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As filed with the Securities and Exchange Commission on August 13, 1999
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM 10-SB
REGISTRATION STATEMENT FOR SMALL BUSINESS ISSUER UNDER
SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
-------------------------------
ZEPPELIN SOFTWARE, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
DELAWARE 3663 98-0196717
(STATE OR JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER
OF INCORPORATION INDUSTRIAL CLASSIFICATION) IDENTIFICATION
OR ORGANIZATION) CODE NUMBER) NUMBER)
2408 WESTHILL COURT
WEST VANCOUVER, BRITISH COLUMBIA
CANADA V7S-3A5
(604) 926-2793
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES
AND PRINCIPAL PLACE OF BUSINESS)
---------------------------
PAUL MINICHIELLO
PRESIDENT
ZEPPELIN SOFTWARE, INC.
2408 WESTHILL COURT
WEST VANCOUVER, BRITISH COLUMBIA
CANADA V7S-3A5
(604) 926-2793
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
Copies to:
STANLEY MOSKOWITZ, ESQ.
MOSKOWITZ ALTMAN & HUGHES LLP
11 EAST 44TH STREET, SUITE 504
NEW YORK, NY 10017
(212) 953-1121
Securities to be registered under Section(g) of the Exchange Act:
Title of Each Class:
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Common Stock, $0.001 par value
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TABLE OF CONTENTS
TABLE OF CONTENTS
PART I
ITEM 6 DESCRIPTION OF BUSINESS
ITEM 7 DESCRIPTION OF PROPERTY
ITEM 8 DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
ITEM 9 REMUNERATION OF DIRECTORS AND OFFICERS
ITEM 10 SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN SECURITY HOLDERS
ITEM 11 INTEREST OF MANAGEMENT AND OTHERS IN
CERTAIN TRANSACTIONS
ITEM 12 DESCRIPTION OF SECURITIES
PART II
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
ITEM 2 LEGAL PROCEEDINGS
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES
ITEM 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS
PART F/S
FINANCIAL STATEMENTS
PART III
ITEM 1 INDEX TO EXHIBITS
ITEM 2 DESCRIPTION OF EXHIBITS
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Glossary of Terms
ASIC chip Application specific integrated circuit chip, which means
that the chip has been built for a specific application.
Bandwidth means the width of the communications channel; typically
measured amount of data transferred in bits per second (bps).
Bit Stream means a continuous stream of data bits transmitted over
a communications line with no break between the data
characters.
BER Bit error rates means the ratio of error bits to the total
number of bits transmitted.
CAP Competitive access provider.
CLEC Competitive local exchange carrier is authorized to provide
voice communications to a pre-determined area.
CPU Central Processing Unit is the functioning system of a
computer.
GHz Gigahertz is a frequency used by radios to transmit
information.
Mbps Million bits per second is the amount of information at which
data is transferred per second.
Microwave means the frequency for communicating to and from satellites
and travels in straight lines.
Modulation means the technique used to encode the digital bits into an
analog signal.
OC-1 Refers to data transfer rates at speeds of 155 Mbps.
OC-3 Refers to data transfer rates at speeds of 466 Mbps.
PCS Personal Communication Service is the Federal Communication
Commission's classification for digital wireless communication
systems.
Polarization means the arrangement of electromagnetic radiation field
signals in a definite direction at specific settings. Each
country has different polarization settings.
Protocols means a set of rules governing the format of messages that are
exchanged between computers and people.
RF Radio frequency
PART I
The Registrant has elected to report under Disclosure Alternative 2 under Form
10-SB.
ITEM 6 DESCRIPTION OF THE BUSINESS
Company Background
Zeppelin Software, Inc. d.b.a. Zeppelin Wireless Technology (the "Company") has
its principal offices at 2408 Westhill Court, West Vancouver, British Columbia,
Canada V7S-3A5. The telephone number is (604) 926-2793. Through May 10, 1999,
the Company has generated no revenues from operations.
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The Company, a development stage company, was incorporated in October 1998 for
the express purpose of developing digital microwave products. The Company
intends to develop new wireless products, including the designing and
manufacturing of an ultra-high bandwidth digital microwave radio. The Company
will not be able to fully implement its business plan unless it is able to raise
a sum of $5,000,000. There can be no assurance that the Company will be able to
raise $5,000,000 or any lesser amount.
To date, the Company has (i) defined the market opportunities for the Company in
the wireless communications industry, (ii) assembled a team of engineers that
the Company believes has the knowledge and experience to create and develop a
digital microwave radio, and (iii) completed a private placement offering of
securities that generated the funds necessary to begin developing the
preliminary design of a prototype of a digital microwave radio. There can be no
assurance that the Company will be able to design or complete a successful
prototype of a radio.
Currently, the Company has sufficient capital, due to its 1998 Private Placement
Offering (which is discussed below), to maintain limited operations. The
operations will be limited to seeking out additional capital. Additional capital
will be sought through the private or public placement of the Company's
securities or by the Company entering into a joint venture with a partner that
would provide capital. The Company forecasts that expenses will not exceed
available funds. To fully implement the business plan of manufacturing,
marketing and selling the radio, the Company has projected that it will need
approximately $5,000,000. The Company intends to seek funding of $5,000,000.
Upon funding, the Company will use the proceeds initially to design and develop
a prototype of a digital microwave radio. The Company projects that it will
spend approximately $1.3 million on engineering salaries and expenses and $1.75
million on capital equipment expenditures. The remaining funds will be spent on
general and administrative expenses, marketing and operating capital. The
Company anticipates that it will take approximately 6 to 8 months from the
receipt of funding to develop a prototype radio and approximately 8 to 10
months, after the completion of the prototype radio, to complete field tests for
a commercially saleable radio. However, there can be no assurance that the
Company will be able to meet this timetable nor that even when commercially
available, that the radio will be sold in sufficient quantities to produce a
profit.
The first product the Company intends to develop is a configurable 38 gigahertz
(GHz) digital microwave radio (the "Zeppelin Radio" or "Radio") which will be
intended for use by customers in areas that cable based service providers are
not equipped to, or unable to, adequately provide with audio, video and data
communications ("last mile solution"). The product will be intended for use in
areas of uneven topography where the installation of cable is difficult. The
Radio will be a low cost unit capable of sending and receiving data
transmissions at very high rates at narrow radio frequency (RF) bandwidths. The
Company will design the Zeppelin Radio to be manufactured with a high level of
ASIC chips (see glossary) with a low ancillary parts count. This is intended to
enable the Company to achieve cost savings in the manufacture of the Radio and
will accordingly allow the Company to offer the Radio at competitive prices.
Products Strategy
The Company intends to focus its selling efforts on the wireless communications
industry by manufacturing and marketing a 38 GHz (with potential future growth
to 55 GHz) microwave Radio that can provide faster data transmission rates at
competitive prices. According to The Yankee Group, a Boston, Massachusetts
independent technology research and forecasting company, wireless devices,
allowing wireless audio, video and data transmission, will grow from an
estimated $600 million in 1999 to a forecasted $4 billion in 2003. By 2005,
Forrester Research, Inc., a Massachusetts independent technology research
company, predicts that wireless services, transmission of audio, video and data,
will generate nearly $60 billion in revenues. The Zeppelin Radio will be
intended to provide existing wireless service providers with the ability to
upgrade (increase their speed of transmission) their networks. The initial
Zeppelin Radio is intended to have 38 GHz bandwidth, with point-to-multipoint
transmission rates up to 155.52 Mbps (OC-1), and with point-to-point
transmission rates up to 3 times as fast, at 466.56 Mbps (OC-3). OC-1 is an
international protocol standard for sending data transmissions with a rate of
155.52 Mbps.
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The Company intends to sell and market the Radio to companies that have or are
developing wireless communications networks, such as; (1) communication
companies with fiber optic networks, i.e. AT&T, common carriers, i.e. Sprint
Communications Co., MCI Worldcom, Inc., other local and long distance telephone
companies, and as a "last mile solution" for Internet Service Providers (ISP's),
i.e. America On-Line; (2) the competitive local exchange carriers (CLEC), i.e.
Bell Atlantic and other local telephone companies, competitive access providers
(CAP), i.e. AT&T, personal communication service (PCS), i.e. Sprint, and
cellular markets; and (3) companies that employ their own private communications
network. The Company believes that these potential customers will integrate the
Radio into their wireless communications system to take advantage of the
wireless communications market by providing Internet access, mobile
communications and data transmissions for their existing and new customers
through the use of the Radio's wireless transmission capabilities.
Currently, most microwave transmissions are conducted at 28 GHz frequencies or
lower. The Company believes that the increased interest in the 38 GHz or higher
radio frequencies is mainly due to the higher frequency's ability to transmit or
receive signals over greater distances. Higher frequency transmissions increases
antenna beamwidth control which, in turn permits service providers to re-use
assigned frequencies in small geographical areas. The use of smaller beamwidths
also reduces transmission errors. Transmission errors occur because
transmissions can take multiple routes between transmitter and receiver. Using
larger beamwidths creates more routes for transmissions to take when going
between transmitter and receiver, thereby increasing the likelihood of errors to
occur. The Radio will allow simultaneous two-way transmissions (duplex
transfers) through normal weather at up to 15 miles and through the heaviest
rainfall, fog, or snow at up to one mile.
Products
The Company intends to develop radios that provide data transmission at a
variety of frequencies in the 38 GHz and higher bandwidths. The Company intends
to design the different bandwidth radios with a common design. This common
design will allow the Company to assemble the different bandwidth radios with as
many common components as possible. Currently, the Radio is approximately 6
months into the development of a design, and a prototype is intended to be
completed within 6 months from the date at least $2,000,000 of funding is
invested in the Company. There are no other products being developed at this
time. Until the Radio is completed and manufactured for the marketplace, the
Company does not intend to develop any other products. The Radio will physically
consist of three components, (1) an outdoor antenna/radio frequency unit (RFU);
(2) an indoor interface Digital Signal Processing Unit (DSPU); and (3) the
specialized central processing unit (CPU).
THE RADIO FREQUENCY UNIT (RFU)
The RFU will send or receive transmission signals to or from other RFUs within
line of sight. In the transmission mode, the RFU will receive signals from the
DSPU and send the signal to other RFUs. In the receiving mode, the RFU receives
signals from other RFUs, which are then relayed to the DSPU for conversion. The
RFU will be designed so as to permit easy installation and replacement of the
RFU. Many countries have different polarization settings for the Radio to
function, therefore, the Company will design the Radio with the capability of
changing the polarization of the beamwidth without misaligning the antenna so as
to comply with various country settings. The RFU will be easy to maintain and
operate.
The RFU is intended to receive its power and control from a single cable. The
Company believes that the cable between the RFU and DSPU can be copper coaxial,
as is the case in numerous radios built by other companies, or fiber optic
cable. The Company believes that fiber optic cables are superior to coaxial
cables, as the fiber optic cable reduces the number of transmission errors
associated with high bandwidth signals and also allows the RFU and DSPU to be
located further apart.
THE DIGITAL SIGNAL PROCESSING UNIT (DSPU)
The DSPU is intended to interface with the RFU by a cable. The DSPU receives a
signal from the RFU, which it then converts for use by the CPU and conversely,
receives signals from the CPU which the DSPU converts for sending by the RFU.
The DSPU is an indoor unit which will have an innovative design using
proprietary modulation techniques. The
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Company believes that its DSPU will use proprietary modulation techniques which
convert the RFU signal to a digital bit stream at rates up to 155 Mbps (OC-1).
The Company intends to design the Radio to handle both very high data
transmission rates and multimedia transmission, or any combination of the two.
The Company believes that its DSPU's internal design will: (1) reduce the number
of parts for the Radio; (2) decrease noise and distortion; and (3) increase the
amount of transmissions.
The DSPU is intended to be frequency independent and as such will be compatible
with all of the Company's and other manufacturer's radios regardless of the
bandwidth. The Company intends to have the communications link between the DSPU
and RFU coded for security.
THE CENTRAL PROCESSING UNIT (CPU)
The CPU is a modified and specialized central processing unit located at the end
user's site. The CPU sends or receives signals to or from the DSPU. The
specialized Central Processing Unit will act as the electrical/optical interface
with the customer's equipment, i.e. computer or phone system. The Company
intends to design the CPU with two plug-in modules, with the capability to
expand to eight plug-ins. The plug-in modules are intended to allow the customer
to connect their various systems into the CPU. The CPU will be connected to the
DSPU and to the customers equipment through physical ports. The Company intends
to have the CPU support electrical or optical interfaces, in addition to various
protocols.
SOFTWARE/FIRMWARE
The Company intends to develop software which will provide control, diagnostics
and maintenance for the Radio. The software will be Windows 95/98 and Windows NT
compatible as well as support open architecture network management software
systems such as Hewlett Packard Openview or SNMP. The software's function will
be to interrogate, upgrade and control the Radio by permitting the user to
conduct the necessary controls from a personal computer attached to the
Internet. These functions include, but are not limited to; changing frequencies;
performing diagnostic tests at the near and far end of the system; and detecting
problems in the system. The software is intended to allow the service providers
using the Radio to efficiently control the outdoor antenna and remedy many
problems through remote access rather than utilizing maintenance personnel.
Intellectual Property
The Company intends to apply for a number of patents, relating to the Zeppelin
Radio, with the United States Patent and Trademark Office under the design and
functionality standard for patents. Under the design and functionality standard,
a patent is granted when a new design is developed for a functioning item. A
patent gives the owner exclusive use of that design for fourteen (14) years. It
intends on applying for additional patents as the Company fully develops more
products and components for the Radio. The Company has entered into
Confidentiality agreements with all employees to protect the Company's
intellectual property, including any copyrights, patents and trade secrets that
the Company may have or may be working on. There can be no assurances that the
Company will be issued any patents for any part of the Radio it intends to
develop. The Company's failure to secure any patent or protect its intellectual
property may have a materially adverse effect on the business, financial
position and operations of the Company.
Manufacturing
The Company intends to rely on subcontractors to manufacture and assemble the
components from the Company's designs that make up the Radio. The Radio's design
is intended to have fewer parts and more common components in an effort to
standardize the manufacturing process. By using a common design for all its
radios, the Company will lower the cost of manufacturing the various radios it
intends to develop. Because the radios' components will have electromagnetic
parts, which are extremely sensitive during the production process, the Company
intends to enforce strict guidelines on any manufacturers employed in
manufacturing the Radio. The Company will attempt to locate and employ a
suitable
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subcontractor manufacturer and supplier. The Company's inability to find a
manufacturer or supplier would have a materially adverse effect on the Company's
financial position and operations.
Competition
The wireless equipment market is experiencing high growth and change. Sales
today are led by microwave system manufacturers, such as P-Com Inc., Digital
Microwave Corporation and Adaptive Broadband Corporation (formerly California
Microwave). As seen by the number of joint ventures with, and acquisitions of,
smaller specialized companies, such as DSC Communications and WPN
Communications, traditional core telecommunication companies, such as AT&T and
Bell Atlantic, are moving into the wireless market. Because of industry growth
forecasts in the wireless market, as previously mentioned, it is expected that
the larger core telecommunication companies, i.e. Sprint and BellSouth, will
enter the market, thereby increasing competition. Nortel Networks Corp., Bosch
Telekom GmbH, Lucent Technologies, Inc., Harris Corporation, Siemens A.G. and
Newbridge Corp., all have interests in the wireless market, and all of those
companies have financial, marketing, manufacturing and engineering skills
greater than the Company. The Company will compete with a number of entities,
all of which are larger, have greater resources and more extensive operating
histories than the Company. Operating losses may result from this competition
which may have a materially adverse effect on the Company.
The Company believes that competitive pressures and high growth in the CLEC,
Cellular and PCS markets may create opportunities for significant sales as the
service providers attempt to capture a larger share of their markets. Rapid
deployment of networks by the service providers and the resulting demand for
wireless products has created a current environment with long lead times to
secure equipment and equipment shortages. The Company intends to have the
product design, manufacturing and distribution strategies directly address these
competitive issues. However, there can be no assurance that the Company will be
able to compete successfully in the wireless industry.
The wireless communications market is subject to rapid technological change, new
product introductions, product obsolescence and changing standards. The
Company's ability to be competitive in this industry will depend on, among other
things, how quickly it is able to raise capital, its ability to develop a
successful Radio and the components that make up the Radio system. The Company
may, from time to time, experience delays in completing the Radio. The Company's
inability to timely introduce the Radio to the market would result in very few,
if any, sales and have a materially adverse effect on the Company's business,
financial position and operations.
Government Regulation
Radio communications are subject to the regulation of the United States
government and foreign governments. The Company's systems must conform to a
variety of domestic and foreign requirements established to avoid interference
among users of radio frequencies and to permit interconnection of equipment. In
many developed countries, historically the limited availability of frequency
spectrum has inhibited the growth of microwave wireless systems. Regulatory
bodies worldwide are in the continuing process of adopting new standards for
wireless communications. The delays inherent with a government's approval
process may cause delays, cancellations or re-scheduling of the purchase and
installation of the Company's products by some customers, which may have a
materially adverse effect on the Company's financial condition.
All of the Company's customers are required to be licensed by the U.S. Federal
Communications Commission ("FCC") or other foreign governments for wireless
broadband transmissions. The regulatory environment in which the Company
operates is subject to change by government regulation. Such regulatory change
could restrict development by the Company's customers, making products obsolete
or increasing competition in certain areas of the market. The Company may be
required to adjust its products to conform with any such government regulatory
modifications, which could be time consuming and financially burdensome. Any
such changes could have a materially adverse effect on the Company's financial
position and operations.
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Sales and Marketing Strategy
The Company's marketing strategy is to sell the Company's products to the core
companies within the wireless communications market and develop product
recognition as quickly as possible. The marketing program will focus on various
industry marketing channels, including: press releases, advertising in trade
publication and attending selected trade shows. This program will be designed to
support the worldwide sales efforts of the Company.
The Company intends to utilize two basic marketing channels: (1) using sales
representatives for direct sales, and (2) using distributors, repeat customers
and customer service for indirect sales. The Company believes that these
channels will be non- competing marketing channels and that sales through
distributors, repeat customers and customer service will only need a few sales
personnel to handle the indirect sales channel. The Company believes that
potential opportunities can be identified through industry research, government
announcements of licensing activity, and trade publications. The Company's
product line will allow the sales personnel, whether direct or indirect, to
identify the potential customers that are in the buying cycle stage and then
direct all necessary sales energy to those potential customers. The Company
believes that this approach increases sales effectiveness, resulting in higher
sales and distributor productivity at lower costs per sale.
The Company intends to aggressively market its product on the Internet, through
its web site and with targeted advertisements and promotions on other web sites.
Staffing Requirements
SALES/SUPPORT STAFF
Currently, the Company does not have any full-time employees. Upon sufficient
funding and appropriate timing after the Company has developed a prototype
Radio, the Company intends to hire a minimum of 2 direct sales representatives,
who will be responsible for establishing and managing distributors according to
the Company's sales plan. These sales representatives will be trained by the
Company's engineers as well as supplied with all literature and documentation to
enable them to successfully market the Company's product line. Additionally, the
Company intends to establish a technical support center using sub-contractors,
which is intended to be operated on a 24 hours a day/ 7 days a week basis. The
Center is intended to support both distributors and end users, allowing the
Company to provide required services, maintaining an independent customer
relationship and keeping a high level of customer satisfaction. However, the
Company will not hire any sales staff or establish a technical support center
unless the Company receives funding.
The Company intends to maintain an extranet, which allows the Company to
electronically link customers and distributers to the Company in a secure, low
cost and reliable environment via the Internet, to provide on-line support to
its sales representatives, distributors and customers.
KEY EMPLOYEES
Mervin Vincent, Executive Vice President and Jay Nagle, Executive Vice President
of Product Development, each of whom is a professional engineer with experience
in working within the wireless technology industry, are currently designing the
Radio on a part-time basis. Neither of these officers are currently paid a
salary. Upon funding, the Company intends to commence the payment of salaries.
The Company believes that Messrs. Vincent's and Nagle's experience and expertise
in the wireless technology industry will enable them to be successful in
developing the Radio. The Company relies heavily on these officers to complete
the Zeppelin Radio. Each officer has signed a Confidentiality and Non-disclosure
agreement with the Company. The unavailability of either Mr. Vincent or Mr.
Nagle would set back the developmental time frame of the Radio and would have a
materially adverse effect on the Company's business, financial position and
proposed operations.
MANAGEMENT
The Company's management team is comprised of individuals who have many years of
experience in developing, managing,
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building and growing technology companies in the competitive national and
international environments.
The Company intends to use contract workers whenever possible. The Company
currently maintains a staff of four officers (See Item 8 below describing
officers), some of whom are presently serving on a part-time basis. Upon
additional funding, it is anticipated that approximately 10 people will be hired
by the Company within the upcoming year.
Department 1999
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Corporate Office 2
Sales and Marketing 1
Design and Manufacturing 5
Product Support 1
Finance and Administration 1
---
Total 10
Regulation D, Rule 504 Offering
The Company recently completed a Regulation D- Rule 504 offering, in which the
Company offered up to and sold 500,000 shares of common stock, par value $0.001
per share (the "Offering"), at an offering price of $.25 per share (the
"Offering Price"). The Offering had been fully subscribed to and a closing Form
D was filed with the Securities and Exchange Commission on or about April 6,
1999.
The proceeds from the Offering were approximately $125,000. The following
summary, based on management estimates, illustrates the manner in which the net
proceeds of the Offering were applied and allocated.
Application Amount
Legal, Accounting, Organization, Filing Fees $25,000
Marketing 18,750
Consultants 15,000
Capital Equipment 6,250
General & Administrative 7,500
Operating Capital 40,000
Printing & Mailing 2,500
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Total $125,000
The Company believes that the proceeds from this Offering are adequate for the
Company to initiate the preliminary stages of its business plan. The preliminary
stages of the business plan are for the Company to conduct market research,
develop the design and begin development of the prototype, all of which has
commenced. The full implementation of the Company's business plan is to market
and manufacture the Radio, which will require additional funds to be obtained
through private or public offerings of its securities, joint ventures or other
arrangements. The proceeds of any additional funding, if available, will be
applied and allocated by the Company, as determined by the board of directors of
the Company. There can be no assurances that any securities offerings will take
place in the future, or that funds sufficient to meet any of the foregoing needs
or plans will be raised. If additional funding is not obtained, then the Company
will not be able to execute its business plan.
General Economic and Other Conditions
The Company's business may be adversely affected from time to time by such
matters that may be outside the control of the Company and/or its officers and
directors such as changes in general economic conditions, real estate, tax law
or policy, local
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and international governments, international relations and related conditions,
as they exist in any country where the Company may penetrate markets.
Control by Current Management.
The Company's directors and executive officers and their affiliates beneficially
own approximately 70.5% of the outstanding common stock. As a result, current
management may be able to exercise control over all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. Such control could delay or prevent a change
in control of the Company or adversely affect the market price of the common
stock.
Year 2000 Compliance
There are issues associated with the programming code in existing computer
systems as the year 2000 approaches. The "year 2000 problem" ("Y2K")is complex,
as virtually every computer operation will be affected in some way by the
rollover of the two-digit year value to 00. The issue is whether computer
systems will properly recognize date sensitive information when the year changes
to 2000. Systems that do not properly recognize such information could generate
erroneous data or cause a system to fail. After a complete assessment of
potential Y2K issues the Company has made a determination that presently and in
the near future it will not be adversely affected by Y2K compliance issues. The
Company's Y2K assessment was based on the following: (i) aside from a Y2K
compliant personal computer, the Company has no computer hardware or software
systems to update or replace; and (ii) the Company does not have any third party
relationships. As the Y2K problem is applied to the Company, the Y2K problem
does not present and will not present a material event or uncertainty for the
Company. However, when the purchase of computer systems and the making of third
party relationships become a necessity for the Company, the Company will take
every measure to insure Y2K compliancy by: (i) purchasing computer systems from
only known Y2K compliant vendors; and (ii) sending questionnaires to, and
obtaining written assurance of Y2K compliancy from, potential third party
vendors, suppliers or subcontractors.
ITEM 7 DESCRIPTION OF PROPERTY
The Company maintains offices at:
2408 Westhill Court
West Vancouver, British Columbia
Canada.
ITEM 8 DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The following table sets forth certain information with respect to the
directors and executive officers of the Company:
Name Age Position
---- --- --------
Paul Minichiello 58 President /Director
Scott Lee Kostiuk 28 Secretary and Treasurer
Donald J. Cheney 55 Director
Jack McKinley Wilson 67 Director
Mervin Vincent 58 Executive Vice President /Director
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Jay Nagle 71 Executive Vice President of Product
Development/Director
The Board of Directors will be the governing body of the Company and will set
goals and establish policies, will retain qualified executive leadership and
will oversee the performance of that leadership for the organization. The Board
will be active in that it will meet formally at least on a quarterly basis. The
full board may choose to delegate some authority to an executive committee that
will meet more frequently and will exercise interim policy making and oversight
authority.
Each director will be elected to hold office until the next annual meeting of
shareholders and until his successor has been qualified and elected. The
following sets forth certain information as well as a brief account of business
experience during the past five years of each director and executive officer of
the Company.
Current Officers, Directors and Key Employees
Paul Minichiello has been the Company's President and Director since the
inception of the Company in October, 1998. Mr. Minichiello currently devotes
approximately 10% of his time to the business of the Company. Upon additional
funding, Mr. Minichiello will devote approximately 50% of his time to the
business of the Company. Since 1963 to present, Mr. Minichiello has served as
the President of Paul's of North Shore, a custom men's clothing design
manufacturer under the Minichiello label. That company is currently trading on
the OTC Bulletin Board.
Mervin Vincent has been the Company's Executive Vice President, Director and
Chairman of the Board of Advisors since February 1, 1999. Dr. Vincent currently
devotes approximately 10% of his time to the business of the Company. Upon
additional funding, Dr. Vincent will devote approximately 50% of his time to the
business of the Company. He has worked for over 31 years at Boeing Information,
Space and Defense Systems, developing advanced antenna designs, stealth designs,
nuclear electromagnetic pulse analysis models and general technology integration
concepts. Dr. Vincent has served the last 9 years at Boeing as a Senior
Technical Fellow functioning as a technology advisor and mentor. He has served
as a Technical Director and Technology Manager of various research and
development contracts. He also serves on a number of national technology
committees or working groups for the Boeing Company. Dr. Vincent is an adjunct
professor at Michigan State University and serves on their Visiting Advisory
Committee. He is also a registered Professional Engineer of the State of
Washington.
Jay Nagle has been the Company's Executive Vice President of Product
Development, Director and a member of the Board of Advisors since February 1,
1999. Mr. Nagle currently devotes approximately 10% of his time to the business
of the Company. Upon additional funding, Mr. Nagle will devote approximately 50%
of his time to the business of the Company. Mr. Nagle has over 30 years
communications and radar design experience with the aerospace industry. As a
lead radar design engineer for GE, he helped develop and install the $1 billion
ballistic missile early warning system (BMEWS) L-Band radar installation at
Clear, Alaska. Later, he was the lead engineer for the specification and
development of the spread spectrum DSCS-II (X-Band) satellite airborne terminal
for the 747 Airborne Command Post aircraft. He was also the key designer for the
avionics suite that was later used as the basis for the B-2 avionics suite.
Other efforts included the design support of the 35 GHz FMCW SAR radar for the
B1-B. His later communication efforts included being the Boeing expert on
airborne satellite terminals, including DSCS-II/III, FLTSATCOM, AFSATCOM and
MILSTAR. Mr. Nagle has attended various IEEE symposia, radar and communications
short courses and is a registered Professional Engineer.
Harold R. Jackson. Upon additional funding, Mr. Jackson will be Chief Engineer
and devote approximately 50% of his time to the business of the Company. Mr.
Jackson currently devotes no time to the business of the Company. Mr. Jackson is
a licensed engineer with 34 years of project engineering experience in the
development of complex electronic equipment. He
10
<PAGE>
has managed all phases of the development of military and commercial hardware
systems including the technical management of subcontractors and the factory
assembly, factory test, field installation check out and delivery of electronic
systems. He has initiated and led inter-agency task forces to solve major
subsystem interface technical problems and has conducted, major trade studies to
establish design criteria and assess cost and risk. His hands on engineering
experience includes the preparation of technical specifications, design
drawings, installation drawings and test plans and the on-site technical support
to factory assembly, factory test and field installation crews.
Scott Lee Kostiuk has been the Company's Secretary and Treasurer since the
inception of the Company in October, 1998. Mr. Kostiuk currently devotes
approximately 10% of his time to the business of the Company. Upon additional
funding, Mr. Kostiuk will devote approximately 50% of his time to the business
of the Company. Since November, 1994 to present, Mr. Kostiuk has served as the
Secretary and Treasurer of The Plant Software, Inc., a computer software
development company. From May, 1993 to October, 1994, Mr. Kostiuk held a
position as an Executive Assistant at Evergreen International Technology, Inc.,
a company involved in the development of computer software. Mr. Kostiuk attended
the University of Toronto, graduating with a B.A. Degree in 1993.
Donald J. Cheney has served as a Director of the Company since the inception of
the Company in October, 1998. Mr. Cheney currently devotes approximately 10% of
his time to the business of the Company. Upon additional funding, Mr. Cheney
will devote approximately 50% of his time to the business of the Company. Since
1971 to present, Mr. Cheney has been employed as a school teacher at Federal Way
School District #203 in Federal Way, Washington. Mr. Cheney attended La Verne
College, graduating with a B.A. Degree in 1965.
Jack McKinley Wilson has served as a Director of the Company since the inception
of the Company in October, 1998. Since 1990, Mr. Wilson has been retired from
his dental practice. Mr. Wilson attended the University of Washington,
graduating with a B.A. Degree in Business Administration in 1956 and received
his D.D.S. from the University of Washington in 1964.
Board of Advisors was created and represented customers, industry specialists
and wireless technology experts to advise and direct management on strategic
product and marketing issues. Dr. Mervin Vincent has been chosen as the Chair
and other positions will be chosen over the coming months.
ITEM 9 REMUNERATION OF DIRECTORS AND OFFICERS
To date, the Company has paid no compensation to any of its officers or
directors. It is the Company's intention, that upon additional funding, in the
upcoming year, to compensate certain officers of the Company on a reasonable
basis in keeping with industry standards.
Directors of the Company who are not employees of the Company do not receive any
compensation for attending meetings of the Board of Directors. Directors are
reimbursed for their expenses in attending such meetings. The following table
sets forth the compensation for the 4 officers of the Company.
11
<PAGE>
Summary Compensation Table
Annual Expected
Name and Compensation Total Compensation
Principal Position Year Salary Compensation for 1999
------------------ ---- ------ ------------ --------
Paul Minichiello 1998 $0 $0 $0
President
Scott Lee Kostiuk 1998 $0 $0 $48,000
Secretary and Treasurer
Mervin Vincent 1998 $0 $0 $50,000
Executive Vice President
Jay Nagle 1998 $0 $0 $50,000
Executive Vice President
of Product Development
ITEM 10 SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
As of May 10, 1999, the Company had 8,500,000 shares of common stock issued and
outstanding. The following table sets forth certain information with respect to
the beneficial ownership of the Company's common stock as of May 10, 1999 by:
(i) each of the Company's directors; (ii) each of the executive officers; (iii)
each person or entity who is known to the Company to beneficially own 5% or more
of the outstanding common stock; and (iv) all directors and executive officers
of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Percentage of Class
Name and Address of Beneficial Owner(2) Beneficially Owned(1) Beneficially Owned
- --------------------------------------- --------------------- ------------------
<S> <C> <C>
Paul Minichiello............................... 3,000,000 35%
Carol Kostiuk.................................. 2,000,000 23.5%
Scott Kostiuk.................................. 2,000,000 23.5%
Donald Cheney.................................. 1,000,000 12%
All Directors and executive officers as a group
(3 persons) .................................. 6,000,000 70.5%
</TABLE>
- --------
(1) Beneficial ownership has been determined in accordance with Rule 13d-3 of
the Securities Exchange Act of 1934, as amended. Generally, a person is
deemed to be the beneficial owner of a security if he has the right to
acquire voting or investment power within 60 days of the date
12
<PAGE>
of this Registration Statement. Except as otherwise noted, each individual
or entity has sole voting and investment power over the securities listed.
(2) The address of each person is c/o Zeppelin Software, Inc., 2408 Westhill
Court, West Vancouver, British Columbia, Canada V7S-3A5.
Changes in Control
The Company is not aware of any arrangements, including the pledge by any person
of securities of the Company, which may at a subsequent date result in a change
in control of the Company.
Provisions of Delaware Law
The Company is a Delaware corporation and is subject to the provisions of
Section 203 of the Delaware General Corporation Law ("DGCL"). In general,
Section 203 prevents an "interested stockholder" (defined generally as a person
owning 15% or more of the Company's outstanding voting stock) from engaging in a
"business combination" (as defined in Section 203) with the Company for three
years following the date that person became an interested stockholder unless (i)
before that person became an interested stockholder the board of directors
approved either the business combination or transaction which resulted in the
stockholder becoming an interested stockholder, (ii) upon completion of the
transaction that resulted in the interested stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the Company outstanding at the time the transaction commenced (excluding
stock held by directors who are also officers of the Company and by employee
stock plans that do not provide employees with the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer) or (iii) on or following the date of which that person
became an interested stockholder, the business combination is approved by the
Company's Board and authorized at a meeting of stockholders by the affirmative
vote of the holders of at least 66 2/3% of the outstanding voting stock of the
Company not owed by the interested stockholder.
Under Section 203 of the DGCL, these restrictions do not apply to certain
business combinations proposed by an interested stockholder following the
announcement or notification of one of certain extraordinary transactions
involving the Company and a person who was not an interested stockholder during
the previous three years or who became an interested stockholder with the
approval of a majority of the Company's directors, if that extraordinary
transaction is approved or not opposed by a majority of the directors (but not
less than one) who were directors before any person became an interested
stockholder in the previous three years or who were recommended for election or
elected to succeed such directors by a majority of such directors then in
office.
Under Section 162 of the DGCL, the board of directors of the Company can,
without stockholders approval, issue authorized but unissued shares of Capital
Stock, which may have the effect of delaying, deferring or preventing a change
of control of the Company.
ITEM 11 INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Mr. Scott Kostiuk, the Secretary and Treasurer of the Company, is the owner of
La Tache DRC, a private company which performs consulting services to the
Company. Mr. Larry Kostiuk and Ms. Carol Kostiuk are the father and mother of
Scott Kostiuk. To date, La Tache has received $90,000 for consulting and other
services rendered to and for the Company, of which all has been paid. Management
believes that fees are commensurate with the fair market value of the services
provided
13
<PAGE>
by La Tache. The Company will continue to utilize the services of La Tache.
No other member of the Board of Directors or officer of the Company, to the
Company's knowledge, has any material interest resulting from any relationship
or business affiliation with the Company.
ITEM 12 DESCRIPTION OF SECURITIES
Description of Securities
The Company, a Delaware corporation had an initial authorization of 100,000,000
shares of which 95,000,000 shares will be Common Stock, $0.001 par value and
5,000,000 shares will be Preferred Stock, $0.001 par value. As of May 10, 1999,
the Company had 8,500,000 shares issued and outstanding.
Common Stock
All shares are fully paid and non-assessable. All shares are equal to each other
with respect to voting, liquidation, and dividend rights. Special shareholder
meetings may be called by the officers or directors, or upon the request of
holders of at least one-tenth (1/10) of the outstanding shares. Holders of
shares are entitled to one vote at any shareholder's meeting for each share they
own as of the record date set by the board of directors. There is no quorum
requirement for shareholders meetings. Therefore, a vote of the majority of the
shares represented at a meeting will govern even if this is substantially less
than a majority of the shares outstanding. Holders of shares are entitled to
receive such dividends as may be declared by the board of directors out of funds
legally available therefore, and upon liquidation are entitled to participate in
a distribution of assets available for such a distribution to shareholders.
There are no conversion, preemptive or other subscription rights or privileges
with respect to any share. Reference is made to the Company's Articles of
Incorporation and its bylaws as well as to the applicable Statutes of the State
of Delaware for a more complete description of the rights and liabilities of
holders of shares. It should be noted that the bylaws may be amended by the
board of directors without notice to the shareholders. The shares of the Company
do not have cumulative voting rights, which means that the holders of more than
fifty percent (50%) of the shares voting for election of directors may elect all
the directors if they choose to do so. In such event, the holders of the
remaining shares aggregating less than fifty percent (50%) will not be able to
elect directors.
Preferred Stock
The Company has not issued any Preferred Stock. The five million (5,000,000)
shares of preferred stock designated in the Company's Certificate of
Incorporation is "blank check" preferred stock, which authorizes the board of
directors to authorize and issue one or more series of preferred stock with the
designations, rights and preferences as determined, from time to time, by the
board of directors. The board of directors is authorized to make such
designations without shareholder approval.
Dividend and Stock Buy Back Policy
The Company is a new business and no assurance can be given that it will
generate earnings from which cash dividends can be paid. However, if earnings
are generated, management may follow a policy of retaining all earnings for the
expansion of the capital base of its business. Such a policy could be maintained
as long as necessary to provide funds for the Company's expansion of capital
base. Any dividends that may be paid in the future will be dependent upon the
earnings and financial requirements of the Company and all other relevant
factors. At such time as the Company has accumulated profits
14
<PAGE>
not needed to sustain operations or planned for expansion, the Company may
choose to implement a share buy back program, if such a program is deemed to be
the most cost efficient method of delivering a capital return to its
shareholders, If such a program is implemented, and if some shareholders choose
to sell a portion of their shares to the Company and others do not, the
proportion of ownership of the Company held by participating and
nonparticipating shareholders will be effected. The Company has not paid any
dividends on its common stock to date.
PART II
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS
Market for Common Stock
Prior to this Registration, there has been no public market for the common stock
of the Company and there can be no assurance that a trading market will develop
at the conclusion of this Registration, or even if such a trading market should
develop, that the common stock may be resold at or near the original purchase
price. Any market for the common stock of the Company that may develop will, in
all likelihood, be a substantially limited one.
Dividend Policy
The Company does not have a policy of paying dividends, and it is currently
anticipated that no cash dividends will be paid. Any future decision to pay cash
dividends will be made on the basis of earnings, alternative needs for funds and
other conditions existing at the time.
ITEM 2 LEGAL PROCEEDINGS
Legal Proceedings
The Company is not a party to any legal proceedings or claims that it believes
will have, individually or in the aggregate, a material adverse effect on the
Company's business, financial condition or results of operations.
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company has had no changes in or disagreements with its accountants since
the Company's incorporation.
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES
Since inception, the Company has issued unregistered securities to a limited
number of persons as described below.
(1) Upon the inception of the Company in October, 1998, the Company
issued 8,000,000 shares of common stock at a subscription price of $0.001 per
share to the founding shareholders.
15
<PAGE>
(2) The company offered for sale Common Stock of the Company through a
Confidential Offering Circular pursuant to Rule 504 of Regulation D of the
Securities Act of 1933. The 504 placement began in October, 1998 and was
completed as of April 6, 1999. The offering was for up to 500,000 shares at an
offering price of $.25 per share. The Company had sold the maximum amount of
shares for a total offering of $125,000. The shares were sold to 87 unaccredited
investors.
ITEM 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS
Limitation on Liability; Indemnification of Directors and Officers
The Company's Certificate of Incorporation includes certain provisions permitted
pursuant to the DGCL whereby officers and directors of the Company shall be
indemnified against certain liabilities to the Company or its shareholders. The
Certificate of Incorporation also limits to the fullest extent permitted by the
DGCL a director's liability to the Company or its stockholders for monetary
damages for breach of fiduciary duty of care as a director, including gross
negligence, except liability for (i) breach of the director's duty of loyalty to
the Company or its shareholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or knowing violation of the laws, (iii)
under Section 174 of the DGCL (relating to unlawful payments of dividends or
unlawful stock repurchases or redemptions) or (iv) any transaction from which
the director derives an improper personal benefit. This provision of the
Company's Certificate of Incorporation has no effect on the availability of
equitable remedies, such as injunction or rescission. The Company believes that
these provisions will facilitate the Company's ability to continue to attract
and retain qualified individuals to serve as directors and officers of the
Company.
Business Insurance
The Company intends to carry Errors and Omissions liability insurance to cover
all officers and directors of the Company. Also, the Company intends to purchase
a standard business insurance policy to insure the assets and activities of the
Company.
PART F/S FINANCIAL STATEMENT
PART III
ITEM 1 INDEX TO EXHIBITS
Exhibit No. Exhibit Name
----------- ------------
2.1 Certificate of Incorporation of Registrant
2.2 By-laws of Registrant
ITEM 2 DESCRIPTION OF EXHIBITS
See Item 1 above
16
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
ZEPPELIN SOFTWARE, INC.
Date: August 12, 1999 By: /s/ Paul Minichiello
------------------- ------------------------
Paul Minichiello
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT, that the persons whose signatures appear
below each severally constitutes and appoints Paul Minichiello as true and
lawful attorney-in-fact and agent, with full powers of substitution and
resubstitution, for them in their name, place and stead, in any and all
capacities, to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, any registration
statement relating to the same offering as this Registration Statement that is
to be effective upon filing pursuant to Section 12 under the Securities Exchange
Act of 1934, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they might or
could do in person, hereby ratifying and confirming all which said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do,
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
/s/ Paul Minichiello
- ---------------------------------------
Paul Minichiello
President and Director Date: August 12, 1999
----------------
/s/ Donald J. Cheney
- ---------------------------------------
Donald J. Cheney
Director Date: August 12, 1999
----------------
/s/ Jack McKinley Wilson
- ---------------------------------------
Jack McKinley Wilson
Director Date: August 12, 1999
----------------
/s/ Mervin Vincent
- ---------------------------------------
Mervin Vincent
Executive Vice President and Director Date: August 12, 1999
----------------
/s/ Jay Nagle
- ---------------------------------------
Jay Nagle
Executive Vice President and Director Date: August 12, 1999
----------------
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Stockholders
of Zeppelin Software, Inc.:
We have audited the accompanying balance sheet of Zeppelin Software,
Inc., a Delaware corporation, as at December 31, 1998 and the related statements
of operations and deficit accumulated during the development stage and cash
flows for the period October 2, 1998 (inception) to December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Zeppelin Software,
Inc. as at December 31, 1998, and the results of its operations and its cash
flows for the period October 2, 1998 (inception) to December 31, 1998 in
conformity with generally accepted accounting principles.
Freeman & Davis LLP
New York, New York
June 10, 1999
<PAGE>
ZEPPELIN SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
------
CURRENT ASSETS
Cash $30,420
Prepaid expenses 500
-------
TOTAL CURRENT ASSETS 30,920
EQUIPMENT 6,088
OTHER ASSETS
Expenses preparatory to an offering of the Company's common stock 11,878
-------
$48,886
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $16,800
Due to common stock shareholder 30,000
-------
TOTAL CURRENT LIABILITIES 46,800
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value per share:
Authorized and unissued 5,000,000 shares
Common stock, $0.001 par value per share:
Authorized 95,000,000 shares
Issued 2,000,000 shares 2,000
Subscribed 6,000,000 shares 6,000
Deficit accumulated during the development stage (426)
-------
7,574
Less: Common stock subscriptions receivable (6,000,000 shares) (5,488)
-------
TOTAL STOCKHOLDERS' EQUITY 2,086
-------
$48,886
=======
The accompanying notes are an integral part of these financial statements.
<PAGE>
ZEPPELIN SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT ACCUMULATED
DURING THE DEVELOPMENT STAGE
OCTOBER 2, 1998 (INCEPTION) TO DECEMBER 31, 1998
REVENUE $ -
-------
EXPENSES
Licenses and permits 232
Dues and subscriptions 170
Bank service charges 24
-------
TOTAL EXPENSES 426
-------
NET LOSS AND DEFICIT ACCUMULATED DURING
THE DEVELOPMENT STAGE $ (426)
=======
The accompanying notes are an integral part of these financial statements.
<PAGE>
ZEPPELIN SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
OCTOBER 2, 1998 (INCEPTION) TO DECEMBER 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (426)
Adjustments to reconcile net loss to net cash used in
operating activities:
Payments for prepaid expenses (500)
-------
NET CASH USED IN OPERATING ACTIVITIES (926)
-------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock subscriptions 2,512
Advances from a shareholder of the Company's common stock 30,000
Payments for expenses preparatory to an offering of
the Company's common stock (1,166)
-------
NET CASH PROVIDED BY FINANCING ACTIVITIES 31,346
-------
CASH AT DECEMBER 31, 1998 $30,420
=======
SUPPLEMENTAL INFORMATION ABOUT CASH PAYMENTS
IS AS FOLLOWS:
Cash payments of interest $ -
Cash payments for income taxes $ -
SUPPLEMENTAL INFORMATION ABOUT NONCASH INVESTING
AND FINANCING ACTIVITIES:
Equipment financed by accounts payable $ 6,088
Expenses preparatory to an offering of the Company's common
stock financed by accounts payable $10,712
Common stock subscription received for subscribed common stock $ 5,488
The accompanying notes are an integral part of these financial statements.
<PAGE>
ZEPPELIN SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. DESCRIPTION OF DEVELOPMENT STAGE ACTIVITIES
Zeppelin Software, Inc. ("Company") was organized on
October 2, 1998 under the laws of the State of Delaware. The
Company was formed for the express purpose of developing
digital microwave products essential to the development of
communications networks for highly established competitive
markets as well as new developing markets. The Company is
presently in its development stage.
B. PROPOSED OFFERING OF THE COMPANY'S COMMON STOCK
As at December 31, 1998, the Company is in the process
of consummating an offering of 500,000 shares of its common
stock at an offering price of $.25 per share to qualified
investors. The offering is being made pursuant to the
exemptions from registration with the Securities and Exchange
Commission (SEC) provided by Regulation D, Rule 504, of the
1933 Act, and under applicable state laws, rules and
regulations.
Expenses incurred in connection with the aforementioned
offering are deferred and will be charged to additional
paid-in capital upon the successful completion of the offering
(See Note 4).
C. USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
NOTE 2. COMMON STOCK SUBSCRIPTIONS RECEIVABLE
At December 31, 1998, there is an outstanding balance of
$5,488 due from subscribers to 6,000,000 shares of the common stock
of the Company. The total subscription price of the shares is
$6,000. The balance is reflected in the balance sheet at December
31, 1998 as a reduction of stockholders' equity. Subsequent to the
year end date, payment of the entire balance was received by the
Company.
<PAGE>
ZEPPELIN SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 3. DUE TO COMMON STOCK SHAREHOLDER
As at December 31, 1998, there are outstanding advances in the
aggregate amount of $30,000 from a common stock shareholder, which
is noninterest bearing. Repayment provisions are informal in nature
and accordingly, the advances are reflected as a current liability
in the balance sheet at December 31, 1998.
NOTE 4. EVENTS SUBSEQUENT TO THESE FINANCIAL STATEMENTS
a. COMPLETION OF OFFERING OF THE COMPANY'S COMMON STOCK AND
RELATED EVENTS
Subsequent to these financial statements, pursuant to
an offering of the Company's common stock, the Company issued
500,000 shares for $125,000, less approximately $25,000 of
costs associated with the offering, for net proceeds of
approximately $100,000.
The Company also received the balance of the
outstanding stock subscriptions receivable in the amount of
$5,488 and repaid the outstanding $30,000 loan from a
shareholder. (See notes 2 and 3).
The following pro forma balance sheet gives effect to
the aforementioned subsequent events.
<TABLE>
<CAPTION>
BALANCES AT UNAUDITED PRO FORMA
DECEMBER 31, 1998 BALANCES AFTER
BEFORE GIVING EFFECT EFFECT OF THE GIVING EFFECT TO
TO THE SUBSEQUENT SUBSEQUENT THE SUBSEQUENT
EVENTS EVENTS EVENTS
------ ------ ------
<S> <C> <C> <C>
Current assets $ 30,920 $ 87,366 $118,286
Equipment 6,088 6,088
Other assets 11,878 (11,878)
---------- --------- --------
$ 48,886 $ 75,488 $124,374
========= ======== ========
Current liabilities $ 46,800 $(30,000) $ 16,800
Stockholders' equity 2,086 105,488 107,574
--------- -------- --------
$ 48,886 $ 75,488 $124,374
========= ======== ========
</TABLE>
<PAGE>
ZEPPELIN SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 4. EVENTS SUBSEQUENT TO THESE FINANCIAL STATEMENTS (CONTINUED)
b. RELATED PARTY TRANSACTION
In January 1999, the Company began receiving certain
consulting services from a company which is deemed to be a
related party due to common management.
The consulting services are expected to continue on an
informal basis month to month. Consulting fees currently
approximate $15,000 to $20,000 per month.
<PAGE>
ZEPPELIN SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
MARCH 31, 1999
ASSETS
------
CURRENT ASSETS
Cash $ 31,657
EQUIPMENT (NET OF ACCUMULATED
DEPRECIATION OF $152) 5,936
--------
$ 37,593
========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 21,190
Accrued expenses payable 1,822
Due to common stock shareholder 539
--------
TOTAL CURRENT LIABILITIES 23,551
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value per share:
Authorized and unissued 5,000,000 shares
Common stock, $0.001 par value per share
Authorized 95,000,000 shares
Issued 8,377,000 shares 8,377
Additional paid-in capital 71,517
Deficit accumulated during the development stage (65,852)
--------
TOTAL STOCKHOLDERS' EQUITY 14,042
--------
$ 37,593
========
<PAGE>
ZEPPELIN SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT ACCUMULATED
DURING THE DEVELOPMENT STAGE
THREE MONTHS ENDED MARCH 31, 1999
REVENUE $ -
-------
EXPENSES
Consulting fees 62,157
Professional fees 1,822
Travel and entertainment 500
Filing fees 220
Transfer agent fee 500
Dues and subscriptions 26
Printing and reproduction 21
Postage and delivery 17
Bank service charges 11
Depreciation expense 152
-------
TOTAL EXPENSES 65,426
-------
NET LOSS (65,426)
DEFICIT ACCUMULATED DURING THE DEVELOPMENT
STAGE AT JANUARY 1, 1999 (426)
--------
DEFICIT ACCUMULATED DURING THE DEVELOPMENT
STAGE AT MARCH 31, 1999 $(65,852)
========
<PAGE>
ZEPPELIN SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net loss $(65,426)
Adjustments to reconcile net loss to net cash used in
operating activities:
Noncash items:
Depreciation of equipment 152
Decrease in prepaid expenses 500
Increase in accrued expenses payable 1,822
--------
NET CASH USED IN OPERATING ACTIVITIES (62,952)
--------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Payments for the purchase of equipment (6,088)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of advances from a shareholder of the Company's common stock (30,000)
Advances from a shareholder of the Company's common stock 539
Proceeds from common stock subscriptions 5,488
Proceeds from issuance of common stock 94,250
--------
NET CASH PROVIDED BY FINANCING ACTIVITIES 70,277
--------
NET INCREASE IN CASH 1,237
CASH AT JANUARY 1, 1999 30,420
--------
CASH AT MARCH 31, 1999 $ 31,657
========
</TABLE>
(CONTINUED)
<PAGE>
ZEPPELIN SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1999
SUPPLEMENTAL INFORMATION ABOUT CASH PAYMENTS IS AS FOLLOWS:
Cash payments of interest $ -
Cash payments for income taxes $ -
SUPPLEMENTAL INFORMATION ABOUT NONCASH
FINANCING ACTIVITIES:
Expenses preparatory to an offering of the Company's
common stock financed by accounts payable $ 10,478
<PAGE>
ZEPPELIN SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
SELECTED DISCLOSURES
(SUBSTANTIALLY ALL DISCLOSURES REQUIRED BY GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES ARE NOT INCLUDED)
THREE MONTHS ENDED MARCH 31, 1999
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. DESCRIPTION OF DEVELOPMENT STAGE ACTIVITIES
Zeppelin Software, Inc. ("Company") was organized on October 2,
1998 under the laws of the State of Delaware. The Company was formed
for the express purpose of developing digital microwave products
essential to the development of communications networks for highly
established competitive markets as well as new developing markets. The
Company is presently in its development stage.
B. COMMON STOCK SUBSCRIPTIONS
At December 31, 1998, there was an outstanding balance of $5,488
due from subscribers to 6,000,000 shares of the common stock of the
Company. The total subscription price of the shares is $6,000. The
balance was received during the three months ended March 31, 1999 and
the 6,000,000 shares were issued.
C. PROPOSED OFFERING OF THE COMPANY'S COMMON STOCK
As at March 31, 1999, the Company is in the process of completing
an offering of 500,000 shares of its common stock at an offering price
of $.25 per share to qualified investors. The Company has issued
377,000 shares as of March 31, 1999. The remaining 123,000 shares were
issued in April and May 1999. The offering is being made pursuant to
the exemptions from registration with the Securities and Exchange
Commission (SEC) provided by Regulation D, Rule 504, of the 1933 Act,
and under applicable state laws, rules and regulations.
D. USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
--------------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "ZEPPELIN SOFTWARE, INC.", FILED IN THIS OFFICE ON THE SECOND
DAY OF OCTOBER, A.D. 1998, AT 9 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS.
[SEAL OF THE STATE OF DELAWARE]
/s/ Edard J. Freel
-------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 9336722
DATE: 10-02-98
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 10/02/1998
981383634 - 2951513
CERTIFICATE OF INCORPORATION
OF
ZEPPELIN SOFTWARE, INC.
The undersigned, in order to form a corporation under and pursuant to the
provisions of the General Corporation Law of the State of Delaware, does hereby
certify the following:
First: The name of the corporation is Zeppelin Software, Inc.
Second: The registered agent and the registered office of the corporation is
as follows:
Nationwide Information Services, Inc.
15 North Street, Dover, Kent County, DE 19901
Third: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
Fourth: The total number of shares of stock which the corporation shall have
authority to issue is 100,000,000, of which 95,000,000 shares shall be
Common Stock, $0.001 par value, and 5,000,000 of which shall be
Preferred Stock, $0.001 par value, which shall be subject to the
provisions of Paragraph Fifth.
Fifth: The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of Paragraph Fourth, to provide
for the issuance of the shares of Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of
Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers,
preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
Sixth: The name and address of the Incorporator is as follows:
Stanley Moskowitz
Moskowitz Altman & Hughes, LLP
11 East 44th Street, Suite 504
New York, NY 10017
Seventh: The directors of the corporation shall have the power to make and to
alter or amend the By-laws of the corporation; to fix the amount to be
reserved as working capital; and to authorize and cause to be executed
mortgages and liens without limit as to the amount upon the property
and franchise of the corporation.
Eighth: No director shall be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director, except that this provision shall not eliminate or limit the
liability of any director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or
a knowing violation of the law; (iii) under Section 174 of the General
Corporation Law of Delaware; or (iv) for any transaction from which
the director derived an improper personal benefit.
IN WITNESS WHEREOF, the incorporator has executed this certificate this
2nd day of October, 1998, and affirms under the penalties of perjury that the
statements contained herein are true and correct.
/s/ Stanley Moskowitz
-----------------------------------
Stanley Moskowitz, Incorporator
<PAGE>
BY-LAWS
OF
ZEPPELIN SOFTWARE, INC.
(A Delaware Corporation)
------------------------------
ARTICLE I - OFFICES
-------------------
The office of the Corporation shall be located in the City and State designated
in the Articles of Incorporation. The Corporation may also maintain offices at
such other places within or without the United States as the Board of Directors
may, from time to time, determine.
ARTICLE II - MEETING OF SHAREHOLDERS
------------------------------------
Section 1- Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held within
five months after the close of the fiscal year of the Corporation, for the
purpose of electing directors, and transacting such other business as may
properly come before the meeting.
Section 2- Special Meetings:
Special meetings of the shareholders may be called at any time by the Board of
Directors or by the President, and shall be called by the President or the
Secretary at the written request of the holders of ten percent (10%) of the
shares then outstanding and entitled to vote thereat, or as otherwise required
under the provisions of the Business Corporation Act.
Section 3- Place of Meetings:
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices or
waivers of notice of such meetings.
Section 4- Notice of Meetings:
(a) Except as otherwise provided by Statute, written notice of each meeting of
shareholders, whether annual or special, stating the time when and place where
it is to be held, shall be served either personally or by mail, not less than
ten or more than fifty days before the meeting, upon each shareholder of record
entitled to vote at such meeting, and to any other shareholder to whom the
giving of notice may be required by law. Notice of a special meeting shall also
state the purpose or purposes for which the meeting is called, and shall
indicate that it is being issued by, or at the direction of, the person or
persons calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle shareholders to receive payment for their shares
pursuant to Statute, the notice of such meeting shall include a statement of
that purpose and to that effect. If mailed, such notice shall be directed to
each such shareholder at his address, as it appears on the records of the
shareholders of the
By-Laws-1
<PAGE>
Corporation, unless he shall have previously filed with the Secretary of the
Corporation a written request that notices intended for him be mailed to the
address designated in such request.
(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the meeting,
or to any shareholder who attends such meeting, in person or by proxy, or to any
shareholder who, in person or by proxy, submits a signed waiver of notice either
before or after such meeting. Notice of any adjourned meeting of shareholders
need not be given, unless otherwise required by statute.
Section 5- Quorum:
(a) Except as otherwise provided herein, or by statute, or in the Certificate of
Incorporation (such Certificate and any amendments thereof being hereinafter
collectively referred to as the "Certificate of Incorporation"), at all meetings
of shareholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of shareholders holding of record a majority of
the total number of shares of the Corporation then issued and outstanding and
entitled to vote, shall be necessary and sufficient to constitute a quorum for
the transaction of any business. The withdrawal of any shareholder after the
commencement of a meeting shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
at the meeting as originally called if a quorum had been present.
Section 6- Voting
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors to be
taken by vote of the shareholders, shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the Corporation entitled to vote thereat, shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so by proxy; provided, however, that the instrument authorizing
such proxy to act shall have been executed in writing by the shareholder
himself, or by his attorney-in-fact thereunto duly authorized in writing. No
proxy shall be valid after the expiration of eleven months from the date of its
execution, unless the persons executing it shall have specified therein the
length of time it is to continue in force. Such instrument shall be exhibited to
the Secretary at the meeting and shall be filed with the records of the
Corporation.
(d) Any resolution in writing, signed by all of the shareholders entitled to
vote thereon, shall be and constitute action by such shareholders to the effect
therein expressed, with the same
By-Laws-2
<PAGE>
force and effect as if the same had been duly passed by unanimous vote at a duly
called meeting of shareholders and such resolution so signed shall be inserted
in the Minute Book of the Corporation under its proper date.
ARTICLE III - BOARD OF DIRECTORS
--------------------------------
Section 1- Number, Election and Term of Office:
(a) The number of the directors of the Corporation shall be three (3), unless
and until otherwise determined by vote of a majority of the entire Board of
Directors. The number of Directors shall not be less than three, unless all of
the outstanding shares are owned beneficially and of record by less than three
shareholders, in which event the number of directors shall not be less than the
number of shareholders permitted by statute.
(b) Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board of Directors of the Corporation, who
need not be shareholders, shall be elected by a majority of the votes cast at a
meeting of shareholders, by the holders of shares, present in person or by
proxy, entitled to vote in the election.
(c) Each director shall hold office until the annual meeting of the shareholders
next succeeding his election, and until his successor is elected and qualified,
or until his prior death, resignation or removal.
Section 2- Duties and Powers:
The Board of Directors shall be responsible for the control and management of
the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation or
by statute expressly conferred upon or reserved to the shareholders.
Section 3- Annual and Regular Meetings: Notice:
(a) A regular annual meeting of the Board of Directors shall be held immediately
following the annual meeting of the shareholders, at the place of such annual
meeting of shareholders.
(b) The Board of Directors, from time to time, may provide by resolution for the
holding of other regular meetings of the Board of Directors, and may fix the
time and place thereof.
(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the meeting;
provided, however, that in case the Board of Directors shall fix or change the
time or place of any regular meeting, notice of such action shall be given to
each director who shall not have been present at the meeting at which such
action was taken within the time limited, and in the manner set forth in
paragraph (b) of Section 4 of this Article III, with respect to special
meetings, unless such notice shall be waived in the manner set forth in
paragraph (c) of such Section 4.
Section 4- Special Meetings: Notice:
By-Laws-3
<PAGE>
(a) Special meetings of the Board of Directors shall be held whenever called by
the President or by one of the directors, at such time and place as may be
specified in the respective notices or waivers of notice thereof.
(b) Except as otherwise required by statute, notice of special meeting shall be
mailed directly to each director, addressed to him at his residence or usual
place of business, at least two (2) days before the day on which the meeting is
to be held, or shall be sent to him at such place by telegram, radio or cable,
or shall be delivered to him personally or given to him orally, not later than
the day before the day on which the meeting is to be held. A notice, or waiver
of notice, except as required by Section 8 of this Article III, need not specify
the purpose of the meeting.
(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5- Chairman:
At all meetings of the Board of Directors the Chairman of the Board, if any and
if present, shall preside. If there shall be no Chairman, or he shall be absent,
then the President shall preside, and in his absence, a Chairman chosen by the
directors shall preside.
Section 6- Quorum and Adjournments:
(a) At all meetings of the Board of Directors, the presence of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business, except as otherwise provided by law, by the Certificate
of Incorporation, or by these By-Laws.
(b) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, until a quorum shall be present.
Section 7- Manner of Acting:
(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or these By-Laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors. Any action authorized in writing, by all of the directors
entitled to vote thereon and filed with the minutes of the corporation shall be
the act of the Board of Directors with the same force and effect as if the same
had been passed by unanimous vote at a duly called meeting of the Board.
Section 8- Vacancies:
Any vacancy in the Board of Directors occurring by reason of an increase in the
number of directors, or by reason of the death, resignation, disqualification,
removal (unless a vacancy
By-Laws-4
<PAGE>
created by the removal of a director by the shareholders shall be filled by the
shareholders at the meeting at which the removal was effected) or inability to
act of any director, or otherwise, shall be filled for the unexpired portion of
the term by a majority vote of the remaining directors, though less than a
quorum, at any regular meeting or special meeting of the Board of Directors
called for that purpose.
Section 9- Resignation:
Any director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or such officer, and the acceptance of
such resignation shall not be necessary to make it effective.
Section 10- Removal:
Any director may be removed with or without cause at any time by the affirmative
vote of shareholders holding of record in the aggregate at least a majority of
the outstanding shares of the Corporation at a special meeting of the
shareholders called for that purpose, and may be removed for caused by action of
the Board.
Section 11- Salary:
No stated shall be paid to directors, as such, for their services, but by
resolution of the Board of Directors a fixed sum and expenses of attendance, if
any, may be allowed for attendance at each regular or special meeting of the
Board; provided, however, that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 12- Contracts:
(a) No contract or other transaction between this Corporation and any other
Corporation shall be impaired, affected or invalidated, nor shall any director
be liable in any way by reason of the fact that any one or more of the directors
of this Corporation is or are interested in, or is a director or officer, or are
directors or officers of such other Corporation, provided that such facts are
disclosed or made known to the Board of Directors.
(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact of
such interest be disclosed or made known to the Board of Directors, and provided
that the Board of Directors shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of any such director) of a
majority of a quorum, notwithstanding the presence of any such director at the
meeting at which such action is taken. Such director or directors may be counted
in determining the presence of a quorum at such meeting. This Section shall not
be construed to impair or invalidate or in any way affect any contract or other
transaction which would otherwise be valid under the law (common, statutory or
otherwise) applicable thereto.
Section 13- Committees:
The Board of Directors, by resolution adopted by a majority of the entire Board,
may from time
By-Laws-5
<PAGE>
to time designate from among its members an executive committee and such other
committees, and alternate members thereof, as they deem desirable, each
consisting of three or more members, with such powers and authority (to the
extent permitted by law) as may be provided in such resolution. Each such
committee shall serve at the pleasure of the Board.
ARTICLE IV - OFFICERS
---------------------
Section 1- Number, Qualifications, Election and Term of Office:
(a) The officers of the Corporation shall consist of a President, a Secretary, a
Treasurer, and such other officers, including a Chairman of the Board of
Directors, and one or more Vice Presidents, as the Board of Directors may from
time to time deem advisable. Any officer other than the Chairman of the Board of
Directors may be, but is not required to be, a director of the Corporation. Any
two or more offices may be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
elected and qualified, or until his death, resignation or removal.
Section 2- Resignation:
Any officer may resign at any time by giving written notice of such resignation
to the Board of Directors, or to the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or by such
officer, and the acceptance of such resignation shall not be necessary to make
it effective.
Section 3- Removal:
Any officer may be removed, either with or without cause, and a successor
elected by a majority of the Board of Directors at any time.
Section 4- Vacancies:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by the Board of Directors.
Section 5- Duties of Officers:
Officers of the Corporation shall, unless otherwise provided by the Board of
Directors, each have such powers and duties as generally pertain to their
respective offices as well as such powers and duties as may be set forth in
these By-laws, or may from time to time be specifically conferred or imposed by
the Board. of Directors. The President shall be the chief executive officer of
the Corporation.
By-Laws-6
<PAGE>
Section 6- Sureties and Bonds:
In case the Board of Directors shall so require, any officer, employee or agent
of the Corporation shall execute to the Corporation a bond in such sum, and with
such surety or sureties as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his hands.
Section 7- Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other Corporation, any
right or power of the Corporation as such shareholder including the attendance,
acting and voting at shareholders' meetings and execution of waivers, consents,
proxies or other instruments) may be exercised on behalf of the Corporation by
the President, any Vice President, or such other person as the Board of
Directors may authorize.
ARTICLE V - SHARES OF STOCK
---------------------------
Section 1- Certificate of Stock:
(a) The certificates representing shares of the Corporation shall be in such
form as shall be adopted by the Board of Directors, and shall be numbered and
registered in the order issued. They shall bear the holder's name and the number
of shares, and shall be signed by (i) the Chairman of the Board or the President
or a Vice President, and (ii) the Secretary or Treasurer, or any Assistant
Secretary or Assistant Treasurer, and shall bear the corporate seal.
(b) No certificate representing shares shall be issued until the full amount of
consideration therefor has been paid, except as otherwise permitted by law.
(c) To the extent permitted by law, the Board of Directors may authorize the
issuance of certificates for fractions of a share which shall entitle the holder
to exercise voting rights, receive dividends and participate in liquidating
distributions, in proportion to the fractional holdings; or it may authorize the
payment in cash of the fair value of fractions of a share as of the time when
those entitled to receive such fractions are determined; or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the signature of an officer or agent of the
Corporation, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a shareholder, except as therein
provided.
Section 2- Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the Board of
Directors in its discretion may require, the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or his legal
representatives, to give the Corporation a bond in such sum as the Board may
direct, and with such surety or sureties as may be satisfactory to the Board, to
indemnify the Corporation against any claims, loss, liability or damage it may
suffer on account of the issuance of the new certificate. A new certificate
By-Laws-7
<PAGE>
may be issued without requiring any such evidence or bond when, in the judgment
of the Board of Directors, it is proper so to do.
Section 3- Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on the share records of
the Corporation only by the holder of record thereof, in person or by his duly
authorized attorney, upon surrender for cancellation of the certificate or
certificates representing such shares, with an assignment or power of transfer
endorsed thereon or delivered therewith, duly executed, with such proof of the
authenticity of the signature and of authority to transfer and of payment of
transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any share
or shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 4- Record Date:
In lieu of closing the share records of the Corporation, the Board of Directors
may fix, in advance, a date not exceeding fifty days, nor less than ten days, as
the record date for the determination of shareholders entitled to receive notice
of, or to vote at, any meeting of shareholders, or to consent to any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividends, or allotment of any rights, or for the purpose
of any other action. If no record date is fixed, the record date for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if no notice is given, the day on which the
meeting is held; the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the resolution of
the directors relating thereto is adopted. When a determination of shareholders
of record entitled to notice of or to vote at any meeting of shareholders has
been made as provided for herein, such determination shall apply to any
adjournment thereof, unless the directors fix a new record date for the
adjourned meeting.
ARTICLE VI - DIVIDENDS
----------------------
Subject to applicable law, dividends may be declared and paid out of any funds
available therefor, as often, in such amounts, and at such time or times as the
Board of Directors may determine.
ARTICLE VII - FISCAL YEAR
-------------------------
The fiscal year of the Corporation shall be fixed by the Board of Directors from
time to time, subject to applicable law.
ARTICLE VIII - CORPORATE SEAL
-----------------------------
By-Laws-8
<PAGE>
The corporate seal, if any, shall be in such form as shall be approved from time
to time by the Board of Directors.
ARTICLE IX - AMENDMENTS
-----------------------
Section 1- By Shareholders:
All by-laws of the Corporation shall be subject to alteration or repeal, and new
by-laws may be made, by the affirmative vote of shareholders holding of record
in the aggregate at least a majority of the outstanding shares entitled to vote
in the election of directors at any annual or special meeting of shareholders,
provided that the notice or waiver of notice of such meeting shall have
summarized or set forth in full therein, the proposed amendment.
Section 2- By Directors:
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, by-laws of the Corporation; provided, however, that the
shareholders entitled to vote with respect thereto as in this Article IX
above-provided may alter, amend or repeal by-laws made by the Board of
Directors, except that the Board of Directors shall have no power to change the
quorum for meetings of shareholders or of the Board of Directors, or to change
any provisions of the by-laws with respect to the removal of directors or the
filling of vacancies in the Board resulting from the removal by the
shareholders. If any by-law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of shareholders for the election of directors,
the by-law so adopted, amended or repealed, together with a concise statement of
the changes made.
ARTICLE X - INDEMNITY
---------------------
(a) Any person made a party to any action, suit or proceeding, by reason of the
fact that he, his testator or intestate representative is or was a director,
officer or employee of the Corporation, or of any Corporation in which he served
as such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorney's fees, actually
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein that such officer,
director or employee is liable for negligence or misconduct in the performance
of his duties.
(b) The foregoing right of indemnification shall not be deemed exclusive of any
other rights to which any officer or director or employee may be entitled apart
from the provisions of this section.
(c) The amount of indemnity to which any officer or any director may be entitled
shall be fixed by the Board of Directors, except that in any case where there is
no disinterested majority of the Board available, the amount shall be fixed by
arbitration pursuant to then existing rules of the American Arbitration
Association.
By-Laws-9
<PAGE>
The undersigned, the secretary of the Corporation, hereby certifies
that the foregoing bylaws were adopted by the board of directors of the
Corporation as of October 6, 1998.
/s/ Scott Lee Kostiuk
--------------------------------
Scott Lee Kostiuk
Secretary
By-Laws-10
