stockholders. Upon the demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation of the laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3
<PAGE> 4
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a meeting
of the shareholders, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its
board of directors. The directors shall in all cases act as a board, and they
may adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be no less than three.
Each director shall hold office until the next annual meeting of stockholders
and until his successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice
than this by-law immediately after, and at the same place, as the annual meeting
of stockholders. The directors may provide, by resolution, the time and place
for the holding of additional regular meetings without other notice than such
resolution.
4
<PAGE> 5
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of
the president or any two directors. The person or persons authorized to call
special meetings of the directors may fix the place for holding any special
meeting of the directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least three days
previously thereto by written notice delivered personally, or by telegram or
mailed to each director at his business address. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail so addressed,
with postage thereon prepaid. If notice be given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
company. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
6. QUORUM.
At any meeting of the directors a majority shall constitute a quorum
for the transaction of business, but if less than said number is present at a
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled by
vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
5
<PAGE> 6
10. RESIGNATION.
A director may resign at any time by giving written notice to the
board, the present or the secretary of the corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt thereof
by the board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their
services, but by resolution of the board a fixed sum and expenses for actual
attendance at each regular or special meeting of the board may be authorized.
Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the
directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of three or more
directors. Each such committee shall serve at the pleasure of the board.
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a vice-president,
a secretary and a treasurer, each of whom shall be elected by the directors.
Such other officers and assistant officers as may be deemed necessary may be
elected or appointed by the directors.
6
<PAGE> 7
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be
removed by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the
corporation and, subject to the control of the directors, shall in general
supervise and control all of the business and affairs of the corporation. He
shall, when present, preside at all meetings of the stockholders and of the
directors. He may sign, with the secretary or any other proper officer of the
corporation thereunto authorized by the directors, certificates for shares of
the corporation, any deeds, mortgages, bonds, contracts, or other instruments
which the directors have authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the directors or
by these by-laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and in general shall perform
all duties incident to the office of president and such other duties as may be
prescribed by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in the event of his death, inability
or refusal to act, the vice-president shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as
7
<PAGE> 8
from time to time may be assigned to him by the President or by the directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the corporation.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authority may be general or confined
to specific instances.
8
<PAGE> 9
2. LOANS.
No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the directors. Such authority may be general or confined to
specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall from time to time be determined by resolution of the
directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositaries as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such
form as shall be determined by the directors. Such certificates shall be signed
by the president and by the secretary or by such other officers authorized by
law and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the
9
<PAGE> 10
transfer book of the corporation which shall be kept at its principal office.
(b) The corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the last day of the
month in each year as elected by the Directors.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may
pay, dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may
be adopted by a vote of the stockholders representing a
10
<PAGE> 11
majority of all the shares issued and outstanding, at any annual stockholders'
meeting or at any special stockholders' meeting when the proposed amendment has
been set out in the notice of such meeting.
/s/
----------------------------------------
SECRETARY
11
<PAGE> 1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of June 1, 1999 among GLOBAL DATA TEL,
INC., a Nevada corporation (the "Company"), and RICHARD BAKER, an individual
(the "Employee").
WITNESSETH
WHEREAS, the Company desires, effective as of the date hereof, to
employ the Employee as The President and Chief Executive Officer subject to the
terms and conditions set forth here; and
WHEREAS, the Employee desires to accept such employment subject to such
terms and conditions.
NOW, THEREFORE, in consideration of the mutual provisions herein
contained, the Employee and the Company agree as follows:
AGREEMENT
1. Definitions. As used herein, the following terms shall have the
meanings set forth below:
"Agreement" "hereof" and "hereunder" and words of similar import refer
to this Employment Agreement, as it may be from time to time amended.
"Base Salary" has the meaning given such term in Section 5(a).
"Board" means the Board of Directors of the Company.
"Shares" means shares of the Common Stock of Company, par value .001
per share.
"Disability" shall mean a physical or mental incapacity of the Employee
which has prevented him from effectively performing his duties for ninety (90)
days, whether or not consecutive, out of any twelve (12) consecutive months.
"Expiration Date" has the meaning given such term in Section 3(a).
"Options" shall mean nonqualified stock options to purchase Shares
issued by the Company.
2. Employment. The Company hereby employs the Employee as President and
Chief Executive Officer, or such other key office as the Board may elect, and
the Employee accepts such employment, upon
<PAGE> 2
the terms and subject to the conditions hereinafter set forth.
3. Term.
(a) The Employee's employment pursuant to this Agreement ("Employment")
shall commence as of June 1, 1999 and shall continue through May 31, 2002 (such
date, or any later date through which this Agreement has been renewed, the
"Expiration Date"), subject to termination under Section 8 or Section 9.
(b) This Agreement and the Employee's employment shall automatically be
renewed for a two (2) year period upon the Expiration Date (and upon each
anniversary of the Expiration Date), unless at least 30 days prior to the
Expiration Date (or prior to such anniversary) (i) the Employee has notified the
Company in writing that the Employee elects not to renew this Agreement, or (ii)
the Company has notified the Employee in writing that it elects not to renew
this Agreement.
4. Capacity and Services.
(a) The Employee shall assume such responsibilities, perform such
duties and have such authority as befits his positions or may from time to time
be assigned or delegated by the Board. In performing his duties, the Employee
shall fully and faithfully perform services and discharge his duties for the
Company consistent with the position of President and Chief Executive Officer,
or such other similar office as the Board may designate.
(b) As an employee of the Company, substantially all of the Employee's
efforts and responsibilities shall relate to the operation of the business of
the Company. The Employee shall report to and work closely with such persons as
the Board may designate from time to time.
(c) During the Employee's employment hereunder, the Employee shall
serve, and the Employee agrees to serve, as a member of the Board.
(d) The Employee shall devote a substantial part of his business time
and energies to his duties hereunder and shall use his best efforts, skills and
abilities to promote the interests of the Company. The Employee shall not engage
in any business activities that are directly or indirectly competitive with any
business conducted by the Company or any of its affiliates. Without in any way
limiting the foregoing, the Employee shall not, without the prior written
consent in each instance of the Company, directly or indirectly perform services
of a business, professional
<PAGE> 3
or commercial nature for any person or entity, for compensation or deferred
compensation, which will in any way interfere with the Employee's obligations
under this Agreement.
5. Base Salary, Bonuses and Benefits. The Company shall pay and the
Employee shall accept for the services to be rendered hereunder compensation
consisting solely of the following:
(a) During the period of his employment, the Employee shall receive an
annual base salary (the "Base Salary") of $ 200,000.00.
(b) During the period of his employment, the Employee shall be entitled
to participate in the Company's group health insurance coverage and such other
fringe benefits as the Company generally provides from time to time to employees
with positions and responsibilities similar to those of the Employee such as the
Chief Operating Officer and the Chief Financial Officer. The Company reserves
the right to modify such group health insurance coverage or benefits for such
employees generally.
(c) Employee may receive bonuses as approved by the Board in the
Board's discretion.
(d) The Company shall purchase for the Employee a term life insurance
policy with a death benefit not less than $1,000,000, the beneficiaries of which
will be designated by the Employee.
(e) The Company will provide Employee with long-term disability
insurance in the event he cannot perform his job for any reason.
6. Options.
(a) In addition to any other options granted under any Stock Option
Plan which may adopted by the Company, on the date hereof the Company is issuing
to the Employee Options for the purchase of 350,000 shares of the Company's
common stock with an exercise price $ 7.12 per share, as provided in the Option
Agreement attached hereto as Exhibit A. Such Options shall vest immediately.
7. Certain Expenses Incident to Employment. The Company agrees to
reimburse the Employee:
(i) in accordance with its normal policy and practices, for all other
authorized, approved and reasonable travel or other expenses or
disbursements incurred or made by
-3-
<PAGE> 4
him in connection with the performance of the Employee's duties under
this Agreement;
(ii) up to $ 750.00, net of Federal income taxes, per month for
documented costs incurred by the Employee in acquiring and maintaining
one automobile, including the purchase of automobile insurance;
(iii) for the cost of one cellular telephone and related costs related
to performing his duties hereunder.
8. Death or Disability. Notwithstanding anything else in this
Agreement, the Employee's employment shall terminate upon the Employee's death.
The Company may elect to terminate the Employee's employment upon the Employee's
disability. In the event that the Employee's employment terminates by reason of
death or disability, the Company shall not have any further obligations or
responsibilities hereunder whatsoever except (i) with respect to Base Salary,
Bonuses and other benefits earned or accrued through the date of termination,
(ii) in the event of a termination by reason of disability, the Employee will be
entitled to receive his Base Salary for three months after his Employment is
terminated or until such time as the insurance provided for in Paragraph 5(d)
begins to pay such benefits.
9. Termination.
(a) The Company may terminate this Agreement and the Employee's
employment by giving ten (10) days written notice thereof to the Employee in the
event that the Board determines that the Employee has (i) materially breached
this Agreement, (ii) repeatedly refused to perform required and reasonable
services after written notice thereof, (iii) engaged in willful misconduct or
committed gross negligence in connection with his employment or the affairs of
the Company, (iv) violated in a material manner any fiduciary duty to the
Company, or (v) committed theft, fraud, embezzlement or dishonesty.
(b) Either the Company or the Employee may, with or without cause or
reason therefor, terminate this Agreement at any time and for any reason upon
thirty (30) days advance written notice to the other party.
(c) If the Company terminates this Agreement under Section 9(a), the
Company shall not have any further obligations or responsibilities hereunder
except with respect to Base Salary, Bonuses and other benefits earned or accrued
through the date of termination.
-4-
<PAGE> 5
(d) If the Company terminates this Agreement under Section 9(b), the
Company shall be obligated to pay the Employee all Base Salary, Bonuses and
other benefits earned or accrued through the date of termination, and a lump sum
equivalent to one-half of Employee's Base Salary.
(e) If the Employee terminates this Agreement for any reason, the
Company shall not have any further obligations or responsibilities hereunder
except with respect to (i) Base Salary, Bonuses and other benefits earned or
accrued through the date of termination and (ii) the Options described in
Section 6.
10. Confidentiality, Non-Solicitation and Non-Competition.
(a) Employee acknowledges that as further inducement to the Company to
enter into this Agreement, Employee has executed a Confidentiality,
Non-Solicitation and Non-Competition Agreement (the "Confidentiality
Agreement"), attached hereto as Exhibit "B". Employee's breach of the
Confidentiality Agreement shall constitute a material breach of this Agreement.
(b) The Employee acknowledges the Company will suffer irreparable harm
if the provisions of the Confidentiality Agreement and that the Company's
remedies at law for damages will be inadequate if the Employee fails to comply
with any of the provisions of the Confidentiality Agreement. Accordingly, the
Employee agrees that the Company shall be entitled to any appropriate legal,
equitable or other remedy, including preliminary and permanent injunctive
relief, in the event the Employee fails to comply with the Confidentiality
Agreement.
11. Amendments. This Agreement constitutes the entire agreement of the
parties and may be modified, amended or waived only by written instruments
executed by the parties.
12. No Conflict. The Employee represents and warrants to AIC and the
Company that he is not bound by any agreement or subject to any restriction
which would interfere with or prevent his entering into or carrying out this
Agreement.
13. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns, except that the Employee shall not assign any of
his rights or delegate any of his duties under this Agreement without the prior
express written consent in each instance of AIC and the Company.
-5-
<PAGE> 6
14. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida.
15. Arbitration. Except as specifically provided for in this Section
16, all controversies, claims and disputes arising out of or relating to the
Employee's rendering of services to AIC or the Company of this Agreement
(including all federal and state statutory claims) shall be subject to final and
binding arbitration before a single arbitrator in Florida in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The costs
of such arbitration, including the arbitrator's fees, shall be allocated in the
manner determined by the arbitrator. Each party shall bear its own expenses,
including attorneys' fees and expert witness fees. The arbitration proceeding
shall be deemed to be an arbitration proceeding specifically enforceable under
the Federal Arbitration Act and any other applicable law. The award of the
arbitrator may be enforced in any court having competent jurisdiction. AIC, the
Company and the Employee shall have no obligation to arbitrate disputes arising
under Section 10 hereof, and may enforce any of their rights and remedies with
respect thereto in any court of competent jurisdiction.
16. Severability. If any part or provision of this Agreement shall to
any extent be invalid or unenforceable, the remainder of this Agreement shall
not be effected thereby and shall be valid and enforced to the fullest extent
permitted by law.
17. No other Agreements. This Agreement shall supersede any and all
prior agreements between the parties hereto, and this Employment Agreement shall
be the only agreement between the parties with respect thereto.
18. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee, to him at: If to the Company, to it at:
20272 Hacienda Court 3333 S. Congress Ave., Suite 404
Boca Raton FL 33498 Delray Beach FL 33445
19. Rights and Waivers. All rights and remedies of the parties hereto
are separate and cumulative, and no one of them, whether exercised or not, shall
be deemed to be to the exclusion of any other rights or remedies or shall be
deemed to limit or prejudice any other legal or equitable rights or remedies
that
-6-
<PAGE> 7
either of the parties hereto may or remedies under this Agreement unless such
waiver is in writing and signed by such party. No delay or omission on the part
of either party in exercising any right or remedy shall operate as a waiver of
such right or remedy or any other rights or remedies. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the date from above written.
GLOBAL DATA TEL, INC.
a Nevada Corporation
By: /s/ Antonio Serrato
-----------------------------
Its: Vice President
-----------------------------
EMPLOYEE:
/s/ Richard Baker
-----------------------------
-7-
<PAGE> 1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of June 1, 1999 among GLOBAL DATA TEL,
INC., a Nevada corporation (the "Company"), and Antonio Serrato, an individual
(the "Employee").
WITNESSETH
WHEREAS, the Company desires, effective as of the date hereof, to
employ the Employee as The Vice-President and Chief Operating Officer subject to
the terms and conditions set forth here; and
WHEREAS, the Employee desires to accept such employment subject to such
terms and conditions.
NOW, THEREFORE, in consideration of the mutual provisions herein
contained, the Employee and the Company agree as follows:
AGREEMENT
1. Definitions. As used herein, the following terms shall have the
meanings set forth below:
"Agreement" "hereof" and "hereunder" and words of similar import refer
to this Employment Agreement, as it may be from time to time amended.
"Base Salary" has the meaning given such term in Section 5(a).
"Board" means the Board of Directors of the Company.
"Shares" means shares of the Common Stock of Company, par value .001
per share.
"Disability" shall mean a physical or mental incapacity of the Employee
which has prevented him from effectively performing his duties for ninety (90)
days, whether or not consecutive, out of any twelve (12) consecutive months.
"Expiration Date" has the meaning given such term in Section 3(a).
"Options" shall mean nonqualified stock options to purchase Shares
issued by the Company.
2. Employment. The Company hereby employs the Employee as
Vice-President and Chief Operating Officer, or such other key office as the
Board may elect, and the Employee accepts such
<PAGE> 2
employment, upon the terms and subject to the conditions hereinafter set forth.
3. Term.
(a) The Employee's employment pursuant to this Agreement ("Employment")
shall commence as of June 1, 1999 and shall continue through May 31, 2002 (such
date, or any later date through which this Agreement has been renewed, the
"Expiration Date"), subject to termination under Section 8 or Section 9.
(b) This Agreement and the Employee's employment shall automatically be
renewed for a two (2) year period upon the Expiration Date (and upon each
anniversary of the Expiration Date), unless at least 30 days prior to the
Expiration Date (or prior to such anniversary) (i) the Employee has notified the
Company in writing that the Employee elects not to renew this Agreement, or (ii)
the Company has notified the Employee in writing that it elects not to renew
this Agreement.
4. Capacity and Services.
(a) The Employee shall assume such responsibilities, perform such
duties and have such authority as befits his positions or may from time to time
be assigned or delegated by the Board. In performing his duties, the Employee
shall fully and faithfully perform services and discharge his duties for the
Company consistent with the position of President and Chief Executive Officer,
or such other similar office as the Board may designate.
(b) As an employee of the Company, substantially all of the Employee's
efforts and responsibilities shall relate to the operation of the business of
the Company. The Employee shall report to and work closely with such persons as
the Board may designate from time to time.
(c) During the Employee's employment hereunder, the Employee shall
serve, and the Employee agrees to serve, as a member of the Board.
(d) The Employee shall devote a substantial part of his business time
and energies to his duties hereunder and shall use his best efforts, skills and
abilities to promote the interests of the Company. The Employee shall not engage
in any business activities that are directly or indirectly competitive with any
business conducted by the Company or any of its affiliates. Without in any way
limiting the foregoing, the Employee shall not, without the prior written
consent in each instance of the Company,
<PAGE> 3
directly or indirectly perform services of a business, professional or
commercial nature for any person or entity, for compensation or deferred
compensation, which will in any way interfere with the Employee's obligations
under this Agreement.
5. Base Salary, Bonuses and Benefits. The Company shall pay and the
Employee shall accept for the services to be rendered hereunder compensation
consisting solely of the following:
(a) During the period of his employment, the Employee shall receive an
annual base salary (the "Base Salary") of $ 150,000.00.
(b) During the period of his employment, the Employee shall be entitled
to participate in the Company's group health insurance coverage and such other
fringe benefits as the Company generally provides from time to time to employees
with positions and responsibilities similar to those of the Employee such as the
Chief Operating Officer and the Chief Financial Officer. The Company reserves
the right to modify such group health insurance coverage or benefits for such
employees generally.
(c) Employee may receive bonuses as approved by the Board in the
Board's discretion.
(d) The Company shall purchase for the Employee a term life insurance
policy with a death benefit not less than $100,000, the beneficiaries of which
will be designated by the Employee.
(e) The Company will provide Employee with long-term disability
insurance in the event he cannot perform his job for any reason.
6. Options.
(a) In addition to any other options granted under any Stock Option
Plan which may adopted by the Company, on the date hereof the Company is issuing
to the Employee Options for the purchase of 200,000 shares of the Company's
common stock with an exercise price $ 7.12 per share, as provided in the Option
Agreement attached hereto as Exhibit A. Such Options shall vest immediately.
7. Certain Expenses Incident to Employment. The Company agrees to
reimburse the Employee:
(i) in accordance with its normal policy and practices, for all other
authorized, approved and reasonable travel
-3-
<PAGE> 4
or other expenses or disbursements incurred or made by him in
connection with the performance of the Employee's duties under this
Agreement;
(ii) up to $ 750.00, net of Federal income taxes, per month for
documented costs incurred by the Employee in acquiring and maintaining
one automobile, including the purchase of automobile insurance;
(iii) for the cost of one cellular telephone and related costs related
to performing his duties hereunder.
8. Death or Disability. Notwithstanding anything else in this
Agreement, the Employee's employment shall terminate upon the Employee's death.
The Company may elect to terminate the Employee's employment upon the Employee's
disability. In the event that the Employee's employment terminates by reason of
death or disability, the Company shall not have any further obligations or
responsibilities hereunder whatsoever except (i) with respect to Base Salary,
Bonuses and other benefits earned or accrued through the date of termination,
(ii) in the event of a termination by reason of disability, the Employee will be
entitled to receive his Base Salary for three months after his Employment is
terminated or until such time as the insurance provided for in Paragraph 5(d)
begins to pay such benefits.
9. Termination.
(a) The Company may terminate this Agreement and the Employee's
employment by giving ten (10) days written notice thereof to the Employee in the
event that the Board determines that the Employee has (i) materially breached
this Agreement, (ii) repeatedly refused to perform required and reasonable
services after written notice thereof, (iii) engaged in willful misconduct or
committed gross negligence in connection with his employment or the affairs of
the Company, (iv) violated in a material manner any fiduciary duty to the
Company, or (v) committed theft, fraud, embezzlement or dishonesty.
(b) Either the Company or the Employee may, with or without cause or
reason therefor, terminate this Agreement at any time and for any reason upon
thirty (30) days advance written notice to the other party.
(c) If the Company terminates this Agreement under Section 9(a), the
Company shall not have any further obligations or responsibilities hereunder
except with respect to Base Salary, Bonuses and other benefits earned or accrued
through the date of termination.
-4-
<PAGE> 5
(d) If the Company terminates this Agreement under Section 9(b), the
Company shall be obligated to pay the Employee all Base Salary, Bonuses and
other benefits earned or accrued through the date of termination, and a lump sum
equivalent to one-half of Employee's Base Salary.
(e) If the Employee terminates this Agreement for any reason, the
Company shall not have any further obligations or responsibilities hereunder
except with respect to (i) Base Salary, Bonuses and other benefits earned or
accrued through the date of termination and (ii) the Options described in
Section 6.
10. Confidentiality, Non-Solicitation and Non-Competition.
(a) Employee acknowledges that as further inducement to the Company to
enter into this Agreement, Employee has executed a Confidentiality,
Non-Solicitation and Non-Competition Agreement (the "Confidentiality
Agreement"), attached hereto as Exhibit "B". Employee's breach of the
Confidentiality Agreement shall constitute a material breach of this Agreement.
(b) The Employee acknowledges the Company will suffer irreparable harm
if the provisions of the Confidentiality Agreement and that the Company's
remedies at law for damages will be inadequate if the Employee fails to comply
with any of the provisions of the Confidentiality Agreement. Accordingly, the
Employee agrees that the Company shall be entitled to any appropriate legal,
equitable or other remedy, including preliminary and permanent injunctive
relief, in the event the Employee fails to comply with the Confidentiality
Agreement.
11. Amendments. This Agreement constitutes the entire agreement of the
parties and may be modified, amended or waived only by written instruments
executed by the parties.
12. No Conflict. The Employee represents and warrants to AIC and the
Company that he is not bound by any agreement or subject to any restriction
which would interfere with or prevent his entering into or carrying out this
Agreement.
13. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns, except that the Employee shall not assign any of
his rights or delegate any of his duties under this Agreement without the prior
express written
-5-
<PAGE> 6
consent in each instance of AIC and the Company.
14. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida.
15. Arbitration. Except as specifically provided for in this Section
16, all controversies, claims and disputes arising out of or relating to the
Employee's rendering of services to AIC or the Company of this Agreement
(including all federal and state statutory claims) shall be subject to final and
binding arbitration before a single arbitrator in Florida in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The costs
of such arbitration, including the arbitrator's fees, shall be allocated in the
manner determined by the arbitrator. Each party shall bear its own expenses,
including attorneys' fees and expert witness fees. The arbitration proceeding
shall be deemed to be an arbitration proceeding specifically enforceable under
the Federal Arbitration Act and any other applicable law. The award of the
arbitrator may be enforced in any court having competent jurisdiction. AIC, the
Company and the Employee shall have no obligation to arbitrate disputes arising
under Section 10 hereof, and may enforce any of their rights and remedies with
respect thereto in any court of competent jurisdiction.
16. Severability. If any part or provision of this Agreement shall to
any extent be invalid or unenforceable, the remainder of this Agreement shall
not be effected thereby and shall be valid and enforced to the fullest extent
permitted by law.
17. No other Agreements. This Agreement shall supersede any and all
prior agreements between the parties hereto, and this Employment Agreement shall
be the only agreement between the parties with respect thereto.
18. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee, to him at: If to the Company, to it at:
4250 St. Charles Way 3333 S. Congress Ave., Suite 404
Boca Raton FL 33434 Delray Beach FL 33445
19. Rights and Waivers. All rights and remedies of the parties hereto
are separate and cumulative, and no one of them, whether exercised or not, shall
be deemed to be to the exclusion of any other rights or remedies or shall be
deemed to limit or
-6-
<PAGE> 7
prejudice any other legal or equitable rights or remedies that either of the
parties hereto may or remedies under this Agreement unless such waiver is in
writing and signed by such party. No delay or omission on the part of either
party in exercising any right or remedy shall operate as a waiver of such right
or remedy or any other rights or remedies. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right or remedy on any future
occasion.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the date from above written.
GLOBAL DATA TEL, INC.
a Nevada Corporation
By: /s/ Richard Baker
---------------------------------
Its: President
---------------------------------
EMPLOYEE:
/s/ Antonio Serrato
---------------------------------
-7-
<PAGE> 1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of June 1, 1999 among GLOBAL DATA TEL,
INC., a Nevada corporation (the "Company"), and Rafael Delgado, an individual
(the "Employee").
WITNESSETH
WHEREAS, the Company desires, effective as of the date hereof, to
employ the Employee as The President of the Global DataTel de Colombia
subsidiary subject to the terms and conditions set forth here; and
WHEREAS, the Employee desires to accept such employment subject to such
terms and conditions.
NOW, THEREFORE, in consideration of the mutual provisions herein
contained, the Employee and the Company agree as follows:
AGREEMENT
1. Definitions. As used herein, the following terms shall have the
meanings set forth below:
"Agreement" "hereof" and "hereunder" and words of similar import refer
to this Employment Agreement, as it may be from time to time amended.
"Base Salary" has the meaning given such term in Section 5(a).
"Board" means the Board of Directors of the Company.
"Shares" means shares of the Common Stock of Company, par value .001
per share.
"Disability" shall mean a physical or mental incapacity of the Employee
which has prevented him from effectively performing his duties for ninety (90)
days, whether or not consecutive, out of any twelve (12) consecutive months.
"Expiration Date" has the meaning given such term in Section 3(a).
"Options" shall mean nonqualified stock options to purchase Shares
issued by the Company.
2. Employment. The Company hereby employs the Employee as President, or
such other key office as the Board may elect, and the
<PAGE> 2
Employee accepts such employment, upon the terms and subject to the conditions
hereinafter set forth.
3. Term.
(a) The Employee's employment pursuant to this Agreement ("Employment")
shall commence as of June 1, 1999 and shall continue through May 31, 2002 (such
date, or any later date through which this Agreement has been renewed, the
"Expiration Date"), subject to termination under Section 8 or Section 9.
(b) This Agreement and the Employee's employment shall automatically be
renewed for a two (2) year period upon the Expiration Date (and upon each
anniversary of the Expiration Date), unless at least 30 days prior to the
Expiration Date (or prior to such anniversary) (i) the Employee has notified the
Company in writing that the Employee elects not to renew this Agreement, or (ii)
the Company has notified the Employee in writing that it elects not to renew
this Agreement.
4. Capacity and Services.
(a) The Employee shall assume such responsibilities, perform such
duties and have such authority as befits his positions or may from time to time
be assigned or delegated by the Board. In performing his duties, the Employee
shall fully and faithfully perform services and discharge his duties for the
Company consistent with the position of President and Chief Executive Officer,
or such other similar office as the Board may designate.
(b) As an employee of the Company, substantially all of the Employee's
efforts and responsibilities shall relate to the operation of the business of
the Company. The Employee shall report to and work closely with such persons as
the Board may designate from time to time.
(c) During the Employee's employment hereunder, the Employee shall
serve, and the Employee agrees to serve, as a member of the Board.
(d) The Employee shall devote a substantial part of his business time
and energies to his duties hereunder and shall use his best efforts, skills and
abilities to promote the interests of the Company. The Employee shall not engage
in any business activities that are directly or indirectly competitive with any
business conducted by the Company or any of its affiliates. Without in any way
limiting the foregoing, the Employee shall not, without the prior written
consent in each instance of the Company,
<PAGE> 3
directly or indirectly perform services of a business, professional or
commercial nature for any person or entity, for compensation or deferred
compensation, which will in any way interfere with the Employee's obligations
under this Agreement.
5. Base Salary, Bonuses and Benefits. The Company shall pay and the
Employee shall accept for the services to be rendered hereunder compensation
consisting solely of the following:
(a) During the period of his employment, the Employee shall receive an
annual base salary (the "Base Salary") of $ 80,000.00.
(b) During the period of his employment, the Employee shall be entitled
to participate in the Company's group health insurance coverage and such other
fringe benefits as the Company generally provides from time to time to employees
with positions and responsibilities similar to those of the Employee such as the
Chief Operating Officer and the Chief Financial Officer. The Company reserves
the right to modify such group health insurance coverage or benefits for such
employees generally.
(c) Employee may receive bonuses as approved by the Board in the
Board's discretion.
(d) The Company shall purchase for the Employee a term life insurance
policy with a death benefit not less than $100,000, the beneficiaries of which
will be designated by the Employee.
(e) The Company will provide Employee with long-term disability
insurance in the event he cannot perform his job for any reason.
6. Options.
(a) In addition to any other options granted under any Stock Option
Plan which may adopted by the Company, on the date hereof the Company is issuing
to the Employee Options for the purchase of 100,000 shares of the Company's
common stock with an exercise price $ 7.12 per share, as provided in the Option
Agreement attached hereto as Exhibit A. Such Options shall vest immediately.
7. Certain Expenses Incident to Employment. The Company agrees to
reimburse the Employee:
(i) in accordance with its normal policy and practices, for all other
authorized, approved and reasonable travel
-3-
<PAGE> 4
or other expenses or disbursements incurred or made by him in
connection with the performance of the Employee's duties under this
Agreement;
(ii) up to $ 750.00, net of Federal income taxes, per month for
documented costs incurred by the Employee in acquiring and maintaining
one automobile, including the purchase of automobile insurance;
(iii) for the cost of one cellular telephone and related costs related
to performing his duties hereunder.
8. Death or Disability. Notwithstanding anything else in this
Agreement, the Employee's employment shall terminate upon the Employee's death.
The Company may elect to terminate the Employee's employment upon the Employee's
disability. In the event that the Employee's employment terminates by reason of
death or disability, the Company shall not have any further obligations or
responsibilities hereunder whatsoever except (i) with respect to Base Salary,
Bonuses and other benefits earned or accrued through the date of termination,
(ii) in the event of a termination by reason of disability, the Employee will be
entitled to receive his Base Salary for three months after his Employment is
terminated or until such time as the insurance provided for in Paragraph 5(d)
begins to pay such benefits.
9. Termination.
(a) The Company may terminate this Agreement and the Employee's
employment by giving ten (10) days written notice thereof to the Employee in the
event that the Board determines that the Employee has (i) materially breached
this Agreement, (ii) repeatedly refused to perform required and reasonable
services after written notice thereof, (iii) engaged in willful misconduct or
committed gross negligence in connection with his employment or the affairs of
the Company, (iv) violated in a material manner any fiduciary duty to the
Company, or (v) committed theft, fraud, embezzlement or dishonesty.
(b) Either the Company or the Employee may, with or without cause or
reason therefor, terminate this Agreement at any time and for any reason upon
thirty (30) days advance written notice to the other party.
(c) If the Company terminates this Agreement under Section 9(a), the
Company shall not have any further obligations or responsibilities hereunder
except with respect to Base Salary, Bonuses and other benefits earned or accrued
through the date of termination.
-4-
<PAGE> 5
(d) If the Company terminates this Agreement under Section 9(b), the
Company shall be obligated to pay the Employee all Base Salary, Bonuses and
other benefits earned or accrued through the date of termination, and a lump sum
equivalent to one-half of Employee's Base Salary.
(e) If the Employee terminates this Agreement for any reason, the
Company shall not have any further obligations or responsibilities hereunder
except with respect to (i) Base Salary, Bonuses and other benefits earned or
accrued through the date of termination and (ii) the Options described in
Section 6.
10. Confidentiality, Non-Solicitation and Non-Competition.
(a) Employee acknowledges that as further inducement to the Company to
enter into this Agreement, Employee has executed a Confidentiality,
Non-Solicitation and Non-Competition Agreement (the "Confidentiality
Agreement"), attached hereto as Exhibit "B". Employee's breach of the
Confidentiality Agreement shall constitute a material breach of this Agreement.
(b) The Employee acknowledges the Company will suffer irreparable harm
if the provisions of the Confidentiality Agreement and that the Company's
remedies at law for damages will be inadequate if the Employee fails to comply
with any of the provisions of the Confidentiality Agreement. Accordingly, the
Employee agrees that the Company shall be entitled to any appropriate legal,
equitable or other remedy, including preliminary and permanent injunctive
relief, in the event the Employee fails to comply with the Confidentiality
Agreement.
11. Amendments. This Agreement constitutes the entire agreement of the
parties and may be modified, amended or waived only by written instruments
executed by the parties.
12. No Conflict. The Employee represents and warrants to AIC and the
Company that he is not bound by any agreement or subject to any restriction
which would interfere with or prevent his entering into or carrying out this
Agreement.
13. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns, except that the Employee shall not assign any of
his rights or delegate any of his duties under this Agreement without the prior
express written
-5-
<PAGE> 6
consent in each instance of AIC and the Company.
14. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida.
15. Arbitration. Except as specifically provided for in this Section
16, all controversies, claims and disputes arising out of or relating to the
Employee's rendering of services to AIC or the Company of this Agreement
(including all federal and state statutory claims) shall be subject to final and
binding arbitration before a single arbitrator in Florida in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The costs
of such arbitration, including the arbitrator's fees, shall be allocated in the
manner determined by the arbitrator. Each party shall bear its own expenses,
including attorneys' fees and expert witness fees. The arbitration proceeding
shall be deemed to be an arbitration proceeding specifically enforceable under
the Federal Arbitration Act and any other applicable law. The award of the
arbitrator may be enforced in any court having competent jurisdiction. AIC, the
Company and the Employee shall have no obligation to arbitrate disputes arising
under Section 10 hereof, and may enforce any of their rights and remedies with
respect thereto in any court of competent jurisdiction.
16. Severability. If any part or provision of this Agreement shall to
any extent be invalid or unenforceable, the remainder of this Agreement shall
not be effected thereby and shall be valid and enforced to the fullest extent
permitted by law.
17. No other Agreements. This Agreement shall supersede any and all
prior agreements between the parties hereto, and this Employment Agreement shall
be the only agreement between the parties with respect thereto.
18. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee, to him at: If to the Company, to it at:
Calle 114A No. 19-10 3333 S. Congress Ave., Suite 404
Bogota,Colombia Delray Beach FL 33445
19. Rights and Waivers. All rights and remedies of the parties hereto
are separate and cumulative, and no one of them, whether exercised or not, shall
be deemed to be to the exclusion of any other rights or remedies or shall be
deemed to limit or
-6-
<PAGE> 7
prejudice any other legal or equitable rights or remedies that either of the
parties hereto may or remedies under this Agreement unless such waiver is in
writing and signed by such party. No delay or omission on the part of either
party in exercising any right or remedy shall operate as a waiver of such right
or remedy or any other rights or remedies. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right or remedy on any future
occasion.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the date from above written.
GLOBAL DATA TEL, INC.
a Nevada Corporation
By: /s/ Richard Baker
---------------------------------
Its: President
---------------------------------
EMPLOYEE:
/s/ Rafael Delgado
-----------------------------
-7-
<PAGE> 1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of June 1, 1999 among GLOBAL DATA TEL,
INC., a Nevada corporation (the "Company"), and Mario Habib, an individual (the
"Employee").
WITNESSETH
WHEREAS, the Company desires, effective as of the date hereof, to
employ the Employee as The President of the eHOLA.com and On Line Latin America,
S.A. subsidiaries subject to the terms and conditions set forth here; and
WHEREAS, the Employee desires to accept such employment subject to such
terms and conditions.
NOW, THEREFORE, in consideration of the mutual provisions herein
contained, the Employee and the Company agree as follows:
AGREEMENT
1. Definitions. As used herein, the following terms shall have the
meanings set forth below:
"Agreement" "hereof" and "hereunder" and words of similar import refer
to this Employment Agreement, as it may be from time to time amended.
"Base Salary" has the meaning given such term in Section 5(a).
"Board" means the Board of Directors of the Company.
"Shares" means shares of the Common Stock of Company, par value .001
per share.
"Disability" shall mean a physical or mental incapacity of the Employee
which has prevented him from effectively performing his duties for ninety (90)
days, whether or not consecutive, out of any twelve (12) consecutive months.
"Expiration Date" has the meaning given such term in Section 3(a).
"Options" shall mean nonqualified stock options to purchase Shares
issued by the Company.
2. Employment. The Company hereby employs the Employee as President, or
such other key office as the Board may elect, and the
<PAGE> 2
Employee accepts such employment, upon the terms and subject to the conditions
hereinafter set forth.
3. Term.
(a) The Employee's employment pursuant to this Agreement ("Employment")
shall commence as of June 1, 1999 and shall continue through May 31, 2002 (such
date, or any later date through which this Agreement has been renewed, the
"Expiration Date"), subject to termination under Section 8 or Section 9.
(b) This Agreement and the Employee's employment shall automatically be
renewed for a two (2) year period upon the Expiration Date (and upon each
anniversary of the Expiration Date), unless at least 30 days prior to the
Expiration Date (or prior to such anniversary) (i) the Employee has notified the
Company in writing that the Employee elects not to renew this Agreement, or (ii)
the Company has notified the Employee in writing that it elects not to renew
this Agreement.
4. Capacity and Services.
(a) The Employee shall assume such responsibilities, perform such
duties and have such authority as befits his positions or may from time to time
be assigned or delegated by the Board. In performing his duties, the Employee
shall fully and faithfully perform services and discharge his duties for the
Company consistent with the position of President and Chief Executive Officer,
or such other similar office as the Board may designate.
(b) As an employee of the Company, substantially all of the Employee's
efforts and responsibilities shall relate to the operation of the business of
the Company. The Employee shall report to and work closely with such persons as
the Board may designate from time to time.
(c) During the Employee's employment hereunder, the Employee shall
serve, and the Employee agrees to serve, as a member of the Board.
(d) The Employee shall devote a substantial part of his business time
and energies to his duties hereunder and shall use his best efforts, skills and
abilities to promote the interests of the Company. The Employee shall not engage
in any business activities that are directly or indirectly competitive with any
business conducted by the Company or any of its affiliates. Without in any way
limiting the foregoing, the Employee shall not, without the prior written
consent in each instance of the Company,
<PAGE> 3
directly or indirectly perform services of a business, professional or
commercial nature for any person or entity, for compensation or deferred
compensation, which will in any way interfere with the Employee's obligations
under this Agreement.
5. Base Salary, Bonuses and Benefits. The Company shall pay and the
Employee shall accept for the services to be rendered hereunder compensation
consisting solely of the following:
(a) During the period of his employment, the Employee shall receive an
annual base salary (the "Base Salary") of $ 180,000.00.
(b) During the period of his employment, the Employee shall be entitled
to participate in the Company's group health insurance coverage and such other
fringe benefits as the Company generally provides from time to time to employees
with positions and responsibilities similar to those of the Employee such as the
Chief Operating Officer and the Chief Financial Officer. The Company reserves
the right to modify such group health insurance coverage or benefits for such
employees generally.
(c) Employee may receive bonuses as approved by the Board in the
Board's discretion.
(d) The Company shall purchase for the Employee a term life insurance
policy with a death benefit not less than $500,000, the beneficiaries of which
will be designated by the Employee.
(e) The Company will provide Employee with long-term disability
insurance in the event he cannot perform his job for any reason.
6. Options.
(a) In addition to any other options granted under any Stock Option
Plan which may adopted by the Company, on the date hereof the Company is issuing
to the Employee Options for the purchase of 350,000 shares of the Company's
common stock with an exercise price $ 10.00 per share, as provided in the Option
Agreement attached hereto as Exhibit A. Such Options shall vest immediately.
7. Certain Expenses Incident to Employment. The Company agrees to
reimburse the Employee:
(i) in accordance with its normal policy and practices, for all other
authorized, approved and reasonable travel
-3-
<PAGE> 4
or other expenses or disbursements incurred or made by him in
connection with the performance of the Employee's duties under this
Agreement;
(ii) up to $ 750.00, net of Federal income taxes, per month for
documented costs incurred by the Employee in acquiring and maintaining
one automobile, including the purchase of automobile insurance;
(iii) for the cost of one cellular telephone and related costs related
to performing his duties hereunder.
8. Death or Disability. Notwithstanding anything else in this
Agreement, the Employee's employment shall terminate upon the Employee's death.
The Company may elect to terminate the Employee's employment upon the Employee's
disability. In the event that the Employee's employment terminates by reason of
death or disability, the Company shall not have any further obligations or
responsibilities hereunder whatsoever except (i) with respect to Base Salary,
Bonuses and other benefits earned or accrued through the date of termination,
(ii) in the event of a termination by reason of disability, the Employee will be
entitled to receive his Base Salary for three months after his Employment is
terminated or until such time as the insurance provided for in Paragraph 5(d)
begins to pay such benefits.
9. Termination.
(a) The Company may terminate this Agreement and the Employee's
employment by giving ten (10) days written notice thereof to the Employee in the
event that the Board determines that the Employee has (i) materially breached
this Agreement, (ii) repeatedly refused to perform required and reasonable
services after written notice thereof, (iii) engaged in willful misconduct or
committed gross negligence in connection with his employment or the affairs of
the Company, (iv) violated in a material manner any fiduciary duty to the
Company, or (v) committed theft, fraud, embezzlement or dishonesty.
(b) Either the Company or the Employee may, with or without cause or
reason therefor, terminate this Agreement at any time and for any reason upon
thirty (30) days advance written notice to the other party.
(c) If the Company terminates this Agreement under Section 9(a), the
Company shall not have any further obligations or responsibilities hereunder
except with respect to Base Salary, Bonuses and other benefits earned or accrued
through the date of termination.
-4-
<PAGE> 5
(d) If the Company terminates this Agreement under Section 9(b), the
Company shall be obligated to pay the Employee all Base Salary, Bonuses and
other benefits earned or accrued through the date of termination, and a lump sum
equivalent to one-half of Employee's Base Salary.
(e) If the Employee terminates this Agreement for any reason, the
Company shall not have any further obligations or responsibilities hereunder
except with respect to (i) Base Salary, Bonuses and other benefits earned or
accrued through the date of termination and (ii) the Options described in
Section 6.
10. Confidentiality, Non-Solicitation and Non-Competition.
(a) Employee acknowledges that as further inducement to the Company to
enter into this Agreement, Employee has executed a Confidentiality,
Non-Solicitation and Non-Competition Agreement (the "Confidentiality
Agreement"), attached hereto as Exhibit "B". Employee's breach of the
Confidentiality Agreement shall constitute a material breach of this Agreement.
(b) The Employee acknowledges the Company will suffer irreparable harm
if the provisions of the Confidentiality Agreement and that the Company's
remedies at law for damages will be inadequate if the Employee fails to comply
with any of the provisions of the Confidentiality Agreement. Accordingly, the
Employee agrees that the Company shall be entitled to any appropriate legal,
equitable or other remedy, including preliminary and permanent injunctive
relief, in the event the Employee fails to comply with the Confidentiality
Agreement.
11. Amendments. This Agreement constitutes the entire agreement of the
parties and may be modified, amended or waived only by written instruments
executed by the parties.
12. No Conflict. The Employee represents and warrants to AIC and the
Company that he is not bound by any agreement or subject to any restriction
which would interfere with or prevent his entering into or carrying out this
Agreement.
13. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns, except that the Employee shall not assign any of
his rights or delegate any of his duties under this Agreement without the prior
express written
-5-
<PAGE> 6
consent in each instance of AIC and the Company.
14. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida.
15. Arbitration. Except as specifically provided for in this Section
16, all controversies, claims and disputes arising out of or relating to the
Employee's rendering of services to AIC or the Company of this Agreement
(including all federal and state statutory claims) shall be subject to final and
binding arbitration before a single arbitrator in Florida in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The costs
of such arbitration, including the arbitrator's fees, shall be allocated in the
manner determined by the arbitrator. Each party shall bear its own expenses,
including attorneys' fees and expert witness fees. The arbitration proceeding
shall be deemed to be an arbitration proceeding specifically enforceable under
the Federal Arbitration Act and any other applicable law. The award of the
arbitrator may be enforced in any court having competent jurisdiction. AIC, the
Company and the Employee shall have no obligation to arbitrate disputes arising
under Section 10 hereof, and may enforce any of their rights and remedies with
respect thereto in any court of competent jurisdiction.
16. Severability. If any part or provision of this Agreement shall to
any extent be invalid or unenforceable, the remainder of this Agreement shall
not be effected thereby and shall be valid and enforced to the fullest extent
permitted by law.
17. No other Agreements. This Agreement shall supersede any and all
prior agreements between the parties hereto, and this Employment Agreement shall
be the only agreement between the parties with respect thereto.
18. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee, to him at: If to the Company, to it at:
Calle 114A No. 19-10 3333 S. Congress Ave., Suite 404
Bogota,Colombia Delray Beach FL 33445
19. Rights and Waivers. All rights and remedies of the parties hereto
are separate and cumulative, and no one of them, whether exercised or not, shall
be deemed to be to the exclusion of any other rights or remedies or shall be
deemed to limit or
-6-
<PAGE> 7
prejudice any other legal or equitable rights or remedies that either of the
parties hereto may or remedies under this Agreement unless such waiver is in
writing and signed by such party. No delay or omission on the part of either
party in exercising any right or remedy shall operate as a waiver of such right
or remedy or any other rights or remedies. A waiver on any one occasion shall
not be construed as a bar to or waiver of any right or remedy on any future
occasion.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the date from above written.
GLOBAL DATA TEL, INC.
a Nevada Corporation
By: /s/ Richard Baker
--------------------------------
Its: President
--------------------------------
EMPLOYEE:
/s/ Mario Habib
---------------------------------
-7-
<PAGE> 1
[SCHVANEVELDT and COMPANY LETTERHEAD]
Exhibit 16.1
The undersigned certifying accountants hereby acknowledge that they have
reviewed the Item 14., "Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures," as contained in the Form 10 Registration
Statement being filed by Global Datatel, Inc., and that the undersigned concurs
with the statements made therein by the Registrant concerning the change in the
Registrant's independent accountant.
/s/ Schvaneveldt & Company
Schvaneveldt & Company
Salt Lake City, Utah
July 20, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 189,154
<SECURITIES> 0
<RECEIVABLES> 4,947,355
<ALLOWANCES> 0
<INVENTORY> 1,375,633
<CURRENT-ASSETS> 7,398,971
<PP&E> 511,054
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,367,074
<CURRENT-LIABILITIES> 5,144,677
<BONDS> 0
0
0
<COMMON> 22,495,623
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 24,367,074
<SALES> 6,502,012
<TOTAL-REVENUES> 6,502,012
<CGS> 4,031,247
<TOTAL-COSTS> 1,531,004
<OTHER-EXPENSES> 86,085
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 144,676
<INCOME-PRETAX> 853,676
<INCOME-TAX> 240,000
<INCOME-CONTINUING> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 621,715
<EPS-BASIC> .02
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</TABLE>
