U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
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GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
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GAMECOM, INC.
(Name of Small Business Issuer in Its Charter)
NEVADA 93-1207631
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
440 NORTH CENTER
ARLINGTON, TEXAS 76011
(Address of Principal Executive Offices) (Zip Code)
(817) 265-0440
(Registrant's Telephone Number, Including Area Code)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: (None)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, par value $.005 per share
(Title of Class)
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TABLE OF CONTENTS
PART I
Item 1 Description of Business.
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 3 Description of Property.
Item 4 Security Ownership of Certain Beneficial Owners and Management.
Item 5 Directors, Executive Officers, Promoters and Control Persons.
Item 6 Executive Compensation.
Item 7 Certain Relationships and. Related Transactions.
Item 8 Description of Securities.
PART II
Item 1 Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder 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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PART I
ITEM I DESCRIPTION OF BUSINESS
BUSINESS OVERVIEW
GameCom, Inc. ("GameCom" or the "Company") was organized in 1996 to
operate theme concept microbrewery restaurants. In 1997, the Company acquired
First Brewery of Dallas, Inc., which operated the former Hubcap Brewery &
Kitchen of Dallas, Texas (later renamed The Schooner Brewery(TM) brewpub). As a
result of several factors, including relatively strict laws that apply to craft
brewers in Texas, GameCom found it difficult to develop this initial business,
and closed down its microbrewery operations in early 1999.
In December of 1997, GameCom acquired all rights to 'Net GameLink(TM), an
interactive entertainment system designed to allow a number of players to
compete with one another in a game via an intranet or the Internet. Since
closing its microbrewery operations GameCom has been devoting substantially all
of its efforts to implementing the 'Net GameLink(TM) product.
The Company maintains its principal office at 440 North Center, Arlington,
Texas 76011, and its telephone number is (817) 265-0440.
INDUSTRY OVERVIEW
The electronic gaming industry has experienced dramatic changes over the
last several years. Beginning with games played by a single user on his own
computer, electronic games have progressed from (i) play by two or more users on
a single computer, to (ii) play by many users over an intranet, to (iii)
simultaneous play by even more users from locations spread throughout the world
via the Internet. These changes have brought about a rapid increase in the
number of interactive electronic gamers. Pogo.com, one of the leading game
enabling companies operating in the Internet electronic gaming sector, recently
reported adding its 3.5 millionth member. Similar increases are being reported
by other participants in that sector.
Initial efforts to capitalize on the Internet interactive electronic games
market were based on the assumption that players would be willing to pay
directly to participate in these games. Pogo.com began with this business model
but was unable to generate a sufficiently large group of paying customers to
make the model profitable. Recent efforts in this area have instead been based
on the media model, in which users do not pay for the service but the site
operator sells access to the users to advertisers.
Despite the success of Internet gaming companies, an element has been lost
in the process of moving from the parlor to the individual user's screen -- the
element of direct social interaction. The Company has found that people like to
talk to each other while they play, and a computer screen is no substitute for
face-to-face communication. Virtually all of the Internet gaming providers have
created some means for the players to "chat" as they are playing by typing
messages back and forth. But this is an inadequate substitute for the immediate
presence of a live human being. Typing simply doesn't convey the excitement or
nuances of meaning communicated by the human voice.
In response to the desire of players for direct interaction, at least one
company has constructed several large electronic gaming centers, and has
announced its intention to build many others. Like the
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arcades frequently seen in suburban malls, these centers are intended to attract
the hard-core electronic gamer who is seeking to play in a social environment.
The Company's product is targeted at a market similar to that of the large
electronic gaming centers, but is designed for smaller-scale and more widespread
use in a neighborhood setting. The experience of the large electronic gaming
centers has demonstrated that players are willing to pay to access electronic
games in the company of others.
'NET GAMELINK(TM) SYSTEM
The Company's 'Net GameLink(TM) system is designed for installation at a
relatively modest cost in neighborhood arcade-like gaming centers and social
bars. It consists of computers, a networking system, and specially-designed
networked kiosks that allow the Company's patrons to play interactive 3D games
with either other users at the same location or users at a remote location. The
gamestations feature X86 compatible 3D-game hardware and software. Customers pay
for their use of the system through a plastic debit card. Each card is prepaid
and is credited with a certain amount of playing time.
Design Goals:
In designing kiosks for its system, the Company's objectives were to
remove the computer look and feel from the game play experience, use state of
the art sound and video systems to further enhance game play, provide for
connection to other kiosks at the same location through an intranet and
connection to kiosks at other locations through the Internet, and provide a
system that would be easy to change and update. In addition, the system had to
be able to run most games on the market, permit easy access to the games by the
user, and prevent the user from obtaining access to the computer's operating
system. Selection of components for the system was based on performance,
reliability, and price, in that order.
Enclosure:
The physical enclosure itself is 3 foot by 3 foot square and over six feet
tall with full length windows on each closed side. The kiosk enclosure is open
on one side and the windows allow the works of the systems to be seen. To
further enhance the open look of the kiosk all enclosures are removed from the
power supply and monitor. Each kiosk has three bays which are arranged
vertically. All computer equipment is mounted in the upper bay. The mid bay is
dedicated to the lighting controller/source and the lower bay holds a sub-woofer
speaker, A/C wiring and un-interruptible power source. The kiosk is made from
high grade particle board and all corners are machined and rounded. Game
controls are mounted on two shelves in the front of the enclosure. The lower
shelf is made of the same board has the enclosure and the top is made of clear
plastic. Two handles provide support for the upper shelf and act as a light for
the lower shelf.
Computer:
The computer system is based on an AMD K6-III(R)/450 MHz processor. This
is mounted on a Epox mother board with 128 megabytes of RAM. It uses the IDE
interface and a 4.5-gigabyte hard drive. The network connection is supplied by a
3-Com 905b 100baseT card. A Creative Labs 16-megabyte accelerated video card
connected to a 21 inch 27 dot pitch monitor supplies video. A Creative Labs
Sound Blaster Alive sound card is used. The speakers are made by Altec Lansing
and have two small high and mid range enclosures and a base and sub-base
enclosure.
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Lighting:
Lighting is supplied from a 150 watt light generator and distributed
through a fiber optic light pipe array. The light generator has an integral
dichromatic filter that causes the light color to shift a few times each minute.
The mounting plates for the motherboard, magnetic card reader, and joystick are
made of a plastic material that allow light to be injected that creates a glow
around the edge. Edge light fiber optic cables are used to light the inside of
the kiosk and also the motherboard mounting plate. Light pipes are also run to
the handles on each side of the lower front shelf.
User interface:
In its usual configuration, the kiosk provides for input through a
keyboard, a mouse, and a joystick. The keyboard is a standard 101 key Keytronic
black keyboard that is mounted on the lower shelf. The mouse is also black and
is made by Keytronic. The joystick is a force feed back type manufactured by
Microsoft. The joystick connections are external to the enclosure. This allows
the joystick to be changed out for other types of game input devices. A magnetic
card reader authenticates users and deducts the appropriate amount for the
user's playing time. All input devices other than the magnetic card reader are
not hard mounted for the convenience of the user.
System Software:
The operating system software is Microsoft Windows 98. The standard TCP/IP
stack is used for network connectivity. The interface software is written in
Micromedia Director and the user database is written under MySql running under
Redhat 6.0 LINUX. The games themselves are stored on an LINUX server running
with SAMBA supplying the connectivity to the Windows environment.
Operation:
Each kiosk is a network client of the LINUX server where all games are
stored. When a user swipes his or her card through the card reader the software
on the kiosk makes a request of the data base stored on the server. This data
base maintains a record of the amount of time the user has bought and how much
he or she has used. Once the user has been authenticated and the system has
verified his remaining time, the server starts the timing clock for the kiosk
and allows the user to select a game. When the user's time expires the kiosk
shuts down the game. Each kiosk has a full time connection to the Internet and
to the local network.
Interactivity:
The Company's system provides for interactive play among gamers at a
single location via an intranet or at widely dispersed locations via the
Internet. Because the Company's system is intended to reach players wishing to
play in a social setting, the Company expects that at least initially the
system's capability to allow play among gamers at a single physical location
through an intranet will be more significant than its ability to enable play on
a worldwide basis. However, it seems likely that in the future games will be
developed that permit teams of players at one location to compete against teams
located elsewhere, and the system's Internet connection will permit such play
without any modification to the system.
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Installed Games:
Each location will provide access to the user's choice of approximately 10
games at any time. The games to be offered on the Company's kiosks will not
necessarily be different from those that an electronic gamer could purchase at
his or her local computer store. Many gaming manufacturers are now offering
their games in an interactive format. To a serious gamer, the appeal of the
Company's system is likely to be the fact that the hardware components will be
faster, bigger, louder, etc. than those he would have available in a home
setting. For the novice, the physical attributes of the system, the stylistic
kiosks, the fiber optic lighting, and the social atmosphere of playing
interactive games on a physically interactive basis through an intranet is
expected to be what he or she finds appealing.
All locations will be accessible through the Company's computer and its
home office, so that a constant evaluation of the popularity of the games
available at a particular location can be continuously monitored. The games
installed at each location will vary to some extent depending upon the amount of
playing each receives as reported by the Company's centralized database.
However, there will be a substantial overlap, since this is required in order to
allow interactive play between widely dispersed locations. The 10 games for the
Company's initial system were selected with the guidance of GT Interactive
Software, a leading games manufacturer/distributor. Present arrangements called
for payment of an annual royalty of $540 per game. However, the Company believes
that as it becomes established in multiple locations it will be in a position to
achieve a strategic alliance with one of the leading games
manufacturers/distributors under which the Company would receive payment from
the manufacturers/distributor in exchange for being in the exclusive supplier of
games to the Company.
The Company's first 'Net GameLink(TM) entertainment system was made
available for public play at Who's on First? in New York City on July 16, 1999.
On November 2, 1999, the Company moved this system to J. Gilligan's in
Arlington, Texas to bring it closer to the Company's principal offices.
Sources of Revenue:
The Company intends to provide its interactive electronic gaming service
through a combination of Company-owned centers and through third parties such as
social bars, which will purchase the system on the basis of a fixed initial fee
and a continuing royalty. In addition, the Company expects revenue to be
generated through the sale of advertising to companies who wish to reach the
Company's demographic market. The Company anticipates that the cost of a system
to third parties will be in the range of $6,500 to $7,000 per kiosk, including
the server for each location. The Company anticipates a royalty based on the
amount spent by patrons to actually play on the system equal to 40% of revenues
and a royalty on the advertising generated by the system at each location equal
to 50% of the advertising revenue paid to the operator.
COMPETITION
The Company believes that its primary competition will be the large gaming
centers being established by companies such as GameWorks. GameWorks was
established by Sega Enterprises, Universal Studios, Inc. and DreamWorks SKG and
was designed under the guidance of Steven Spielberg. GameWorks has far greater
financial and technical resources than the Company and has
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created an entire establishment devoted to various forms of gaming, including
virtual reality games. The Company intends to compete by providing more but
smaller facilities that will be readily accessible in the gamer's immediate
neighborhood, with the companionship of the gamer's neighbors, rather than
requiring substantial travel to game among strangers.
MARKETING
Until such time as the Company is in a position to raise significant
amounts of additional capital, its capacity for producing 'NetGamelink(TM)
systems will be severely limited, and its marketing efforts will be consistent
with its production capacity. Initial marketing efforts are expected to consist
of follow-ups by the Company's Director of Sales directed toward a limited
number of individual and chain casual restaurant/bars, some of which have
learned of the Company's system by observing it when it was installed at Who's
on First in New York or later at J. Gilligan's Bar & Grill in Arlington, Texas.
Longer range plans include production of a promotional video of the system for
distribution to potential customers, use of live streaming video on the
Company's Web site showing actual real-time use of the Company's system by
patrons at J. Gilligan's, and an advertising campaign in leading restaurant/food
industry publications. The Company intends to add additional marketing staff as
required.
EMPLOYEES
At September 30, 1999 the Company employed 4 persons. The Company
considers relations with its employees to be satisfactory.
TRADEMARKS
The Company has filed for federal registration of its 'Net GameLink(TM)
trademark, and a patent application is pending for its network enabled gaming
kiosk.
YEAR 2000 DISCLOSURE
Until recently, computer programs were generally written using two digits
rather than four to define the applicable year. Accordingly, such programs may
be unable to distinguish properly between the year 1900 and the year 2000. The
Company is entirely dependent upon software provided by others both for
operation of its 'Net GameLink(TM) system and for its internal operations. In
view of the Company's financial position and the anticipated scope of its
operations over the next several months, it intends to limit its efforts in
dealing with this problem to seeking assurance from its outside vendors prior to
purchasing any additional hardware or software that their products will be Year
2000 compliant. Given the reliance on third-party information as it relates to
their compliance programs and the difficulty of determining potential errors on
the part of external service suppliers, no assurance can be given that the
Company's systems or operations will not be affected by mistakes, if any, of
third parties or third-party failures to complete their Year 2000 projects on a
timely basis, or that any such failure to convert by another company would not
have an adverse effect on the Company's systems.
The Company does not have any contingency plans in place to address the
failure of timely conversion of third-party systems in respect of the Year 2000
issue.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion contains certain forward-looking statements that
are subject to business and economic risks and uncertainties, and the Company's
actual results could differ materially from those forward-looking statements.
The following discussion regarding the financial statements of the Company
should be read in conjunction with the financial statements and notes thereto.
Overview. The Company was capitalized in 1996 to develop, own, and operate
theme brewpub/microbrewery restaurants. Until March of 1997 when the Company
acquired, and July 1, 1997 when the Company began operating, the former Hubcap
Brewery & Kitchen in Dallas, Texas, the Company had no operations or revenues
and its activities were devoted solely to development. However, since the
acquisition was accounted for as a pooling of interests, the results of
operations of Hubcap Brewery & Kitchen were carried forward into the Company's
financial statements and accordingly the 1997 financial statements reflect a
full year of operations of that business.
In January, 1999, the Company terminated its brewpub/microbrewery
restaurant operations. Future revenues and profits will depend upon various
factors, including market acceptance of 'Net GameLink(TM), and general economic
conditions. The Company's present sole source of revenue is the future sale of
'Net GameLink(TM) systems and from associated royalties. There can be no
assurances that the Company will successfully implement its expansion plans,
including the 'Net GameLink(TM) entertainment concept. The Company also faces
all of the risks, expenses, and difficulties frequently encountered in
connection with the expansion and development of a new business. Furthermore, to
the extent that the Company's expansion strategy is successful, it must manage
the transition to multiple sites, higher volume operations, control of overhead
expenses, and the addition of necessary personnel.
Results of Operations.
Fiscal year ended December 31, 1998 compared to fiscal year ended December
31, 1997.
The Company had no revenues from the date of inception through July 1,
1997, when it began operating the former Hubcap Brewery & Kitchen, through its
wholly-owned Texas subsidiary corporation, First Brewery of Dallas, Inc.
However, as noted above, results for the year reflect operations of the acquired
Company prior to the acquisition. Prior to July 1, 1997, the Company had
received $391,351.00 in paid-in capital, and had incurred $237,478.54 in
start-up, consulting, and legal expenses associated with the formation of the
Company and its development activities.
For the 12 months ended December 31, 1998, the Company, through its
wholly-owned subsidiary, First Brewery of Dallas, Inc., had a net loss of
$681,018, compared to a loss of $576,520 for the 12 months ended December 31,
1997. First Brewery of Dallas, Inc. ceased operations on January 10, 1999. Line
by line comparisons of the individual items contributing to the Company's
results for these two years is of little or no significance in view of the
decision to terminate the Company's brewpub/microbrewery operations. Increases
in revenues and the related increases in costs of sales from the 1997 to the
1998 fiscal years generally reflect the Company's moderate degree of success in
expanding its restaurant operations. However, as the 1998 fiscal year drew to a
close it became clear to the Company's management that Texas's liquor control
laws were such that the Company would not be able to obtain approval for the
microbrewery operations which it regarded as the key to achieving
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profitable operations. Probably the most significant items in the Statement of
Operations for the two years are the increase in interest expense from $12,776
in fiscal 1997 to $39,026 in fiscal 1998, reflecting an increased level of
borrowing, primarily from shareholders., and the $132,545 provision taken in
fiscal 1998 for losses from discontinued operations, reflecting the
determination to shut down the brewpub/microbrewery activities. Interest expense
is expected to be substantially lower for the immediate future as a result of
the forgiveness of certain debt in connection with termination of the Company's
brewpub/microbrewery operations in January, 1999 as described below, and the
one-time issuance of stock in lieu of future interest as described under
"Certain Transactions."
Nine months ended September 30, 1999 compared to nine months ended
September 30, 1998.
These two periods are in no way comparable, since the nine months ended
September 30, 1998 reflect the Company's unsuccessful efforts to develop its
brewpub/microbrewery business, whereas the corresponding nine months of 1999
reflect a redirection of the Company's efforts from the discontinued business to
the development of the Company's 'Net GameLink(TM) System. For the first nine
months of 1999, the Company had essentially no revenues. Administrative costs of
$224,381 for the nine months ended September 30, 1999 compared to $368,757 for
the nine months ended September 30, 1998 reflect the $132,545 charge reflecting
the decision in January, 1999 to terminate the brewpub/microbrewery operations.
The Company recorded a $67,849 gain on the sale of equipment for the nine months
ended September 30, 1999. This gain reflects the fact that, as described below,
the guarantors of the Company's bank debt secured by that equipment foregave
approximately $65,000 in indebtedness when they acquired the bank's security
interest in that equipment upon payment of that indebtedness, and later disposed
of the equipment to reimburse themselves for a portion of these payments. The
reduction in interest charges for the nine months ended September 30, 1999
reflects an agreement by holders of that indebtedness to accept a one-time
issuance of common stock in lieu of accrued and future interest.
Liquidity and Capital Resources. As of September 30, 1999 the Company's
liquidity position was extremely precarious. The Company had current liabilities
of $908,780, including $524,111 in trade payables, most of which were overdue,
short-term notes payable of $360,500, all of which were either demand
indebtedness or were payable at an earlier date and were in default, and related
accrued interest on the notes. Current assets available to meet those
liabilities were only $4,709.
To date the Company and First Brewery of Dallas I, Ltd., the predecessor
to First Brewery of Dallas, Inc., the Company's wholly-owned Texas subsidiary
corporation, met their capital requirements through capital contributions, loans
from principal shareholders and officers, bank borrowings, and certain private
placement offerings. At the time the operations of First Brewery of Dallas, Inc.
were terminated, all of that subsidiary's assets were pledged to secure
indebtedness to SecurityBank of Arlington, Texas. That indebtedness had been
personally guaranteed by the Company's directors and by another individual. Upon
termination of the brewpub/microbrewery operations the guarantors were required
to repay that indebtedness to the bank, and upon such payment the bank assigned
the Company's notes and the related security to the guarantors. The guarantors
subsequently foregave the indebtedness and disposed of the assets securing the
indebtedness to third parties at a loss.
It is anticipated that the Company will in the near future place First
Brewery into voluntary liquidation under Chapter 7 on the Bankruptcy Act. Upon
the anticipated conclusion of that
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proceeding, the Company's consolidated balance sheet will be improved by the
elimination of $431,111 in trade payables, as those amounts are owed solely by
the subsidiary.
Even with the expected elimination of the First Brewery indebtedness, the
Company will be unable to continue its operations or to complete the development
of its 'Net GameLink(TM) hardware in the absence of substantial additional
financing. The Company is registering its outstanding common stock under the
Securities Exchange Act of 1934 with a view toward making its equity securities
more attractive to potential investors, but at the present time it has not
completed any arrangements to obtain additional financing and there can be no
assurance that it will be able to raise the necessary funds. In that connection,
it should be noted that the Company intends to place its First Brewery of
Dallas, Inc. subsidiary into voluntary bankruptcy. The Company is unable to
predict the effect of the anticipated bankruptcy on its ability to raise
additional funds to develop its gaming operations, but efforts to raise these
funds could be adversely affected by the bankruptcy.
ITEM 3 - DESCRIPTION OF PROPERTY
The Company's executive offices are located in Arlington, Texas, at the
offices of Jones & Cannon, P.C. See "Certain Relationships and Related
Transactions." Although the Company has not been charged rent for its office
space, there is no assurance that these offices will remain sufficient for the
Company's use, or that the gratis nature of this relationship will continue.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 30, 1999, certain
information with respect to the Company's equity securities believed by the
Company to be owned of record or beneficially by (i) each Director of the
Company; (ii) each person who owns beneficially more than 5% of each class of
the Company's outstanding equity securities; and (iii) all Directors and
Executive Officers as a group.
Shareholders' Name and Address Number of Shares Owned Percent
L. Kelly Jones 1,766,980 (1) 15.75
440 North Center
Arlington, Texas 76011
Jim Poynter 737,260 (2) 6.57
City Center Tower II
301 Commerce Street
Suite 1205
Fort Worth, Texas 76102
Kimberly Biggs 42,460 (3) 0.38
2414 Green Willow Court
Arlington, Texas 76001
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John Aleckner 347,400 (4) 3.10
1901 Rockcliff Court
Arlington, Texas 76012
All Officers and Directors
As a Group (4 Persons) 2,894,100 (1) (2) (3) (4) 25.80
----------------------------------------------
(1) Excludes incentive conditional options to purchase 833,000 shares of
Common Stock for $4,165.00, which are not exercisable within 60 days. The
Company is obligated to redeem 591,622 of these shares for a nominal
amount, which would reduce Mr. Jones's ownership to 10.48%.
(2) Excludes incentive conditional option to purchase 333,000 shares of Common
Stock for $1665.00 which is not exercisable within 60 days. The Company is
obligated to redeem 287,531 of these shares for a nominal amount, which
would reduce Mr. Poynter's ownership to 4.01%.
(3) The Company is obligated to redeem 16,559 of these shares for a nominal
amount, which would reduce Ms. Biggs's ownership to 0.23%.
(4) Excludes incentive conditional option to purchase 333,000 shares of
restricted Common Stock for $1665.00 which is not exercisable within 60
days. The Company is obligated to redeem 135,486 of these shares for a
nominal amount, which would reduce Mr. Aleckner's ownership to 1.89%.
The beneficial owners of securities listed above have sole investment and
voting power with respect to such shares. Beneficial ownership is determined in
accordance with the rules of the Commission and generally includes voting or
investment power with respect to securities. Shares of stock subject to options
or warrants currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person holding such
options or warrants, but are not deemed outstanding for purposes of computing
the percentage of any other person.
In addition to the shareholders listed above, Connect Computer Group,
Inc., the firm which has been largely responsible for development of the
Company's kiosk and computer systems ("Connect Computer"), has performed its
development work on the basis of an oral understanding or "gentleman's
agreement" with the Company's president that if the Company is successful in
marketing the product Connect Computer will be issued a significant equity
position in the Company, the amount of which is yet to be determined.
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ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the names and ages of the current directors
and executive officers of the Company, the principal offices and positions with
the Company held by each person, and the date such person became a director or
executive officer of the Company.
Date became
director or
Name Age Positions executive officer
- ---- --- --------- -----------------
L. Kelly Jones 46 President, Chief Executive
Officer and Chairman of the
Board of Directors March 26, 1997
W. James Poynter 44 Vice-President and Director March 26, 1997
Kimberly Biggs 33 Secretary and Treasurer March 26, 1997
John F. Aleckner, Jr. 54 Director March 26, 1997
The members of the Company's board of directors are elected annually and
hold office until their successors are elected and qualified. The Company's
officers are chosen by and serve at the pleasure of its board of directors. Each
of the officers and directors has positions of responsibility with businesses
other than the Company and will devote only such time as they believe necessary
on the business of the Company.
There are no family relationships between any of the directors and
executive officers. There was no arrangement or understanding between any
executive officer and any other person pursuant to which any person was selected
as an executive officer.
L. Kelly Jones has since 1980 been a member of the law firm Jones &
Cannon, a firm which he founded and which provides legal services to the
Company. Mr. Jones is certified in the area of commercial real estate law by the
Texas Board of Legal Specialization and is the author of an article "Texas
Mechanics' and Materialmen's Lien Laws: A Guide Through the Maze," which
appeared in the Texas Bar Journal in March of 1985. Mr. Jones' areas of practice
include corporate, construction, real estate, municipal law, and commercial
litigation. Mr. Jones served from 1985 through 1989 on the Arlington City
Council, and on the Stephen F. Austin State University Board of Regents from
1987 through 1993, where he was chairman from 1991 through 1993. He holds a J.D.
from the University of Texas and a B.A. in Political Science from Stephen F.
Austin State University
W. James Poynter has been engaged in the real estate brokerage and
construction business since 1979. He is the president of Tenant Realty Advisors,
Inc., a subsidiary of the Poynter Scifres Company group. Tenant Realty Advisors,
Inc. is a national tenant representation firm, representing office tenants in
securing new office locations throughout the United States. He holds a B.A. from
the University of Pennsylvania's Wharton School of Business
Kimberly Biggs has for the last 10 years been legal administrator of the
Arlington law firm of Jones & Cannon (which provides legal services for the
Company) as legal administrator, a position which she holds to this date.
John F. Aleckner, Jr. is a private investor. From 1983 to 1989 Mr.
Aleckner was vice-president and a shareholder of Research Polymers International
Corporation, a compounder of specialty plastic materials which was acquired by
another Company in 1987. From 1984 to 1998, he
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was vice-president of marketing and sales and a principal shareholder in UVTEC,
Inc., a marketer of specialty plastic compounds which was, prior to the sale of
Research Polymers, affiliated through common stock ownership with Research
Polymers, and which acted as a broker in connection with purchases by Research
Polymers and other companies. From 1971 to 1983 he was employed by Ciba-Geigy
Corporation in various sales capacities. He holds a B.S. in chemistry from Case
Institute of Technology
SIGNIFICANT EMPLOYEES
In addition to the officers and directors identified above, the following
employees play a significant role in the Company's operations.
Rey Cardino, age 39, serves as Director of Sales for the Company. Mr.
Cardino was employed by the Hubcap Brewery & Kitchen from prior to its opening
until the operation was closed in early 1999, at which time he was the general
manager of its restaurant. Prior to that time he was employed by TGI Friday.
Jose Olivares, age 32, serves as Director of Technical Support for the
Company. Prior to taking the position he was the principal brewer of the
Company's microbrewery operations.
ITEM 6 EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows certain compensation information for
services rendered in all capacities during each of the prior three (3) fiscal
years. No bonuses or stock options were granted and no additional compensation
was paid or deferred.
<TABLE>
<CAPTION>
Securities
Other Underlying
Annual Restricted Options/
Name and Principal Position Year Salary Bonus Compensation Stock Awards SARs
- --------------------------- ---- ------ ----- ------------ ------------ ----
<S> <C> <C> <C> <C> <C> <C>
L. Kelly Jones, President, Chief 1998 -- -- -- -- 833,000 (1)
Executive Officer and Chairman of the
Board of Directors
1997 -- -- -- -- --
1996 -- -- -- -- --
W. James Poynter, Vice-President and 1998 -- -- -- -- 333,000 (2)
Director
1997 -- -- -- -- --
1996 -- -- -- -- --
John F. Aleckner, Jr., Director 1998 333,000 (2)
1997 --
1996 --
</TABLE>
13
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Kimberly Biggs, Secretary and Treasurer -- -- -- -- --
-- -- -- -- --
-- -- -- -- --
</TABLE>
(1) These options, incentive in nature, provide that Mr. Jones may purchase
(i) 111,000 shares at par value subject to the condition precedent that
the Company's shares are trading at $1.50 per share, (ii) 361,000 shares
at par value subject to the condition precedent that the Company's shares
are trading at $3.00 per share, (iii) 111,000 shares at par value subject
to the condition precedent that the Company's shares are publicly trading
at $4.50 per share, and (iv) the balance of 250,000 shares at par value
subject to the condition precedent that the Company's shares are publicly
trading at $5.00 per share. These incentive stock options were granted to
Mr. Jones by the Company's board of directors (Mr. Jones abstaining) on
December 12, 1997 and on December 14, 1998.
(2) Messrs. Poynter and Aleckner each holds an option for 333,000 shares of
the Company's Common Stock. These options, incentive in nature, provide
that Messrs. Poynter and Aleckner may purchase (i) 111,000 shares at par
value subject to the condition precedent that the Company's shares are
trading at $1.50 per share, (ii) 111,000 shares at par value subject to
the condition precedent that the Company's shares are trading at $3.00 per
share, and (iii) the balance of 111,000 shares at par value subject to the
condition precedent that the Company's shares are publicly trading at
$4.50 per share. These incentive stock options were granted to Messrs.
Poynter and Aleckner by the Company's board of directors (Each of Messrs.
Poynter and Aleckner abstaining on the grant of his stock option) on
December 14, 1998.
COMPENSATION OF DIRECTORS
No Director receives or has received any compensation from the Company for
service as a member of the Board of Directors.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Jones, the president of the Company, is also president of Jones &
Cannon, a Texas professional corporation, which has provided legal services to
the Company and which may continue to provide legal services to the Company in
the future. During the fiscal year ended December 31, 1998 the Company incurred
legal fees of $66,331 to that firm. The Company currently owes Jones & Cannon an
amount in excess of $83,550 for legal services rendered. Jones & Cannon has also
been providing the limited amount of office space required by the Company and
certain clerical and other services required for the Company's operations
without charge under an oral agreement with Mr. Jones.
In December, 1997, the Company agreed to redeem at par value an aggregate
of 1,505,399 shares of the Common Stock held by the ten former shareholders of
First Brewery of Dallas, Inc., a company the Company had acquired in April,
1997. The aggregate redemption price was to have been $7,527.02. That redemption
was to have occurred no later than March 31, 1998. However, the Company did not
have sufficient funds to honor this commitment and is currently in default under
the
14
<PAGE>
agreement. Messrs. Jones, Poynter, and Aleckner and Ms. Biggs are among those
whose shares were to have been redeemed.
During the period from July, 1997 through May, 1998 Mr. Jones, the
president of the Company, lent the Company an aggregate of $90,000 for use as
operating capital. Of this amount, $65,000 was subsequently forgiven, leaving a
balance of $25,000. This indebtedness is evidenced by an unsecured demand
promissory note at an annual interest rate of 12% per annum.
ITEM 8 - DESCRIPTION OF SECURITIES
COMMON STOCK
The Company's Certificate of Incorporation authorizes the issuance of 50
million shares of Common Stock, of a par value of $.005 per share, of which
11,216,053 shares were issued and outstanding as of September 30, 1999. Holders
of shares of Common Stock are entitled to one vote for each share on all matters
to be voted on by the shareholders. Holders of Common Stock have no cumulative
voting rights. Holders of shares of Common Stock are entitled to share ratably
in dividends, if any, as may be declared, from time to time by the Board of
Directors in its discretion, from funds legally available therefor. In the event
of a liquidation, dissolution, or winding up of the Company, the holders of
shares of Common Stock are entitled to share pro rata all assets remaining after
payment in full of all liabilities. Holders of Common Stock have no preemptive
rights to purchase the Company's common stock. There are no conversion rights or
redemption or sinking fund provisions with respect to the common stock. All of
the outstanding shares of Common Stock are fully paid and non-assessable.
Transfer Agent. Continental Stock Transfer, Inc. of New York is the
Company's transfer agent.
CONVERTIBLE PROMISSORY NOTES/PROMISSORY NOTES
The Company has outstanding $100,000 in principal amount of its
Convertible Promissory Notes. These notes bear interest at the rate of 12
percent per annum, call for monthly payments of interest, and matured May 10,
1998 (the "Convertible Promissory Notes"). The holder of each Convertible
Promissory Note has a non-assignable option to purchase 7,500 shares of Common
Stock at par value. Alternatively, each holder has the right to convert his
Convertible Promissory Note at the rate of 1.25 shares of Common Stock for each
$1.00 in principal amount of notes.
The Company has outstanding $25,000 in principal amount of a promissory
note due to L. Kelly Jones upon demand. This note bears interest at the rate of
12 percent per annum.
The Company has outstanding $235,500 in principal amount of promissory
notes payable to other shareholders, all of which are in default. These notes
provide for an initial issuance of shares of common stock in lieu of interest,
all of which (913,000 shares) have been issued. Accordingly, no additional
interest is accruing on these notes. However, $103,500 in principal amount of
such promissory notes provide for a per diem issuance of common stock as a
penalty for late payment. To date, the per diem issuance would be in excess of
2,000,000 shares of the Company's Common Stock. The Company believes that the
penalty provisions are unenforceable as illegal usury under applicable Texas
law, and has obtained a written legal opinion to that effect from a third-party
law firm. The
15
<PAGE>
Company believes that upon full payment of these promissory notes along with
non-usurious monetary interest, this matter of additional shares for late
payment by the Company will be amicably resolved between the Company and the
holder of these promissory notes. However no assurance can be given in that
regard.
PART II
ITEM I - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
MARKET INFORMATTON
The Company's Common Stock is quoted under the symbol "GAMZ" on the OTC
Electronic Bulletin Board. The following table sets forth the high and low bid
prices for shares of the Company Common Stock for the periods noted, as reported
by the OTC Electronic Bulletin Board. Quotations are on an as-adjusted basis to
reflect a 1 for 5 reverse split effected in 1997 and reflect inter dealer
prices, without retail markup, mark down or commission and may not represent
actual transactions.
BID PRICES
YEAR PERIOD HIGH LOW
1997 First Quarter $- $-
Second Quarter 0.50 0.50
Third Quarter 0.25 0.25
Fourth Quarter 1.25 0.25
1998 First Quarter 1.25 0.25
Second Quarter 2.25 0.25
Third Quarter 0.50 0.25
Fourth Quarter 0.875 0.375
1999 First Quarter 0.6875 0.09375
Second Quarter 1.0313 0.26
Third Quarter 1.2188 0.09
The Company's common stock was not quoted on the OTC Bulletin Board during
the first quarter of 1997. As of December 3, 1999 the reported bid price for the
Company's common stock was $0.53 per share.
SHAREHOLDERS
As of December 3, 1999, the Company had 11,216,053 shares of Common Stock
outstanding held by 103 shareholders of record.
DIVIDENDS
16
<PAGE>
The Company has not paid cash dividends on its Common Stock in the past
and does not anticipate doing so in the foreseeable future.
ITEM 2 - LEGAL PROCEEDINGS
The Company's First Brewery of Dallas, Inc. subsidiary is a defendant in a
proceeding commenced June 14, 1999 in the County Court at Law Number Two,
Tarrant County, Texas by Ben Strong individually and d/b/a Benco & Associates.
This litigation arose out of the construction of a brewpub which First Brewery
acquired from its predecessor in interest, and alleges that the transaction in
which First Brewery of Dallas, Inc. acquired the assets of the predecessor in
interest constituted a fraudulent conveyance. The amount sought is approximately
$58,000. The Company believes that this claim is without merit, and anticipates
that it will be eliminated in any event through the filing of a bankruptcy
proceeding by First Brewery of Dallas, Inc.
The Company's First Brewery of Dallas, Inc. subsidiary is a defendant in a
proceeding commenced June 30, 1999 in the County Court at Law Number Three,
Dallas County, Texas by Alliant Foodservice, Inc. seeking to recover
approximately $19,000 allegedly owed for foodstuffs furnished to the subsidiary.
The Company anticipates that this claim will be eliminated through the filing on
a bankruptcy proceeding by First Brewery of Dallas, Inc.
In January, 1999, the Company commenced an action against Robert Elton
Bragg, III, the Company's former president, seeking, among other things, (i) a
declaratory judgment that the March, 1997 agreement pursuant to which the
Company acquired its brewpub/microbrewery operations, is a valid and binding
agreement, (ii) an injunction prohibiting Bragg from selling his shares in the
Company, and (iii) damages for misappropriation of the Company's funds.
In November, 1999, the Company commenced an action against Kelly Hart and
Mitch Geller d/b/a Nu-Design. This suit alleges breach of a contract to provide
software for the Company's 'Net GameLink(TM) system and conversion for
wrongfully withholding assets of the Company, and seeks damages of an as yet
unspecified amount.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WTTH ACCOUNTANTS
Inapplicable
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
Upon its organization in January, 1996, the Company issued 2,100,000 of
its Common Stock to its promoters and a limited number of third party investors
at a purchase price of $0.02 per share. This sale was made in reliance upon the
exemption contained in Section 4(2) of the Securities Act of 1933, as amended
(the "Act").
In May of 1996, the Company sold 400,000 units at a price of $0.125 per
unit. Each unit consisted of one share of Common Stock and two warrants, each
warrant authorizing the holder to buy
17
<PAGE>
one share of the Company's Common Stock at the purchase price of $0.50. This
sale was made in reliance upon the exemption contained in Rule 504 of Regulation
D under the Act.
In March of 1997, the Company sold 633,000 shares of the Company's Common
Stock at a price of $.50 per share upon exercise of the warrants referred to in
the preceding paragraph. This sale was made in reliance on the exemption
contained in Rule 504 of Regulation D under the Act .
In March of 1997, the Company issued 3,860,000 shares of its Common Stock
to 10 shareholders of First Brewery of Dallas, Inc., then operating the Hubcap
Brewery & Kitchen of Dallas, Texas, in exchange for all of the outstanding
shares of that corporation. The shares were issued in reliance upon the private
offering exemption contained in Section 4(2) of the Act.
In conjunction with the stock-for-stock swap discussed in the preceding
paragraph, the Company redeemed 193,000 shares of its Common Stock from Adams
Bragg & Company, Inc.
In September of 1997 the Company issued 490,102 shares of its Common Stock
upon exercise of the warrants originally issued in 1996. The shares were issued
in reliance upon the private offering exemption contained in Section 4(2) of the
Act.
In December of 1997, the Company issued 425,000 shares of its Common Stock
to Adams Bragg & Company, Inc., in exchange for its proprietary rights in the
'Net GameLink(TM) system. The shares were issued in reliance upon the private
offering exemption contained in Section 4(2) of the Act.
In March of 1998, the Company issued 120,000 shares of its Common Stock to
certain of its existing shareholders as additional consideration for a loan in
the aggregate amount of $50,000. The shares were issued in reliance upon the
private offering exemption contained in Section 4(2) of the Act.
Between December, 1997 and February, 1998, the Company issued $100,000 in
principal amount of its convertible subordinated notes to certain of its
existing shareholders and one additional sophisticated investor. These shares
were issued in reliance upon the private offering exemption contained in Section
4(2) of the Act.
In May, 1998, the Company issued 300,000 shares of its Common Stock to Net
Gameport, Inc., an accredited investor, in payment for financial and public
relations consulting services. These shares were issued in reliance upon the
private offering exemptions contained in Section 4(2) and the accredited
investor exemption contained in Section 4(6) of the Act.
In June, 1998, the Company issued 300,000 shares of its Common Stock to
Capital & Media Partners, Inc. in payment for financial and public relations
consulting services. These shares were issued in reliance upon the private
offering exemption contained in Section 4(2) and the accredited investor
exemption contained in Section 4(6) of the Act.
In September, 1998, the Company issued 493,000 shares of its Common Stock
to existing shareholders who held certain of its promissory notes, in lieu of
interest otherwise payable on such notes. These shares were issued in reliance
upon the private offering exemption contained in Section 4(2) of the Act.
In December, 1998, the Company issued 800,000 shares of its Common Stock
to an individual accredited investor in payment for shareholder relations and
strategic planning services. These shares were issued in reliance upon the
private offering exemption contained in Section 4(2) and the accredited
18
<PAGE>
investor exemption contained in Section 4(6) of the Act.
In January, 1999, the Company issued 300,000 shares of its Common Stock to
existing shareholders in lieu of interest otherwise payable on notes held by
such shareholders. These shares were issued in reliance upon the private
offering exemption contained in Section 4(2) of the Act.
In April, 1999, the Company issued in aggregate of 1,000,000 shares of its
Common Stock to two investors for an aggregate of $60,000, and an additional
100,000 shares to the law firm handling the transaction and a financial services
firm in payment for their services in connection with the transaction. The
shares were issued in reliance upon the limited offering exemption of Rule 504
under the Act.
In July, 1999, the Company issued 119,048 shares of its Common Stock for
an aggregate of $50,000. These shares were issued in reliance upon the private
offering exemption contained in Section 4(2) of the Act.
In October, 1999, the Company issued 250,000 shares of its Common Stock to
an accredited investor for $25,000. These shares were issued in reliance upon
the private offering exemption contained in Section 4(2) and the accredited
investor exemption contained in Section 4(6) of the Act.
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
The bylaws generally provide that the Company will indemnify its directors
and officers to the fullest extent authorized or permitted under Chapter 78 of
Nevada Revised Statutes and that the Company will advance expenses at the
request of a director or officer. In addition, the articles of incorporation
generally limit the personal liability the personal liability of directors for
monetary damages for breaches of fiduciary duty, as well as indemnifying its
directors to the fullest extent authorized or permitted by Nevada law.
PART F/S
FINANCIAL STATEMENTS
19
<PAGE>
GAMECOM, INC.
CONSOLIDATED FINANCIAL STATEMENTS
As of and for the Years ended December 31, 1998 and 1997 and the Nine Months
ended September 30, 1999 and 1998 (Unaudited)
GAMECOM, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors
Consolidated Financial Statements of GameCom, Inc. and subsidiary:
Consolidated statement of Financial Condition as of December 31,
1998 and December 31, 1997, and September 30, 1999 (Unaudited).........1
Consolidated Statements of Operations for the years ended December 31,
1998 and 1997 and nine months ended September 30, 1999 and 1998
(unaudited)............................................................2
Consolidated Statements of Shareholders' Equity (Deficit) for the years
ended December 31, 1998 and 1997 and the nine months ended September
30, 1999 (Unaudited)...................................................3
Consolidated Statements of Cash Flows for the years ended December 31,
1998 and 1997 and nine months ended September 30, 1999 and 1998
(Unaudited)............................................................4
Notes to Consolidated Financial Statements.................................5
20
<PAGE>
INDEPENDENT AUDITORS REPORTS
Thomas O. Bailey
and Associates, PC
Certified Public Accountants
Report of Independent Public Accountants
To the Shareholders of The Schooner Brewery Incorporated
We have audited the accompanying balance sheet of The Schooner Brewery
Incorporated as of December 31, 1998 and the related statement of operations,
changes in stockholders' equity, and cash flows for the year then ended. 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 audits in accordance with generally accepted auditing
standards. These 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 The Schooner Brewery
Incorporated as of December 31, 1998 and the results of their operations and
their cash flows in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. During the year ended December 31,
1998 the Company incurred a net loss of $681,018. Future working capital
requirements are dependent on the Company's ability to restore and maintain
profitable operations, to restructure its financing arrangements, and to
continue its present short-term financing, or obtain alternative financing as
required. It is not possible to predict the outcome of future operations or
whether the necessary alternative financing may be arranged, if needed. Those
conditions raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Thomas O. Bailey and Associates, P.C.
June 17, 1999
21
<PAGE>
Thomas O. Bailey
and Associates, PC
Certified Public Accountants
Report of Independent Public Accountants
To the Shareholders of The Schooner Brewery Incorporated
We have audited the accompanying balance sheet of The Schooner Brewery
Incorporated as of December 31, 1997 and the related statement of operations,
changes in stockholders' equity, and cash flows for the year then ended. 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 audits in accordance with generally accepted auditing
standards. These 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 The Schooner Brewery
Incorporated as of December 31, 1997 and the results of their operations and
their cash flows in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. During the year ended December 31,
1998 the Company incurred a net loss of $576,520. Future working capital
requirements are dependent on the Company's ability to restore and maintain
profitable operations, to restructure its financing arrangements, and to
continue its present short-term financing, or obtain alternative financing as
required. It is not possible to predict the outcome of future operations or
whether the necessary alternative financing may be arranged, if needed. Those
conditions raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Thomas O. Bailey and Associates, P.C.
Certified Public Accountants
Dallas, Texas
September 11, 1998
22
<PAGE>
GAMECOM, INC
(FORMERLY THE SCHOONER BREWERY INCORPORATED)
Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 31, September 30 (Unaudited)
1999 1999 1998
---- ---- ----
<S> <C> <C> <C>
ASSETS
Current assets
Cash $ 5,666 $ 4,529 $ 16,427
Accounts receivable 1,547.00 180 6,999
Inventories -- -- --
----------- ----------- -----------
Total current assets 7,213 4,709 23,426
Property and equipment
Machinery and equipment 473324 -- 282,479
Furniture and fixtures and other -- 81,150 156,676
Leasehold improvements -- -- 166,713
----------- ----------- -----------
473,324 81,150 605,868
Accumulated depreciation (348,526) (2,576) (467,215)
----------- ----------- -----------
Net property and equipment 124,798 78,574 138,653
Other assets
Organization cost 38490 28,867 41,697
Other 12033 8,989 12,033
----------- ----------- -----------
Total other assets 50,523 37,856 53,730
----------- ----------- -----------
Total assets $ 182,534 $ 121,139 $ 215,809
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade payables $ 385,669 $ 524,111 $ 374,632
Accrued interest 24,439 24,169 18,177
Other accrued payables 2,675 -- --
Short-term notes payable 550,360 430,770 482,209
----------- ----------- -----------
Total current liabilities 963,143 979,050 875,018
Shareholders' equity
Capital stock 30,000,000 shares authorized
par value $.005; 8,828,005 and 7,715,102 issued
and outstanding respectively 44,140 50,110 39,566
Paid-in capital 473,744 583,774 459,319
Retained earnings (1,298,493) (1,491,795) (1,158,094)
----------- ----------- -----------
Total shareholders' equity (780,609) (857,911) (659,209)
----------- ----------- -----------
Total liabilities and shareholder equity $ 182,534 $ 121,139 $ 215,809
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement
23
<PAGE>
GAMECOM, INC
(FORMERLY THE SCHOONER BREWERY INCORPORATED)
Consolidated Statement of Operations
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31 Sept. 30 (unaudited)
---------------------- --------------------
1997 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Restaurant sales $ 361,074 $ 469,357 $ 5,431 $ 357,675
Other 9,500 (7,500) -- --
----------- ----------- ----------- -----------
Total revenues 370,574 461,857 5,431 357,675
Cost of sales
Food, beer, wine and merchandise 126,505 182,334 (2,893) 125,561
Salaries and labor 161,574 268,826 27,365 194,440
----------- ----------- ----------- -----------
Total cost of sales 288,079 451,160 24,472 320,001
----------- ----------- ----------- -----------
Gross profit 82,495 10,697 (19,041) 37,674
General and administrative expense
Administrative cost 604,579 456,192 224,381 368,757
Interest 12,776 39,026 8,770 30,103
Depreciation and amortization 41,660 63,952 9,622 46,888
Provision for loss from discontinued
operations -- 132,545 -- 132,545
Gain on sale of equipment -- -- (67,849) --
----------- ----------- ----------- -----------
659,015 691,715 174,924 578,293
----------- ----------- ----------- -----------
Net loss $ (576,520) $ (681,018) $ (193,965) $ (540,619)
=========== =========== =========== ===========
Average outstanding shares 5,923,784 8,271,553 9,715,006 7,814,202
Net loss per share $ (0.10) $ (0.08) $ (0.02) $ (0.07)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement
24
<PAGE>
GAMECOM, INC
(FORMERLY THE SCHOONER BREWERY INCORPORATED)
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31 Sept. 30 (unaudited)
---------------------- --------------------
1997 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss $(576,520) $(681,018) $(193,302) $(540,621)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation and amortization 28,830 183,667 2,576 169,811
(Increase) decrease in:
Accounts receivable-trade 2,908 483 1,367 (4,969)
Other assets (7,314) 20,146 12,667 16,939
Increase (decrease) in: (2,710) -- -- --
Accounts payable and accrued expense 205,198 122,601 135,497 102,631
--------- --------- --------- ---------
Net cash provided by operating activities (349,608) (354,121) (41,195) (256,209)
Cash flows from investing activities
Sale of capital assets -- -- 43,648 --
Capital expenditures (15,193) (2,081) (2,078)
--------- ---------
Net cash used by investing activities (15,193) (2,081) 43,648 (2,078)
Cash flow from financing activities
Short-term notes payable 76,962 311,452 (119,590) 243,302
Increase in capital stock and paid-in capital 308,350 19,001 116,000 --
--------- --------- --------- ---------
Net cash provided by financing activities 385,312 330,453 (3,590) 243,302
Net increase in cash and cash equivalents 20,511 (25,749) (1,137) (14,985)
Cash and cash equivalents beginning of period 10,904 31,415 5,666 31,415
--------- --------- --------- ---------
Cash and cash equivalents end of period $ 31,415 $ 5,666 $ 4,529 $ 16,430
========= ========= ========= =========
Interest paid during the year $ 7,932 $ 19,701 $ 8,770 $ 11,926
========= ========= ========= =========
Income taxes paid during the year $ -- $ -- $ -- $ --
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of this financial statement
25
<PAGE>
GAMECOM, INC.
Consolidated Statement of Stockholders' Equity
For the Nine Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Shares of Additional Total
Common Common Paid-in Accumulated Stockholders'
Stock Stock Capital Deficit Equity
----- ----- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1997 7,715,102 $ 38,576 $ 460,309 $ (617,473) $ (118,588)
Stock issued in connection with loans 198,200 1,265 (1,265) --
Net loss for the nine months ended September 30, 1998 -- -- -- (540,620) (540,620)
----------- ----------- ----------- ----------- -----------
Balance September 30, 1998 7,913,302 $ 39,841 $ 459,044 $(1,158,093) $ (659,208)
=========== =========== =========== =========== ===========
Balance December 31, 1998 8,828,006 $ 44,140 $ 473,744 $(1,298,493) $ (780,609)
*
Stock issued in connection with loan 25,000 $ 125 $ (125) $ -- $ --
Stock issued in consideration of serivces 50,000 $ 250 $ 5,750 $ -- $ 6,000
Sale of stock 1,119,000 $ 5,595 $ 104,405 $ -- $ 110,000
Net loss for the nine months ended September 30, 1999 -- $ -- $ -- $ (193,302) $ (193,302)
----------- ----------- ----------- ----------- -----------
10,022,006 $ 50,110 $ 583,774 $(1,491,795) $ (857,911)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement
26
<PAGE>
THE SCHOONER BREWERY INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
Principal Business Activity
The Schooner Brewery Incorporated operates a restaurant and brewpub through it's
wholly owned subsidiary, First Brewery of Dallas, Inc.
Principals of Consolidation
The accompanying consolidated financial statements include the accounts of the
parent company, The Schooner Brewery Incorporated ("Company") and its subsidiary
after elimination of significant intercompany accounts and transactions.
Concentration of Credit Risk
The Company maintains deposits within federally insured limits. Statement of
Financial Accounting Standards No. 105 identifies these items as concentration
of credit risk requiring disclosure, regardless of the degree of risk. The risk
is managed by maintaining all deposits in high quality financial institutions.
Use of Estimates in Preparation of Financial Statements
The preparation of the accompanying financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that directly affect the results of reported assets,
liabilities, revenues and expenses. Actual results may differ from these
estimates.
Fair Value of Financial Instruments
The fair value of all reported assets and liabilities which represent financial
instruments (none of which are held for trading purposes) approximate the
carrying value of such amounts.
<PAGE>
Inventories
Inventories are stated at the lower of cost or market.
Cash Flow Presentation
For purposes of the Statement of Cash Flows, cash equivalents include time
deposits, certificates of deposits and all liquid debt instruments with original
maturates of three months or less.
Earnings Per Share
Primary earnings per share amounts are computed based upon the weighted average
number of shares actually outstanding. The number of shares used in the
computation were 5,923,784.
Property, Equipment and Depreciation
Property and equipment are valued at cost. Maintenance and repair costs are
charged to expenses as incurred. Gains and losses on disposition of property and
equipment are reflected in income. Depreciation is computed on the straight-line
method for financial reporting purposes, based on the estimated useful lives of
the assets.
Revenue Recognition and Accounts Receivable
Sales are made for cash or they are charged to credit cards. The credit card
sales are recorded as accounts receivable and collected within the following
two-week period. Revenues are recognized at the point sales are made.
Intangibles
Intangibles consist of cost incurred in the organization of the Company and are
amortized over five years.
<PAGE>
NOTE 2 GOING CONCERN
As shown in the accompanying financial statements the Company has incurred
losses from operations and has a deficit working capital. The Company's current
net operating revenues are not sufficient to provide adequate cash flow required
to pay all of the Company's administrative expenses. For this reason the Company
must rely on short-term borrowing and equity financing.
NOTE 3 ACQUISITION OF SUBSIDIARY
In March 1997 the Company acquired all of the outstanding stock of First Brewery
of Dallas, Inc. ("First") was acquired by exchanging 19,300,000 shares of the
Company's common capital stock for all of the outstanding capital stock of First
whereby First became the wholly owned subsidiary of the Company. This
transaction was accounted for as a "Pooling of Interest." Prior to the pooling
the Company had recorded a net loss for the current year of approximately
$175,000. Prior to the acquisition by the Company, First had acquired the
interest of all of the partners in First Brewery of Dallas, Ltd., a limited
partnership by issuing its capital stock in exchange for all of the partners
interest in the partnership. The partnership had operated a restaurant and
brewpub in the West End district of Dallas, Texas since June 1994. On July 1,
1997, First acquired all of the assets of the partnership in exchange for 49,500
shares of common stock of First.
NOTE 4 NOTES PAYABLE
Notes payable at December 31, 1997 consists of the following:
Note payable to bank due March 1, 1998 with interest at 9.5% $ 80,368
Note payable to bank due March 19, 1998 with interest at 10% 70,000
Note payable to stockholder due on demand with interest at 8% 15,000
Note payable to stockholder due on demand with interest at 8% 3,541
Notes payable to stockholders due June 1, 1998 with interest at 12% 70,000
--------
Total short-term notes $238,909
========
NOTE 5 INCOME TAXES
The Company follows Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," which requires an asset and liability approach
for accounting for income taxes. Deferred income taxes arise from temporary
differences between financial and tax basis of certain assets and liabilities. A
<PAGE>
valuation allowance will be established if it is more likely than not that some
portion of the deferred tax asset will be realized. The Company's net operating
loss carryforward is $617,000.
NOTE 6 LEASES
The Company leases its restaurant space under a lease agreement, which expires
October 1, 1999. During the six months ended December 31, 1997 the Company paid
$66,146.84 under the lease agreement.
NOTE 7 RELATED PARTY TRANSACTIONS
Notes payable includes $88,541 due to stockholders. On December 12, 1997, by
unanimous consent, the Board of Directors approved borrowing up to $100,000 from
certain stockholders. The promissory notes provide that the notes be secured by
the 'Net GameLink(TM) system to be installed at the Company's restaurant. The
holders of said notes shall, for each $10,000 of notes, in addition to the
payment of principal and interest, be entitled to 7,500 shares of the Company's
common stock at par value at maturity. Prior to maturity, the holders of the
promissory notes shall have the right to convert their notes to equity in the
amount of 12,500 shares of the Company's restricted common stock.
NOTE 8 STOCK OPTIONS
On December 12, 1997, by unanimous consent of the Board of Directors, restricted
options to purchase 50,000 shares of the Company's common stock were issued to
certain key personnel of the Company at an exercise price of $.01 per share. The
shares are non-transferable and may be redeemed at $.01 per share by the Company
in the event the holder shall cease for any reason to be employed by the
Company.
On December 12, 1997, by unanimous consent of the Board of Directors, options to
purchase 750,000 shares of the Company's common stock were granted to an officer
of the Company. The option provides that 250,000 shares may be purchased at par
value without any condition precedent; the next 250,000 shares may be purchased
by the holder at par value provided the Company's stock is currently trading at
$3 per share; and the balance of the 250,000 shares may be purchased by the
holder at par value, provided the Company's stock is currently trading at $5 per
share.
NOTE 9 LEGAL PROCEEDINGS
<PAGE>
On February 27, 1998 a judgment was rendered against First Brewery of Dallas I,
Ltd. the partnership all of which interest was acquired by First Brewery of
Dallas, Inc. The Company intends to liquidate the judgment, as funds are
available. The Company is not aware of other pending or threatened lawsuits.
NOTE 10 REVERSE STOCK SPLIT
In a Special Meeting of the Board of Directors on June 30, 1997 and pursuant to
the action of taken by the shareholders owning a majority of the issued and
outstanding shares of the Company's common stock the Company gave effect to a
reverse stock split of one share for five shares of the Company's common stock.
Before the stock split the Company had 34,965,000 shares of stock outstanding;
immediately after the stock split the Company had outstanding 6,993,000 shares
of common stock.
<PAGE>
PART III
ITEM I - INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NO
(3.1) Articles of Incorporation of The Schooner Brewery Incorporated
(3.2) Certificate of Amendment of Articles of Incorporation of The Schooner
Brewery Incorporated dated February 14, 1997
(3.3) Certificate of Amendment of Articles of Incorporation of The Schooner
Brewery Incorporated filed February 10, 1999
(3.4) Bylaws
(4.1) Form of Subordinated Notes
(4.2) Form of Convertible Subordinated Notes
(4.3) Form of Convertible Subordinated Notes providing for penalty payable in
shares
(21) List of Subsidiaries
(27) Financial Data Schedule
ITEM 2 - DESCRIPTION OF EXHIBITS
Not applicable
<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.
GAMECOM, INC.
By: /s/ L. Kelly Jones
-------------------------------------------
L. Kelly Jones
Chief Executive Officer and Chief Financial
Officer
Date:
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
THE SCHOONER BREWERY INCORPORATED
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a Corporation under and pursuant to the laws
of the State of Nevada, and we do hereby certify that:
ARTICLE I - NAME: The exact name of this Corporation is:
The Schooner Brewery Incorporated
ARTICLE II - RESIDENT AGENT:
The Resident Agent of the Corporation is Max C. Tanner, Esq., The Law
offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, Las Vegas, Nevada
89121.
ARTICLE III DURATION: The Corporation shall have perpetual existence.
ARTICLE IV PURPOSES: The purpose, object and nature of the business for
which this Corporation is organized are:
(a) To engage in any lawful activity;
<PAGE>
(b) To carry on such business as may be necessary, convenient, or
desirable to accomplish the above purposes, and to do all other things
incidental thereto which are not forbidden by law or by these Articles of
Incorporation.
ARTICLE V - POWERS: The powers of the Corporation shall be those powers
granted by 78.060 and 78.070 of the Nevada Revised Statutes under which this
corporation is formed. In addition, the Corporation shall have the following
specific powers:
(a) To elect or appoint officers and agents of the Corporation and to fix
their compensation;
(b) To act as an agent for any individual, association, partnership,
corporation or other legal entity;
(c) To receive, acquire, hold, exercise rights arising out of the
ownership or possession thereof, sell, or otherwise dispose of, shares or other
interests in, or obligations of, individuals, associations, partnerships,
corporations, or governments;
(d) To receive, acquire, hold, pledge, transfer, or otherwise dispose of
shares of the corporation, but such shares may only be purchased, directly or
indirectly, out of earned surplus;
(e) To make gifts or contributions for the public welfare or for
charitable, scientific or educational purposes, and in time of war, to make
donations in aid of war activities.
ARTICLE VI - CAPITAL STOCK:
Section 1. Authorized Shares. The total number of shares which this
Corporation is authorized to issue is 25,000,000 shares of Common Stock at $.001
par value per share.
Section 2. Voting Rights of Shareholders. Each holder of the Common Stock
shall be entitled to one vote for each share of stock standing in his name on
the books of the Corporation.
Section 3. Consideration for Shares. The Common Stock shall be issued for
such consideration, as shall be fixed from time to time by the Board of
Directors. In the absence of fraud, the judgment of the Directors as to the
value of any property for shares shall be conclusive. When shares are issued
<PAGE>
upon payment of the consideration fixed by the Board of Directors, such shares
shall be taken to be fully paid stock and shall be non-assessable. The Articles
shall not be amended in this particular.
Section 4. Pre-emptive Rights. Except as may other-wise be provided by the
Board of Directors, no holder of any shares of the stock of the Corporation,
shall have any preemptive right to purchase, subscribe for, or otherwise acquire
any shares of stock of the Corporation of any class now or hereafter authorized,
or any securities exchangeable for or convertible into such shares, or any
warrants or other instruments evidencing rights or options to subscribe for,
purchase, or otherwise acquire such shares.
Section 5. Stock Rights and Options. The Corporation shall have the power
to create and issue rights, warrants, or options entitling the holders thereof
to purchase from the corporation any shares of its capital stock of any class or
classes, upon such terms and conditions and at such times and prices as the
Board of Directors may provide, which terms and conditions shall be incorporated
in an instrument or instruments evidencing such rights. In the absence of fraud,
the judgment of the Directors as to the adequacy of consideration for the
issuance of such rights or options and the sufficiency thereof shall be
conclusive.
ARTICLE VII - ASSESSMENT OF STOCK: The capital stock of this Corporation,
after the amount of the subscription price has been fully paid in, shall not be
assessable for any purpose, and no stock issued as fully paid up shall ever be
assessable or assessed. The holders of such stock shall not be individually
responsible for the debts, contracts, or liabilities of the Corporation and
shall not be liable for assessments to restore impairments in the capital of the
Corporation
ARTICLE VIII - DIRECTORS: For the management of the business, and for the
conduct of the affairs of the Corporation, and for the future definition,
limitation, and regulation of the powers of the Corporation and its directors
and shareholders, it is further provided:
Section 1. Size of Board. The members of the governing board of the
Corporation shall be styled directors. The number of directors of the
Corporation, their qualifications, terms of office, manner of election, time and
place of meeting, and powers and duties shall be such as are prescribed by
statute and in the by-laws of the Corporation. The name and street address of
the director constituting the first board of directors, which shall be one (1)
in number is:
NAME ADDRESS
Vickie Bragg 622 Camino Santa Barbara
<PAGE>
Solano Beach, CA 92075
Section 2. Powers of Board. In furtherance and not in limitation of the
powers conferred by the laws of the State of Nevada, the Board of Directors is
expressly authorized and empowered:
(a) To make, alter, amend, and repeal the By-Laws subject to the power of
the shareholders to alter or repeal the By-Laws made by the Board of Directors.
(b) Subject to the applicable provisions of the ByLaws then in effect, to
determine, from time to time, whether and to what extent, and at what times and
places, and under what conditions and regulations, the accounts and books of the
Corporation, or any of them, shall be open to shareholder inspection. No
shareholder shall have any right to inspect any of the accounts, books or
documents of the Corporation, except as permitted by law, unless and until
authorized to do so by resolution of the Board of Directors or of the
Shareholders of the Corporation;
(c) To issue stock of the Corporation for money, property, services
rendered, labor performed, cash advanced, acquisitions for other corporations or
for any other assets of value in accordance with the action of the board of
directors without vote or consent of the shareholders and the judgment of the
board of directors as to value received and in return therefore shall be
conclusive and said stock, when issued, shall be fully-paid and non-assessable.
(d) To authorize and issue, without shareholder consent, obligations of
the Corporation, secured and unsecured, under such terms and conditions as the
Board, in its sole discretion, may determine, and to pledge or mortgage, as
security therefore, any real or personal property of the Corporation, including
after-acquired property;
(e) To determine whether any and, if so, what part, of the earned surplus
of the Corporation shall be paid in dividends to the shareholders, and to direct
and determine other use and disposition of any such earned surplus;
(f) To fix, from time to time, the amount of the pro-Fits of the
Corporation to be reserved as working capital or for any other lawful purpose;
(g) To establish bonus, profit-sharing, stock option, or other types of
incentive compensation plans for the employees, including officers and
directors, of the Corporation, and to fix
<PAGE>
the a-mount of profits to be shared or distributed, and to determine the persons
to participate in any such plans and the amount of their respective
participations.
(h) To designate, by resolution or resolutions passed by a majority of the
whole Board, one or more committees, each consisting of two or more directors,
which, to the extent permitted by law and authorized by the resolution or the
By-Laws, shall have and may exercise the powers of the Board;
(i) To provide for the reasonable compensation of its own members by
By-Law, and to fix the terms and conditions upon which such compensation will be
paid;
(j) In addition to the powers and authority herein before, or by statute,
expressly conferred upon it, the Board of Directors may exercise all such powers
and do all such acts and things as may be exercised or done by the corporation,
subject, nevertheless, to the provisions of the laws of the State of Nevada, of
these Articles of Incorporation, and of the By-Laws of the Corporation.
Section 3. Interested Directors. No contract or transaction between this
Corporation and any of its directors, or between this Corporation and any other
corporation, firm, association, or other legal entity shall be invalidated by
reason of the fact that the director of the Corporation has a direct or indirect
interest, pecuniary or otherwise, in such corporation, firm, association, or
legal entity, or because the interested director was present at the meeting of
the Board of Directors which acted upon or in reference to such contract or
transaction, or because he participated in such action, provided that: (1) the
interest of each such director shall have been disclosed to or known by the
Board and a disinterested majority of the Board shall have nonetheless ratified
and approved such contract or transaction (such interested director or directors
may be counted in determining whether a quorum is present f or the meeting at
which such ratification or approval is given) ; or (2) the conditions of N.R.S.
78.140 are met.
ARTICLE IX - LIMITATION OF LIABILITY OF OFFICERS OR DIRECTORS:
The personal liability of a director or officer of the corporation to the
corporation or the Shareholders for damages for breach of fiduciary duty as a
director or officer shall be limited to acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law.
ARTICLE X - INDEMNIFICATION: Each director and each officer of the
corporation may be indemnified by the corporation as follows:
<PAGE>
(a) The corporation may indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation), by reason of the f
act that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement, actually and reasonably incurred by him in
connection with the action, suit or proceeding, if he acted in good faith and in
a manner which he reasonably believed to he in or not opposed to the best
interests of the corporation and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suite or proceeding, by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
(b) The corporation may indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action or
suit by or in the right of the corporation, to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit, if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals there from, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
Article, or in defense of any claim, issue or matter therein, he must be
indemnified by the corporation against expenses, including attorney's fees,
actually and reasonably incurred by him in connection with the defense.
(d) Any indemnification under subsections (a) and (b) unless ordered by a
court or advanced pursuant to subsection (e), must be made by the corporation
only as authorized in the specific
<PAGE>
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances. The determination must be
made:
(i) By the stockholders;
(ii) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding;
(iii) If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(iv) If a quorum consisting of directors who were not parties to the
act, suit or proceeding cannot be obtained, by independent legal counsel in a
written opinion.
(e) Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the corporation as they are
incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
(f) The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(i) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the certificate
or articles of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or other-wise, for either an action in his official
capacity or an action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection (b) or for the
advancement of expenses made pursuant to subsection (e) may not be made to or on
behalf of any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action.
(ii) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE XI - PLACE OF MEETING; CORPORATE BOOKS: Subject to the laws of the
State of Nevada, the shareholders and the Directors shall have power to hold
their meetings, and the Directors shall have power to have an office or offices
and to maintain the books of the Corporation
<PAGE>
outside the State of Nevada, at such place or places as may from time to time be
designated in the By-Laws or by appropriate resolution.
ARTICLE XII - AMENDMENT OF ARTICLES: The provisions of these Articles of
Incorporation may be amended, altered or repealed from time to time to the
extent and in the manner prescribed by the laws of the State of Nevada, and
additional provisions authorized by such laws as are then in force may be added.
All rights herein conferred on the directors, officers and shareholders are
granted subject to this reservation.
ARTICLE XIII - INCORPORATOR: The name and address of the sole incorporator
signing these Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
1. Max C. Tanner 2950 East Flamingo Road, Suite G
Las Vegas, Nevada 89121
<PAGE>
STATE OF NEVADA
COUNTY OF CLARK
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 13 day of __________1995.
Max C. Tanner
On 1995, personally appeared before me, a Notary Public, Max C. Tanner,
who acknowledged to me that he executed the foregoing Articles of Incorporation
of The Schooner Brewery Incorporated, a Nevada corporation.
NOTARY PUBLIC
RONALD L. DRAKE
Exhibit 3.2
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF THE
SCHOONER BREWERY INCORPORATED
Pursuant to a NRS 78.385 and 78.390 of the Nevada Revised Statutes, we,
the undersigned officers of The Schooner Brewery Incorporated, (the
"Corporation"), do hereby certify the following:
1. That we are the duly elected President and Secretary of the
Corporation;
2. That the amendment to the Articles of Incorporation were unanimously
approved by the Board of Directors of said Corporation by written consent in
lieu of the special meeting of the Board of Directors, dated December 2, 1996
and by a majority of the outstanding shares entitled to vote, there being
12,500,000 shares authorized to vote and 10,000,000 shares having voted in favor
of the amended articles; and
3. That the Amendment to the Articles of Incorporation in its entirety is
set forth in Exhibit "A" attached hereto.
/s/ Robert E. Bragg, III
Robert E. Bragg, III, President
/s/ Vickie Bragg
Vickie Bragg, Secretary
ACKNOWLEDGMENT
STATE OF CALIFORNIA
ss.
COUNTY OF San Diego
On this 14th day of Feb., 1997, before me, the undersigned Notary Public,
personally appeared Robert E. Bragg, III, known to me to be the President of The
Schooner Brewery Incorporated, a Nevada Corporation, the Corporation which
executed the attached instrument, and two executed the same on behalf of said
Corporation, freely and voluntarily and for the uses and purposes therein
mentioned.
/s/ F. P. Langan
Notary Public
<PAGE>
STATE OF CALIFORNIA
ss.
COUNTY OF San Diego
On this 14th day of Feb., 1997, before me, the undersigned Notary Public,
personally appeared Vickie Bragg, known to me to be the Secretary of The
Schooner Brewery Incorporated, a Nevada Corporation, the corporation which
executed the attached instrument, and two executed the same on behalf of said
corporation, freely and voluntarily and for the uses and purposes therein
mentioned.
<PAGE>
EXHIBIT A
<PAGE>
THE SCHOONER BREWERY INCORPORATED
Amendment to the Articles of Incorporation
The Articles of Incorporation for The Schooner Brewery Incorporated, a
Nevada Corporation, are hereby amended with the change of Article VI to read as
follows:
The Articles of Incorporated are hereby amended by striking out the
existing Article VI in its entirety and substituting therefor a new Article VI,
to wit:
Article VI - CAPITAL STOCK:
Section 1. Authorized Shares. The total number of shares which this
Corporation is authorized to issue is 50,000,000 shares of Common Stock at $.001
par value per share.
Exhibit 3.3
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF THE
SCHOONER BREWERY INCORPORATED
Pursuant to a NRS 78.385 and 78.390 the undersigned President and
Secretary of The Schooner Brewery Incorporated, (the "Corporation"), do hereby
certify:
That the following amendment to the articles of incorporation was
unanimously approved by the Board Directors of said corporation by written
consent in lieu of a special meeting of the Board Directors dated February 1,
1999 and by a majority of the outstanding shares entitled to vote.
Article I is hereby amended to read as follows:
The exact name of this Corporation is GameCom, Inc.
This Certificate of Amendment to the Articles the of Incorporation may be signed
in two or more counterparts.
/s/ L. Kelly Jones
L. Kelly Jones, President
/s/ Kimberly Biggs
Kimberly Biggs, Secretary
ACKNOWLEDGMENT
STATE OF TEXAS
ss.
COUNTY OF TARRANT
On the 9th day of February, 1999, personally appeared before me, a Notary
Public, L. Kelly Jones, President of The Schooner Brewery Incorporated, who
acknowledged that he executed the above instrument.
/s/ Julie Murphy
Notary Public
<PAGE>
STATE OF TEXAS
ss.
COUNTY OF TARRANT
On the 9th day of February, 1999, personally appeared before me, a Notary
Public, Kimberly Biggs, Secretary of The Schooner Brewery Incorporated, who
acknowledged that he executed the above instrument.
/s/ Julie Murphy
Notary Public
Exhibit 3.4
BY-LAWS OF
THE SCHOONER BREWERY INCORPORATED
ARTICLE I
SHAREHOLDERS
Section 1.01 Annual Meeting. The annual meeting of the shareholders shall
be held at such date and time as shall be designated by the board of directors
and stated in the notice of the meeting or in a duly-executed waiver of notice
thereof. If the corporation shall fail to provide notice of the annual meeting
of the shareholders as set forth above, the annual meeting of the shareholders
of the corporation shall be held during the month of November or December of
each year as determined by the Board of Directors, for the purpose of electing
directors of the corporation to serve during the ensuing year and for the
transaction of such other business as may properly come before the meeting. If
the election of the directors is not held on the day designated herein for any
annual meeting of the shareholders, or at any adjournment thereof, the president
shall cause the election to be held at a special meeting of the shareholders as
soon thereafter as is convenient.
Section 1.02 Special Meetings. Special meetings of the shareholders may be
called by the president or the Board of Directors and shall be called by the
president at the written request of the holders of not less than 51% of the
issued and outstanding shares of capital stock of the corporation.
All business lawfully to be transacted by the shareholders may be
transacted at any special meeting at any adjournment thereof. However, no
business shall be acted upon at a special meeting, except that referred to in
the notice calling the meeting, unless all of the outstanding capital stock of
the corporation is represented either in person or by proxy. Where all of the
capital stock is represented, any lawful business may be transacted and the
meeting shall be valid for all purposes.
Section 1.03 Place of Meetings. Any meeting of the shareholders of the
corporation may be held at its principal office in the State of Nevada or such
other place in or out of the United States as the Board of Directors may
designate. A waiver of notice signed by the shareholders entitled to vote may
designate any place for the holding of such meeting.
Section 1.04 Notice of Meetings.
(a) The secretary shall sign and deliver to all shareholders of
record written or printed notice of any meeting at least ten (10) days,
but not more than sixty (60) days, before the date of such meeting; which
notice shall state the place, date and time of the meeting, the general
<PAGE>
nature of the business to be transacted, and, in the case of any meeting
at which directors are to be elected, the names of nominees, if any, to be
presented for election.
(b) In the case of any meeting, any proper business may be presented
for action, except that the following items shall be valid only if the
general nature of the proposal is stated in the notice or written waiver
of notice:
(1) Action with respect to any contract or transaction between
the corporation and one or more of its directors or another firm,
association, or corporation in which one or more of its directors
has a material financial interest;
(2) Adoption of amendments to the Articles of Incorporation
or;
(3) Action with respect to the merger, consolidation,
reorganization, partial or complete liquidation, or dissolution of
the corporation.
(c) The notice shall be personally delivered or mailed by first
class mail to each shareholder of record at the last known address
thereof, as the same appears on the books of the corporation, and the
giving of such notice shall be deemed delivered the date the same is
deposited in the United States mail, postage prepaid. If the address of
any shareholder does not appear upon the books of the corporation, it will
be sufficient to address any notice to such shareholder at the principal
office of the corporation.
(d) The written certificate of the person calling any meeting, duly
sworn, setting forth the substance of the notice, the time and place the
notice was mailed or personally delivered to the several shareholders, and
the addresses to which the notice was mailed shall be prima facie evidence
of the manner and fact of giving such notice.
Section 1.05 Waiver of Notice. If all of the shareholders of the
corporation shall waive notice of a meeting, no notice shall be required, and,
whenever all of the shareholders shall meet in person or by proxy, such meeting
shall be valid for all purposes without call or notice, and at such meeting any
corporate action may be taken.
Section 1.06 Determination of Shareholders of Record.
(a) The Board of Directors may at any time fix a future date
as a record date for the determination of the shareholders entitled to
notice of any meeting or to vote or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any other lawful action. The record date
so fixed shall not be more than sixty (60) days prior to the date of such
meeting nor more than sixty (60) days prior to any other action. When a
record date is so fixed, only shareholders of record on that date are
entitled to notice of and to vote at the meeting or to receive the
dividend
<PAGE>
distribution or allotment of rights, or to exercise their rights, as the
case may be, notwithstanding any transfer of any shares on the books of
the corporation after the record date.
(b) If no record date is fixed by the Board of Directors, then
(1) the record date for determining shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business on
the business day next preceding the day on which notice is given or, if
notice is waived at the close of business on the day next preceding the
day on which the meeting is held; (2) the record date for determining
shareholders entitled to give consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which written consent is given; and (3) the
record date for determining shareholders for any other purpose shall be at
the close of business on the day on which the Board of Directors adopts
the resolution relating thereto, or the sixtieth (60th) day prior to the
date of such other action, whichever is later.
Section 1.07 Quorum: Adjourned Meetings.
(a) At any meeting of the shareholders, a majority of the issued and
outstanding shares of the corporation represented in person or by proxy,
shall constitute a quorum.
(b) If less than a majority of the issued and outstanding shares are
represented, a majority of shares so represented may adjourn from time to
time at the meeting, until holders of the amount of stock required to
constitute a quorum shall be in attendance. At any such adjourned meeting
at which a quorum shall be present, any business may be transacted which
might have been transacted as originally called. When a shareholders'
meeting is adjourned to another time or place, notice need not be given of
the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken, unless the adjournment is for
more than ten (10) days in which event notice thereof shall be given.
Section 1.08 Voting.
(a) Each shareholder of record, such shareholder's duly
authorized proxy or attorney-in-fact shall be entitled to one (1) vote for
each share of stock standing registered in such shareholder's name on the
books of the corporation on the record date.
(b) Except as otherwise provided herein, all votes with respect to
shares standing in the name of an individual on the record date (included
pledged shares) shall be cast only by that individual or such individual's
duly authorized proxy or attorney-in-fact. With respect to shares held by
a representative of the estate of a deceased shareholder, guardian,
conservator, custodian or trustee, votes may be cast by such holder upon
proof of capacity, even though the shares do not stand in the name of such
holder. In the case of shares under the control of a receiver, the
receiver may cast votes carried by such shares even though the shares do
not stand in the name of the receiver provided that the order of the court
of competent jurisdiction which appoints the receiver contains the
authority to cast votes carried by such shares. If shares stand in the
name of a minor, votes may be cast only by the duly-appointed
<PAGE>
guardian of the estate of such minor if such guardian has provided the
corporation with written notice and proof of such appointment.
(c) With respect to shares standing in the name of a corporation on
the record date, votes may be cast by such officer or agents as the
by-laws of such corporation prescribe or, in the absence of an applicable
by-law provision, by such person as may be appointed by resolution of the
Board of Directors of such corporation. In the event no person is so
appointed, such votes of the corporation may be cast by any person
(including the officer making the authorization) authorized to do so by
the Chairman of the Board of Directors, President or any Vice President of
such corporation.
(d) Notwithstanding anything to the contrary herein contained, no
votes may be cast by shares owned by this corporation or its subsidiaries,
if any. If shares are held by this corporation or its subsidiaries, if
any, in a fiduciary capacity, no votes shall be cast with respect thereto
on any matter except to the extent that the beneficial owner thereof
possesses and exercises either a right to vote or to give the corporation
holding the same binding instructions on how to vote.
(e) With respect to shares standing in the name of two or more
persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by the
entirety, voting trustees, persons entitled to vote under a shareholder
voting agreement or otherwise and shares held by two or more persons
(including proxy holders) having the same fiduciary relationship respect
in the same shares, votes may be cast in the following manner:
(1) If only one such person votes, the votes of such person
binds all.
(2) If more than one person casts votes, the majority so
voting binds all.
(3) If more than one person casts votes, but the vote is
evenly split on a particular matter, shall be deemed cast
proportionately as split.
(f) Any holder of shares entitled to vote on any matter may cast a
portion of the votes in favor of such matter and refrain from casting the
remaining votes or cast the same against the proposal, except in the case
of elections of directors. If such holder entitled to vote fails to
specify the number of affirmative votes, it will be conclusively presumed
that the holder is casting affirmative votes with respect to all shares
held.
(g) If a quorum is present, the affirmative vote of holders of a
majority of the shares represented at the meeting and entitled to vote on
any matter shall be the act of the shareholders, unless a vote of greater
number or voting by classes is required by the laws of the State of
Nevada, the Articles of Incorporation and these By-Laws.
<PAGE>
Section 1.09 Proxies. At any meeting of shareholders, any holder of shares
entitled to vote may authorize another person or persons to vote by proxy with
respect to the shares held by an instrument in writing and subscribed to by the
holder of such shares entitled to vote. No proxy shall be valid after - the
expiration of six (6) months from the date of execution thereof, unless coupled
with an interest or unless otherwise specified in the proxy. In no event shall
the term of a proxy exceed seven (7) years from the date of its execution. Every
proxy shall continue in full force and effect until its expiration or
revocation. Revocation may be effected by filing an instrument revoking the same
or a duly-executed proxy bearing a later date with the secretary of the
corporation.
Section 1.10 Order of Business. At the annual shareholders meeting, the
regular order of business shall be as follows:
(1) Determination of shareholders present and existence of quorum;
(2) Reading and approval of the minutes of the previous meeting or
meetings;
(3) Reports of the Board of Directors, the president, treasurer and
secretary of the corporation, in the order named;
(4) Reports of committee;
(5) Election of directors;
(6) Unfinished business;
(7) New business;
(8) Adjournment.
Section 1.11 Absentees Consent to Meetings. Transactions of any meeting of
the shareholders are as valid as though had at a meeting duly-held after regular
call and notice if a quorum is present, either in person or by proxy, and if,
either before or after the meeting, each of the persons entitled to vote, not
present in person or by proxy (and those who, although present, either object at
the beginning of the meeting to the transaction of any business because the
meeting has not been lawfully called or convened or expressly object at the
meeting to the consideration of matters not included in the notice which are
legally required to be included therein), signs a written waiver of notice
and/or consent to the holding of the meeting or an approval of the minutes
thereof. All such waivers, consents, and approvals shall be filed with the
corporate records and made a part of the minutes of the meeting. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person objects at the beginning of the meeting to the transaction of
any business because the meeting is not lawfully called or convened and except
that attendance at a meeting is not a waiver of any right to object to the
consideration of matters not included in the notice if such objection is
expressly made at the beginning.
<PAGE>
Neither the business to be transacted at nor the purpose of any regular or
special meeting of shareholders need be specified in any written waiver of
notice, except as otherwise provided in Section 1.04 (b) of these By-Laws.
Section 1.12 Action Without Meeting. Any action which may be taken by the
vote of the shareholders at a meeting may be taken without a meeting if
consented to by the holders of a majority of the shares entitled to vote or such
greater proportion as may be required by the laws of the State of Nevada, the
Articles of Incorporation, or these Bylaws. Whenever action is taken by written
consent, a meeting of shareholders needs not be called or noticed.
ARTICLE II
DIRECTORS
Section 2.01 Number, Tenure and Qualification. Except as otherwise
provided herein, the Board of Directors of the corporation shall consist of at
least one (1) but no more than nine (9) persons, who shall be elected at the
annual meeting of the shareholders of the corporation and who shall hold office
for one (1) year or until their successors are elected and qualify.
Section 2.02 Resignation. Any director may resign effective upon giving
written notice to the chairman of the Board of Directors, the president, or the
secretary of the corporation, unless the notice specifies a later time for
effectiveness of such resignation. If the Board of Directors accepts the
resignation of a director tendered to take effect at a future date, the Board or
the shareholders may elect a successor to take office when the resignation
becomes effective.
Section 2.03 Reduction in Number. No reduction of the number of directors
shall have the effect of removing any director prior to the expiration of his
term of office.
Section 2.04 Removal.
(a) The Board of Directors or the shareholders of the corporation,
by a majority vote, may declare vacant the office of a director who has
been declared incompetent by an order of a court of competent jurisdiction
or convicted of a felony.
Section 2.05 Vacancies.
(a) A vacancy in the Board of Directors because of death,
resignation, removal, change in number of directors, or otherwise may be
filled by the shareholders at any regular or special meeting or any
adjourned meeting thereof or the remaining directors by the affirmative
vote of a majority thereof. A Board of Directors consisting of less than
the maximum number authorized in Section 2.01 of ARTICLE II constitutes
vacancies on the Board of Directors for purposes of
<PAGE>
this paragraph and may be filled as set forth above including by the
election of a majority of the remaining directors. Each successor so
elected shall hold office until the next annual meeting of shareholders or
until a successor shall have been duly-elected and qualified.
(b) If, after the filling of any vacancy by the directors, the
directors then in office who have been elected by the shareholders shall
constitute less than a majority of the directors then in office, any
holder or holders of an aggregate of "five percent (5%) or more of the
total number of shares entitled to vote may call a special meeting of
shareholders to be held to elect the entire Board of Directors. The term
of office of any director shall terminate upon such election of a
successor.
Section 2.06 Regular Meetings. Immediately following the adjournment of,
and at the same place as, the annual meeting of the shareholders, the Board of
Directors, including directors newly elected, shall hold its annual meeting
without notice, other than this provision, to elect officers of the corporation
and to transact such further business as may be necessary or appropriate. The
Board of Directors may provide by resolution the place, date and hour for
holding additional regular meetings.
Section 2.07 Special Meetings. Special meetings of the Board of Directors
may be called by the chairman and shall be called by the chairman upon the
request of any two (2) directors or the president of the corporation.
Section 2.08 Place of Meetings. Any meeting of the directors of the
corporation may be held at its principal office in the State of Nevada, or at
such other place in or out of the United States as the Board of Directors may
designate. A waiver or notice signed by the directors may designate any place
for the holding of such meeting.
Section 2.09 Notice of Meetings. Except as otherwise provided in Section
2.06, the chairman shall deliver to all directors written or printed notice of
any special meeting, at least three (3) days before the date of such meeting, by
delivery of such notice personally or mailing such notice first class mail, or
by telegram. If mailed, the notice shall be deemed delivered two (2) business
days following the date the same is deposited in the United States mail, postage
prepaid. Any director may waive notice of any meeting, and the attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
unless such attendance is for the express purpose of objecting to the
transaction of business threat because the meeting is not properly called or
convened.
Section 2.10 Quorum: Adjourned Meetings.
(a) A majority of the Board of Directors in office shall constitute
a quorum.
(b) At any meeting of the Board of Directors where a quorum is not
present, a majority of those present may adjourn, from time to time, until
a quorum is present, and no notice of such adjournment shall be required.
At any adjourned meeting where a quorum is
<PAGE>
present, any business may be transacted which could have been transacted
at the meeting originally called.
Section 2.11 Action Without Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors or any committee thereof may
be taken without a meeting if a written consent thereto is signed by all of the
members of the Board of Directors or of such committee. Such written consent or
consents shall be filed with the minutes of the proceedings of the- Board of
Directors or committee. Such action by written consent shall have the same force
and effect as the unanimous vote of the Board of Directors or committee.
Section 2.12 Telephonic Meetings. Meetings of the Board of Directors may
be held through the use of a conference telephone or similar communications
equipment so long as all members participating in such meeting can hear one
another at the time of such meeting. Participation in such a meeting constitutes
presence in person at such meeting.
Section 2.13 Board Decisions. The affirmative vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 2.14 Powers and Duties.
(a) Except as otherwise provided in the Articles of Incorporation or
the laws of the State of Nevada, the Board of Directors is invested with
the complete and unrestrained authority to manage the affairs of the
corporation, and is authorized to exercise for such purpose as the general
agent of the corporation, its entire corporate authority in such manner as
it sees fit. The Board of Directors may delegate any of its authority to
manage, control or conduct the current business of the corporation to any
standing or special committee or to any officer or agent and to appoint
any persons to be agents of the corporation with such powers, including
the power to sub-delegate, and upon such terms as may be deemed fit.
(b) The Board of Directors shall present to the shareholders at
annual meetings of the shareholders, and when called for by a majority
vote of the shareholders at a special meeting of the shareholders, a full
and clear statement of the condition of the corporation, and shall, at
request, furnish each of the Shareholders with a true copy thereof.
(c) The Board of Directors, in its discretion, may submit any
contract or act for approval or ratification at any annual meeting of the
shareholders or any special meeting properly called for the purpose of
considering any such contract or act, provided a quorum is present. The
contract or act shall be valid and binding upon the corporation and upon
all the shareholders thereof, if approved and ratified by the affirmative
vote of a majority of the shareholders at such meeting.
(d) In furtherance and not in limitation of the powers conferred by
the laws of the State of Nevada, the Board of Directors is expressly
authorized and empowered to issue stock of the
<PAGE>
Corporation for money, property, services rendered, labor performed, cash
advanced, acquisitions for other corporations or for any other assets of
value in accordance with the action of the Board of Directors without vote
or consent of the shareholders and the judgment of the Board of Directors
as to the value received and in return therefore shall be conclusive and
said stock, when issued, shall be fully-paid and non-assessable.
Section 2.15 Compensation. The directors shall be allowed and paid all
necessary expenses incurred in attending any meetings of the Board, but shall
not receive any compensation for their services as directors until such time as
the corporation is able to declare and pay dividends on its capital stock.
Section 2.16 Board officers.
(a) At its annual meeting, the Board of Directors shall elect, from
among its members, a chairman to preside at the meetings of the Board of
Directors. The Board of Directors may also elect such other board officers
and for such term as it may, from time to time, determine advisable.
(b) Any vacancy in any board office because of death, resignation,
removal or otherwise may be filled by the Board of Directors for the
unexpired portion of the term of such office.
Section 2.17 Order of Business. The order of business at meeting of the
Board of Directors shall be as follows:
(1) Determination of members present and existence of quorum;
(2) Reading and approval of the minutes of any previous meeting or
meetings;
(3) Reports of officers and committeemen;
(4) Election of officers;
(5) Unfinished business;
(6) New business;
(7) Adjournment.
ARTICLE III
OFFICERS
<PAGE>
Section 3.01 Election. The Board of Directors, at its first meeting
following the annual meeting of shareholders, shall elect a president, a
secretary and a treasurer to hold office for one (1) year next coming and until
their successors are elected and qualify. Any person may hold two or more
offices. The Board of Directors may, from time to time, by resolution, appoint
one or more vice presidents, assistant secretaries, assistant treasurers and
transfer agents of the corporation as it may deem advisable; prescribe their
duties; and fix their compensation.
Section 3.02 Removal; Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed by it whenever, in its
judgment, the best interest of the corporation would be served thereby. Any
officer may resign at any time upon written notice to the corporation without
prejudice to the rights, if any, of the corporation under any contract to which
the resigning officer is a party.
Section 3.03 Vacancies. Any vacancy in any office because of death,
resignation, removal, or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
Section 3.04 President. The president shall be the general manager and
executive officer of the corporation, subject to the supervision and control of
the Board of Directors, and shall direct the corporate affairs, with full power
to execute all resolutions and orders of the Board of directors not especially
entrusted to some other officer of the corporation. The president shall preside
at all meetings of the shareholders and shall sign the certificates of stock
issued by the corporation, and shall perform such other duties as shall be
prescribed by the Board of Directors.
Unless otherwise ordered by the Board of Directors, the president shall
have full power and authority on behalf of the corporation to attend and to act
and to vote at any meetings of the shareholders of any corporation in which the
corporation may hold stock and, at any such meeting, shall possess and may
exercise any and all rights and powers incident to the ownership of such stock.
The Board of Directors, by resolution from time to time, may confer like powers
on any person or persons in place of the president to represent the corporation
for these purposes.
Section 3.05 Vice President. The Board of Directors may elect one or more
vice presidents who shall be vested with all the powers and perform all the
duties of the president whenever the president is absent or unable to act,
including the signing of the certificates of stock issued by the corporation,
and the vice president shall perform such other duties as shall be prescribed by
the Board of Directors.
Section 3.06 Secretary. The secretary shall keep the minutes of all
meetings of the shareholders and the Board of directors in books provided for
that purpose. The secretary shall attend to the giving and service of all
notices of the corporation, may sign with the president in the name of the
corporation all contracts authorized by the Board of Directors or appropriate
committee, shall have the custody of the corporate seal, shall affix the
corporate seal to all certificates of stock duly issued by the
<PAGE>
corporation, shall have charge of stock certificate books, transfer books and
stock ledgers, and such other books and papers as the Board of Directors or
appropriate committee may direct, and shall, in general perform all duties
incident to the office of the secretary. All corporate books kept by the
secretary shall be open for examination by any director at any reasonable time.
Section 3.07 Assistant Secretary. The Board of Directors may appoint an
assistant secretary who shall have such powers and perform such duties as may be
prescribed for him by the secretary of the corporation or by the board of
Directors.
Section 3.08 Treasurer. The treasurer shall be the chief financial officer
of the corporation, subject to the supervision and control of the Board of
Directors, and shall have custody of all the funds and securities of the
corporation. When necessary or proper, the treasurer shall endorse on behalf of
the corporation for collection checks, notes and other obligation, and shall
deposit all monies to the credit of the corporation in such bank or banks or
other depository as the Board of Directors may designate, and shall sign all
receipts and vouchers for payments made by the corporation. Unless otherwise
specified by the Board of Directors, the treasurer shall sign with the president
all bills of exchanged and promissory notes of the corporation, shall also have
the care and custody of the stocks, bonds, certificates, vouchers, evidence of
debts, securities and such other property belonging to the corporation as the
Board of Directors shall designate, and shall sign all papers required by law,
by these By-laws or by the Board of Directors to be signed by the treasurer. The
treasurer shall enter regularly in the books of the corporation, to be kept for
that purpose, full and accurate accounts of all monies received and paid on
account of the corporation and whenever required by the Board of Directors. The
treasurer shall, if required by the Board of Directors, give a bond to the
corporation in such sum and with such security as shall be approved by the Board
of Directors for the faithful performance of all the duties of the treasurer and
for restoration to the corporation in the event of the treasurer's death,
resignation, retirement, or removal from office, of all books, records, papers,
voucher, money and other property belonging to the corporation. The expense of
such bond shall be borne by the corporation.
Section 3.09 Assistant Treasurer. The Board of Directors may appoint an
assistant treasurer who shall have such powers and perform such duties as may be
prescribed by the treasurer of the corporation or by the Board of Directors, and
the Board of Directors may require the assistant treasurer to give a bond to the
corporation in such sum and with such security as it may approve, for the
faithful performance of the duties of assistant treasurer, and for the
restoration to the corporation, in the event of the assistant treasurer's death,
resignation, retirement or removal from office, of all books, records, papers,
vouchers, money and other such property belonging to the corporation, The
expense of such bond shall be borne by the corporation.
ARTICLE IV
CAPITAL STOCK
<PAGE>
Section 4.01 Issuance. Shares of capital stock of the corporation shall be
issued in such manner and at such times and upon such conditions as shall be
prescribed by the Board of Directors.
Section 4.02 Certificates. Ownership in the corporation shall be evidenced
by certificates for shares of stock in such form as shall be prescribed by the
Board of Directors, shall be under the seal of the corporation and shall be
signed by the president or the vice president and also by the secretary or an
assistant secretary. Each certificate shall contain the name of the record
holder, the number, designation, if any, class or series of shares represented,
a statement of summary of any applicable rights, preferences, privileges, or
restrictions thereon, and a statement that the shares are assessable, if
applicable. All certificates shall be consecutively numbered. The name and
address of the shareholder, the number of shares, and the date of issue shall be
entered on the stock transfer books of the corporation.
Section 4.03 Surrender: Lost or Destroyed Certificates. All certificates
surrendered to the corporation, except those representing shares of treasury
stock, shall be canceled and no new certificates shall be issued until the
former certificate for a like number of shares shall have been canceled, except
that in case of a lost, stolen, destroyed or mutilated certificate, a new one
may be issued therefore. However, any shareholder applying for the issuance of a
stock certificate in lieu of one alleged to have been lost, stolen, destroyed or
mutilated shall, prior to the issuance of a replacement, provide the corporation
with his, her or its affidavit of the facts surrounding the loss, theft,
destruction or mutilation and an indemnity bond in an amount and upon such terms
as the treasurer, or the Board of Directors, shall require. In no case shall the
bond be in amount less than twice the current market value of the stock and it
shall indemnify the corporation against any loss, damage, cost or inconvenience
arising as a consequence of the issuance of a replacement certificate.
Section 4.04 Replacement Certificate. When the Articles of Incorporation
are amended in any way affecting the statements contained in the certificates
for outstanding shares of capital stock of the corporation or it becomes
desirable for any reason, including, without limitation, the merger or
consolidation of the corporation with another corporation or the reorganization
of the corporation, to cancel any outstanding certificate for shares and issue a
new certificate therefore conforming to the rights of the holder, the Board of
directors may order any holders of outstanding certificates for shares to
surrender and exchange the same for new certificates within a reasonable time to
be fixed by the Board of Directors, The order may provide that a holder of any
certificate(s) ordered to be surrendered shall not be entitled to vote, receive
dividends or exercise any other rights of shareholder until the holder has
complied with the order provided that such order operates to suspend such rights
only after notice and until compliance.
Section 4.05 Transfer of Shares. No transfer of stock shall be valid as
against the corporation except on surrender and cancellation by the certificate
therefore, accompanied by an assignment or transfer by the registered owner made
either in person or under assignment. Whenever any transfer shall be expressly
made for collateral security and not absolutely, the collateral nature of the
transfer shall be reflected in the entry of transfer on the books of the
corporation.
<PAGE>
Section 4.06 Transfer Agent. The Board of Directors may appoint one or
more transfer agents and registrars of transfer and may require all certificates
for shares of stock to bear the signature of such transfer agent and such
registrar of transfer.
Section 4.07 Stock Transfer Books. The stock transfer books shall be
closed for a period of ten (10) days prior to all meetings of the shareholders
and shall be closed for the payment of dividends as provided in Article V hereof
and during such periods as, from time to time, may be fixed by the Board of
Directors, and, during such periods, no stock shall be transferable.
Section 4.08 Miscellaneous. The Board of Directors shall have the power
and authority to make such rules and regulation not inconsistent herewith as it
many deem expedient concerning the issue, transfer and registration of
certificates for shares of the capital stock of the corporation.
ARTICLE V
DIVIDENDS
Section 5.01 Dividends may be declared, subject to the provisions of the
laws of the State of Nevada and the Articles of Incorporation, by the Board of
directors at any regular or special meeting and may be paid in cash, property,
shares of corporate stock, or any other medium. The Board of Directors may fix
in advance a record date, as provided in Section 1.06 of these By-laws, prior to
the dividend payment for the purpose of determining shareholders entitled to
receive payment of any dividend. The Board of Directors may close the stock
transfer books for such purpose for a period of not more than ten (10) days
prior to the payment date of such dividend.
ARTICLE VI
OFFICES; RECORDS; REPORTS; SEAL AND FINANCIAL MATTERS
Section 6.01 Principal Office. The principal office of the corporation in
the State of Nevada shall be the Law Offices of Max C. Tanner, 2950 East
Flamingo road, Suite G, Las Vegas, Nevada 89121, and the corporation may have an
office in any other state or territory as the Board of Directors may designate.
Section 6.02 Records. The stock transfer books and a certified copy of the
By-laws, Articles of Incorporation, any amendments thereto, and the minutes of
the proceedings of the shareholder, the Board of Directors, and committees of
the Board of Directors shall be kept at the principal office of the corporation
for the inspection of all who have the right to see the same and for the
transfer of stock. All
<PAGE>
other books of the corporation shall be kept at such places as may be prescribed
by the Board of Directors.
Section 6.03 Financial Report on Request. Any shareholder or shareholders
holding at least five percent (5%) of the outstanding shares of any class of
stock may make a written request for an income statement of the corporation for
the three (3) month, six (6) month, or nine (9) month period of the current
fiscal year ended more than thirty (30) days prior to the date of the request
and a balance sheet of the corporation as of the end of such period. In
addition, if no annual report for the last fiscal year has been sent to
shareholder, such shareholder or shareholders may make a request for a balance
sheet as of the end of such fiscal year and an income statement and statement of
changes in financial position for such fiscal year. The statement shall be
delivered or mailed to the person making the request within thirty (30) days
thereafter. A copy of the statements shall be kept on file in the principal
office of the corporation for twelve (12) months, and such copies shall be
exhibited at all reasonable times to any shareholder demanding an examination of
them or a copy shall be mailed to each shareholder. Upon request by any
shareholder, there shall be mailed to the shareholder a copy of the last annual,
semiannual or quarterly income statement which it has prepared and a balance
sheet as of the end of the period. The financial statements referred to in this
Section 6.03 shall be accompanied by the report thereon, if any, of any
independent accountants engaged by the corporation or the certificate of an
authorized officer of the corporation that such financial statements were
prepared without audit from the books and records of the corporation.
Section 6.04 Right of Inspection.
(a) The accounting books and records and minutes of proceedings of
the shareholder and the Board of Directors and committees of the Board of
Directors shall be open to inspection upon the written demand of any
shareholder or holder of a voting trust certificate at any reasonable time
during usual business hours for a purpose reasonably related to such
holder's interest as a shareholder or as the holder of such voting trust
certificate. This right of inspection shall extend to the records of the
subsidiaries, if any, of the corporation. Such inspection may be making in
person or by agent or attorney, and the right of inspection includes the
right to copy and make extracts.
(b) Every director shall have the absolute right at any reasonable
time to inspect and copy all books, records and documents of every kind
and to inspect the physical properties of the corporation and/or its
subsidiary corporations. Agent or attorney may make in person or such
inspection, and the right of inspection includes the right to copy and
make extracts.
Section 6.05 Corporate Seal. The Board of Directors may, by resolution,
authorize a seal, and the seal may be used by causing it, or a facsimile, to be
impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the corporation shall have the
authority to affix the seal to any document requiring it.
<PAGE>
Section 6.06 Fiscal Year. The fiscal year-end of the corporation shall be
the calendar year or such other term as may be fixed by resolution of the Board
of Directors.
Section 6.07 Reserves. The Board of Directors may create, by resolution,
out of the earned surplus of the corporation such reserves as the directors may,
from time to time, in their discretion, think proper to provide for
contingencies, or to equalize dividends or to repair or maintain any property of
the corporation, or for such other purpose as the Board of directors may deem
beneficial to the corporation, and the directors may modify or abolish any such
reserves in the manner in which they were created.
ARTICLE VII
INDEMNIFICATION
Section 7.01 Indemnification. The corporation shall, unless prohibited by
Nevada Law, indemnify any person (an "Indemnitee") who is or was involved in any
manner (including, without limitation, as a party or a witness) or is threatened
to be so involved in any threatened, pending or completed action suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, including without limitation, any action, suit or proceeding
brought by or in the right of the corporation to procure a judgment in its favor
(collectively, a "Proceeding") by reason of the fact that he is or was a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other entity or enterprise, against all
Expenses and Liabilities actually and reasonably incurred by him in connection
with such Proceeding. The right to indemnification conferred in the Article
shall be presumed to have been relied upon by the directors, officers, employees
and agents of the corporation and shall be enforceable as a contract right and
inure to the benefit of heirs, executors and administrators of such individuals.
Section 7.02 Indemnification Contracts. The Board of Directors is
authorized on behalf of the corporation, to enter into, deliver and perform
agreements or other arrangements to provide any Indemnitee with specific rights
of indemnification in addition to the rights provided hereunder to the fullest
extent permitted by Nevada Law. Such agreements or arrangements may provide (i)
that the Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding, must be paid by the corporation as they are
incurred and in advance of the final disposition of any such action, suit or
proceeding provided that, if required by Nevada Law at the time of such advance,
the officer or director provides an undertaking to repay such amounts of it is
ultimately determined by a court of competent jurisdiction that such individual
is not entitled to be indemnified against such expenses, (ii) that the
Indemnitee shall be presumed to be entitled to indemnification under this
Article or such agreement or arrangement and the corporation shall have the
burden of proof to overcome that presumption, (iii) for procedures to be
followed by the corporation and the Indemnitee in making any determination of
entitlement to indemnification or for appeals therefrom and (iv) for insurance
or such
<PAGE>
other Financial Arrangements described in Paragraph 7.02 of this Article, all as
may be deemed appropriate by the Board of Directors at the time of execution of
such agreement or arrangement.
Section 7.03 Insurance and Financial Arrangements. The corporation may,
unless prohibited by Nevada Law, purchase and maintain insurance or make other
financial arrangements ("Financial Arrangements") on behalf of any Indemnitee
for any liability asserted against him and liability and expenses incurred by
him in his capacity as a director, officer, employee or agent, or arising out of
his status as such, whether or not the corporation has the authority to
indemnify him against such liability and expenses. Such other Financial
Arrangements may include (i) the creation of a trust fund, (ii) the
establishment of a program of self-insurance, (iii) the securing of the
corporation's obligation of indemnification by granting a security interest or
other lien on any assets of the corporation, or (iv) the establishment of a
letter of credit, guaranty or surety.
Section 7.04 Definitions. For purposes of this Article:
Expenses. The word "Expenses" shall be broadly construed and,
without limitation, means (i) all direct and indirect costs incurred, paid or
accrued, (ii) all attorney's fees, retainers, court costs, transcripts, fees of
experts, witness fees, travel expenses, food and lodging expenses while
traveling, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service, freight or other transportation fees and expenses,
(iii) all other disbursements and out-of-pocket expenses, (iv) amounts paid in
settlement, to the extent permitted by Nevada Law, and (v) reasonable
compensation for time spent by the Indemnitee for which he is otherwise not
compensated by the corporation or any third party, actually and reasonable
incurred in connection with either the appearance at or investigation, defense,
settlement or appeal of a Proceeding or establishing or enforcing a right to
indemnification under any agreement or arrangement, this Article, the Nevada Law
or otherwise; provided, however, that "Expenses" shall not include any judgments
or fines or excise taxes or penalties imposed under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or other excise taxes or
penalties.
Liabilities. "Liabilities" means liabilities of any type whatsoever,
including, but not limited to, judgments or fines, ERISA or other excise taxes
and penalties, and amounts paid in settlement.
Nevada Law. "Nevada Law" means Chapter 78 of the Nevada Revised Statues as
amended and in effect from time to time or any successor or other statutes of
Nevada having similar import and effect.
This Article. "This Article" means Paragraphs 7.01 through 7.04 of these
bylaws or any portion of them.
Power of Stockholders. Paragraphs 7.01 through 7.04, including this
Paragraph, of these Bylaws may be amended by the stockholders only by vote of
the holders of sixty-six and two-thirds percent (66 2/3%) of the entire number
of shares of each class, voting separately, of the outstanding capital stock of
the corporation (even though the right of any class to vote is otherwise
restricted or
<PAGE>
denied); provided, however, no amendment or repeal of this Article shall
adversely affect any right of any Indemnitee existing at the time such amendment
or repeal becomes effective.
Power of Directors. Paragraphs 7.01 through 7.04 and this Paragraph of
these Bylaws may be amended or repealed by the Board of Directors only by vote
of eighty percent (80%) of the total number of Directors and the holders of
sixty-six and two-thirds percent (66 2/3%) of the entire number of shares of
each class, voting separately, of the outstanding capital stock of the
corporation (even though the right of any class to vote is otherwise restricted
or denied); provided, however, no amendment or repeal of this Article shall
adversely affect any right of any Indemnitee existing at the time such amendment
or repeal becomes effective.
ARTICLE VIII
BY-LAWS
Section 8.01 Amendment. Amendments and changes of these By-Laws may be
made at any regular or special meeting of the Board of directors by a vote of
not less than all of the entire Board, or may be made by a vote of, or a consent
in writing signed by the holders of a majority of the issued and outstanding
capital stock.
Section 8.02 Additional By-Laws. Additional by-laws not inconsistent
herewith may be adopted by the Board of Directors at any meeting of the Board of
Directors at which a quorum is present by an affirmative vote of a majority of
the directors present or by the unanimous consent of the Board of Directors in
accordance with Section 2.11 of these By-laws.
CERTIFICATION
I, the undersigned, being the duly elected secretary of the Corporation,
do hereby certify that the foregoing By-laws were adopted by the Board of
Directors on the 3rd day of January, 1996.
_______________________________
Max C. Tanner, Secretary
Exhibit 4.1
THE SCHOONER BREWERY INCORPORATED
PROMISSORY NOTE (SINGLE PAYMENT)
Maker: The Schooner Brewery Incorporated
Date: ______________________
Maturity Date: [used three months]
----------------------------------
Interest Calculation Basis: 360 days
Amount of Note: $________________
Annual Rate of Interest (Interest Rate): none
For value received, Maker promises to pay to the order of bold ("Lender")
at Maker's place of business at 440 North Center, Arlington, Tarrant County,
Texas, or its present place of business if different, the Amount of Note
(_____________________ dollars) plus interest on unpaid Amount of Note from Date
to Maturity Date at the Interest Rate, calculated on the Interest Calculation
Basis. At the election of the holder of this note, the Interest Calculation
Basis may be the actual number of days in the applicable calendar year in which
interest on this note accrues.
The Interest Rate provided in this note, however, shall be limited to the
maximum rate allowed from time to time by applicable state or federal law (the
"Highest Lawful Rate"). Regardless of any provision contained in this note, or
in any other document executed in connection with this note, the holder of this
note shall never be entitled to receive, collect, or apply, as interest on this
note, any amount in excess of the Highest Lawful Rate, and in the event the
holder of this note ever receives, collects, or applies, as interest, any such
excess, such amount shall be deemed a partial prepayment of principal, and, if
the principal of this note is paid in full, any remaining excess shall
immediately be refunded to the payor. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Highest Lawful
Rate, Maker and the holder of this note shall, to the maximum extent permitted
by law, (a) characterize any nonprincipal payment as an expense, fee, or premium
rather than as interest; (b) exclude voluntary prepayment and the effects of
such; and (c) amortize, prorate, allocate, and spread, in equal parts, the total
amount of interest throughout the entire
<PAGE>
contemplated term of this note so that the Interest Rate is uniform throughout
the entire term of this note. Past due principal and interest shall bear
interest at the Highest Lawful Rate.
At all such times, if any, as Texas law shall establish the Highest Lawful
Rate, the Highest Lawful Rate shall be the "indicated ceiling" (as defined in
TEX. REV. CIV. STAT. ANN. art. 5069-1.04, as amended) from time to time in
effect; but payee may from time to time, as to current and future balances,
implement any other ceiling under such chapter and/or revise the index, formula,
or provision of law used to compute the rate on this note by notice to Maker, if
and to the extent permitted by, and in the manner provided in such chapter.
All unpaid Amount of Note shall be payable on [used maturity date] .
It is expressly understood and agreed that failure to pay this note when
due shall constitute default under this note. Upon any such default, and without
waiving any other rights under this note or any other instrument executed in
connection with this note, Lender or other holder may, at its option, exercise
any or all rights, powers, and remedies afforded under all security instruments
securing this note and by law, including the right to declare the unpaid balance
of principal and accrued interest on this note immediately due and payable.
Each Maker agrees that his, her, or its liability on or with respect to
this note shall not be affected by any release of or change in any security at
any time existing or by any failure to perfect or maintain perfection of any
lien on or security interest in such security.
Each Maker, guarantor, surety, and endorser waives certain otherwise
applicable legal requirements relating to the collection of notes, such as
grace, demand, presentment for payment, notice of non-payment, protest, notice
of protest, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and diligence in collection and the bringing of suit against any
party to this note; agrees to application of any bank balance to payment of this
note; agrees that extensions and renewals without limit as to number, acceptance
of any number of partial payments, and releases or substitutions of collateral,
with or without notice, before or after maturity, shall not release or discharge
his, her, or its obligations under this note; agrees that waiver of any default
shall not constitute waiver of any prior or subsequent default; and agrees to
pay in addition to all other sums due under this note a reasonable sum of at
least ten percent of the unpaid Amount of Note as reasonable attorneys' fees if
this note is placed in the hands of an attorney for collection or if it is
collected through probate, bankruptcy, or other judicial proceeding. The holder
may, at its option, without notice to any Maker or any other person, accelerate
the Maturity Date at any time it shall deem itself insecure or if Maker shall
fail to make any payment when due.
<PAGE>
[Maker(s) to initial this space, if the following paragraph is applicable
to this note]:_________
Maker warrants and represents to payee, and to all other owners and/or
holders of any indebtedness evidenced pursuant to this note, that (a) all loans
evidenced by this note are and shall be "business loans" as such term is used in
the Depository Institutions Deregulation and Monetary Control Act of 1980, as
amended, and (b) such loans are for a business, commercial, investment or
similar purpose and not primarily personal, family, household, or agricultural
use, as such terms are used in TEX. REV. CIV. STAT. ANN. art. 5069-1.04, as
amended.
This note is one of a series of Maker's non-interest bearing promissory
notes (the "Notes"), issued pursuant to the terms provided below.
Maker represents and warrants that it has not, either directly or through
any agent, offered any of the Notes to any person other than 1) existing
shareholders of Maker, and only those existing shareholders who are very
familiar with Maker's current business plans, including that contained within
Maker's business plan dated November, 1997 (the "Business Plan") and Maker's
draft private placement memorandum dated May 8, 1998 (the "Private Placement
Memorandum"), or 2) individuals who are personally very familiar with the
business acumen of Maker's management. Lender represents to Maker, in accepting
one of the Notes, that Lender is acquiring this Note for Lender's own account,
for the purpose of investment, and not with a view to the distribution or resale
of the Note, and that, to the best of Lender's knowledge, Lender qualifies as a
"well-informed investor" pursuant to applicable state securities laws. Lender
further represents to Maker that Lender has received, thoroughly reviewed, and
understands the Business Plan and the Private Placement Memorandum, specifically
including, but not limited to, Maker's most recent 15c2-11 filing dated May 13,
1997, a photocopy of which is contained within the Business Plan.
In lieu of interest, Maker will cause to be issued to Lender [$ X 4]
shares of Maker's restricted common stock. The parties agree, however, that
Maker shall have the right, exercisable prior to [used one year in advance of
note date], to redeem all of such shares at the price of $.20 per share.
This note, and all of the Notes, may not be transferred without an opinion
of counsel selected by Lender and reasonably satisfactory to Maker as to the
nonnecessity for registration under the Securities Act of 1933, or if an
exemption from registration is otherwise available.
Terms used in this note shall have the meanings indicated above. As used
in this note, where appropriate, the masculine gender includes the feminine and
the neuter, and the singular number includes
<PAGE>
the plural number. This note shall be governed by and construed in accordance
with the laws of the State of Texas and the United States of America.
MAKER:
THE SCHOONER BREWERY
INCORPORATED
by: ____________________________
Kimberly Biggs, secretary
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
MAKER:
THE SCHOONER BREWERY
INCORPORATED
by: ____________________________
Kimberly Biggs, secretary
LENDER:
________________________________
<PAGE>
all caps
-------------
Exhibit 4.2
THE SCHOONER BREWERY INCORPORATED
CONVERTIBLE PROMISSORY NOTE (SINGLE PAYMENT)
Maker: The Schooner Brewery Incorporated
Date:
Maturity Date:
Interest Calculation Basis: 360 days
Amount of Note: $_________________
Annual Rate of Interest (Interest Rate): 12 percent
For value received, Maker promises to pay to the order of ______________
("Lender") at Maker's place of business at 440 North Center, Arlington, Tarrant
County, Texas, or its present place of business if different, the Amount of Note
(__________ thousand dollars) plus interest on unpaid Amount of Note from Date
to Maturity Date at the Interest Rate, calculated on the Interest Calculation
Basis. At the election of the holder of this note, the Interest Calculation
Basis may be the actual number of days in the applicable calendar year in which
interest on this note accrues.
The Interest Rate provided in this note, however, shall be limited to the
maximum rate allowed from time to time by applicable state or federal law (the
"Highest Lawful Rate"). Regardless of any provision contained in this note, or
in any other document executed in connection with this note, the holder of this
note shall never be entitled to receive, collect, or apply, as interest on this
note, any amount in excess of the Highest Lawful Rate, and in the event the
holder of this note ever receives, collects, or applies, as interest, any such
excess, such amount shall be deemed a partial prepayment of principal, and, if
the principal of this note is paid in full, any remaining excess shall
immediately be refunded to the payor. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Highest Lawful
Rate, Maker and the holder of this note shall, to the maximum extent permitted
by law, (a) characterize any nonprincipal payment as an expense, fee, or premium
rather than as interest; (b) exclude voluntary prepayment and the effects of
such; and (c) amortize, prorate, allocate, and spread, in equal parts, the total
amount of interest throughout the entire
<PAGE>
contemplated term of this note so that the Interest Rate is uniform throughout
the entire term of this note. Past due principal and interest shall bear
interest at the Highest Lawful Rate.
At all such times, if any, as Texas law shall establish the Highest Lawful
Rate, the Highest Lawful Rate shall be the "indicated ceiling" (as defined in
TEX. REV. CIV. STAT. ANN. art. 5069-1.04, as amended) from time to time in
effect; but payee may from time to time, as to current and future balances,
implement any other ceiling under such chapter and/or revise the index, formula,
or provision of law used to compute the rate on this note by notice to Maker, if
and to the extent permitted by, and in the manner provided in such chapter.
All unpaid Amount of Note shall be payable on ______________. Accrued
interest shall be due and payable on _____________, and on the 10th day of each
succeeding month, and/or at Maturity Date, whichever first occurs. All payments
shall be applied first to accrued interest, with any balance applied to Amount
of Note.
It is expressly understood and agreed that failure to pay this note when
due shall constitute default under this note. Upon any such default, and without
waiving any other rights under this note or any other instrument executed in
connection with this note, Lender or other holder may, at its option, exercise
any or all rights, powers, and remedies afforded under all security instruments
securing this note and by law, including the right to declare the unpaid balance
of principal and accrued interest on this note immediately due and payable.
Each Maker agrees that his, her, or its liability on or with respect to
this note shall not be affected by any release of or change in any security at
any time existing or by any failure to perfect or maintain perfection of any
lien on or security interest in such security.
Each Maker, guarantor, surety, and endorser waives certain otherwise
applicable legal requirements relating to the collection of notes, such as
grace, demand, presentment for payment, notice of non-payment, protest, notice
of protest, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and diligence in collection and the bringing of suit against any
party to this note; agrees to application of any bank balance to payment of this
note; agrees that extensions and renewals without limit as to number, acceptance
of any number of partial payments, and releases or substitutions of collateral,
with or without notice, before or after maturity, shall not release or discharge
his, her, or its obligations under this note; agrees that waiver of any default
shall not constitute waiver of any prior or subsequent default; and agrees to
pay in addition to all other sums due under this note a reasonable sum of at
least ten percent of the unpaid Amount of Note as reasonable attorneys' fees if
this note is placed in the hands of an attorney for collection or if it is
collected through probate, bankruptcy, or other judicial proceeding. The holder
may, at its option, without notice to any Maker or any other person,
<PAGE>
accelerate the Maturity Date at any time it shall deem itself insecure or if
Maker shall fail to make any payment when due.
[Maker(s) to initial this space, if the following paragraph is applicable
to this note]:_________
Maker warrants and represents to payee, and to all other owners and/or
holders of any indebtedness evidenced pursuant to this note, that (a) all loans
evidenced by this note are and shall be "business loans" as such term is used in
the Depository Institutions Deregulation and Monetary Control Act of 1980, as
amended, and (b) such loans are for a business, commercial, investment or
similar purpose and not primarily personal, family, household, or agricultural
use, as such terms are used in TEX. REV. CIV. STAT. ANN. art. 5069-1.04, as
amended.
This note is one of a series of Maker's 12 percent convertible promissory
notes, limited in aggregate to the original principal sum of $100,000.00 (the
"Convertible Notes"), issued pursuant to the terms of this note as provided
below. This note provides the holder the option to purchase _______ shares of
Maker's restricted stock at par value, and also contains a redemption provision
in favor of Maker, as well as a conversion feature in favor of this note's
holder, all as provided below.
Maker represents and warrants that it has not, either directly or through
any agent, offered any of the Convertible Notes to any person other than 1)
existing shareholders of Maker, and only those existing shareholders who are
very familiar with Maker's current business plans, including that contained
within Maker's business plan dated November, 1997 (the "Business Plan"), or 2)
individuals who are personally very familiar with the business acumen of Maker's
management. Lender represents to Maker, in accepting one of the Convertible
Notes, that Lender is acquiring this Convertible Note for Lender's own account,
for the purpose of investment, and not with a view to the distribution or resale
of the Convertible Note, and that, to the best of Lender's knowledge, Lender
qualifies as a "well-informed investor" pursuant to applicable state securities
laws. Lender further represents to Maker that Lender has received, thoroughly
reviewed, and understands the Business Plan, specifically including, but not
limited to, Maker's most recent 15c2-11 filing dated May 13, 1997, a photocopy
of which is contained within the Business Plan.
Maker, by the execution of this note payable to Lender, hereby grants
Lender a non-assignable (except as provided below) option to purchase _______
shares of Maker's restricted common stock, at par value, exercisable at Maturity
Date (___________________) and for a period of 30 days following Maturity Date,
which option shall be deemed fully exercised by Lender at Maturity Date unless
Lender expressly sends written notice to Maker to the contrary.
<PAGE>
The Convertible Notes shall be subject to early redemption, at Maker's
option, at any time prior to ___________________, by payment to Lender of all
Amount of Note, plus accrued interest. In the case of such redemption, Maker
shall give written notice to Lender of Maker's intent to redeem not less than 15
days prior to the date fixed for such redemption (the "Redemption Date"). In the
event of redemption by Maker, and Maker's payment of all Amount of Note and
accrued interest to the Redemption Date, the stock option referred to above
shall automatically and without further action of either Maker or Lender be
reduced to ___________ shares of Maker's restricted common stock, and, unless
written notice to the contrary is received by Maker, such stock option in favor
of Lender shall be deemed fully exercised by Lender as of the Redemption Date.
Lender, and the other holders of the Convertible Notes, shall have the
right, at any time (unless Maker has given notice of redemption) until ten days
prior to Maturity Date (_______________), to convert the note into _________
shares of Maker's restricted common stock. In order to convert this note, the
holder shall surrender the note to Maker at Maker's principal office,
accompanied by a written statement designating Lender's desire to convert the
principal and accrued interest represented by the note to ___________ restricted
shares of Maker's common stock.
Upon any of the events contemplated by the Convertible Notes involving
issuance of Maker's restricted common stock (i.e., exercise of option at
Maturity Date or Redemption Date, or conversion), Maker shall issue and deliver
to Lender, registered in Lender's name, a certificate or certificates for the
number of shares of restricted common stock issuable upon the exercise of the
option, redemption, or conversion, as applicable, in each case within 20 days of
the applicable purchase price (par value times number of shares or surrender of
note) being received by Maker.
Maker covenants and represents to Lender that all shares of Maker's
restricted common stock issued upon exercise of option rights, redemption, or
conversion of all Convertible Notes will, upon issuance, be duly and validly
issued and fully paid and nonassessable, and free from all taxes, liens, and
charges with respect to said shares' issuance. Maker further covenants and
agrees that it will at all times have authorized, and reserved and kept
available solely for the purpose of issue upon the maturity, redemption, or
conversion of the Convertible Notes, a sufficient number of shares of its common
stock as are then issuable upon any of said occurrences.
This note, and all of the Convertible Notes, and any shares acquired upon
the maturity, redemption, or conversion of this note, may not be transferred
without an opinion of counsel selected by Lender and reasonably satisfactory to
Maker as to the nonnecessity for registration under the Securities Act of 1933,
or if an exemption from registration is otherwise available.
Terms used in this note shall have the meanings indicated above. As used
in this note, where appropriate, the masculine gender includes the feminine and
the neuter, and the singular number includes
<PAGE>
the plural number. This note shall be governed by and construed in accordance
with the laws of the State of Texas and the United States of America.
Secured by: The Convertible Notes are secured by the `Net GameLink system
to be installed at the Dallas Schooner Brewery.
MAKER:
THE SCHOONER BREWERY
INCORPORATED
by: ____________________________
L. Kelly Jones, president
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
MAKER:
THE SCHOONER BREWERY
INCORPORATED
by: ____________________________
L. Kelly Jones, president
<PAGE>
LENDER:
________________________________
_______________
Exhibit 4.3
THE SCHOONER BREWERY INCORPORATED
PROMISSORY NOTE (SINGLE PAYMENT)
Maker: The Schooner Brewery Incorporated
Date:
Maturity Date:
Interest Calculation Basis: 360 days
Amount of Note: $________________
Annual Rate of Interest (Interest Rate): none
For value received, Maker promises to pay to the order of
_______________________ ("Lender") at Maker's place of business at 440 North
Center, Arlington, Tarrant County, Texas, or its present place of business if
different, the Amount of Note (___________________ dollars) plus interest on
unpaid Amount of Note from Date to Maturity Date at the Interest Rate,
calculated on the Interest Calculation Basis. At the election of the holder of
this note, the Interest Calculation Basis may be the actual number of days in
the applicable calendar year in which interest on this note accrues.
The Interest Rate provided in this note, however, shall be limited to the
maximum rate allowed from time to time by applicable state or federal law (the
"Highest Lawful Rate"). Regardless of any provision contained in this note, or
in any other document executed in connection with this note, the holder of this
note shall never be entitled to receive, collect, or apply, as interest on this
note, any amount in excess of the Highest Lawful Rate, and in the event the
holder of this note ever receives, collects, or applies, as interest, any such
excess, such amount shall be deemed a partial prepayment of principal, and, if
the principal of this note is paid in full, any remaining excess shall
immediately be refunded to the payor. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Highest Lawful
Rate, Maker and the holder of this note shall, to the maximum extent permitted
by law, (a) characterize any nonprincipal payment as an expense, fee, or premium
rather than as interest; (b) exclude voluntary prepayment and the effects of
such; and (c) amortize, prorate, allocate, and spread, in equal parts, the total
amount of interest throughout the entire
<PAGE>
contemplated term of this note so that the Interest Rate is uniform throughout
the entire term of this note. Past due principal and interest shall bear
interest at the Highest Lawful Rate.
At all such times, if any, as Texas law shall establish the Highest Lawful
Rate, the Highest Lawful Rate shall be the "indicated ceiling" (as defined in
TEX. REV. CIV. STAT. ANN. art. 5069-1.04, as amended) from time to time in
effect; but payee may from time to time, as to current and future balances,
implement any other ceiling under such chapter and/or revise the index, formula,
or provision of law used to compute the rate on this note by notice to Maker, if
and to the extent permitted by, and in the manner provided in such chapter.
All unpaid Amount of Note shall be payable on _________________.
Maker shall pay the Amount of Note by Fed Ex delivery. In addition, the
Fed Ex delivery date will establish the date of payment and will be the basis
for computing the number of days beyond the Maturity Date in the event Maker is
in default under this note, and to determine the number of additional shares
assessed as additional interest below.
It is expressly understood and agreed that failure to pay this note when
due shall constitute default under this note. Upon any such default, and without
waiving any other rights under this note or any other instrument executed in
connection with this note, Lender or other holder may, at its option, exercise
any or all rights, powers, and remedies afforded under all security instruments
securing this note and by law, including the right to declare the unpaid balance
of principal and accrued interest on this note immediately due and payable.
Each Maker agrees that his, her, or its liability on or with respect to
this note shall not be affected by any release of or change in any security at
any time existing or by any failure to perfect or maintain perfection of any
lien on or security interest in such security.
Each Maker, guarantor, surety, and endorser waives certain otherwise
applicable legal requirements relating to the collection of notes, such as
grace, demand, presentment for payment, notice of non-payment, protest, notice
of protest, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and diligence in collection and the bringing of suit against any
party to this note; agrees to application of any bank balance to payment of this
note; agrees that extensions and renewals without limit as to number, acceptance
of any number of partial payments, and releases or substitutions of collateral,
with or without notice, before or after maturity, shall not release or discharge
his, her, or its obligations under this note; agrees that waiver of any default
shall not constitute waiver of any prior or subsequent default; and agrees to
pay in addition to all other sums due under this note a reasonable sum of at
least ten percent of the unpaid Amount of Note as reasonable attorneys' fees if
this note is placed
<PAGE>
in the hands of an attorney for collection or if it is collected through
probate, bankruptcy, or other judicial proceeding. The holder may, at its
option, without notice to any Maker or any other person, accelerate the Maturity
Date at any time it shall deem itself insecure or if Maker shall fail to make
any payment when due.
[Maker(s) to initial this space, if the following paragraph is applicable
to this note]:_________
Maker warrants and represents to payee, and to all other owners and/or
holders of any indebtedness evidenced pursuant to this note, that (a) all loans
evidenced by this note are and shall be "business loans" as such term is used in
the Depository Institutions Deregulation and Monetary Control Act of 1980, as
amended, and (b) such loans are for a business, commercial, investment or
similar purpose and not primarily personal, family, household, or agricultural
use, as such terms are used in TEX. REV. CIV. STAT. ANN. art. 5069-1.04, as
amended.
This note is one of a series of Maker's non-interest bearing promissory
notes (the "Notes"), issued pursuant to the terms provided below.
Maker represents and warrants that it has not, either directly or through
any agent, offered any of the Notes to any person other than 1) existing
shareholders of Maker, and only those existing shareholders who are very
familiar with Maker's current business plans, including that contained within
Maker's business plan dated November, 1997 (the "Business Plan") and Maker's
draft private placement memorandum dated May 8, 1998 (the "Private Placement
Memorandum"), or 2) individuals who are personally very familiar with the
business acumen of Maker's management. Lender represents to Maker, in accepting
one of the Notes, that Lender is acquiring this Note for Lender's own account,
for the purpose of investment, and not with a view to the distribution or resale
of the Note, and that, to the best of Lender's knowledge, Lender qualifies as a
"well-informed investor" pursuant to applicable state securities laws. Lender
further represents to Maker that Lender has received, thoroughly reviewed, and
understands the Business Plan and the Private Placement Memorandum, specifically
including, but not limited to, Maker's most recent 15c2-11 filing dated May 13,
1997, a photocopy of which is contained within the Business Plan.
In lieu of interest, Maker will cause to be issued to Lender _________
shares of Maker's restricted common stock. The parties agree, however, that
Maker shall have the right, exercisable prior to __________________, to redeem
_________ such shares at the price of $_____ per share.
Maker's failure to pay this note on or before the Maturity Date shall
constitute default under this note. In addition to the _________ shares
indicated above, ___________ shares of Maker's restricted common stock shall be
issued by Maker for each day that the Amount of Note is not paid
<PAGE>
beyond the Maturity Date, and said additional shares in event of default shall
be issued to Lender on a monthly basis until the Amount of Note and all accrued
interest and any default penalties have been paid in full. In no event, however,
shall the issuance of share penalty upon default contained within this paragraph
exceed __________ shares per any 30-day period that the note is in default. In
the event that Maker defaults in an amount less than the entire Amount of Note,
the stock issuance penalty contained within this paragraph shall be made on a
pro-rata basis. Maker will cause to be issued to Lender all of any accrued
shares in lieu of past due interest by the end of each calendar month during
which this note is in default. Maker shall have the right to redeem one-half of
said default shares at a price of $______ per share at any time within six
months of said shares' issuance.
Maker shall be required to pay in full all amounts owing under Maker's
notes to Lender dated _____________, ______________, _____________,
_________________, _______________, and ______________ prior to making payments
on Amount of Note due under the terms of the note.
This note, and all of the Notes, may not be transferred without an
opinion of counsel selected by Lender and reasonably satisfactory to Maker as to
the nonnecessity for registration under the Securities Act of 1933, or if an
exemption from registration is otherwise available.
Terms used in this note shall have the meanings indicated above. As used
in this note, where appropriate, the masculine gender includes the feminine and
the neuter, and the singular number includes the plural number. This note shall
be governed by and construed in accordance with the laws of the State of Texas
and the United States of America.
MAKER:
THE SCHOONER BREWERY
INCORPORATED
by: ____________________________
Kimberly Biggs, secretary
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE
<PAGE>
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
MAKER:
THE SCHOONER BREWERY
INCORPORATED
by: ____________________________
Kimberly Biggs, secretary
LENDER:
________________________________
Exhibit 21
Subsidiaries of the Company
First Brewery of Dallas, Inc., a Texas corporation formerly doing business
as "Hubcap Brewery & Kitchen" and "The Schooner Brewery"
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 4,529
<SECURITIES> 0
<RECEIVABLES> 180
<ALLOWANCES> 0
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<CURRENT-ASSETS> 4,709
<PP&E> 81,150
<DEPRECIATION> 2,576
<TOTAL-ASSETS> 121,139
<CURRENT-LIABILITIES> 979,050
<BONDS> 0
0
0
<COMMON> 50,110
<OTHER-SE> (908,021)
<TOTAL-LIABILITY-AND-EQUITY> 121,139
<SALES> 5,431
<TOTAL-REVENUES> 5,431
<CGS> (2,893)
<TOTAL-COSTS> 27,365
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<INTEREST-EXPENSE> 8,770
<INCOME-PRETAX> (193,365)
<INCOME-TAX> 0
<INCOME-CONTINUING> (193,965)
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<EXTRAORDINARY> 0
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<NET-INCOME> (193,965)
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