UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
BANYAN CORPORATION
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(Exact name of Registrant as specified in its charter)
Oregon 84-1346327
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(State or other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
4740 Forge Rd., Bldg. 112, Colorado Springs, Colorado 80907
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(Address of Principal Executive offices)
Issuer's Telephone Number: (719) 531-5535
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Securities to be registered pursuant to section 12(b) of the Act:
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None
Securities to be registered pursuant to section 12(g) of the Act:
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Common Stock, no par value
(Title of Class)
DOCUMENTS INCORPORATED BY REFERENCE: See the Exhibit Index attached hereto.
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Banyan Corporation
Form 10-SB
TABLE OF CONTENTS
PART I Page
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Item 1. Description of Business 3
Item 2. Management's Discussion and Analysis or Plan of
Operation 16
Item 3. Description of Property 18
Item 4. Security Ownership of Certain Beneficial Owners
and Management 18
Item 5. Directors, Executive Officers, Promoters and
Control Persons 19
Item 6. Executive Compensation 20
Item 7. Certain Relationships and Related Transactions 21
Item 8. Description of Securities 22
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters 24
Item 2. Legal Proceedings 25
Item 3. Changes in and Disagreements with Accountants 25
Item 4. Recent Sales of Unregistered Securities 26
Item 5. Indemnification of Directors and Officers 34
PART F/S Financial Statements 34
PART III
Item 1. Index to Exhibits
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This Registration Statement contains forward-looking statements which
involve risks and uncertainties. When used in this Registration Statement, the
words "believes," "anticipates," "expects" and other such similar expressions
are intended to identify such forward-looking statements. Actual results of the
Company (as defined below) may differ significantly from the results discussed
in the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, hose discussed in "Item 1. - Description of
Business - Risk Factors." Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
An investment in Banyan Corporation (the "Company") is highly speculative
and involves a high degree of risk. Prospective investors should consider the
risk factors involved in an investment in the Company, including the following:
(a) that the Company is a development stage company that has a limited operating
history, (b) the Company has not generated a profit, (c) there is intense
competition in the industry in which the Company operates and (d) the
uncertainty of future funding. Prospective investors should carefully read each
section of this registration statement which contain these and other risk
factors.
PART I.
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ITEM 1. DESCRIPTION OF BUSINESS
ORGANIZATION AND CHARTER AMENDMENTS
Banyan Corporation (the "Company") was organized under the laws of Oregon
on June 13, 1978 under the name Omni-Tech International Corporation to acquire
the exclusive licensing rights to an aluminum analyzing process and to an oil
absorbent material made from wood fibers.
The initial amount of authorized capital was $50,000 consisting of
5,000,000 shares of Common Stock, $0.01 par value. A copy of the Company's
initial Articles of Incorporation is attached hereto and is incorporated by
reference. See Part III, Item 1.
On August 25, 1981, the Company's Articles of Incorporation were restated.
A copy of the Company's restated Articles of Incorporation is attached hereto
and is incorporated by reference. See Part III, Item 1.
On February 28, 1988, the Company's Articles of Incorporation were amended.
A copy of the Company's Articles of Amendment is attached hereto and is
incorporated by reference. See Part III, Item 1.
On February 28, 1988, the Company acquired 100% of Interactive Data Vision,
Inc., an Oregon company. Initially Interactive Data was a wholly-owned
subsidiary, but was subsequently merged with the Company to create a single
entity. Afterwards the Company changed its name to Interactive Data Vision,
Inc. Daily operations were suspended in April 1991, at which time the Company
became an inactive corporation.
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On October 27, 1995, after several years of inactivity, the Company
acquired 100% of DoubleCase Corporation, a Kansas corporation, which became a
wholly-owned subsidiary. DoubleCase designs, manufactures and markets personal
computer accessory products, most notably for notebook computers and other
portable electronic devices.
On December 29, 1995, the Company's Articles of Incorporation were amended.
A copy of the Company's Articles of Amendment is attached hereto and is
incorporated by reference. See Part III, Item 1.
After acquiring DoubleCase the Company changed its name to Banyan
Corporation and filed a Form 15(c)211 with the National Association of
Securities Dealers (NASD) to allow its Common Stock to trade on the OTC Bulletin
Board stock exchange. The Company's Common Stock began trading on the OTC
Bulleting Board in April 1996, and is currently quoted on this stock exchange
under the trading symbol "BANY."
MATERIAL CHANGES IN CONTROL SINCE INCEPTION AND RELATED BUSINESS HISTORY
On or about January 10, 1979, the Company, under its original name of
Omni-Tech International Corporation, undertook an offering pursuant to
Regulation A under the Securities Act of 1933, as amended, for 500,000 shares of
common stock. At the time of the offering the Company had 413,857 shares of
common stock issued and outstanding. Upon completion of the Regulation A
offering, the Company had 913,857 shares of Common Stock issued and outstanding.
On or about August 18, 1981, the Company, under the name of Omni-Tech
International Corporation, undertook an offering in reliance on the exemption
from registration provided by Section 3(a)(11) of the Securities Act of 1933, as
amended, and Rule 147 thereunder. The offering was for 787,500 shares of Class
B common stock. At the time of the offering the Company had 2,817,023 shares of
common stock issued and outstanding. Pursuant to the Restated Articles of
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Incorporation of August 11, 1981, "Upon any transfer of this stock more than
ten months after its issuance, the corporation shall convert (on a one for one
basis) the stock transferred into common stock and issue common stock to the
transferee." There is no Class B common stock issued or outstanding as of May
7, 1999. The Articles of Amendment dated February 29, 1988, modified the rights
and preferences of the Class B common stock, as it is described later in this
document, so that it no longer converts to Class A common stock.
On or about February 25, 1988 the Company, under the name of Omni-Tech,
entered into a Share Exchange Agreement dated February 25, 1988 ("Share Exchange
I") with the shareholders of Interactive Data Vision, Inc., an Oregon
corporation, and Coast Capital, Ltd. A copy of the Share Exchange I is attached
hereto and is incorporated by reference. See Part III, Item 1. Pursuant to the
Share Exchange I, the Company issued 8,141,712 shares of its Class A common
stock in exchange for all the issued and outstanding common stock of Interactive
Data Vision, Inc. According to the Share Exchange I, at the time of the share
exchange 2,657,265 shares of the Company's Class A common stock were issued and
outstanding. Upon completion of the share exchange, the Company had a total of
10,798,977 shares of Class A common stock issued and outstanding, and
Interactive Data Vision Inc. became a wholly-owned subsidiary of the Company.
Pursuant to the Articles of Amendment dated February 29, 1988, the Company
changed its name to Interactive Data Vision, Inc., and its wholly owned
subsidiary changed its name to IDV, Inc. Subsequently, on July 10, 1990, IDV,
Inc. merged with and into the Company, then known as Interactive Data Vision,
Inc.
An additional 4,925,000 shares of the Company's Class A common stock were
issued between the Share Exchange I and April 1991. Subsequent thereto, 400,000
shares were canceled by the Company, resulting in a total of 15,323,977 shares
of the Company's Class A common stock issued and outstanding as of April 1991.
On or about December 9, 1994, at a special meeting of the Board of
Directors of the Company, a resolution was approved providing for a 1-for-10
reverse stock split resulting in the Company having 1,532,398 shares of Class A
common stock issued and outstanding. Furthermore, on February 15, 1995, the
Board of Directors of the Company adopted a resolution creating a further
1-for-2 reverse stock split and canceling 210,000 shares of the Company's issued
and outstanding Class A common stock, all of which resulted in an aggregate of
661,199 shares of the Company's Class A common stock being issued and
outstanding at that time.
Pursuant to a Share Exchange Agreement dated October 27, 1995 ("Share
Exchange II"), the Company acquired all of the outstanding common stock of
DoubleCase Corporation, a Kansas corporation, and also converted certain debt
owed by DoubleCase Corporation and the Company, respectively, into Class A
common stock of the Company and Class A preferred stock of the Company. A copy
of the Share Exchange II is attached hereto and is incorporated by reference.
See Part III, Item 1.
Upon completion of the Share Exchange II and debt conversion described in
the Share Exchange II, as of December 31, 1995 there were issued and outstanding
4,825,384 shares of Class A Common stock and 187,190 shares of Class A Preferred
stock.
Between December 31, 1995 and August 22, 1996, the Company issued 2,250,000
shares of its Class A common stock. On August 23, 1996, the Company underwent a
1-for-2 reverse split of its Class A common stock. After the reverse split,
there were 3,537,692 Class A common shares outstanding and 187,190 shares of
Class A Preferred stock.
Between August 24, 1996 and December 10, 1996, the Company issued 2,235,832
shares of its Class A common stock and retired 807,500 shares of its Class A
common stock resulting in 4,966,024 shares of Class A common stock issued and
outstanding as of December 10, 1996. On December 10, 1996, the Company
reversed split its Class a common shares 1-for-20, resulting in 246,669 shares
of Class A common outstanding after the reverse split and fractional rounding.
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On December 7, 1998, the Company issued a stock dividend of 200,000 shares
of Anything Internet Corporation, an Internet e-commerce company it invested in,
to its shareholders of record on November 3, 1998. The Company presently
retains 800,027 shares of Anything Internet, which represents about 26% of
Anything Internet's issued and outstanding shares.
Between December 10, 1996 and March 31, 1999, the Company issued a net
increase of 9,403,550 shares of its Class A common stock. There have been no
splits or dividends of the Company's Class A common stock between December 10,
1996 and March 31, 1999. On March 31, 1999, there were issued and outstanding
9,650,219 shares of the Company's Class A common stock and 187,190 shares of the
Company's Class A Preferred stock.
BUSINESS
Banyan Corporation is a publicly traded holding company focused on
investing in and building a network of operating subsidiaries engaged in
designing, manufacturing and marketing products and services aimed at the
personal computer market, the notebook computer segment in particular, and
Internet e-commerce.
The notebook computer market is currently the fastest growing segment of
the personal computer industry - growing at an estimated rate of four times that
of the desktop personal computer market. Banyan offers a series of products
especially for the notebook computer market through its wholly-owned subsidiary,
DoubleCase Corporation.
DoubleCase is the leading U.S. supplier of hard-side protective carrying
cases for notebook computers. Compared to the more frequently used soft-side,
or "bag", type carrying case, the DoubleCase product line of hard-side
protective carrying cases offers a level of protection that will protect even
the most costly notebook computer or portable electronic device in almost any
situation.
Banyan's interest in Internet e-commerce is a natural complement to its
personal computer products business interests. The largest segment of Internet
sales are expected to be computer hardware, software and consumer electronics
purchases. Forrester Research, Inc., a market research firm, issued a report in
December 1998 predicting U.S. business trade on the Internet will explode from
$43 billion in 1998 to $1.3 trillion in 2003. Meanwhile, International Data
Corporation ("IDC"), another market research firm, estimated the number of
Internet users worldwide will grow from approximately 69 million at the end of
1997 to approximately 320 million by 2002. In addition, IDC estimates that the
percentage of such Internet users buying goods and services on the Internet will
increase from 26% in 1997 to 40% in 2002.
Currently, Banyan offers its products directly to consumers via the
Internet through its DoubleCase Internet site, www.doublecase.com, as well as
third party resellers such as Anything Internet Corporation, an Internet
e-commerce company which Banyan also retains a 26% ownership in.
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DOUBLECASE CORPORATION
DoubleCase Corporation, a wholly-owned subsidiary of the Company, is
involved in the design, manufacture and marketing of personal computer accessory
products, most notably a unique line of hard-sided carrying cases for notebook
computers and portable electronic devices.
Notebook computers and portable electronic devices are often quite
expensive and are typically extremely sensitive to impact and extreme
temperatures. Through modern design and manufacturing techniques, DoubleCase
has created a line of attractive, functional and affordable hard-sided
protective carrying cases for notebook computers and other sensitive electronic
devices. DoubleCase cases are built using four levels of protection: an outer
shell, an air cushion barrier, an inner shell, and The Perfect Fit Protective
Foam Interior System(tm).
DoubleCase cases range in size from the NB-1000 Series, which carries a
single notebook computer with no accessories or documents, all the way to the
NB-5000 Series, which has storage room for the notebook computer, power
supplies, extra batteries, and even a portable printer, as well as a folio for
executive briefs and documents. DoubleCase cases are extremely price
competitive.
Complementing its line of protective cases, DoubleCase also manufactures
and markets a line of custom-fit "saddlebag" products which attach securely to
the outside of the protective case to provide additional storage for less
sensitive items and reduce the need to carry a briefcase in addition to the
DoubleCase product. Various sized saddlebag products are available to fit
DoubleCase's entire line of protective cases.
In addition to cases for portable computers, DoubleCase also offers a line
of hard-sided carrying cases that can be customized to protect a variety of
other sensitive portable electronic devices, including digital cameras and
external data storage devices such as the Iomega Zip(tm) and Jazz(tm) Drives.
Markets for these devices are expanding rapidly, and DoubleCase seeks to take
advantage of that growth by offering the same level of protection for these
devices as it does for notebook computers.
All DoubleCase products are manufactured and assembled in United States and
carry a limited lifetime warranty.
Additionally, DoubleCase is currently evaluating several options to expand
its current product lines. These options include developing new products that
fill niches in the notebook computer accessory market, acquiring new products
and technologies from third party inventors, and acquiring other companies that
complement DoubleCase's strategic business goals without losing its focus on the
notebook computer market.
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MARKETING AND SALES
The Company, through its DoubleCase subsidiary, has targeted notebook
computer users as its primary market. The notebook computer market is currently
the fastest growing segment of the computer industry. According to BIS
Strategic Decisions, Inc., a market research firm, sales of notebook computers
are growing at about four times the rate of desktop computers. The market is
extremely competitive and is dominated by well-known manufacturers such as IBM,
Toshiba, NEC, Texas Instruments, and Apple. Intense competition has resulted in
sharp price reductions by manufacturers and shorter periods of time for bringing
new technologies to market. These are the same factors that put desktop
computers into a large percentage of U.S. homes. Management believes notebook
computers are gaining similar large-scale acceptance.
The Company is focusing its marketing efforts in the following areas:
CONSUMER MARKET - DoubleCase is currently selling its products through the
computer distributor Ingram Micro who in turn resells the products to dealers
who in turn sell to the end user, or consumer. Additionally, DoubleCase
maintains a world wide wed site (www.doublecase.com) which illustrates all of
the DoubleCase's products and allows end-users to purchase DoubleCase products.
Management has been greatly encouraged by the current level of consumer
acceptance, and is striving to have DoubleCase products offered by many major
U.S. computer retailers.
GOVERNMENT/INSTITUTIONAL MARKET - DoubleCase is rapidly becoming a major
supplier of protective carrying cases to various federal, state and local
government agencies, as well as Fortune 500 companies. DoubleCase products are
currently listed on the GSA Schedule, which essentially means certain DoubleCase
products are pre-approved for government use and purchase from certain
resellers. DoubleCase products are also approved for government VISA
authorization, which helps expedite government sales.
DISTRIBUTION/CHANNEL SALES - Channel Sales are the primary method used by
manufacturers to get their products to market. The "channel" begins with the
manufacturer and ultimately end with the consumer. Typically, the manufacturer
will sell its product to a distributor which in turn sells the product to
resellers, dealers and value added resellers (VARs) who then sell it to the end
consumer. This method is preferred by most resellers, dealers and VARs because
it eliminates their need to coordinate inventory purchases from hundreds, if not
thousands, of individual manufacturers; in essence, the distributor is a
"shopping mall" for most resellers, dealers and VARs. DoubleCase is working on
expanding the number of distributors that carry its products in order to expand
its channel sales presence. In June 1998, DoubleCase entered into a
distribution agreement with Ingram Micro (NYSE: IM), the world's leading
electronics distributor.
ORIGINAL EQUIPMENT MANUFACTURERS (OEM's) - DoubleCase is just entering the
realm of becoming an OEM supplier, allowing DoubleCase products to be sold as
standard or optional equipment on new notebook computer purchases. In June
1998, Dell Computer (NASDAQ: DELL), an innovator in the computer business and
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the fastest growing manufacturer of notebook computers in the world, selected
DoubleCase at its provider of hard-sided protective carrying cases for its
notebook computers. Under this agreement, DoubleCase cases are presently being
offered as an option on new notebook purchases and are being sold under the
DoubleCase brand.
INTERNET SALES - DoubleCase is targeting Internet e-commerce sales for
future growth. Through its own site, www.doublecase.com, and others such as
www.dell.com and www.anythingpc.com, DoubleCase is building a strong Internet
retail presence. With the growing popularity of shopping from home or the
office via the Internet, Internet storefronts such as these are expected to
become a significant source of future revenues.
INTERNATIONAL SALES - Although DoubleCase has concentrated its marketing
efforts primarily on the United States, where nearly half of all notebook
computers are purchased, it has also pursued opportunities to establish
international sales. Currently, DoubleCase products are sold through
international dealers in France, Canada and England. DoubleCase intends to
continue pursuing growth opportunities in these markets.
COMPETITION
Currently, the market for carrying cases for notebook computers and
sensitive electronic equipment is dominated by soft-sided products. Management
believes DoubleCase products are in an advantageous position as one of the few
existing manufacturers and marketers of hard-sided protective carrying cases.
The only direct competition DoubleCase has encountered to date for its
hard-sided cases is from Samsonite, which offers only two models of its own
hard-side carrying case, and Zero Haliburton, which does not market its products
through normal retail channels and tends to have significantly higher suggested
retail prices. With little direct competition from hard-side case
manufacturers, DoubleCase intends to focus its competitive efforts on
emphasizing that the DoubleCase designs provide superior protection at very
affordable prices.
The soft-side carrying case market is primarily dominated by two
manufacturers: Targus and Kensington Microware.
Targus exclusively designs and manufactures soft-sided carrying cases for
notebook computers. While Targus has never marketed a hard-sided protective
carrying case in the United States, it is possible Targus may decide to
introduce such a product sometime in the future.
Kensington Microware is a wholly owned subsidiary of ACCO World, the large
office supply company based in San Mateo, California, and manufactures a wide
variety of computer accessory products, including a line of soft-sided cases for
notebook computers.
By targeting the soft-sided carrying case market, DoubleCase will be
competing against well established companies that have significantly greater
financial and personnel resources than the Company. Management will focus
competitive efforts on emphasizing the superior protection offered by and
affordability of the DoubleCase product line and continue furthering efforts to
get DoubleCase products into the all appropriate retail markets.
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ANYTHING INTERNET CORPORATION
On August 19, 1998, the Company entered into a Share Exchange Agreement
with Anything, Inc., subsequently renamed Anything Internet Corporation. Under
the terms of the agreement, Anything Internet was re-capitalized with 200,000
shares of Banyan restricted Common Stock and granted stock options to purchase
300,000 shares of Banyan Common Stock at: 100,000 shares at $0.50 a share,
expiring February 28, 1999 which were extended to expire on August 31, 1999;
100,000 shares at $1.00 a share expiring August 31, 1999; and 100,000 shares at
$2.00 a share, expiring August 31, 2000. In return for this equity issuance,
the Company received 1,000,000 shares of Anything Internet Common Stock and,
after a stock dividend to its shareholders, the Company now retains 800,027, or
about 26%, of Anything Internet. In addition, Banyan appointed two members,
Cameron Yost and J. Scott Sitra, to Anything Internet's Board of Directors.
Anything Internet is an Internet e-commerce holding company focused on
building a network of successful e-commerce operating companies, joint ventures,
strategic alliances and partnerships. The anticipated outcome of these various
endeavors is the creation of the first true e-commerce conglomerate.
Unlike most e-commerce businesses today, Anything Internet is not limiting
itself to one specific area of e-commerce (ie. books, computers, CDs, etc.).
Rather, Anything Internet is aggressively pursuing diversification into a
variety of emerging e-commerce venues. If successful, Anything Internet will
have:
- - minimized its exposure and risk to normal industry specific business down
cycles;
- - increased its chances of participating in one of the few expected "super
successful" Internet e-commerce ventures; and
- - created more site traffic and revenue generating opportunities by
referring potential customers to other Internet storefronts owned and
operated by Anything Internet rather than by a third-party.
Currently Anything Internet operates through one wholly-owned subsidiary,
AnythingPC Internet Corporation ("AnythingPC"). AnythingPC is a rapidly growing
Internet based discount retailer of over 175,000 different computer hardware,
software and peripheral products to end consumers and businesses. Through its
Internet storefronts - www.anythingpc.com, www.anythingmac.com, and
www.anythingunix.com - AnythingPC offers one-stop shopping to its customers 24
hours a day, seven days a week. In addition to its wide array of product
offerings, AnythingPC's storefronts feature competitively priced "Hot Products",
an easy-to-use graphical interface, a powerful search engine to locate any
product desired, a unique "quote monkey" for pricing assistance on hard-to-find
products, and a special "notify me" feature that automatically notifies
customers when a backordered product arrives in stock and keeps the customer
appraised of the estimated time of arrival.
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At the present time the Company views its relationship with Anything
Internet as purely a strategic investment. Anything Internet does, however,
sell the Company's products via their Internet storefronts and has been a good
customer to date. Because Anything Internet is in the process of "going public"
additional information may on be found through Anything Internet Corporation SEC
filings.
RISK FACTORS
THE FOLLOWING RISK FACTORS SHOULD BE READ CAREFULLY BEFORE PURCHASING THE
COMPANY'S COMMON STOCK. THIS DISCLOSURE STATEMENT CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS BASED ON CURRENT EXPECTATIONS THAT INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF MANY FACTORS, INCLUDING THE RISK
FACTORS SET FORTH BELOW AND ELSEWHERE IN THIS DISCLOSURE STATEMENT. ADDITIONAL
RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN OR DEEMED IMMATERIAL MAY ALSO IMPAIR
THE COMPANY'S BUSINESS OPERATIONS. IF ANY OF THESE RISKS ACTUALLY OCCUR, THE
COMPANY'S BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS COULD BE MATERIALLY
ADVERSELY AFFECTED. IN SUCH CASE, THE TRADING PRICE OF THE COMPANY'S COMMON
STOCK COULD DECLINE AND ANY OR ALL OF AN INVESTMENT IN THE COMPANY COULD BE
LOST. THE CAUTIONARY STATEMENTS MADE IN THIS DISCLOSURE STATEMENT SHOULD BE
READ AS BEING APPLICABLE TO ALL FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR
IN THIS DISCLOSURE STATEMENT.
LIMITED OPERATING HISTORY; LACK OF PROFITABILITY.
The Company was incorporated under the laws of the state of Oregon on June
13, and began selling computer accessory products through its DoubleCase
subsidiary in October 1995. Since then the Company has made several recent
inroads into various consumer, corporate and governmental sales channels, but
has yet to generate enough revenue to show a profit. Furthermore, the Company
has no significant assets. The Company's prospects must be considered in light
of the risks, expenses and difficulties frequently encountered by companies in
their early stages of growth. To address these risks, the Company must, among
other things, maintain and increase its customer base, maintain and develop
relationships with suppliers and distributors, implement and successfully
execute its business and marketing strategies, continue to develop and expand
its product line, provide superior customer service and order fulfillment,
respond to competitive developments, and attract, retain and motivate qualified
personnel. There can be no assurance that the Company will be successful in
addressing such risks, and the failure to do so could have a material adverse
effect on the Company's business, financial condition and results of operations.
LIMITED CAPITAL; NEED FOR ADDITIONAL FUNDING.
The Company presently has limited operating capital and will require
additional capital to continue the development of its product lines, expand its
operations, extend marketing efforts, and cover operating losses until the
Company is can become profitable. The Company anticipates that, along with
existing cash flows, it will be able to meet all of its future capital needs,
which are estimated at between $500,000 and $700,000 over the next 12-months,
through the exercise of outstanding options by their respective holders and its
investment in Anything Internet. As of March 31, 1999, the Company values its
investment in Anything Internet at $13,539, but anticipates higher market
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valuations and that it will be able to sell a portion of its holdings or borrow
against its holdings once Anything Internet successfully "goes public."
Nevertheless, the Company can give no assurance that Anything Internet will be
successful when it does eventually "go public" or that the needed capital to run
the business will be realized or readily available, either of which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
UNPREDICTABILITY OF FUTURE OPERATING RESULTS; SEASONALITY.
Sales within the computer industry are substantially affected by new
product releases from manufacturers. Historically, such releases tend to
maintain or increase overall sales revenues. Therefore, a lack of or delay in
new product releases by manufacturers can negatively impact the Company's
revenues. The Company's current and future expense levels are based largely on
its investment plans and estimates of future revenues. Sales and operating
results generally depend on the volume of, timing of, and ability to fulfill
orders received, which are difficult to forecast. The Company may be unable to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Accordingly, any significant shortfall in revenues in relation to
the Company's planned expenditures would have an immediate adverse effect on the
Company's business, prospects, financial condition, and results of operations.
Furthermore, as a strategic response to changes in the competitive environment,
the Company may from time to time make certain unforeseen pricing, service, or
marketing decisions, the consequence of which could have a material adverse
effect on the Company's business, prospects, financial condition and results of
operations.
The Company may experience seasonality in its business, reflecting seasonal
fluctuations in the computer industry and traditional retail, government and
corporate seasonal spending patterns and advertising expenditures. In
particular, the computer industry typically experiences a slowdown during the
summer months. Such seasonality may cause quarterly fluctuations in the
Company's operating results and could have a material adverse effect on the
Company's business, operating results and financial condition.
COMPETITION.
The market for notebook carrying cases is intensely competitive and
dominated by soft-sided manufacturers such as Targus and Kensington Microware.
In the event consumers and businesses start buying more hard-sided cases there
are no assurances that Targus, Kensington or any other manufacturers may not
develop their own line of hard-sided cases to compete against the DoubleCase
brand. Additionally, some of these manufacturers are have much better funding
and stronger brands. Increased competition from these and other sources could
require the Company to respond to competitive pressures by establishing pricing,
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marketing and other programs, or seeking out additional strategic alliances or
acquisitions, that may be less favorable to the Company than would otherwise be
established or obtained, and thus could have a material adverse effect on the
business, prospects, financial condition and results of operations.
DEPENDENCE ON KEY PERSONNEL; NEED FOR ADDITIONAL PERSONNEL.
The Company's performance is substantially dependent on the continued
services and on the performance of its senior management and other key
personnel, particularly its Chairman, President and Chief Executive Officer,
Cameron B. Yost. The Company's performance depends on its ability to retain and
motivate its other officers and key employees. The loss of the services of any
of its executive officers or other key employees could have a material adverse
effect on the Company's business, prospects, financial condition and results of
operations. The Company's future success also depends on its ability to
identify, attract, hire, train, retain and motivate other highly skilled
technical, managerial, editorial, merchandising, marketing and customer service
personnel. Competition for such personnel is intense, and there can be no
assurance that the Company will be able to successfully attract, integrate or
retain sufficiently qualified personnel. The failure to attract and retain the
necessary technical, managerial, editorial, merchandising, marketing and
customer service personnel could have a material adverse effect on the Company's
business, prospects, financial condition and results of operations. The Company
anticipates hiring a seasoned general sales manager sometime during the Summer
of 1999 which will result in an anticipated increase in payroll expenses of
about $75,000 annually.
TRADEMARKS AND PROPRIETARY RIGHTS.
The Company regards its service marks, trademarks, trade secrets and
similar intellectual property as instrumental to its success, and relies on
trademark and copyright law, trade secret protection, and confidentiality and/or
licensing agreements with its employees, customers, strategic partners and
others to protect its proprietary rights. The Company has licensed in the past,
and expects that it may license in the future, certain of its propriety rights,
such as trademarks or copyrighted material, to third parties. While the Company
attempts to ensure that the quality of its brand is maintained by such
licensees, there can be no assurance that such licensees will not take actions
that might materially adversely affect the value of the Company's business,
prospects, financial condition and results of operations. There can be no
assurance that the steps taken by the Company to protect its proprietary rights
will be adequate or that third parties will not infringe or misappropriate the
Company's service marks, trademarks, trade secrets and other intellectual
property rights. In addition, there can be no assurance that others will not
independently develop substantially equivalent intellectual property. A failure
by the Company to protect its intellectual property in a meaningful manner could
have a material adverse effect on the Company's business, prospects, financial
condition and results of operations. Furthermore, litigation may be necessary
in the future to enforce the Company's intellectual property rights, to protect
the Company's trade secrets, or to determine the validity and scope of the
proprietary rights of others. Such litigation could result in substantial costs
and diversion of management and technical resources, either of which could have
a material adverse effect on the Company's business, prospects, financial
condition and results of operations.
13
<PAGE>
In addition, there can be no assurance that other parties will not assert
infringement claims against the Company. The Company may receive notice of
claims of infringement of other parties' proprietary rights. There can be no
assurance that such claims will not be asserted or prosecuted against the
Company in the future or that any such assertion or prosecution will not
materially adversely affect the Company's business, prospects, financial
condition and results of operations. The defense of any such claims, whether
such claims are with or without merit, could be time-consuming, result in costly
litigation and diversion of management and technical personnel, cause product
shipment delays, or require the Company to develop non-infringing technology or
enter into royalty or licensing agreements. Such royalty or licensing
agreements, if required, may not be available on terms acceptable to the
Company, or at all. In the event of a successful claim of product infringement
against the Company and the failure or inability of the Company to develop
non-infringing technology or license the infringed or similar technology on a
timely basis, the Company's business, prospects, financial condition and results
of operations would be materially adversely affected.
SALES AND OTHER TAXES.
The Company does not currently collect sales and other similar taxes in
respect to shipments of goods into states other than Colorado. However, one or
more local, state or foreign jurisdictions may seek to impose sales tax
collection obligations on out of state companies, such as the Company, which
engage in interstate commerce. In addition, any new operation in states outside
of Colorado could subject shipments into such states to state sales taxes under
current or future laws. A successful assertion by one or more states or any
foreign country that the Company should collect sales or other taxes on the sale
of merchandise could have a material adverse effect on the Company's business,
prospects, financial condition and results of operations.
NO CASH DIVIDENDS AND NONE ANTICIPATED.
The Company anticipates using all future earnings to complete the
marketing, development and expansion of its business, for operating capital, and
for corporate development and expansion activities. The Company has not paid or
declared any cash dividends, nor, by reason of its present stage of growth and
anticipated financial requirements, does not anticipate paying any cash
dividends in the foreseeable future. The future payment of cash dividends by
the Company on its Common Stock, if any, rests within the sole discretion of the
Company's Board of Directors and will depend on, among other things, the
Company's earnings, capital requirements and overall financial condition.
ANTI-TAKEOVER; "POISON PILL" PROVISIONS.
Certain provisions of the Company's Certificate of Incorporation and Bylaws
may make a change in the control of the Company more difficult to effect, even
if a change in control were in the shareholders' best interest. These
provisions include the ability of the Board of Directors, without further
shareholder approval, to issue Preferred Stock with all rights, powers and
14
<PAGE>
privileges of the Common Stock. The issuance of Preferred Stock may have the
effect of delaying, deferring or preventing a change in control of the Company
without further action by the stockholders and may adversely affect the voting
and other rights of the holders of Common Stock. The Company has no present
plans to issue any new shares of Preferred Stock. Furthermore, certain
provisions of the Company's Certificate of Incorporation and Bylaws and Colorado
law could delay or make more difficult a merger, tender offer or proxy contest
involving the Company.
NEW SEC REGULATIONS
On January 1, 1999, the SEC imposed a new series of regulations mandating
all new listing OTC Bulletin Board companies to begin making regular filings
with the SEC prior to their first day of trading. As soon as the SEC declares
this disclosure statement "effective", the Company will be compelled to make
regular filings with the SEC and, as a result, will be in full compliance with
these new regulations, regardless of which stock exchange the Company's Common
Stock may be trading upon.
PENNY STOCK RULES
The SEC has adopted a set of rules that regulate broker-dealer securities
with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the Nasdaq system, provided that
current price and volume information regarding transactions in such securities
is provided by the exchange or system). The penny stock rules require a
broker-dealer to deliver to the customer a standardized risk disclosure document
prepared by the SEC that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer also must
provide the customer with other information. The penny stock rules require that
prior to a transaction in a penny stock, the broker-dealer must determine in
writing that the penny stock is a suitable investment for the purchaser and
receive the purchaser's written agreement to the transaction. These disclosure
requirements may reduce the level of trading activity in the secondary market
for a stock that becomes subject to the penny stock rules. Investors in stocks
subject to the penny stock rules may, as a direct result, find it more difficult
to dispose of their shares of stock.
EMPLOYEES
The Company believes its success depends to a significant extent on its
ability to attract, motivate and retain highly skilled management and employees.
To this end, the Company focuses on incentive programs such as employee stock
options and competitive compensation and benefits packages for its employees to
foster a corporate culture which is challenging and rewarding, yet fun. As of
May 7, 1999, the Company, including its subsidiaries, had three full-time
employees. Currently the only employee receiving health and dental benefits is
Cameron B. Yost. The Company also employs, from time to time, a limited number
of independent contractors and temporary employees on a periodic basis. None of
the Company's employees are represented by a labor union and the Company
considers its labor relations to be good.
15
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Fiscal Year 1998 Ending December 31, 1998
Net sales for the fiscal year ending December 31, 1998 were $206,467, which
marked a decline of 16.7% compared to net sales of $247,773 for the same period
ending December 31, 1997. The primary reason for the decline was the Company's
marketing budget was sharply reduced and Management spent more of its time
cultivating new relationships aimed at generating long-term sales such as the
new Ingram Micro and Dell Computer relationships, neither of which contributed
materially to fiscal 1998 sales results, rather than focusing on one-time sales
opportunities. Additionally, Management spent more time than anticipated on
finalizing its investment in Anything Internet. All of these developments are
anticipated to contribute to fiscal 1999 results and beyond.
Gross profits for fiscal year 1998 were 39.2% compared to 53.1% for the
same period a year ago. The decrease in gross margins reflects certain
accounting changes made during fiscal 1998 that resulted in manufacturing
expenses being reclassified from a general expense item and included in the cost
of goods sold.
Selling, general and administrative expenses for fiscal year 1998 were
$516,820, representing a declined of 22.6% over $667,941 for the same period a
year earlier as a result of the Company's ongoing cost reduction programs.
Interest expense declined 56.6% in fiscal year 1998 to ($22,913) compared to
($52,843) for fiscal year 1997 as a result of several note holders converting
their loans into Common Stock through a private placement offering.
Additionally, in fiscal year 1998 the Company acquired a minority interest
in Anything Internet Corporation. For fiscal year 1998 the Company recorded
$39,590 as its share of Anything's operating loss under the equity method of
accounting for investments.
The net loss for the year ending December 31, 1998, was $494,910 compared
to a net loss of $589,163, before the impact of deferred income tax benefits
recorded, for fiscal year 1997. In fiscal year 1998 the Company reversed all
such fiscal year 1997 deferred tax benefits to comply with SEC accounting
preferences. See Note 4 in the notes to the audited consolidated financial
statements.
Three-Months Ending March 31, 1999 Compared to Three-Months Ending March 31,
1998
Net sales for the three-months ended March 31, 1999, were $31,037, a
decrease of 46.9% compared to $58,486 for the same period a year ago. The
decrease in net sales was driven primarily by reduced marketing budgets and a
diversion of Management's attention by contributing significantly to the
development and growth of Anything Internet.
Gross profits for the three-months ended March 31, 1999, were $10,904, or
35.1% of sales, compared to $7,077, or 12.1% of sales, for the same period a
16
<PAGE>
year ago. The increase in gross profit was due to cost cutting measures and
improved product and inventory management.
Selling, general and administrative (SG&A) expenses for the three-months
ended March 31, 1999, were $67,196, a decrease of 43.1% over $96,184 for the
same period a year ago. The sharp decrease in SG&A expenses is the result of
successful cost cutting measures implemented in fiscal 1998.
The net loss for the three-months ended March 31, 1999, was ($92,589), or
($0.01) a share, a decrease of 8.4% over ($101,069), or ($0.02) a share, for the
same period a year ago. The decrease in net loss is attributable to cost
cutting measures and a sharp decrease in SG&A expenses.
The Company does not believe that inflation has had a material adverse
effect on sales or income. Increases in raw materials or other operating costs
may adversely affect the Company's operations; however, the Company believes it
will be able to maintain, or even improve, its present gross profit margins by
monitoring and adjusting the prices of the products it sells to offset increases
in costs of raw materials or other operating costs.
Based on its experience to date, the Company believes that its future
operating results may be subject to quarterly variations based on a variety of
factors, including seasonal buying patterns in the computer industry. Such
effects may not be apparent in the Company's operating results during a period
of expansion. However, the Company can make no assurances that its business can
be significantly expanded under any circumstances.
Liquidity and Capital Resources
The Company's operations to date have focused on developing and marketing
personal computer accessory products, building brand awareness, initiating
government, corporate and consumer sales, and securing the necessary financing
to fund the development, operations and expansion of its business.
As of March 31, 1999, the Company had $14,409 cash on hand, accounts
receivable of $60,821, inventory of $43,775, a stock subscription receivable of
$150,000, notes receivable of $40,000 and an investment in Anything Internet
Corporation valued at $13,539.
As of March 31, 1999, cash used by operating activities was ($65,847).
Almost a third of the cash flow used by operating activities consisted of the
Company's share of Anything Internet's quarterly operating loss from an equity
accounting standpoint. The remainder was used in day-to-day operations.
As of March 31, 1999, cash provided by financing activities totaled
$50,000. This was entirely from the proceeds of equity issued for cash
financing.
The Company anticipates making significant investments in the future to
support its overall growth and substantially expand its product offerings.
Currently, it is anticipated that ongoing operations will be financed primarily
from the cash on hand, internally generated funds and any sales or borrowing
17
<PAGE>
proceeds from its investment in Anything Internet. However, as indicated in the
Company's most recent financial statements available herein, while operating
activities provide some cash flow, the Company is currently cash flow negative.
There can be no assurances that the Company's ongoing operations will begin to
generate a positive cash flow or that unforeseen events may not require more
working capital than the Company currently has at its disposal.
Year 2000 Compliance
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. This could result in system failures or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities. As a result, many companies' software and computer systems
may need to be upgraded or replaced in order to comply with such "Year 2000"
requirements. The Company utilizes third-party equipment and software that it
believes is Year 2000 compliant. The Company is in the early stages of
conducting an audit of its third-party suppliers as to the Year 2000 compliance
of their systems. The Company does not believe it will incur significant costs
in order to comply with Year 2000 requirements. However, failure of the
Company's internal computer systems or of such third-party equipment or
software, or of systems maintained by the Company's suppliers, to operate
properly with regard to the Year 2000 and thereafter could require the Company
to incur unanticipated expenses to remedy any problems, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Item 3. DESCRIPTION OF PROPERTY
The Company, and its wholly-owned subsidiary DoubleCase Corporation, share
combined headquarters in Colorado Springs, Colorado at 4740 Forge Rd., Bldg. 112
in a 2,760 square foot office/warehouse space. The Company pays $1,138 a month,
for this leased office space. The lease expires on April 30, 2000 and the
Company is negotiating two one-year extension options.
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of Common Stock as of May 7, 1999, by (i)
each Director of the Company, (ii) each executive officer of the Company, (iii)
all directors and executive officers as a group, and (iv) each person known to
the Company to be the beneficial owner of more than 5% of its outstanding shares
of Common Stock.
18
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Owned
------------------------
Percentage
Directors and Executive Officers Shares Held Owned (1)
- ------------------------------------ ----------- -----------
<S> <C> <C>
Cameron B. Yost (2) 1,216,000 12.6%
4740 Forge Rd., Bldg. 112
Colorado Springs, CO 80907
Lloyd Parrish, Jr. 1,055,837 10.9%
4740 Forge Rd., Bldg. 112
Colorado Springs, CO 80907
Lawarance Stanley 40,000 0.4%
4740 Forge Rd., Bldg. 112
Colorado Springs, CO 80907
All current directors and executive
officers as a group (3 persons) 2,311,837 24.0%
Five Percent Shareholders
- ------------------------------------
Ann L. Gee (3)
110 S. Main Street, #510
Wichita, KS 67202 581,932 6.0%
- ------------------------------------ ----------- -----------
<FN>
(1) Percentage of ownership is based on 9,650,219 shares of Common Stock
issued and outstanding as of March 31, 1999.
(2) Does not include an outstanding and vested stock option to purchase
11,154 at an aggregate price of $0.05 a share.
(3) Ann L. Gee is Lloyd K. Parrish Jr.'s sister. Mr. Parrish is a Director.
</TABLE>
Item 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The directors, executive officers promoters and control persons of the
Company, their ages as of March 31, 1999, and their positions with the Company
are as follows:
<TABLE>
<CAPTION>
Name Age Position
- -------------------- --- ------------------------------------
<S> <C> <C>
Cameron B. Yost 46 Chairman, President, Chief Executive
Officer and Director
Lloyd K. Parrish Jr. 61 Director
Lawarance Stanley 51 Secretary and Director
</TABLE>
The Board of Directors of the Company is comprised of only one class of
director. Each director is elected to hold office until the next annual meeting
of shareholders and until his successor has been elected and qualified.
Officers are elected annually by the Board of Directors and hold office until
successors are duly elected and qualified. The following is a brief account of
the business experience of each director and executive officer of the Company.
There is no family relationship between any Director or Executive Officer of the
Company.
19
<PAGE>
CAMERON B. YOST, Chairman, President, Chief Executive Officer and Director,
Mr. Yost is the founder of DoubleCase Corporation, a wholly-owned subsidiary of
Banyan. He founded DoubleCase in 1991 and joined Banyan in 1995 when the two
companies merged together. Mr. Yost brings to Banyan a wealth of experience
with start-up ventures and turn-around situations. Prior to joining Banyan and
DoubleCase, Mr. Yost was in an executive position at BYCO, Ltd., a manufacturer
of evaporative cooler products located in Greeley, Colorado. When he joined
BYCO it was suffering from the remains of a leveraged buy-out (LBO): excessive
debt and inventory, insufficient working capital and lower-than-expected sales.
During his tenure at BYCO, Mr. Yost secured the primary investors and
successfully implemented a complex series of strategic transactions that
resulted in the sale of various product lines enabling BYCO to return the
majority of the primary investors' capital. In 1988, Mr. Yost joined a group of
engineers and formed Vornado Air Circulation Systems, Inc., a start-up venture
located in Wichita, Kansas as a Co-Founder and Vice President. At Vornado, Mr.
Yost successfully structured the finances, operations and marketing efforts
enabling Vornado to generate $2.8 million in sales during its first year in
business and $5.7 million in sales during its second year in business. Mr. Yost
is a graduate of Western State College in Gunnison, Colorado. Mr. Yost also
serves as a director at Anything Internet Corporation. Mr. Yost is currently
under indictment in the U.S. District Court for the Southern District of New
York for conspiracy to commit securities fraud, mail fraud and commercial
bribery in connection with the common stock of Banyan Corporation. Mr. Yost has
been, and plans on continuing to, vigorously deny any and all charges brought
against him.
LLOYD K. PARRISH JR., Director, has held his position since 1995 and is
concurrently a director at DoubleCase Corporation. Mr. Parrish has an extensive
background in business development and operations. He is concurrently the
President of Parrish Corporation, a Kansas oil and gas lease management company.
LAWARANCE STANLEY, Secretary and Director, has his positions since 1998. Mr.
Stanley is the owner of Stanley Accounting Services, an independent accounting
business, and owns half of The P3 Group, which provides management training to
companies of all sizes. Prior to starting these businesses, he was President of
Kaman Instrumentation Corporation, a subsidiary of Kaman Corporation, and
Controller of a division of Bendix Corporation.
The Company does not currently have employment agreements with any of its
officers and management personnel, but has had such agreements in the past and
is contemplating do so again in the near future.
Item 6. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid during the fiscal year
ended December 31, 1998, to the Company's Chief Executive Officer and each of
the Company's officers and directors. No person received compensation equal to
or exceeding $100,000 in fiscal 1998 and no bonuses were awarded during fiscal
1998.
20
<PAGE>
<TABLE>
<CAPTION>
Name and Principal
Position Salary Options Granted (1)
- ------------------------ ------- -------------------
<S> <C> <C>
Cameron B. Yost,
President, CEO and
Director $90,400 None
Lloyd Parrish Jr.,
Director 14,000 None
Lawarance Stanley,
Secretary and Director 8,000 None
<FN>
(1) No stock options were granted to Management during the fiscal year
ending December 31, 1998.
</TABLE>
In addition, the Company has adopted an incentive stock option plan for its
officers, directors and salaried employees. The plan is administered by the
Board of Directors. The options are exercisable for a period of 10 years,
except in the case of any option holders owning 10% or more of the Company's
outstanding Common Stock, in which case the exercise period is five years. The
exercise price for options granted pursuant to the plan is 95% of the closing
market price of the Common Stock on the date the option is granted, or if no
market exists, then as determined by the Board of Directors. An Aggregate of
105,345 shares are reserved for issuance under the plan. As of March 31, 1998,
options to purchase an aggregate of 11,154 shares of Common Stock, at an
exercise price of $0.05 per share, had been granted to Cameron Yost.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which the
Company or any of its subsidiaries was or is to be a party, in which the amount
involved exceeds $60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or beneficially
more than five percent of the Company's Common Stock, or any member of the
immediate family of any of the foregoing persons, had a material interest.
CERTAIN BUSINESS RELATIONSHIPS
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which the
Company or any of its subsidiaries was or is to be a party, in which the amount
involved exceeds $60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or beneficially
21
<PAGE>
more than five percent of the Company's Common Stock, or any member of the
immediate family of any of the foregoing persons, had a material interest.
INDEBTEDNESS OF MANAGEMENT
DoubleCase Corporation is indebted to Mr. Parrish in the amount of $66,589.
This obligation is represented by a promissory note, bears interest at the rate
of 10% per annum and is secured by the DoubleCase's furniture, equipment,
inventory and accounts receivable. The note is due and payable on April 1,
2000.
As of May 7, 1999, DoubleCase was indebted to Mr. Yost in the amount of
$21,155 for accrued and unpaid salary.
As of March 31, 1999, DoubleCase was indebted to other stockholders and
related parties for an aggregate amount of $38,647. These obligations bear
interest at rates ranging from 6% to 12% per annum and are not secured by assets
of the Company, and do not mature until April 1, 2000.
Item 8. DESCRIPTION OF SECURITIES
The Company's authorized capital consists of 70,500,000 shares, no par
value, of which 50,000,000 shares are Class A Common Stock, 10,000,000 shares
are Class B Common Stock, 10,000,000 are Class A Preferred Stock, and 500,000
are Class B Preferred Stock. As of March 31, 1999, there were 9,650,219 shares
of Class A Common Stock and no shares of Class B Common Stock issued and
outstanding. There were 187,190 shares of Class A Preferred Stock and no shares
of Class B Preferred Stock issued and outstanding.
CLASS A COMMON STOCK
The Company's Articles of Incorporation, as amended, authorize the issuance
of up to 50,000,000 shares of Class A Common Stock, no par value. Each holder
of record of Class A Common Stock is entitled to one vote for each share held on
all matters properly submitted to the shareholders for their vote. Cumulative
voting is not authorized by the Articles of Incorporation.
Holders of outstanding Class A Common Stock are entitled to those dividends
declared by the Board of Directors out of legally available funds, and, in the
event of liquidation, dissolution or winding up of the affairs of the Company,
holders are entitled to receive ratably the net assets of the Company available
to the shareholders. Holders of outstanding Class A Common Stock have no
preemptive, conversion or redemptive rights. All of the issued and outstanding
shares of Class A Common Stock are, and all unissued shares of Class A Common
Stock when offered and sold will be, duly authorized, validly issued, fully paid
and non-assessable. To the extent that additional shares of Class A Common
Stock are issued, the relative interests of the then existing shareholders may
be diluted.
CLASS B COMMON STOCK
22
<PAGE>
The Company's Articles of Incorporation, as amended, authorize the issuance
of up to 10,000,000 shares of Class B Common Stock, no par value. Each holder
of record of Class B Common Stock is entitled to one vote for each share held on
all matters properly submitted to the shareholders for their vote. Cumulative
voting is not authorized by the Articles of Incorporation.
Holders of outstanding Class B Common Stock are entitled to those dividends
declared by the Board of Directors out of legally available funds, and, in the
event of liquidation, dissolution or winding up of the affairs of the Company,
holders are entitled to receive ratably the net assets of the Company available
to the shareholders. Holders of outstanding Class B Common Stock have no
preemptive, conversion or redemptive rights. All of the issued and outstanding
shares of Class B Common Stock are, and all unissued shares of Class B Common
Stock when offered and sold will be, duly authorized, validly issued, fully paid
and non-assessable. To the extent that additional shares of Class B Common
Stock are issued, the relative interests of the then existing shareholders may
be diluted.
CLASS A PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of up to
10,000,000 shares of Class A Preferred Stock, no par value per share. The Board
of Directors may divide the Preferred Stock into classes and to fix and
determine the relative rights and preferences of the shares of any such class in
respect to, among other things, (a) the number of shares to constitute such
series and the distinctive designations thereof; (b) the rate and preference of
dividends, if any, the time of payment of dividends, whether dividends are
cumulative and the date from which any dividend shall accrue; (c) whether the
shares may be redeemed and, if so, the redemption price and the terms and
conditions of redemption; (d) the liquidation preferences payable on the shares
in the event of involuntary or voluntary liquidation; (e) sinking fund or other
provisions, if any, for redemption or purchase of the shares; (f) the terms and
conditions by which the shares may be converted, if the shares of any series are
issued with the privilege of conversion; (g) voting rights, if any and (h) any
other relative rights and preferences of shares of such series, including,
without limitation, any restriction on an increase in the number of shares in
any series theretofore authorized and any limitation or restriction of rights or
powers to which shares of any future series shall be subject.
The Class A Preferred Stock has identical voting rights to the Company's
Common Stock. The Company has the right to redeem each share of Class A
Preferred Stock, upon not less than 60 days prior written notice, at a
redemption price of $2.75 per share. Each share of Class A Preferred Stock is
convertible into one share of Class A Common Stock at any time prior to
redemption upon notice to the Company. Upon dissolution, liquidation and
winding up of the Company, holders of Class A Preferred Shares shall be entitled
to receive, out of the net assets of the Company, the amount of $2.75 per share,
and upon receiving that amount, shall not be entitled to participate further in
any remaining assets of the Company. Holders of Class A Preferred Shares have
no preemptive or other rights to purchase any other securities issued by the
Company.
23
<PAGE>
CLASS B PREFERRED STOCK
A total of 500,000 shares have been designated as Class B Preferred Stock,
and no other rights or preferences have yet been designated. There are no shares
of Class B Preferred Stock issued or outstanding as of the date of this filing
and management has no plan to issue any Class B Preferred Stock in the
foreseeable future.
DIVIDEND POLICY
Holders of Common Stock are entitled to dividends in the discretion of the
Board of Directors and payment thereof will depend upon, among other things, the
Company's earnings, its capital requirements and its overall financial
condition. The Company has not paid any cash dividends on its Common Stock
since inception and intends to follow a policy of retaining any earnings to
finance the development and growth of its business. Accordingly, it does not
anticipate the payment of cash dividends in the foreseeable future.
TRANSFER AGENT
The Company has engaged OTR/California Stock Transfer and Registrar to act
as its transfer agent for its Common Stock. The Company acts as transfer agent
for all of its other securities.
INTEREST OF NAMED EXPERTS AND COUNSEL
The financial statements of the Company at December 31, 1998, included in
this Disclosure Statement, have been audited by Ronald R. Chadwick, P.C. as
indicated in their report with respect thereto and are included herein in
reliance upon authority of said firm as experts in giving said reports.
PART II
- -------
Item 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
Market for Common Stock
The Company's Common Stock is quoted on the OTC Bulletin Board under the
symbol "BANY." The following table sets forth the high and low bid prices as
reported by the National Association of Securities Dealers (NASD) for the
periods ending March 31, 1999 and prior.
24
<PAGE>
<TABLE>
<CAPTION>
High Low
----- -----
<S> <C> <C>
1999
- ----
First Quarter $1.50 $0.57
1998
- ----
Fourth Quarter 0.92 0.35
Third Quarter 0.56 0.22
Second Quarter 0.40 0.16
First Quarter 0.35 0.14
1997
- ----
Fourth Quarter 0.50 0.18
Third Quarter 0.86 0.20
Second Quarter 1.00 0.16
</TABLE>
Dividends
The Company has never declared or paid any cash dividends on its capital
stock. The Company currently intends to retain all available funds and any
future earnings of its business for use in the operation of its business and
does not anticipate paying any cash dividends in the foreseeable future. The
declaration, payment and amount of future dividends, if any, will depend upon
the future earnings, results of operations, financial position and capital
requirements of the Company, among other factors, and will be at the sole
discretion of the Board of Directors.
Item 2. LEGAL PROCEEDINGS
The are no material legal proceedings pending or, to the Company's
knowledge, threatened against the Company.
Item 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
On February 18, 1999, the Company engaged DWP, Certified Public Accountants
as its public accountants.
Prior to engaging DWP, the Company used J. Paul Kenote, CPA, P.C. as its
independent public accountants. The Company discontinued using J. Paul Kenote's
services when they discontinued conducting SEC audits in January 1999.
25
<PAGE>
Item 4. RECENT SALES OF UNREGISTERED SECURITIES
On May 17, 1996, the Company issued 2,250,000 shares of its common stock to
a Business Development Company for consideration of a $1,000,000 promissory
note. Each share of common stock was valued at $0.46178. This issuance was a
transaction exempt from registration under Section 4(2) of the Securities Act
and Regulation D, Rule 504 thereunder as a transaction not involving a public
offering. Subsequently, only $75,000 was received and the balance of the unpaid
shares were returned and canceled.
On September 5, 1996, the Company issued 2,000 shares of its common stock
to an employee of DoubleCase Corporation as a bonus. The then market price for
the Company's common stock was $5.75 a share. This transaction was exempt from
registration under Section 4(2) of the Securities Act and Rule 144 thereunder.
Stock issued under these exemptions carries certain resale restrictions and the
stock certificates bear restrictive legends.
On the same date the Company was obligated to issue 1,037,500 of its common
stock to the Business Development Company which purchased shares on May 17,
1996, to reestablish it to "pre-split" total shares. The Company received no
consideration for the issuance of these shares. This issuance was a transaction
exempt from registration under Section 4(2) of the Securities Act and Regulation
D, Rule 504 thereunder as a transaction not involving a public offering.
Also on September 5, 1996, the Company exchanged 857,143 shares of its
common stock for 109,689 preferred shares of Colonial Funds Ltd. This share
exchange transaction was valued at $142,898. This transaction was exempt from
registration under Section 4(2) of the Securities Act and Rule 144 thereunder.
Stock issued under these exemptions carries certain resale restrictions and the
stock certificates bear restrictive legends. Subsequently, this transaction was
reversed and all shares were returned to the original issuers.
On the same date the Company was obligated to issue 10,097 shares of its
common stock to a shareholder who had acquired shares in the Company when it was
named Interactive Data Vision. As a result in a change of transfer agents in
the early 1990's, this shareholder's record was lost by the transfer agent
although his ownership was authenticated. The Company received no consideration
for the issuance of these shares. This issuance was a transaction exempt from
registration under Section 4(2) of the Securities Act and Regulation D, Rule 504
thereunder as a transaction not involving a public offering.
Additionally, on September 5, 1996, the Company issued 57,217 shares of its
common stock, distributed pro rata, to the original DoubleCase shareholders who
exchanged their DoubleCase shares for shares in the Company in October, 1995.
This was a result of the above referenced Interactive Data Vision shareholder
who produced an authentic share certificate which was not represented on the
Company stock ledger at the time of the exchange. The share exchange ratio
required the Company to then issue the above referenced shares to the original
DoubleCase shareholders. The Company received no consideration for the issuance
of these shares. This issuance was a transaction exempt from registration under
Section 4(2) of the Securities Act and Regulation D, Rule 504 thereunder as a
transaction not involving a public offering.
26
<PAGE>
On September 5, 1996, the Company entered into a contract for services from
an investor relations company. The Company issued 45,000 shares of its common
stock for said services valued at $6,250. This transaction was exempt from
registration under Section 4(2) of the Securities Act and Rule 144 thereunder.
Stock issued under these exemptions carries certain resale restrictions and the
stock certificates bear restrictive legends.
On September 26, 1996, the Company issued 73,651 shares of its common stock
to "old" Interactive Data Vision Shareholders in exchange for debt totaling
$202,540. These shares were issued and priced pursuant to the Share Exchange
Agreement between DoubleCase Corporation and Interactive Data Vision (IDV) of
October 27, 1995, for the conversion of IDV debt to equity. This transaction was
exempt from registration under Section 4(2) of the Securities Act and Rule 144
thereunder. Stock issued under these exemptions carries certain resale
restrictions and the stock certificates bear restrictive legends.
On November 5, 1996, the Company retired and cancelled 807,500 shares of
its common stock. Said shares were issued on May 17 and September 5, 1996, to a
Business Development Company who failed to pay the remaining principal balance
of their promissory note. These shares that were retired were valued at
$925,000
On November 15, 1996, the Company issued 125,000 shares of its common stock
to a consultant who exercised his option to purchases said shares for $0.10 per
share. The Option was granted the consultant for management consulting services
rendered. This issuance was a transaction exempt from registration under Section
4(2) of the Securities Act and Regulation D, Rule 504 thereunder as a
transaction not involving a public offering.
On December 5, 1996, the Company was obligated to issue, pursuant to an
Agreement entered into on September 5, 1996, with an investor relations company,
10,000 shares of its common stock. Although the Company received no monetary
consideration for the transaction, the market value of the Company's common
stock on December 5, 1996 was 16 per share. This issuance was a transaction
exempt from registration under Section 4(2) of the Securities Act and Regulation
D, Rule 504 thereunder as a transaction not involving a public offering.
On December 6, 1996, the Company was obligated to issue 18,224 shares of
common stock to the Business Development Company under the Subscription
Agreement of May 17, 1996. The price per share was established on May 17, 1996.
This issuance was a transaction exempt from registration under Section 4(2) of
the Securities Act and Regulation D, Rule 504 thereunder as a transaction not
involving a public offering.
On December 12, 1996, the Company offered, to shareholders of record as of
December 9, 1996 (the Rights Record Date), Rights to purchase additional shares
of Class A Common Stock for each share held as of the Rights Record Date, at a
price of $0.005 per Right. Each holder of Class A Common Stock as of the Rights
27
<PAGE>
Record Date was entitled to subscribe for one Series A Right and One Series B
Right for each share of Class A Common Stock held as of the Rights Record Date.
Rights were subscribed for and exercised only in pairs of one Series A Right and
one Series B Right for each share of Class A Common Stock held as of the Rights
Record Date. Each Right entitled the holder to purchase one share of Class A
Common Stock at an exercise price of $0.125 per share. Each Series A Right
could be exercised to purchase one share of Class A Common Stock issued without
a restrictive legend. Each Series B Right could be exercised to purchase one
share of Class A Common Stock which was non-transferable for a period of two
years after issuance. The Rights were exercisable in a series of cumulating
portions commencing January 27, 1997 and continuing through January 23, 1998,
unless called for earlier redemption by the Company. The Rights were not
subject to adjustment in either the exercise price or the number of shares for
which they were exercised as a result of the 1-for-20 reverse stock split
adopted by the Company as of December 10, 1996. The Rights were offered on a
"best efforts" basis by the Company through its officers and directors. The
Rights Offering closed on January 24, 1997, with a total of 2,449,609 Rights
Pairs subscribed and issued. Throughout the course of 1997 a total of 1,378,120
shares were issued in cumulating portions for net consideration of $134,803.
The Rights and securities were offered without registration under the Securities
Act of 1933, as amended, and were offered in reliance upon the exemptions from
registration provided by Rule 504 of Regulation D as a transaction not involving
a public offering.
Also on December 12, 1996, the Company escrowed 800,000 shares of its
common stock to the name of First National Bank as escrow agent for a proposed
private placement offering exempt from registration under Section 4(2) of the
Securities Act and Regulation D, Rule 504 thereunder as a transaction not
involving a public offering. The private placement offering did not occur and
said shares were returned to the Company from escrow and were cancelled and
retired on November 26, 1997.
On February 3, 1997, the Company issued 10,000 shares of its common stock
to a public and investor relations company as retainer for service to be
rendered. Said shares were valued at 20 per share. This issuance was a
transaction exempt from registration under Section 4(2) of the Securities Act
and Regulation D, Rule 504 thereunder as a transaction not involving a public
offering.
On February 10, 1997, the Company issued 2 shares of its common stock to
the Depository Trust Company resulting from balance differences araising from
fractional rounding of shares during the reverse split December 10, 1996. The
Company received no consideration for these shares. The securities were offered
without registration under the Securities Act of 1933, as amended, and were
offered in reliance upon the exemptions from registration provided by Rule 504
of Regulation D.
On February 10, 1997, the Company issued 1,100,000 shares of its common
stock to a Business Development Company for a promissory note of $330,000.
Subsequently, the Company received consideration on this note totaling $60,000.
With the note in default and deemed uncollectable the Company attempted to
28
<PAGE>
recover the shares issued but was unsuccessful. The securities were offered
without registration under the Securities Act of 1933, as amended, and were
offered in reliance upon the exemptions from registration provided by Rule 504
of Regulation D.
On June 16, 1997, the Company issued 100,000 shares of its common stock for
entering into an agreement with a public and investor relations company as a fee
for service to be rendered. Said shares were valued at $0.15625 per share. This
issuance was a transaction exempt from registration under Section 4(2) of the
Securities Act and Regulation D, Rule 504 thereunder as a transaction not
involving a public offering.
On June 30, 1997, the Company issued 95,500 shares of its common stock to
two non-affiliated individuals who had performed services or loaned the Company
funds. The cumulative value of said shares was $0.18465 per share. The
securities were offered without registration under the Securities Act of 1933,
as amended, and were offered in reliance upon the exemptions from registration
provided by Rule 504 of Regulation D.
Also on June 30, 1997, the Company issued 50,000 shares of its common stock
as severance pay to an employee. The shares were valued at $0.20. The
securities were offered without registration under the Securities Act of 1933,
as amended, and were offered in reliance upon the exemptions from registration
provided by Rule 504 of Regulation D.
On July 1, 1997, the Company issued a cumulative total of 694,736 shares
of its common stock pro rated among the members of the Board of Director of
Banyan Corporation and its wholly owned subsidiary, DoubleCase Corporation, for
their services rendered to date. Said shares were valued at $0.267 per share.
This transaction was exempt from registration under Section 4(2) of the
Securities Act and Rule 144 thereunder. Stock issued under these exemptions
carries certain resale restrictions and the stock certificates bear restrictive
legends.
On August 26, 1997, the Company issued 495,000 shares of its common stock
on a promissory note totaling $75,000 to an unaffiliated investor. The
securities were offered without registration under the Securities Act of 1933,
as amended, and were offered in reliance upon the exemptions from registration
provided by Rule 504 of Regulation D. No consideration was ever received on the
note and the shares were subsequently recovered by the Company, cancelled and
retired on November 17, 1997.
On August 27, 1997, the Company issued 250,000 shares of its common stock
to an unaffiliated investor for $0.192 per share. The securities were offered
without registration under the Securities Act of 1933, as amended, and were
offered in reliance upon the exemptions from registration provided by Rule 504
of Regulation D.
On October 23, 1997, the Company issued 31,100 shares of its common stock
to satisfy debt owed a non-affiliated vendor of $11,247. The securities were
offered without registration under the Securities Act of 1933, as amended, and
were offered in reliance upon the exemptions from registration provided by Rule
504 of Regulation D.
29
<PAGE>
On November 7, 1997, the Company issued 130,000 shares of its common stock
for $0.2577 per share to a non-affiliated investor. The securities were offered
without registration under the Securities Act of 1933, as amended, and were
offered in reliance upon the exemptions from registration provided by Rule 504
of Regulation D.
On November 11, 1997, the Company issued 344,000 shares of its common stock
for net consideration of $66,327 to a non-affiliated investor. The securities
were offered without registration under the Securities Act of 1933, as amended,
and were offered in reliance upon the exemptions from registration provided by
Rule 504 of Regulation D.
On December 1, 1997, the Company issued 143,000 shares of its common stock
to a non-affiliated investor for a promissory note of $40,000. The note has
subsequently been extended and remains unpaid. The Company has received 60,000
shares of Oxford Knight International, Inc. (OTCBB: "OKTI"), without
restriction, as a "fee" for extending the note. The securities were offered
without registration under the Securities Act of 1933, as amended, and were
offered in reliance upon the exemptions from registration provided by Rule 504
of Regulation D.
On January 23, 1998, the Company issued 2,632,802 shares of its common
stock to Rightsholders who subscribed to the last opportunity to exercise their
Rights obtained from the Rights Offering of December 12, 1996. The Company
received net consideration of $220,805. The securities were offered without
registration under the Securities Act of 1933, as amended, and were offered in
reliance upon the exemptions from registration provided by Rule 504 of
Regulation D.
On February 4, 1998, the Company issued 172,200 shares of its common stock
to a non-affiliated management consulting firm for expenses and fees valued at
$29,123. The securities were offered without registration under the Securities
Act of 1933, as amended, and were offered in reliance upon the exemptions from
registration provided by Rule 504 of Regulation D.
On February 13, 1998, the Company issued 50,000 shares of its common stock
as severance pay to an employee. This was valued at $7,500. This transaction
was exempt from registration under Section 4(2) of the Securities Act and Rule
144 thereunder. Stock issued under these exemptions carries certain resale
restrictions and the stock certificates bear restrictive legends.
On February 13, 1998, the Company entered into a contractual relationship
with a non-affiliated investor relation firm. Developmental, start-up and
renewal fees were compensated for by the issuance of a cumulative total of
200,000 shares of the Company's common stock valued at $29,375 issued: 125,000
shares on February 3, 1998; 25,000 shares issued July 13, 1998; and 50,000
shares issued July 29, 1998. Additionally, the Company issued warrants for:
100,000 shares at $0.16 for 180 days; 200,000 shares at $0.20 for 60 days;
200,000 shares at $0.225 for 180 days; 200,000 shares at $0.30 for 180 days;
115,000 shares at $0.35 for 180 days and 200,000 shares at $0.50 for one year.
30
<PAGE>
The warrants and securities were offered without registration under the
Securities Act of 1933, as amended, and were offered in reliance upon the
exemptions from registration provided by Rule 504 of Regulation D.
On March 19, 1998, the non-affiliated investor relations firm exercised
70,000 shares of their 200,000, $0.20 warrant. The Company received $14,000 and
issued 70,000 shares of common stock. The securities were offered without
registration under the Securities Act of 1933, as amended, and were offered in
reliance upon the exemptions from registration provided by Rule 504 of
Regulation D thereunder as a transaction not involving a public offering.
On April 1, 1998, the non-affiliated investor relations firm exercised the
balance of their 20 warrant, 130,000 shares. The Company received $26,000 and
issued 130,000 shares of common stock. The securities were offered without
registration under the Securities Act of 1933, as amended, and were offered in
reliance upon the exemptions from registration provided by Rule 504 of
Regulation D thereunder as a transaction not involving a public offering.
On June 23, 1998, the non-affiliated investor relations firm exercised
their 16 warrant for 100,000 shares. The Company received $16,000 and issued
100,000 shares of common stock. The securities were offered without registration
under the Securities Act of 1933, as amended, and were offered in reliance upon
the exemptions from registration provided by Rule 504 of Regulation D thereunder
as a transaction not involving a public offering.
On July 2, 1998, the non-affiliated investor relations firm exercised
100,000 shares of their 200,000, 22.5 warrant. The Company received $22,500
and issued 100,000 shares of common stock. The securities were offered without
registration under the Securities Act of 1933, as amended, and were offered in
reliance upon the exemptions from registration provided by Rule 504 of
Regulation D thereunder as a transaction not involving a public offering.
On July 13, 1998, the non-affiliated investor relations firm exercised the
balance of 100,000 shares of their 200,000, 22.5 warrant. The Company received
$22,500 and issued 100,000 shares of common stock. The securities were offered
without registration under the Securities Act of 1933, as amended, and were
offered in reliance upon the exemptions from registration provided by Rule 504
of Regulation D thereunder as a transaction not involving a public offering.
On July 23, 1998, the non-affiliated investor relations firm exercised
100,000 shares of their 200,000, 30 warrant. The Company received $30,000 and
issued 100,000 shares of common stock. The securities were offered without
registration under the Securities Act of 1933, as amended, and were offered in
reliance upon the exemptions from registration provided by Rule 504 of
Regulation D thereunder as a transaction not involving a public offering.
On July 27, 1998, the non-affiliated investor relations firm exercised the
balance of 100,000 shares of their 200,000, 30 warrant. The Company received
$30,000 and issued 100,000 shares of common stock. The securities were offered
without registration under the Securities Act of 1933, as amended, and were
offered in reliance upon the exemptions from registration provided by Rule 504
of Regulation D thereunder as a transaction not involving a public offering.
31
<PAGE>
On July 31, 1998, the non-affiliated investor relations firm exercised
115,000 shares of their 115,000, 35 warrant. The Company received $40,000 and
issued 115,000 shares of common stock. The securities were offered without
registration under the Securities Act of 1933, as amended, and were offered in
reliance upon the exemptions from registration provided by Rule 504 of
Regulation D thereunder as a transaction not involving a public offering.
On August 2, 1998, the Company issued a cumulative total of 180,000 shares
of its common stock pro rated among the members of the Board of Director of
Banyan Corporation and its wholly owned subsidiary, DoubleCase Corporation, for
their services rendered through 1998. Said shares were valued at $0.20 per
share. This transaction was exempt from registration under Section 4(2) of the
Securities Act and Rule 144 thereunder. Stock issued under these exemptions
carries certain resale restrictions and the stock certificates bear restrictive
legends.
Also on August 2, 1998, the Company issued a cumulative total of 45,070
shares of its common stock to three employees as severance. This transaction
was valued at $4,654. Of the securities were offered, 21,070 were offered
without registration under the Securities Act of 1933, as amended, and were
offered in reliance upon the exemptions from registration provided by Rule 504
of Regulation D thereunder as a transaction not involving a public offering.
The balance of this transaction, 24,000 shares, were offered exempt from
registration under Section 4(2) of the Securities Act and Rule 144 thereunder.
Stock issued under these exemptions carries certain resale restrictions and the
stock certificates bear restrictive legends
On August 2, 1998, the Company entered into a long-term agreement for the
provision of management consulting and investor relations services to the
Company. For said services, the Company issued 300,000 shares of its common
stock, valued at $45,000. Additionally, the Company issued the following
options to purchase the Company's common stock: 100,000 shares at 40 ; 100,000
shares at 80 and 100,000 shares at $1.20. All of the stated options expire
July 31, 2001. The securities and options were offered without registration
under the Securities Act of 1933, as amended, and were offered in reliance upon
the exemptions from registration provided by Rule 504 of Regulation D thereunder
as a transaction not involving a public offering.
On August 2, 1998, the Company mistakenly issued 205,000 shares of its
common stock in exchange for 1,000,000 shares of Anything Internet Corporation
common stock. This exchange was to be for 200,000 shares of the Company's
common stock. The Company is recovering the 5,000 shares and will retire said
5,000 shares upon their return. Using equity accounting, this transaction was
valued at $86,629.00. The 1,000,000 shares the Company received from Anything,
Inc. were issued without registration under the Securities Act of 1933, as
amended, and were offered in reliance upon the exemptions from registration
provided by Rule 504 of Regulation D thereunder as a transaction not involving a
public offering. Additionally, the Company issued the following options to
purchase the Company's common stock: 100,000 shares at 50 originally expiring
32
<PAGE>
February 28, 1998, but extended on February 18, 1999, to expire August 31, 1999;
100,000 shares at $1.00, expiring on August 31, 1999; and 100,000 shares at
$2.00 expiring August 31, 2000. This transaction was exempt from registration
under Section 4(2) of the Securities Act and Rule 144 thereunder. Stock issued
under these exemptions carries certain resale restrictions and the stock
certificates bear restrictive legends.
On December 4, 1998, the Company issued 200,000 shares of its common stock
as a result of a warrant to purchase 200,000 at 50 , issued February 13, 1998,
was presented for exercise. Upon receipt of $100,000, the Company issued said
shares. The securities were offered without registration under the Securities
Act of 1933, as amended, and were offered in reliance upon the exemptions from
registration provided by Rule 504 of Regulation D thereunder as a transaction
not involving a public offering.
On December 29, 1998, the Company issued 62,500 shares of its common stock
as a result of an option to purchase 100,000 at 40 , issued August 2, 1998, was
presented for partial exercise. Upon receipt of $25,000, the Company issued
62,500 shares. There remains 37,500 shares to purchase the Company's common
stock at 40 on this option. The securities were offered without registration
under the Securities Act of 1933, as amended, and were offered in reliance upon
the exemptions from registration provided by Rule 504 of Regulation D thereunder
as a transaction not involving a public offering.
On January 15, 1999, the Company offered to exchange certain shares of its
common stock that had been previously issued pursuant to the exercise of Rights
which required the subscriber to hold said shares of common stock for a period
of two years even though said shares were issued under Regulation D, 504. Said
shares were offered to be exchanged for shares that had no holding period
restriction. This exchange was offered to all holders of said shares. Any
shareholder which participated in the exchange agreed to the terms of the
exchange; one of which is that each holder would receive back 66.6% of the total
number of shares submitted to the company for exchange. The exchange offer
expired February 28, 1999. There were 141,985 shares presented for exchange.
All 141,985 shares were cancelled and retired and 94,657 shares of the Company's
common stock were issued in exchange. The securities were offered without
registration under the Securities Act of 1933, as amended, and were offered in
reliance upon the exemptions from registration provided by Rule 504 of
Regulation D thereunder as a transaction not involving a public offering.
On February 19, 1999, the Company issued 111,472 shares of its common stock
valued at 89.7 per share. Said shares were issued to a non-affiliate. The
securities were offered without registration under the Securities Act of 1933,
as amended, and were offered in reliance upon the exemptions from registration
provided by Rule 504 of Regulation D thereunder as a transaction not involving a
public offering and an accredited investor.
On March 26, 1999, the Company issued 150,376 shares of its common stock
valued at 66.5 per share. Said shares were issued to a non-affiliate. The
securities were offered without registration under the Securities Act of 1933,
as amended, and were offered in reliance upon the exemptions from registration
provided by Rule 504 of Regulation D thereunder as a transaction not involving a
public offering and an accredited investor.
33
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company grants indemnification to the Company's officers and directors,
present and former, for expenses incurred by them in connection with any
proceeding that they are involved in by reason of their being or having been an
officer or director of the Company. The person being indemnified must have
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Company.
Insofar as indemnification for liability arising under the Securities Act
may be permitted to directors or officers the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director or officer of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director or officer in connection with the securities being registered, the
Company will, unless in the opinion of its legal counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
FINANCIAL STATEMENTS
- --------------------
<TABLE>
<CAPTION>
AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998
CONTENTS
<S> <C>
Independent Auditor's Report on
the Consolidated Financial Statements 35
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet 36
Consolidated Statement of Operations 38
Consolidated Statement of Stockholders' Deficit 39
Consolidated Statement of Cash Flows 41
Notes to Consolidated Financial Statements 42
</TABLE>
34
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Banyan Corporation
Colorado Springs, Colorado
I have audited the accompanying consolidated balance sheet of Banyan Corporation
as of December 31, 1998 and the related consolidated statements of operations,
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit. The consolidated statements of operations, stockholders' equity and
cash flows of Banyan Corporation for the year ended December 31, 1997 were
audited by other auditors whose report dated October 8, 1998 expressed an
unqualified opinion on those matters.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Banyan Corporation at December 31,
1998 and the results of its operations and its cash flows for the year ended
December 31, 1998 in conformity with generally accepted accounting principles.
/s/ Ronald R. Chadwick, P.C.
RONALD R. CHADWICK, P.C.
Aurora, Colorado
April 18, 199
35
<PAGE>
<TABLE>
<CAPTION>
BANYAN CORPORATION
COSOLIDATED BALANCE SHEET
(audited)
December 31, 1998
ASSETS
<S> <C>
Current assets:
Cash $ 30,256
Accounts receivable 47,495
Inventory 42,956
Prepaid expenses 4,914
---------
125,621
---------
Furniture and fixtures:
Office furniture and equipment 11,043
Equipment and tooling 5,648
Less accumulated depreciation (16,105)
---------
586
---------
Other assets:
Development costs 25,519
Trademarks and licenses, net of
Accumulated amortization of $49,828 35,227
Note receivable 40,000
Investment in Anything Internet Corp. 47,039
Other 4,700
---------
152,485
---------
$278,692
=========
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
BANYAN CORPORATION
CONSOLIDATED BALANCE SHEET
(audited)
December 31, 1998
LIABILITIES AND STOCKHOLDERS' DEFICIT
<S> <C>
Current liabilities:
Accounts payable $ 83,705
Accrued salaries and related expenses 85,553
Accrued interest 222,242
Notes payable 105,234
------------
496,734
------------
Stockholders' equity:
Preferred stock, Class A, no par value;
500,000 shares authorized;
187,190 issued and outstanding 334,906
Common stock, Class A, no par value;
50,000,000 shares authorized;
9,435,699 issued and outstanding 2,942,795
Accumulated deficit (3,495,743)
------------
(218,743)
------------
$ 278,692
============
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
BANYAN CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(audited)
- Fiscal Years Ending -
December 31, 1998 December 31, 1997
------------------- -------------------
<S> <C> <C>
Sales $ 206,467 $ 247,773
Cost of sales 125,503 116,152
------------------- -------------------
Gross profit 80,964 131,621
Selling, general and
administrative expenses 516,820 667,941
Loss from operations (435,856) (536,320)
Other income (expense):
Interest expense (22,913) (52,843)
Gain on sale of assets 3,449 -
Equity loss in
Anything Internet Corp. (39,590) -
Provision for income taxes - -
Net loss for the period (494,910) (589,163)
=================== ===================
Net income (loss) per share
(basic and fully diluted) ($0.06) ($0.25)
=================== ===================
Weighted average number of
common shares outstanding 8,359,433 2,409,898
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
BANYAN CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
(audited)
For The Years Ended December 31, 1997 and 1998
Common Stock, Preferred Stock, Stock
Class A Class A Subscrip- Stock-
----------------------- ---------------------
Tion Accumulated holders'
Shares Amount Shares Amount Received Deficit Equity
---------- ----------- --------- ---------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1996 246,669 $ 1,532,243 187,190 $ 334,906 $ - ($2,411,670) ($544,521)
Issuance of
shares pursuant
to rights
offering 1,378,120 134,803 134,803
Issuance of stock
for services 1,854,738 197,500 197,500
Sales of common
stock 1,319,000 223,454 223,454
Conversion of
debt to equity 126,600 29,710 29,710
Cancellation of
shares due to
default under
terms of
subscription
agreement (495,000) -
Common Stock
subscribed 143,000 40,000 (40,000) -
Net gain (loss)
for the year
ended December
31, 1997 (589,163) (589,163)
--------- ---------- --------- --------- ---------- ------------ ----------
Balances as of
December 31, 1997 4,573,127 $ 2,157,710 187,190 $ 334,906 ($40,000) ($3,000,833) ($548,217)
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
BANYAN CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(audited)
For The Years Ended December 31, 1997 and 1998
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of
shares pursuant
to rights
offering 2,632,802 220,805 220,805
Issuance of stock
for services 937,570 161,778 161,778
Sales of common
stock 1,015,000 301,000 301,000
Conversion of
debt to equity 77,200 14,873 14,873
Stock issued for
equity investment 200,000 86,629 86,629
Common stock
subscribed 40,000 40,000
Net gain (loss)
for the year
ended December
31, 1998 (494,910) (494,910)
--------- ---------- --------- --------- ---------- ------------ ----------
Balances as of
December 31, 1998 9,435,699 $ 2,942,699 187,190 $ 334,906 $ - ($3,495,743) ($218,042)
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
BANYAN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(audited)
- For the Years Ended -
December 31, 1997 December 31, 1998
------------------- -------------------
<S> <C> <C>
Cash flows from operating
activities:
Net operating deficit ($589,163) ($494,910)
Adjustments to
Reconcile net loss to
net cash provided:
Depreciation and
Mortgage expense 15,373 15,909
Loss in Anything Internet
Corporation - 39,590
Compensatory debt
Issuance - 14,873
Compensatory stock
Issuances - 161,778
Net changes in
operating assets
and liabilities:
Accounts receivable (39,330) 5,486
Securities (16,329) 12,729
Inventory and prepaid
Expenses 28,244 (26,274)
Deposits - 4,319
Accounts payable
and accrued
expenses 47,621 (57,404)
------------------- -------------------
Net cash used by
Operations (553,584) (323,904)
------------------- -------------------
Cash flows from investing
activities:
Note receivable - (40,000)
Net cash used by
Investing activities - (40,000)
Cash flow from financing
activities:
Receipts from notes payable - 5,000
Payments on notes payable (30,213) (76,640)
Stock subscriptions
Receivable - 40,000
Proceeds from issuance of
Common stock 585,467 422,239
------------------- -------------------
Net cash provided by
financing activities 555,254 390,599
Net increase (decrease)
in cash 1,670 26,695
Cash at beginning of the
Period 1,891 3,561
------------------- -------------------
Cash at end of the period $ 3,561 $ 30,256
=================== ===================
</TABLE>
41
<PAGE>
Schedule of Non-Cash Investing and Financing Activities:
- --------------------------------------------------------------
During the year ended December 31, 1997, the Company issued 1,981,338 common
shares for services valued at $197,500 and cancellation of indebtedness for
$29,712.
During the year ended December 31, 1998, the Company issued 200,000 common
shares to purchase an equity interest in Anything Internet Corporation valued at
$86,629, and issued 1,187,190 common shares for $99,566 in debt cancellation.
Supplemental Disclosure:
- -------------------------
Cash paid in 1997 and 1998 for interest and income taxes: None.
BANYAN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(audited)
For the year ended December 31, 1998
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
Banyan Corporation ("Banyan", the "Company"), was incorporated in the State of
Oregon on June 13, 1978. The Company manufactures and distributes hard carrying
cases for portable notebook computers and data storage devices.
Principles of consolidation
- -----------------------------
The accompanying consolidated financial statements include the accounts of
Banyan Corporation and its wholly owned subsidiary, DoubleCase Corporation. All
inter-company accounts and transactions have been eliminated in consolidation.
Use of estimates
- ------------------
42
<PAGE>
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Income tax
- -----------
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss
carryforwards and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment. Additionally, tax
returns have not been filed since 1992. The Company has a net operating loss
carry forward. Consequently, there is not a liability exposure resulting from
not filing past tax returns. The Company intends to become current with it's
filing by September 15, 1999.
Cash and cash equivalents
- ----------------------------
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
Net income (loss) per share
- -------------------------------
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon conversion of the Company's preferred
stock are not included in the computation if the effect of such inclusion would
be anti-dilutive and would increase the earnings or decrease loss per share.
Inventory
- ---------
Inventory consists of raw materials and consigned finished goods. Inventories
are valued at the lower of cost or market using the first-in, first-out (FIFO)
method.
Property and equipment
- ------------------------
Property and equipment are recorded at cost and depreciated under accelerated
methods over an estimated life of five to seven years.
43
<PAGE>
Other assets
- -------------
Product licenses and trademarks are recorded at cost and amortized based on the
straight line method over five to ten years.
Accounts receivable
- --------------------
The Company reviews accounts receivable periodically for collectibility and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed necessary. As of December 31, 1998, the balance in allowance for
doubtful accounts was $1,424.
NOTE 2. EQUITY INVESTMENT
On August 22, 1998 Banyan Corporation purchased 1,000,000 common shares of
Anything Internet Corporation, a marketer of wholesale and retail products over
the Internet, in exchange for 200,000 common shares of Banyan. The purchase
represented 35.7% of the outstanding common stock of Anything Internet
Corporation, and was recorded for valuation purposes by Banyan at $86,629. As
of December 31, 1998, Banyan owned 26% of the outstanding common stock of
Anything Internet Corporation, and accounts for its investment under the equity
method.
Condensed financial information for Anything Internet Corporation as of and for
the year ended December 31, 1998 is set forth below:
<TABLE>
<CAPTION>
<S> <C>
Current assets $ 124,940
Other assets 102,124
-----------
Total assets $ 227,064
===========
Current liabilities $ 180,363
Stockholders' equity 46,701
-----------
Total liabilities and
stockholders' equity $ 227,064
===========
Net income (loss) ($265,311)
</TABLE>
NOTE 3. LEASE COMMITMENT
Effective May 1, 1998, DoubleCase Corporation entered into a lease agreement for
office and warehouse space; the lease agreement is for a period of twelve months
and can be renewed for an additional twelve months at the then current monthly
rental rate plus 3%. Lease expense incurred for the years ended December 31,
1997 and 1998 was $37,766 and $33,017, respectively. The remaining minimum
future rental payment, all in 1999, is $4,420.
44
<PAGE>
NOTE 4. INCOME TAXES
Deferred income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These loss
carryovers are limited under the Internal Revenue Code should a significant
change in ownership occur.
At December 31, 1998, the Company had approximately $3,000,000 of unused federal
net operating loss carryforwards, which begin to expire in the year 2005.
A deferred tax asset, arising from net operating loss carryover and temporary
differences of approximately $1,200,000 has been offset by a 100% valuation
allowance. The Company accounts for income taxes pursuant to SFAS 109.
NOTE 5. NOTES PAYABLE
At December 31, 1998, the Company had the following notes payable outstanding:
<TABLE>
<CAPTION>
Balances at December 31, 1998
-------------------------------
<S> <C>
Related party notes payable,
Unsecured, interest from 6% to 12%
per annum, maturing April 1, 2000 $ 38,647
Related party note payable,
Secured by all inventory, furniture,
equipment, and accounts receivable,
interest at 10% per annum, maturing
April 1, 2000 66,587
Total notes payable 105,234
Less current portion ( -)
Long term notes payable $ 105,234
</TABLE>
The schedule of maturities by fiscal year for all notes outstanding is as
follows:
<TABLE>
<CAPTION>
Years ending December 31,
<S> <C>
1999 $ -
2000 105,234
--------
Total $105,234
</TABLE>
45
<PAGE>
NOTE 6. STOCKHOLDERS' EQUITY
Common stock
- ------------
The Company as of December 31, 1997 and 1998 had 50,000,000 shares of authorized
Class A common stock, no par value, with 4,573,127 and 9,435,699 shares issued
and outstanding respectively.
Preferred stock
- ---------------
The Company as of December 31, 1997 and 1998 had 500,000 shares of authorized
Class A preferred stock, no par value, with 187,190 shares issued and
outstanding at each date. The Company has the right at any time, to call any or
all preferred Class A shares at a price of $2.75 per share. Each Class A
preferred share is convertible by the record owner into one share of the
Company's Class A common stock at any time prior to redemption upon notice to
the Company.
Stock options
- -------------
In August 1998, the Company granted stock options, exercisable immediately, to
certain officer of Anything Internet Corporation, to purchase common shares of
Banyan Corporation as follows:
<TABLE>
<CAPTION>
Amount Price/share Expiration Date
- -------------- ------------ ---------------
<C> <C> <S>
100,000 shares $ 0.50 August 31, 1999
100,000 shares $ 1.00 August 31, 1999
100,000 shares $ 2.00 August 31, 2000
</TABLE>
Also in August 1998, the Company granted stock options, exercisable immediately,
to a consulting company, to purchase common shares of Banyan Corporation as
follows:
<TABLE>
<CAPTION>
Amount Price/share Expiration Date
- -------------- ------------ ---------------
<C> <C> <S>
100,000 shares $ 0.40 August 1, 2001
100,000 shares $ 0.80 August 1, 2001
100,000 shares $ 1.00 August 1, 2001
</TABLE>
Incentive stock option plan
- ---------------------------
As part of an overall executive compensation program, the Company has adopted a
tax qualified incentive stock option plan. The plan which is set to expire
September 18, 2005 unless extended by the directors, allows eligible employees
to receive options to acquire Class A common stock of the Company at a price
equivalent to 95% of the fair market value of the stock on the date the option
is granted. Each option granted will become exercisable over a ten year period
unless the optionee owns 10% or more of the stock of the Company, in which case
the option is exercisable over a five year period. The ability to exercise the
46
<PAGE>
options vests at a rate of 20% per year. As of October 10, 1996, 105,345 shares
of Class A common stock of the Company have been reserved for sale through the
plan. Options to acquire 11,154 shares were outstanding on December 31, 1998
and are exercisable over a five year period at $0.05 per share. The plan
provides that the number of shares issuable upon exercise as well as the
exercise price will not be adjusted for any post offering split or any other
change in the overall capitalization of the Company.
Stock rights offering
- ---------------------
On November 15, 1996, the board of directors approved a rights offering to
shareholders of record on December 6, 1996. Each right allowed a shareholder to
acquire two shares of common stock for $0.125 per share. The terms of the
offering provided that the number of shares issuable upon exercise as well as
the exercise price would not be adjusted for any post offering stock splits or
any other change in the overall capitalization of the Company. The rights were
offered for $0.01 per right. Of the 2,449,609 rights that were issued,
2,005,401 were exercised and exchanged for 4,010,802 new shares of Class A
common stock, including 1,378,000 shares in 1997 and 2,632,802 shares in 1998.
NOTE 7. CONTINGENCIES
An officer of the Company is currently under indictment in U.S. District Court,
Southern District of New York for certain alleged securities violations
occurring in 1996. No allegations have been made against the Company. The
eventual effect of these proceedings, if any, on the Company's business
undertaking is unknown at the present time.
47
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED 3-MONTHS INTERIM FINANCIAL STATEMENTS ENDING MARCH 31, 1999
BANYAN CORPORATION
COSOLIDATED BALANCE SHEET
(unaudited)
March 31, 1999
ASSETS
<S> <C>
Current assets:
Cash $ 14,409
Accounts receivable 60,821
Stock subscription receivable 150,000
Inventory 43,775
Prepaid expenses 4,914
--------
273,919
--------
Furniture and fixtures:
Office furniture and equipment 11,921
Equipment and tooling 5,648
Less accumulated depreciation 16,295
--------
1,274
--------
Other assets:
Development costs 25,519
Trademarks and licenses, net of
Accumulated amortization of $52,759 32,296
Note receivable 40,000
Investment in Anything Internet Corp. 13,539
Other 4,700
--------
116,054
--------
$391,247
========
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
BANYAN CORPORATION
CONSOLIDATED BALANCE SHEET
(unaudited)
March 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Current liabilities:
Accounts payable $ 82,621
Accrued salaries and related expenses 88,992
Accrued interest 225,031
Notes payable 105,234
------------
501,878
------------
Stockholders' equity:
Preferred stock, Class A, no par value;
500,000 shares authorized;
187,190 issued and outstanding 334,906
Common stock, Class A, no par value;
50,000,000 shares authorized;
9,697,547 issued and outstanding 3,142,795
Accumulated deficit (3,588,332)
------------
(110,631)
------------
$ 391,247
============
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
BANYAN CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
- Three Months Ending -
March 31, 1999 March 31, 1998
---------------- ----------------
unaudited unaudited
---------------- ----------------
<S> <C> <C>
Sales $ 31,037 $ 58,486
Cost of sales 20,133 51,409
---------------- ----------------
Gross profit 10,904 7,077
Selling, general and administrative expenses
67,196 96,184
Other income (expense):
Interest expense (2,797) (11,726)
Loss on sale of assets - (236)
Equity loss in
Anything Internet Corp. (33,500) -
Net loss for the period (92,589) (101,069)
Provision for income taxes - -
Earnings per share (weighted) ($0.01) ($0.02)
Weighted average number of common shares outstanding
9,566,623 6,098,128
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
BANYAN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
- Three Months Ending -
March 31, 1999 March 31, 1998
---------------- ----------------
unaudited unaudited
---------------- ----------------
<S> <C> <C>
Cash flows from operating
activities:
Net operating deficit ($91,589) ($101,069)
Adjustments to
Reconcile net loss to
net cash provided:
Depreciation and
Mortgage expense 3,121 3,231
Loss in Anything Internet
Corporation 33,500 -
Net changes in
operating assets
and liabilities:
Accounts receivable (13,326) (384)
Inventory and prepaid
expenses (819) 4,131
Purchase of fixed
Assets (878) (2,000)
Sale of fixed assets - 535
Accounts payable
and accrued 5,144 18,785
expenses ---------------- ----------------
Net cash used by
Operations (65,847) (76,771)
---------------- ----------------
Cash flow from financing
activities:
Stock subscriptions
Receivable (150,000) -
Proceeds from issuance of
Common stock 200,000 275,678
Increase in notes
Receivable - (10,000)
Repayment of notes payable - (163,083)
Net cash provided by ---------------- ----------------
Financing activities 50,000 102,595
Net increase (decrease)
in cash (15,847) 25,824
Cash at beginning of the
period 30,256 3,561
---------------- ----------------
Cash at end of the period $ 14,409 $ 29,385
================ ================
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
BANYAN CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
(unaudited)
For the three months ending March 31, 1999
Common Stock, Preferred Stock,
Class A Class A Stock
---------------------- ----------------- Subscrip- Stock-
tion Accumulated holders'
Shares Amount Shares Amount Received Deficit Equity
---------- ---------- ------- -------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1998 9,435,699 $2,942,795 187,190 $334,906 ($3,495,743) ($218,042)
Common Stock
subscribed; net
gain (loss) for
the period ending
March 31, 1999 261,848 200,000 (150,000) 200,000
Net gain (loss)
for the year
period ended
March 31, 1999 (47,328) (92,589) (92,589)
Balances as of
March 31, 1999 9,650,219 $3,142,795 187,190 $334,906 ($150,000) ($3,588,332) ($110,631)
</TABLE>
52
<PAGE>
PART III
- --------
Item 1. INDEX TO EXHIBITS
The following exhibits are filed as a part of this disclosure statement:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------------------------------------------------------------------------------------------
<C> <S>
3.1 Articles of Incorporation, filed on June 13, 1978
3.2 Certificate of Incorporation
3.3 Restated Articles of Incorporation, filed on August 25, 1981
3.4 Amended Articles of Amendment, filed on February 29, 1988
3.5 Amended Articles of Amendment, filed December 29, 1995
3.6 By-laws
10.1 Share Exchange Agreement dated February 25, 1988.
10.2 Share Exchange Agreement dated October 27, 1995.
10.3 Lease agreement for 4740 Forge Rd., Bldg. 112, Colorado Springs, CO 80907
10.4 Equity Exchange Agreement between Banyan Corporation and Anything, Inc. Dated August 19, 1998
23.1 May 7, 1999 consent letter of Ronald R. Chadwick, P.C.
27.1 Financial Data Schedule for fiscal year ending June 30, 1998
27.2 Interim Financial Data Schedule for three-months ending March 31, 1999.
</TABLE>
53
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, there unto duly authorized.
BANYAN CORPORATION
(Registrant)
Date: May 11, 1999 By: /s/ Cameron B. Yost
----------------------
Cameron B. Yost
President, Chairman and
Chief Executive Officer
In accordance with the requirements of the Securities Exchange Act of 1934,
this Disclosure Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Cameron B. Yost President, Chairman and
- ------------------------
Cameron B. Yost Chief Executive Officer May 11, 1999
/s/ Lloyd K. Parrish Jr.
- ------------------------
Lloyd K. Parrish Jr. Director May 11, 1999
/s/ Lawarance Stanley
- ------------------------
Lawarance Stanley Secretary and Director May 11, 1999
</TABLE>
54
<PAGE>
STATE OF OREGON
DEPARTMENT OF COMMERCE
CORPORATION DIVISION
CERTIFICATE OF INCORPORATION
OF
OMNI-TECH INTERNATIONAL CORPORATION
-----------------------------------
TBE UNDERSIGNED, as Corporation Commissioner of the State of Oregon.,
hereby certifies that duplicate originals of Articles of Incorporation, duly
signed and verified pursuant to the provisions of the Oregon Business
Corporation Act, have been received in this office and are found to conform to
law.
ACCORDINGLY, the undersigned, as such Corporation Commissioner, and by
virtue of the authority vested in him by law, hereby issues this Certificate of
Incorporation and attaches hereto a duplicate original of the Articles of
Incorporation.
In Testimony Whereof, I have hereunto set my hand and
affixed hereto the seal of the Corporation Division of the
Department of Commerce of the State of Oregon this
13th day of ____ June ____ 1978
Corporation Commissioner
By /s/ Shirley Smith
----------------------
Chief Clerk
<PAGE>
ARTICLES OF INCORPORATION
OF
OMNI-TECH INTERNATIONAL CORPORATION
The undersigned natural person of the age of eighty acting as Incorporator
under the Oregon Business Corporation Act, adopt the following Articles of
Incorporation:
ARTICLE I
The name of this corporation is Omni-Tech International Corporation, and
its duration shall be perpetual.
ARTICLE II
The purpose or purposes for which the Corporation is organized are:
To engage in any lawful activity for which Corporations may be organi-zed
under Chapter 57 of Oregon Revised Statutes; including but not limited to
services and activities In the fields of high technology.
ARTICLE III
The amount of total authorized capital stock of this Corporation is
$50,000.00,.consisting of 5,000,000 shares of common stock having a par value of
$0.01 ( one cent ) per share. This stock is comprised of one series, having no
pre-emptive rights, and each share is entitled to one vote on each matter
submitted to a vote at any meeting of Its shareholders.
ARTICLE IV
The address of the initial registered office of the Corporation is 811 S.W.
6th Avenue, Suite 712 Portland, Oregon 97204 and the name of its initial
registered agent at such address is Gary L. Jordan.
ARTICLE V
The business and affairs of the Corporation shall be managed by a governing
board called the Board of Directors, and the number thereof shall be fixed by
the bylaws of this Corporation, but shall not be less than three.
ARTICLE VI
The number of directors constituting the initial board of directors of the
Corporation is three, and the names and addresses of the persons who are to
serve as directors until the first annual meeting of shareholders or until their
successors are elected and shall qualify are:
PAGE 1 - ARTICLES OF INCORPORATION
<PAGE>
RESTATED ARTICLES OF INCORPORATION
OF
OMNI-TECH INTERNATIONAL CORPORATION
We, the undersigned, do hereby certify that the following are the Restated
Articles of Incorporation of Omni-Tech International Corporation, an Oregon
corporation, adopted August 11, 1981, and that these Restated Articles of
Incorporation supersede and take the place of the heretofore existing Articles
of Incorporation and Amendments thereto.
ARTICLE 1. NAME
-----------------
The name of the corporation is Omni-Tech International Corporation.
ARTICLE 2. DURATION
---------------------
The period of its duration is perpetual.
ARTICLE 3. PURPOSES AND POWERS
----------------------------------
The purpose and powers of the corporation are:
1. To engage in consulting services, manufacturing, and marketing
activities in high technology fields.
2. To engage in any lawful activities for which corporations may be
organized and to do anything in the operation of this corporation or for the
accomplishment of any of its purposes or for the exercise of any power herein
set forth which shall appear necessary or beneficial to this corporation in
connection therewith.
ARTICLE 4. CAPITALIZAT1ON
---------------------------
This corporation is authorized to issue two classes of shares of stock
designated as "common" and "class B capital" as follows:
1. 5,000,000 shares common stock having par value of $.01 per share.
2. 787,500 shares class B capital stock having par value of $.01 per share.
Upon
1 - RESTATED ARTICLES OF INCORPORATION
<PAGE>
any transfer of this stock more than ten (10) months after its issuance, the
corporation shall convert (on a one for one basis) the stock transferred into
common stock and issue common stock to the transferee.
3. Each shareholder of record of this corporation whether common stock,
class B capital stock or both shall have one vote for each share of record on
all matters submitted for shareholder approval. Voting shall be combined and not
by class.
4. Shareholders of record of common stock or class B capital stock shall
receive equal distributions per share of dividends, liquidating dividends or
other distributions to shareholders.
ARTICLE 5. CONSENT TO ACTION
--------------------------------
Any action which may be taken at a meeting of the shareholders or
directors, may be taken without a meeting if a consent in writing setting forth
the action so taken shall be signed by all of the shareholders or directors
entitled to vote with respect to the subject matter thereof. Such consent shall
have the same force and effect as a unanimous vote of such shareholders or
directors.
ARTICLE 6. CUMULATIVE VOTING
----------------------------
No shareholder shall be entitled to cumulate his votes for election of
directors.
ARTICLE 7. DIRECTORS
----------------------
The members of the governing board shall be known as directors, and the
number thereof shall be fixed by the bylaws of this corporation.
ARTICLE 8. OFFICERS' STATEMENT
---------------------------------
The date of adoption of these Restated Articles of Incorporation by the
shareholders is August 11, 1981.
2 - RESTATED ARTICLES OF INCORPORATION
<PAGE>
The stated capital of the corporation at such time was $235,736.
2,774,241 shares of common stock were outstanding at such time, which is
the number of shares entitled to vote thereon. 1,561,637 shares of common stock
were voted in favor of the resolution authorizing the Restated Articles of
Incorporation, and no shares were voted against same. Under penalties of
perjury, I verify that I have examined the Officers' Statement and to the best
of my knowledge and belief, it is true, correct and complete.
OMNI-TECH INTERNATIONAL CORPORA77ON
By: /s/
------------------------------
President'
------------------------------
By: /s/
Secretary
3 - RESTATED ARTICLES OF INCORPORATION
<PAGE>
STATE OF OREGON
CORPORATION DIVISION
158 12th Street NE
Salem, OR 97310
REGISTRY NUMBER:
ARTICLES OF AMENDMENT
12910519 BY DIRECTORS OR SHAREHOLDERS
- --------
(If known)
PLEASE TYPE OR PRINT LEGIBLY IN BLACK INK
Name of the corporation prior to amendment:
OMNI-TECH INTERNATIONAL CORPORATION
State the article number(s) and set forth the article(s) as it is amended to
read.
(Attach additional sheets, if necessary.)
ARTICLE I The name of the Corporation is INTERACTIVE DATA VISION INC.
ARTICLE III Clyde D Feyrer 6950 SW Hampton #200 Portland, OR. 97223
ARTICLE V 50,000,000 Class A Common NPV
10,000,000 Class B Common NPV
10,000,000 Perferd
The amendment was adopted on Feb 29, 1988, 19__ (If more than one amendment was
------------
adopted, identify the date of adoption of each amendment.)
Check the one appropriate statement:
[ ] Shareholder action w" not required to adopt the amendment (s) The
amendment was adopted by the board of directors without shareholder action.
[X] shareholder action was required to adopt the amendment(s). The shareholder
vote was as follows:
<TABLE>
<CAPTION>
Class or Series Number of Shares Number of Votes Number of votes Number of Votes
of Shares Outstanding Entitled to be Cast Cast For Cast Aqainst
- --------------- ---------------- ------------------- --------------- ---------------
<S> <C> <C> <C> <C>
Common &. . . . 2,657,265 2,657,265 1,589,880 200
Class B Common
</TABLE>
Other provisions, if applicable (Attach additional sheets, if necessary).
ecution: /s/ Walter T. Aho Walter T. Aho Secretary
-------------------- --------------- ---------
Signature Printed Name Title
Person to contact about this filing: Walter T Aho 503-684-7540
------------ --------------------
Name Daytime Phone Number
Submit the original and a true copy to the Corporation Division, 158 12th Street
NE, Sales, Oregon 97310. There is no fee required. If you have questions, please
call (503) 378-4166.
<PAGE>
[STATE OF OREGON 1859 SEAL]
Subeit the original THIS SPACE FOR OFFICE USE ONLY
and one true copy Corporation Division - Business Registry
$10.00 Public Service Building
255 Capitol Street NE, Suite 151
Registry Number Salem, OR 97310-1327
(503) 986-2200 Facsimile (503) 378-4381
12910519 ARTICLES OF AMENDMENT.
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By Incorporators, Directors or Shareholders
PLEASE TYPE OR PRINT LEGIBLY IN BLACK INK
1. Name of the corporation prior to amendment:
Interactive Data Vision
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2. State the article number(s) and set forth the article(s) as it is amended
to read or attach a separate sheet.
See attached sheet "Article of Amendment" - 1 page
3. The amendment(s) was adopted on December 29, 1995. (If more than one
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amendment was adopted, identify the date of adoptipn of each amendment.)
All amendments were adopted on December 29, 1995.
4. Check the appropriate statement:
[X] Shareholder action was required to adopt the amendment(s). The vote was as
follows:
<TABLE>
<CAPTION>
Class or series Number of shares Number of votes Number of votes Number of votes
of shares outstanding entitled to be cast cast for cast against
<S> <C> <C> <C> <C>
Common Class A. 4,825,384 3,771,378 3,771,318 60
</TABLE>
[ ] Shareholder action was not required to adopt the amendment(s). The
amendment(s) was adopted by the board of directors without shareholder action.
[ ] The corporation has not issued any shares of stock. Shareholder action
was not required to adopt the amendment(s). The amendment(s) was adopted by the
incorporators or by the board of directors without shareholder action.
Execution: /s/ Cameron B. Yost Cameron B. Yost President
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Signature Printed name Title
Person to contact about this filing: Cameron B. Yost 719-531-5535
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Name Daytime phone number
MAKE CHECKS PAYABLE TO THE CORPORATION DIVISION OR INCLUDE YOUR VISA OR
MASTERCARD NUMBER AND EXPIRATION DATE 5407-5610-0137-7513-08196. SUBMIT THE
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COMPLETED FORM AND FEE TO THE ABOVE ADDRESS OR FAX - -0 (503) 378-1381.
<PAGE>
ARTICLES OF AMENDMENT
Interactive Data Vision, Inc.
(Banyan Corporation)
Article 1 The name of the corporation be changed from Interactive
Data Vision, Inc. to Banyan Corporation.
Article 4.1 This corporation is authorized to issue the following classes
of shares of stock designated as follows:
50,000,000 Class A Common NPV
10,000,000 Class B Common NPV
10,000,000 Class A Preferred NPV
500,000 Class B Preferred NPV
Article 4.2 The Directors of the Corporation shall have the right to
prescibe the classes, series and the number of each class or
series of authorized stock and the voting powers,
designations, preferences, limitations, restrictions and
relative rights of each class or series of authorized stock. The
Directors of the Corporation shall have the right to increase
or decrease the number of issued and outstanding shares of
the same class and/or series held by each stockholder of
record at the effective date and time of the change, except as
otherwise provided in Oregon Law, without obtaining the
approval of the stockholders.
Page 1 of 1
BYLAWS
OF
OMNI-TECH INTERNATIONAL CORPORATION
ARTICLE I
OFFICES
Section 1. Registered office. A registered office shall be maintained by
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the corporation in the State of Oregon at such location as the Board of
Directors, from time to time, shall designate. The registered office may, but
need not be, the same as the corporation's principal place of business.
Section 2. Other Offices. The corporation also may have offices at such
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other places both within and without the State of Oregon as the Board of
Directors may from time to time determine or the business of the corporation may
REQUIRE.
ARTICLE II
SHAREHOLDERS
Section 1. Location of Meetings. All meetings of the shareholders,
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whether annual or special, shall be held at such location, whether within or
without the State of Oregon as the Board of Directors from time to time shall
determine.
Section 2. Annual Meetings. The annual meeting of shareholders, for the
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purpose of electing directors and for the transaction of such other business as
properly may come before the meeting, shall be held on the. first Monday in
January each year, if not a legal holiday, and if a legal holiday then on the
next succeeding business day, or on such other day as the Board of Directors
shall designate, and at such time as may be designated by the Board of
Directors.
Section 3. Special Meetings. Special meetings of the Shareholders may
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be called at any time by the President, the Board of Directors or the holders of
not less than one-tenth of all the shares entitled to vote at such meeting.
Section 4. Notice of Meetings. Written or printed notice stating the
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place, day and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten nor more than fifty days before the date of the meeting, either
personally or by' mail, by or at the direction of the President, the Secretary
or the officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at his last known address as appears on the books and records maintained
by the Secretary, with postage thereon prepaid.
Section 5. Quorums and Adjournments. The holders or a majority of the
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stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
statute or by the articles of incorporation. The shareholders present in person
or represented by proxy at a duly organized meeting may ' continue to transact
business until adjournment, notwithstanding the with-drawal of enough
shareholders to leave less than a quorum. if, however, such quorum initially
shall not be present or repre-sented at any meeting of the shareholders, those
shareholders present in person. or represented by proxy, and from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented.' At such reconvened meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the original meeting.
Section 6. Voting Rights.
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(a) The persons entitled to receive a notice of and to vote at any
shareholders meeting shall be determined from the records of the corporation on
the date of mailing of the notice or on such other date not more than fifty nor
less than ten days before such meeting, as shall be fixed in advance by the
Board of Directors.
(b) The officer or agent having charge of the stock transfer books for
shares of the corporation shall make, at least ten days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten days prior to such meeting, shall be kept on file at the registered office
of the corporation and shall he subject to inspection by any shareholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any shareholder during the time of the meeting. The original stock transfer book
or records shall be prima facie evidence as to who are the shareholders entitled
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to examine such list or transfer books or records or to vote at any meeting of
shareholders. Failure to comply with the requirements of this subsection (b)
shall not affect the validity of any action taken at such meeting.
(c) Except, and to the extent, provided otherwise by express provision
of statute or of the articles of incorporation, each person entitled to vote at
a shareholders' meeting shall have one vote for each share of voting stock
standing registered in his name on the stock transfer books of this corporation
as of the foregoing subsection (b).
Page 2 - BYLAWS
<PAGE>
(d) If a quorum is present or representet9 at any meeting, the
affirmative vote of a majority of the stock having power present in person or
represented by proxy shall be the act of the shareholders, unless by express
provision of statute or of the articles of incorporation a different vote is
required, in which case such express provision shall govern and control.
Section 7. Proxies. Every shareholder entitled to vote or to execute
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any waiver or consent may do so either in person or by written proxy duly
executed and filed with the Secretary of the corporation. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
Section 8. Voting of Shares by Certain Holders.
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(a) Shares standing in the name of another corporation may be voted by
such officer, agent or proxy as the bylaws of such corporation may prescribe or,
in the absence of such revision, as the Board of Directors of such corporation
may determine.
(b) Shares held by an administrator, executor, guardian or conservator
may be voted by him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name.
(c) Shares standing in the name of a receiver or bankruptcy trustee may
be voted by such receiver or bankruptcy trustee, and shares held by or under the
control of a receiver or bankruptcy trustee may be voted by such receiver or
bankruptcy trustee without the transfer thereof into his name if authority so to
do is contained in an appropriate order of the court or bankruptcy referee by
which such receiver or bankruptcy trustee was appointed.
(d) A shareholder whose shares are pledged shall, he entitled to vote
such shares until the shares have been transferred into the name of the pledqee,
and thereafter the pledgee shall lie entitled to vote the shares so transferred.
(e) Neither treasury shares, nor shares of its own stock held by a
corporation in a fiduciary capacity, shall be voted at any meeting or counted in
determining the total number of outstanding shares at any given time.
ARTICLE III
DIRECTORS
Section 1. Number.
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(a) The number of directors which shall 'constitute the whole
Board shall be five until the number be changed by the Board of
Page 3 - BYLAWS
<PAGE>
Directors by amendment of these bylaws. Directors need not be shareholders, or
residents of Oregon.
(b) No reduction in the number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
(c) A director shall hold office for a term of one year and until his
successor shall have been elected and qualified.
Section 2. Vacancies.
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(a) A vacancy in the Board of Directors shall exist upon the death,
resignation or removal of any director.
(b) Any director may resign at any time by giving written notice to the
Board of Directors, the President or the Secretary of the corporation. Any such
resignation shall take effect upon the receipt of such notice or at any later
time specified therein. Unless otherwise specified in the notice, the acceptance
of such resignation shall not be necessary to make it effective, provided that
the Board of Directors may reject any postdated resignation by notice in writing
to the resigning director in the event the resignation of a director is tendered
to take effect at a future time, a successor may be elected to take office when
the resignation becomes effective.
(c) Vacancies in the Board of Directors may be filled by a majority of
the remaining directors though less than a quorum, or by a sole remaining
director. Each director so elected shall hold office for the balance of the
unexpired term of his predecessor and until his qualified successor is elected
and accepts office.
(d) The shareholders may at any time elect a director to fill any
vacancy not filled by the directors.
Section 3. Removal of Directors. The entire Board of Directors or any
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individual director may be removed from office at a special meeting called for
that purpose by a majority vote of shareholders entitled to vote on the election
of directors. Unless otherwise prohibited by statute, the articles of
incorporation or an express provision of these bylaws, any director may be
removed, with or without cause, by a majority vote of the Board of Directors.
Section 4. Powers and Executive Committee.
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(a) The business and affairs of the corporation shall be managed by the
Board of Directors who shall exercise or direct the exercise of all corporate
powers except to the extent shareholder authorization is required by law, the
articles of incorporation, or these bylaws. However, when there are five (5) or
more directors, the Board of Directors, by majority vote, may designate two or
more directors to constitute an executive committee, and
Page 4 - BYLAWS
<PAGE>
may designate one or more persons as ex officio members without voting power,
which committee shall have and may exercise all the authority of the Board of
Directors in the management of this corporation, excepting only the authority to
amend the articles of incorporation; adopt a plan of merger or consolidation;
recommend to the shareholders the sale, lease, exchange, mortgage, pledge, or
other disposition of all or substantially all the property and assets of this
corporation or a revocation thereof; or Amend the bylaws of this corporation.
Such committee shall hold office at the pleasure of the Board.
(b) Any executive committee shall meet from time to time on call of the
chairman of the executive committee or of any two or more members of the
executive committee. Notice of each such meeting, stating the place, day and
hour thereof, sh411 be served personally on each member of the executive
committee, or-shall be mailed, telegraphed or telephoned to his address on the
books of the corporation, at least twenty-four hours before the meeting. No such
notice need state the business proposed to he transacted at the meeting. No
notice of the time or place of any meeting of the executive committee need be
given to any member thereof who attends in person or who, in writing executed
and filed with the records of the meeting either before or after the holding
thereof, waives such notice. No notice need be given of an adjourned meeting of
the executive committee. Meetings of the executive committee may be held by
telephone or at such place or places either within or outside the State of
Oregon, as the executive committee shall determine, or as may be specified or
fixed in the respective notices or waivers thereof. The executive committee may
fix its own rules of procedure. it shall keep a ' record of its proceedings and
shall report these proceedings to the Board of Directors at the regular meetings
thereof held next after they have been taken.
Section 5. Meetings.
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(a) Meetings of the Board of Directors shall be hold at such place
within or without the State of Oregon as may he designated from time to time by
the Board of Directors or other person calling the meeting.
(b) The annual meeting of each newly elected Board of Directors shall
be held, without notice, immediately following the adjournment of the annual
meeting of shareholders.
(c) Regular meetings of the Board of Directors may be held, without
notice, at such time and place, as shall from time to time be determined by the
Board.
(d) Special Meetings of the Board of Directors for any purpose or
purposes may be called at any time by the President, and shall be called by the
President, any Vice President or Secretary upon the written request of any two
or more directors.
Page 5 - BYLAWS
<PAGE>
Section 6. Quorums. A majority of the directors at a Meeting shall
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constitute a quorum for the transaction of business, and the act of a majority
of the directors present at any meeting at which a quorum is present shall be
the act of the Board of Directors, except as may be otherwise specifically
provided by statute or by the articles of incorporation or by these bylaws. if a
quorum initially shall not be present at any meeting of directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 7. Notice of Special Meetings.
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(a) Notice of the time and place of special meetings shall be given
orally or delivered in writing personally or by mail or telegram at least 24
hours before the meeting. Notice shall be sufficient if actually received at the
required time or if mailed or telegraphed not less than 72 hours before the
meeting. Notice mailed or telegraphed shall be directed to the address shown on
the corporate records or to the director's actual address ascertained by the
person giving the notice.
(b) Notice of the time and place of holding an adjourned meeting need
not be given if such time and place be fixed at the meeting adjourned.
ARTICLE IV
NOTICES AND WAIVERS
Section 1. Form of Notices. Whenever under the provisions of the
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statutes or of the articles of incorporation or of these bylaws, notice is
required to be given to any director or shareholder, it shall not be construed
to require personal notice, but such notice may be given in writing, by mail or
telegram, addressed to such director or shareholder at such address as appears
on the records of the corporation with postage thereon prepaid, and such notice
by mail shall be deemed to be given at the time when the same shall be deposited
in the United States mail.
Section 2. Attendance at Meetings. Attendance of a shareholder, either
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in person or by proxy, or of a director at a meeting shall constitute a waiver
of notice of such meeting, except where such attendance is done for the express
purpose of objecting to the transaction of any business because the meeting is
not lawful3v called or convened.
Section 3. waivers. Whenever any notice whatever is required to be given
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under the provisions of the statutes, of the articles of incorporation or of
these bylaws, a waiver thereof in writing, signed by the person entitled to said
notice either before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
Page 6 - BYLAWS
<PAGE>
Section 4. Consents. Any action which the applicable law, the articles
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of Incorporation or the bylaws require or permit the shareholders or directors
to take at a meeting may be taken with-out a meeting if a' consent in writing
setting forth the action so taken is signed by all of the shareholders or
directors entitled to vote with respect to the subject matter thereof. The
consent, which shall have the same effect as a unanimous vote of the
shareholders or directors, shall be filed in the records of minutes of the
corporation. ,
ARTICLE V
OFFICERS
Section 1. Designation. The officers of the corporation shall be a
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President and a Secretary, and. such Vice Presidents and other officers,
assistant officers and agents as the Board of Directors by resolution shall.
designate. With the exception of the Chairman of the Board of Directors, if such
office be created, no officer need be a member of the Board of Directors. Any
two offices may be held by the same person except the offices of President and
Secretary.
Section 2. Election. The Board of Directors, at its first meeting after
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each-annual meeting of the shareholders, shall elect a President and a
Secretary. other officers, assistant officers or agents of the corporation shall
be elected at such meeting, or on such other occasions as the Board of Directors
in its discretion shall from time to time deem appropriate. Except in the event
of removal by the Board, death, resignation, dis-qualification or abolition of
an office, the officers, assistant officers and agents of the corporation shall
hold office until their successors are chosen and qualified, or for such other
period as the Board may determine.
Section 3. vacancies and Removal.
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(a) A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to such office, unless a majority of the
directors vote to abolish such office not required by the articles of
incorporation or by statute.
(b) Any officer, assistant officer or agent may be removed, or any
office, not required by the articles of incorporation or by statute, abolished
at any time by the affirmative vote of a majority of the Board of Directors,
whenever in its judgment the best interests of the corporation will be served
thereby.
(c) Any officer, assistant officer or agent may resign at any time by
giving-written notice to the Board of Directors, the, President or the Secretary
of the corporation. Any such resignation shall take effect upon receipt of such
notice or at any
Page 7 - BYLAWS
<PAGE>
later time specified therein. Unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective, provided that
the Board of Directors may reject any post-dated resignation by notice in
writing to the resigning officer.
(d) This section shall not affect the contract rights of the
corporation or any officer, assistant officer or agent.
(e) Election or appointment of an officer or agent shall not by itself
create contract rights.
Section 4. Compensation. The salaries and other compensation of all
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6fficers, assistant officers and agents of the corporation shall be fixed by the
Board of Directors.
Section 5. President. The President shall be the chief executive
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officer of the corporation, and shall have general policy direction of the
business of the corporation. Tie shall preside at meetings of the shareholders
and directors in the absence of a chairman; he shall be ex officio a member of
all standing committees, unless the Board of Directors shall designate
other-wise; he shall have general management and direction of the business of
the corporation, and all powers ordinarily exercised by the chief executive
officer of the corporation. He shall have the authority to sign or countersign
all certificates, contracts and other instruments of the corporation, under the
seal of the corporation or otherwise, except where required by law to be
otherwise signed and executed, and except where the signing and execution
thereof shall be delegated or reserved by the Board of Directors to some other
officer or agent of the corporation. Tie shall perform all other duties as are
in6ident to his office or are properly required of him by the Board of
Directors.
Section 6. Secretary. The Secretary shall attend all meetings of the
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Board and all meetings of the shareholders and shall record, or cause to be
recorded, all votes and the minutes of all proceedings in a book to be kept for
that purpose, and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
shareholders and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or the Chairman
or the President, under whose supervision he shall be. Unless otherwise provided
by the Board of Directors, the Secretary shall have authority to affix the
corporate seal to any instrument requiring a seal, and when so affixed it shall
be attested by his signature or by the signature of an Assistant Secretary. The
Board of Directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.
Section 7. Chairman. The Chairman of the Board of Directors, if one be
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appointed, may sign or countersign certificates, contracts and other instruments
of the corporation as authorized by the
Page 8 - BYLAWS
<PAGE>
Board of Directors, and shall preside at meetings of the Board of Directors and
at meetings of the shareholders, and shall make reports to the shareholders. in
the absence or disability of the President, he may assume chief executive duties
and general management and direction of the business of the corporation, and all
powers ordinarily exercised by the chief executive officer of the corporation.
Section 8. Treasurer. The Treasurer, if one shall be appointed, shall
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keep accounts of all of the monies of the corporation received and disbursed,
and subject to direction of the Board of Directors, shall safely keep all
securities and valuables of the corporation. He shall, from time to time, make
such reports to the officers, Board of Directors and shareholders as may be
required and shall perform such other duties as the Board of Directors and/or
the President shall, from time to time, delegate to him. In the absence of a
Treasurer, the duties of the Treasurer shall be discharged by the Secretary, or
such other officer as the Board of Directors shall designate.
Section 9. Other Officers. Other officers, assistant officers or agents
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appointed by the Board of Directors shall exercise such powers and perform such
duties as shall he determined from time to time by the Board of Directors,
except such duties as shall be exclusively delegated to the Board of Directors
by statute, the articles of incorporation, or these bylaws. Unless otherwise
specified by the Board of Directors, any Assistant Secretary or Assistant
Treasurer shall have authority to exercise any powers delegated to them from the
Secretary or Treasurer, respectively, and in the absence of the secretary or
Treasurer shall assume all powers and discharge all duties ordinarily exercised
by such absent officer.
ARTICLE VI
INDEMNIFICATION
Section 1. Non-Derivative Actions. Subject to the provisions
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of Sections 3, and 6, below, the corporation shall 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 or arising from the fact that he is or was a director
or officer of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner or trustee 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 such action, suit or
proceeding if (i) he acted in good faith and in a manner he reasonably
believed to be 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
Page 9 - BYLAWS
<PAGE>
unlawful, or (ii) his act or omission giving rise to such action, suit or
proceeding is ratified, adopted or confirmed by the corporation or the benefit
thereof received-by the corporation. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
----
contendere or its equivalent, shall not of itself create a presumption that the
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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, with respect
to any criminal action or proceeding, had reasonable cause to believe his
conduct was unlawful, and settlement shall not constitute any evidence of any of
the foregoing.
Section 2. Derivative Actions. Subject to the provisions of Sections 3,
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5 and 6F below, the corporation shall indemnify any person who was or is a party
or is threatened to he 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 or arising from the fact that he is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner or trustee of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he M acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, or (ii) his act or omission giving rise
to such action or suit is ratified, adopted or con-firmed by the corporation or
the benefit thereof received by the corporation; provided, however, that no
indemnification shall be made in respect to any claim, issue or matter as to
which such person shall have been adjudged to he liable for negligence or
deliberate misconduct in the performance of his duty to the corporation unless,
and only to the extent that, the court in which action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Section 3. Determination of Right to indemnification in Certain Cases.
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Subject to the provisions of Sections 5 an3 r,, below, indemnification under
Sections I and 2 of this Article automatically shall be made by the corporation
unless it is expressly determined by a majority vote of a quorum of the Board of
Directors consisting of directors who were not parties to such action, suit or
proceeding, or if such a quorum is not obtain-able, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or by a majority vote of the shareholders of the corporation
that indemnification of the person who is or was an officer, or director, or is
or was serving at the request of the corporation, as an officer, director,
partner or trustee of another corporation, partnership, joint venture, trust or
other enterprise, is not proper in the circumstances because he has not met
the applicable standard of conduct set forth in Section 1 or 2.
Section 4. Indemnification of Persons other Than Officers or Directors.
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In the event any person not included with the group of persons referred to in
Sections 1 and 2 of this Article was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding of a
type referred to in Sections I and 2 of this Article by reason of or arising
from the fact that he is or was an employee or agent of the corporation, or is
or was serving at the request of the corporation as an employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, the
Board of Directors of the corporation by a majority vote of a quorum (whether or
not such quorum consists in whole or in part of directors who were parties to
such action, suit or proceeding) or the shareholders of the corporation by a
majority vote of the outstanding shares may, but shall not be required to, grant
to such person a right of indemnification to the extent described in Sections 1
or 2 of this Article as if he were an officer or director referred to therein,
provided that such person meets the applicable standard of conduct set forth in
such Sections.
Section 5. Successful Defense. Notwithstanding any other provision of
--------------------
Sections 1, 2, 3 or 4 of this Article, but subject to the provisions of Section
6 below, if a director, officer, employee or agent is successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Sections 1, 2 or 4 of this Article, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (inc2ud-ing attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 6. Condition Precedent to Indemnification tinder Sections 1, 2 or 5.
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Any person who desires to receive the benefits otherwise conferred by Sections
2., 2 or 5 of this Article shall notify the corporation reasonably promptly that
he has been named a defendant to an action, suit or proceeding of a type
referred to in Sections I or 2 and that he intends to rely upon the right of
indemnification described in Sections 1, 2 or 5 of this Article. The notice
shall be in writinq and mailed via registered or certified mail, return receipt
requested, to the President of the corporation at the executive offices of the
corporation or, in the event the notice is from the President, to the registered
agent of the corporation. Failure to give the notice required hereby shall
entitle the Board of Directors of the corporation by a majority vote of a quorum
(consisting of directors who, insofar as indemnity of officers or directors is
concerned, were not parties to such action, suit or proceeding, but who, insofar
as indemnity of employees or agents is concerned, may or may not have been
parties) or the shareholders of the corporation by a majority vote of the
outstanding shares of the corporation to make a determination, 'in their sole
discretion, that such failure was prejudicial to the corporation in the
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<PAGE>
circumstances and that, therefore, the right to indemnification referred to in
Sections 1, 2 or 5 of this Article shall be denied in its entirety or reduced in
amount.
Section 7. Insurance. At the discretion of the Board of Directors, the
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corporation may purchase and maintain insurance on behalf of any person who 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 any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this Section.
Section 8. Former Officers and Directors. The indemnification provisions
------------------------------
of this Article VI or each or any of said provisions individually shall be
extended to a person who has ceased to be a director, officer, employee or agent
and shall inure to the bene-fit of the heirs, executors and administrators of
such a person.
Section 9. Purpose and Exclusivity. The indemnification referred to in
------------------------
the various sections of this Article shall be deemed to he in addition to and
not in lieu of any other rights to which those indemnified may be entitled under
any statute, rule or law or equity, agreement, vote of the shareholders or Board
of Directors or otherwise. The purpose of this Article is to augment, pursuant
to ORS 57.260(3), the other provisions of ORS 57.255 and 57.260.
ARTICLE VII
CERTIFICATES FOR SHARES
Section 1. Form of Certificates. Certificates for shares of stock of the
---------------------
corporation shall be in such form (not inconsistent with the articles of
incorporation or applicable law) as shall he approved by the Board of Directors
and shall be numbered and entered in the books of the corporation as they are
issue. Every certificate for shares shall be signed by the President or Vice
President and by the Secretary or an Assistant Secretary, provided, however,
that if the certificate is manually signed on behalf of a transfer agent or
registrar (other than the corporation itself or an employee of the corporation),
the signatures of such officers or their successors may be facsimiles.
Section 2. Transfer Agents and Registrars. The Board of Directors may
from time to time appoint one or more transfer agents and one or more registrars
for the shares of the corporation who shall have such powers and duties as the
Board of Directors shall specify.
Section 3. Restrictions on Transfer. No securities of this corporation
--------------------------
or certificates representing such securities shall be transferred in violation
of any law or of any restriction on such transfer set forth in the articles of
incorporation or amendments thereto, the bylaws or any buy-and-sell agreement,
right of first refusal, or other agreement restricting such transfer which has
been filed with the corporation if reference to any such restrictions is made
on the certificates representing such securities. The corporation shall not
he bound by any restrictions not so filed and noted. The corporation may rely
in good faith upon the opinion of its counsel as to such legal or contractual
violation with respect to any such restrictions unless the issue of
transferability has been finally determined by a court of competent
jurisdiction. The corporation and any party to such agreement sha.11 have the
right to have a restrictive legend imprinted upon any-such certificate and any
certificates issued in replacement or exchange therefor or with respect thereto.
Section 4. Closing Transfer Books and fixing Record Date. The directors
----------------------------------------------
may prescribe a period not exceeding fifty days nor less than ten days prior to
any meeting of the shareholders or prior to the date appointed for the payment
of dividends during which no transfer of stock may be made on the books of the
corporation, or may fix a day not more than fifty days not less than ten days
prior to the holding of any such meeting or the date for the payment of any such
dividend as the day as of which shareholders entitled to notice of and to vote
at such meeting or entitled to receive payment of such dividend shall be
determined; and only shareholders of record on such day shall be entitled to
notice or to vote at such meeting or to receive payment of such dividend.
Section 5. Presumption of Ownership. The corporation shall be entitled
--------------------------
to treat the holder of record of any share or shares of stock as the holder in
fact thereof and the owner of share or shares to receive dividends and to vote
as such owner and tn hold liable for calls and assessment's a person registered
on its books as the owner of share or shares, and accordingly shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thcr~of, except as expressly provided by the laws of Oregon.
Section 6. Lost, Stolen or Destroyed Certificates. In the event a
-------------------------------------------
certificate is claimed to be lost, stolen or destroyed, the issuance of a new
certificate in replacement thereof may be conditioned upon the giving of such
proof of the loss, -theft or destruction as the Board of Directors, or-such
corporate officer or agent as they may designate, may require.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Reserves. Before payment of any dividend or making any
---------
distribution of profits, the Board of Directors may set aside out of any funds
of the corporation available for dividends such
Page 13 - BYLAWS
<PAGE>
sum or sums as they from time to time in their absolute discretion, think proper
as a reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created, subject to provisions of the articles of
incorporation and statutes.
Section 2. Checks, Drafts. All checks, drafts or other orders for
----------------
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation shall be signed or endorsed by such person or
persons and in such manner as shall be determined from time to time by rsolution
of the Board of Directors.
Section 3. Taxable Year. The taxable year, whether fiscal or calendar,
--------------
of this corporation, shall be fixed by resolution of the Board of Directors.
Section 4. Headings. The headings contained in these bylaws are for
---------
convenience only and shall not in any way affect thc meaning or interpretation
of these bylaws.
ARTICLE IX
AMENDMENT OF BYLAWS
Section 1. Amendment and Repeal. Except as otherwise provided by law,
-----------------------
the power to alter, amend or repeal these bylaws, or adopt new bylaws shall he
vested exclusively in the Board of Directors.
Section 2. Recordation. Whenever an amendment or new bylaw is adopted, a
------------
copy thereof shall be kept in the minute book with the original bylaws, and, of
any amendment, a notation placed along-side of the original bylaw to the effect
that it has been amended on the date thereof. If any bylaw is repealed, the fact
of such repeal and the date on which it occurred shall be recorded in the minute
book and a notation placed alongside of the original bylaw to the effect that it
has been repealed on said date.
I, the undersigned, being the Secretary of Omni-Tech International
Corporation do hereby certify the foregoing to be the bylaws of said
corporation, as adopted by the Board of Directors on the __ day of August, 1978.
Secretary
---------
Page 14 - BYLAWS
<PAGE>
SHARE EXCHANGE AGREEMENT
Interactive Data Vision, Inc.
Omni-Tech International, Inc.
This agreement dated effective February 25, 1988 by and among the
shareholders ("IDV Shareholders") of Interactive Data Vision, Inc ( "IDV" ) ,
Omni-Tech International , I n c . ("OTI") and Coast Capital Ltd ("Coast").
Coast controls OTI, a shell corporation with public shareholders which
desires to acquire all of the outstanding stock of IDV. The IDV Shareholders are
willing to exchange their shares for shares of OTI pursuant to the terms and
conditions of this agreement and with the understanding and intention in that
the exchange of shares will qualify as a tax-free reorganization under Section
368(a)(1)(B) of the Internal Revenue Code of 1986.
I. The Exchange.
--------------
1. Share Exchange. Each IDV Shareholder will exchange each share of
----- ---------
their common stock of IDV for an equal number of shares of Class A common stock
of OTI. All outstanding warrants and options for IDV will be exchanged for
similar options or warrants issued by OTI. A schedule of all stockholders,
warrant holders and option holders of OTI (collectively "IDV Shareholders")
together with their holdings is attached as Schedule A.
2. Procedure. Each IDV Shareholder by executing this agreement
----------
agrees to surrender to the Escrow Agent described in Section V all their shares,
warrants or options (the "IDV Securities") for exchange
1 - SHARE EXCHANGE AGREEMENT
pursuant to this agreement. In executing this agreement, such IDV Shareholder al
so authorizes and appoints the Escrow Agent or Its designee as attorney-in-fact
to transfer the IDV Securities on the books of IDV into the name of OTI under
the terms of this agreement.
II. Representations and Warranties of IDV Shareholders.
--------------------------------------------------------
1. By executing this agreement, each IDV Shareholder represents and
warrants that they own all of the IDV Securities listed on Schedule A free and
clear of any lien, encumbrance or claim of others and may freely transfer,
assign and exchange the same.
2. Each IDV Shareholder represents and warrants that they are
exchanging their IDV Securities for securities of OTI ("OTI Securities") for
investment purposes only and not with a view to distribution and acknowledge
that OTI Securities will not be registered and may be only sold or transferred
pursuant to a registration statement or an exemption from registration under the
Securities Act of 1933. Each IDV Shareholder acknowledges that the OTI
Securities issued to them may be issued with a legend setting forth this
restriction on transfer.
III. Representations and Warranties of Coast and OTI.
------------------------------------------------------
1. Coast and OTI are corporations duly organized, validly existing, and
authorized to exercise all their corporate powers, rights, and privileges.
2. Coast and OTI have the corporate power and corporate authority to
own and operate their properties and to carry on their businesses now conducted.
3. Coast and OTI have all requisite legal and corporate power to
execute and deliver this agreement.
2 - SHARE EXCHANGE AGREEMENT
4. OTI will have at the closing date all required legal and corporate
power to issue the OTI Securities called for by this agreement and to issue the
Class B common stock to be subscribed to. by Transition Metal Corporation
("TMC") as described In Section IV, and to carry out and perform its obligations
under the terms of this exchange.
5. OTI is a non-reporting public corporation within the meaning of the
Securities Exchange Act of 1934.
6. OTI has no subsidiaries or affiliated companies and does not
otherwise own or control, directly or indirectly, any other corporation,
association or business entity.
7. All corporate action on the part of OTI necessary for the
authorization, execution, delivery and performance of all obligations under this
agreement and for the issuance and delivery of the OTI Securities has been
taken, and this agreement constitutes a valid obligation of Coast and OTI.
8. The OTI Securities, when sold and delivered in accordance with the
terms of this agreement and for the consideration expressed herein, shall be
duly and validly issued (including, without limitation, issued in compliance
with applicable federal and state securities laws), fully paid and
non-assessable.
9. There is no action, proceeding, or investigation pending or, to the
knowledge of Coast, threatened, or any basis therefore known to Coast to
question the validity of this agreement or the accuracy of the representation
and warranties herein contained.
10. All federal, state, local and foreign tax returns required to be
filed by OTI have been filed, and any taxes, assessments, or fees and/or other
governmental charges owed by OTI have been duly paid.
3 - SHARE EXCHANGE AGREEMENT
11. Coast and OTI will provide an opinion of Alan L. Schneider,
attorney, regarding the trade ability of all of the outstanding shares of OTI at
the time of closing including the free trade ability of the OTI common stock
held by TMC.
12. A CUSIP Number for the OTI shares will be provided as soon after
closing as possible but no later than ten days thereafter.
13. OTI has no assets or liabilities, contingent or otherwise.
14. Coast will indemnify and hold harmless IDV or the IDV Shareholders
against any and all liabilities and/or debts of OTI.
15. OTI will deliver to IDV officers at the time of closing all of its
corporate books and minutes of previous shareholders' or Board of Director's
actions.
16. OTI will deliver to IDV officers all of its bank records, audited
financial statements, bank accounts, and corporate tax filings for the period
OTI was active, to the extent currently available.
17. Within five days of the closing date, Coast and OTI will ensure
that there will be three market makers quoting the OT!
stock in the "pink sheets".
18. Coast, promptly after the closing date (but no later than 5 days
thereafter) shall prepare and file a schedule under Regulation 15c2-11 of the
Securities Exchange Act of 1934 with the market makers.
19. Immediately following closing, the current directors of OTI shall
appoint Clyde Feyrer, Reginald Chamorre, and Walter T. Aho as directors of OTI,
after which the current directors of OTI will resign.
4 - SHARE EXCHANGE AGREEMENT
provide that such shares shall be automatically and Immediately converted into
Class A common stock on a one-for-one basis upon the issuance of an order of
registration by the Securities and Exchange Commission with respect to such
Class A shares.
V. Closing.
--------
1. Closing shall take place in the offices of OTR, Inc., a, duly
registered stock transfer agent located at 1130 S.W. Morrison Street, Portland,
Oregon, who shall serve as Escrow Agent under thi s agreement. Upon receipt of
an agreement executed by all parties or In counterparts and when in possession
of all of the IDV Securities and the executed subscription of TMC and assurances
of its ownership of 1,000,000 shares of OTI common stock, the Escrow Agent may
complete the transaction by transferring the IDV Securities and issuing or
causing to be issued the OTI Securities to the IDV Shareholders. The
subscription of TMC shall be delivered to OTI management.
VI. Compensation Paid to Coast.
------------------------------
1. Coast will be entitled to receive a fee of $90,000 in cash which
funds will be paid to it at the rate of 25% of all proceeds as and when received
upon payment by TMC under its subscription for shares of OTI of Class B common
stock as described in Section IV. Coast shall not be entitled to receive any
interest on its fee.
VII. Miscellaneous.
--------------
1. This agreement may be signed in any number of counterparts, each of
which will be considered an original.
2. The representations and warranties herein contained will survive
closing.
6 - SHARE EXCHANGE AGREEMENT
20. The authorized capital stock of OTI shall consist of 50,000,000
shares of Class A common stock, of which 2,657,265 shares are outstanding,
10,000,000 shares of Class 8 common stock, none of which are outstanding, and
10,000,000 shares of preferred stock, none of which are outstanding. Except as
contemplated in this agreement there are no other securities, options, warrants
or other rights to purchase any securities of OTI outstanding. All outstanding
securities of OTI are duly and validly issued, are fully paid and non-assessable
and were issued in compliance with all applicable federal and state securities
laws.
IV. Purchase of Shares by Transition Metal Corporation.
---------------------------------------------------------
1. As a condition of closing, OTI shall have received an irrevocable
subscription from TMC for the purchase of 1,200,000 shares of Class 8 common
stock of OTI at $.80 per share. TMC shall represent to and satisfy Escrow Agent
that it holds 1,000,000 shares of free-trading common stock of OTI. It is
understood that immediately following closing, such free-trading common shares
will be sold to certain investors at a price of $1 per share, the net proceeds
of which sale will be committed to the purchase of the Class B common stock of
OTI. As and when such free-trading common shares are sold by TMC, the net
proceeds from such sale will be paid to OTI and the Class 8 common shares issued
to TMC. The issuance of such subscription was in compliance with all applicable
federal and state securities laws.
2. The Class B common stock of OTI to be authorized by the shareholders
of OTI prior to closing and issuable pursuant to the subscription from TMC,
shall be Identical In all respects to the existing common stock of OTI with the
exception that the Class B shares shall
5 - SHARE EXCHANGE AGREEMENT
3. This agreement supercedes any previous agreement between the parties.
This agreement is executed effective the day first above written by the parties
hereto.
COAST CAPITAL LTD. IDV SHAREHOLDERS
By: /s/ /s/
/s/
OMNI-TECH INTERNATIONAL, INC.
By: /s/ /s/
/s/
/s/
/s/
/s/
/s/
/s/
/s/
7 - SHARE EXCHANGE AGREEMENT
3. This agreement supercedes any previous agreement between the parties.
This agreement is executed effective the day first above written by the parties
hereto.
COAST CAPITAL LTD. IDV SHAREHOLDERS
By: /s/ /s/
/s/
OMNI-TECH INTERNATIONAL, INC.
By: /s/ /s/
/s/
/s/
/s/
/s/
/s/
/s/
/s/
7 - SHARE EXCHANGE AGREEMENT
/s/Donald H.Hartvig
--------------------
By: Donald H.Hartvig
Donald H.Hartvig, Incorporated, trustee in
7 SHARE EXCHANGE AGREEMENT bankruptcy for the Estate of Kenneth
Collins
SHARE EXCHANGE AGREEMENT
DATED: Oct 27, 1995
-------
BETWEEN: DoubleCase Corporation, a Kansas corporation
967 Elkton Drive
Colorado Springs, CO 80907 "DoubleCase"
AND: InterActive Data Vision, an Oregon corporation
4710 East Sphinx Way, Suite 2149
Las Vegas, NV 89115 "IDV"
AND: Those persons whose names appear on the
attached Schedules A, B and C as DoubleCase
Shareholders, DoubleCase Noteholders, and
DoubleCase Debenture Holders "DoubleCase Shareholder"
"DoubleCase Noteholder"
"DoubleCase Debenture Holders",
or collectively as "DoubleCase Securities Holders"
AND: Those persons whose names appear on the
attached Schedule D as IDV Debtholder "IDV Debtholders"
RECITALS
A. IDV desires to acquire all of the outstanding common stock of DoubleCase.
B. The DoubleCase Shareholders are willing to exchange their shares for
shares of
IDV pursuant to the terms and conditions of this Agreement and with the
understanding and
intention that the exchange of shares will qualify as a tax-free reorganization
under Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
C. The DoubleCase Noteholders, DoubleCase Debenture Holders and IDV
Debtholders are willing to convert their respective securities into common stock
of IDV as part of the above-described share exchange.
NOW, THEREFORE, the parties hereto agree as follows:
I. The Exchange.,
---------------
(a) Common Share Exchange.Each DoubleCase Shareholder will exchange
------------------------
2.0171857 shares of outstanding common stock of DoubleCase for one (1) share of
Class A common stock of 1DV. A schedule of all DoubleCase Shareholders is
attached hereto as Schedule A and incorporated herein by this reference.
Page 1 - SHARE EXCHANGE AGREEMENT
(b) Preferred Share Exchange.
---------------------------
(1) Except as otherwise provided herein, certain Doublecase
Noteholders, who are described in the attached Schedule B and incorporated by
this reference, will convert one-half of the amount of their respective debt for
shares of common stock of IDV at a conversion rate of $2.75 of debt for one (1)
share of Class A common stock of IDV. The remaining one-half of their respective
debt will be converted into (1) share of callable, voting, convertible Series A
Preferred Stock of IDV ("Preferred Stock") at the exchange rate of one (1) share
of Preferred Stock for each $2.75 of debt. Specifically excluded from the
above-described debt conversion are notes payable in the amount of $150,188
payable to the following:
Byron Yost $ 8,276.78
Deline Corporation 13,794.21
Walter Kush 50,000.00
Cleveland Ventures 50,000.00
Cameron Yost 28,117.15
Interest payable on the notes will be a continuing obligation of IDV, and
will be deferred for a period of one year from the Closing described in Section
VII herein, unless sooner paid.
(2) Each DoubleCase Debenture Holder, who are described in the attached
Schedule C and incorporated by this reference, will convert one-half of the
amount of their respective outstanding debenture into shares of IDV Class A
common stock at the conversion rate of $2.75 of debt for one (1) share of Class
A common stock. The remaining one-half of the principal balance of the
debentures will be converted into callable, voting, convertible Series A
Preferred Stock of IDV ("Preferred Stock") at an exchange rate of one (1) share
of Preferred Stock for each $2.75 of the remaining one-half the principal
balance of the debentures.
Interest payable on the debentures will be a continuing obligation of IDV
and will be deferred for a period of one (1) year from Closing described in
Section VII herein, unless sooner paid.
(c) Procedure.The DoubleCase Securities Holders, by executing this
----------
agreement agrees to surrender to the Escrow Agent described in Section IV all
their respective shares, notes and debentures (the "DoubleCase Securities") for
exchange pursuant to this
Page 2 - SHARE EXCHANGE AGREEMENT
Agreement. In executing this Agreement, such DoubleCase Security Holder also
authorizes and appoints the Escrow Agent or its designee as attorney-in-fact to
transfer the DoubleCase Securities on the books of DoubleCase as called for by
this Agreement.
II. Conversion of IDV Debt.
--------------------------
Contemporaneous with the exchanges described in Section I herein, IDV
Debtholders, who are described in the attached Schedule D and incorporated by
this reference, will convert $,202,540 of IDV debt into shares of Class A common
stock of IDV at an exchange rate of $2.75 of debt for one (1) share of IDV Class
A common stock. After the conversion, Clyde D. Feyrer ("Feyrer") and First
Colonial Funds Ltd. ("First") will enter into a Lockup Agreement with IDV
whereby Feyrer will agree not to sell, transfer or assign his shares of Class A
common stock until ninety (90) days after IDV common stock is approved for
listing on the NASDAQ Small Cap, and whereby First will agree not to sell,
transfer or assign its shares of Class A common stock until six (6) months after
IDV common stock is approved for listing on NASDAQ Small Cap.
111. Rel2resentat ions and Warranties of DoubleCase Securities Holders.
-----------------------------------------------------------------------
(a) By executing this Agreement, the DoubleCase Securities Holders
represent and warrant that they own all of the DoubleCase Securities listed
opposite their names on Schedules A, B and C, respectively, free and clear of
any lien, encumbrance or claim of others and may freely transfer, assign and
exchange the same.
(b) The DoubleCase Securities Holder represent and warrant that they
are exchanging their DoubleCase Securities for securities of IDV ("IDV
Securities") for investment purposes only, and not with a view to distribute and
acknowledge that IDV Securities will not be registered and only may be sold or
transferred pursuant to a registration staternent or an exemption from
registration under the Securities Act of 1933. The DoubleCase Securities Holders
acknowledge that the IDV Securities may be issued to them with a legend setting
forth this restriction on transfer.
V. Representations and Warranties of IDV.
------------------------------------------
(a) IDV is a corporation duly organized under the laws of the State of
Oregon, validly existing, and authorized to exercise all its corporate powers,
fights and privileges.
(b) IDV has the corporate power and authority to own and operate its
properties and to carry on its businesses now conducted.
Page 3 - SHARE EXCHANGE AGREEMENT
(c) IDV has all requisite legal and corporate power to execute and
deliver this Agreement.
(d) IDV will have at Closing all require( legal and corporate power to
issue the IDV Securities called for by this Agreement.
(e) All corporate actions on the part of IDV necessary for the
authorization, execution, delivery and performance of all obligations under this
Agreement and for the issuance and delivery of the IDV Securities has been
taken, and this Agreement constitutes a valid obligation of IDV.
(f) IDV is a non-reporting public corporation within the meaning of the
Securities Exchange Act of 1934.
(g) IDV has no subsidiaries or affiliated companies and does not
otherwise own or control, directly or indirectly, any other corporation,
association or business entity.
(h) The IDV Securities, when sold and delivered in accordance with the
terms of this Agreement and for the consideration expressed here n, shall be
duly and validly issued, fully paid and non-assessable.
(i) There is no action, proceeding, or investigation pending or
threatening, or any basis therefor known to IDV to question the validity of this
Agreement or the accuracy of the representations and warranties contained herein
(j) IDV, promptly after Closing date but no later than five (5) days
thereafter, shall prepare and file with market makers an Information Statement
under Rule 15c2-11 of the Securities Exchange Act of 1934 ("Information
Statement" .
(k) Within sixty (60) days of the effective date of the Information
Statement, IDV will ensure that there will be at least three market makers
quoting the IDV common stock on the OTC Bulletin Board.
(1) Immediately following Closing, the current officers and directors
of IDV, except Clyde D. Feyrer, will resign from their respective positions and
Clyde D. Feyrer will appoint the following additional individuals as directors:
Cameron Yost
Lloyd Parrish
Charles Maton
Marvin Grier
The new Board of Directors of IDV will immediately elect the following officers:
Page 4 - SHARE EXCHANGE AGREEMENT
Cameron Yost President
Laurence Stanley Treasurer
Jonathan Morrill Secretary
Sarah Hall Assistant Secretary
(m) The authorized capital stock of IDV consists of 50,000,000 shares
of Class A common stock, of which 661,199 shares are outstanding, 10,000,000
shares of Class B common stock, none of which are outstanding, and 10,000,000
shares of preferred stock, none of which are outstanding. Except as contemplated
in this Agreement, there are no other securities, options, warrants, or other
rights to purchase any securities of IDV outstanding. All outstanding securities
of IDV are duly and validly issued, are fully paid and non-assessable and were
issued in compliance with all applicable federal and state securities laws.
VI. Rel2resentat ions and Warranties of DoubleCase.
----------------------------------------------------
(a) DoubleCase is a corporation duly organized under the laws of the
State of Kansas, validly existing and authorized to exercise all its corporate
powers, rights and privileges.
(b) DoubleCase has the corporate power and authority to own and operate
its properties and to carry on its business as now conducted.
(c) DoubleCase has all, requisite legal and corporate power to execute
and deliver this Agreement.
(d) All corporate actions on the part of DoubleCase necessary for the
authorization, execution, delivery and performance of all obligations under this
Agreement have been taken and this Agreement constitutes a valid obligation of
DoubleCase.
(e) DoubleCase is a non-reporting corporation within the meaning of the
Securities Exchange Act of 1934.
(f) There is no action, proceeding or investigation pending or threatening
or any basis thereof known to DoubleCase to question the validity of this
Agreement or the accuracy of the representations and warranties contained
herein.
VII. Closin.
------
Closing shall take place in the law offices of Terry Pilgreen, 229 E.
Williams, 5th Floor, Wichita, Kansas 57202, who shall serve as Escrow Agent
under this Agreement. Upon receipt of the Agreement executed by all parties or
in counterparts and when in possession of all of the DoubleCase Securities, the
Escrow Agent may complete the transaction by transferring the IDV Securities to
the DoubleCase Shareholders.
Page 5 - SHARE EXCHANGE AGREEMENT
VIII. Miscellaneous.
--------------
(a) This Agreement may be signed in any number of counterparts, each of
which will be considered an original.
(b) The representations and warranties herein contained will survive
Closing.
(c) This Agreement supersedes any previous agreem,2nd between the
parties. This Agreement is executed effective the date first above written by
the parties hereto.
INTERACTIVE DATA VISION, INC. DOUBLECASE SHAREHOLDERS
By: /s/ Clyde D. Fryrer _________________________
----------------------
_____________________________ _________________________
DOUBLECASE CORPORATION _________________________
By: /s/ Cameron Yost _________________________
------------------
President
_____________________________ _________________________
DOUBLECASE NOTEHOLDERS
_____________________________ _________________________
_____________________________ _________________________
_____________________________ _________________________
_____________________________ _________________________
_____________________________ _________________________
DOUBLECASE DEBENTURE HOLDERS
_____________________________ _________________________
_____________________________ _________________________
_____________________________ _________________________
_____________________________ _________________________
_____________________________ _________________________
Page 6 - SHARE EXCHANGE AGREEMENT
OFFICE WAREHOUSE LEASE AGREEMENT
THIS LEASE AGREEMENT made this 4th day of May, 1998, by and between 4740
Forge Road, LLP., hereinafter referred to as "Landlord", and Doublecase
Corporation, hereinafter referred to as "Tenant", on the following terms and
conditions:
1. LOCATION: Landlord is the owner of an office warehouse building
---------
on the following described land situated in the City of Colorado Springs, County
of El Paso, and State of Colorado, to-wit:
See attached Exhibit "A"
known as 4740 Forge Road, Colorado Springs, Colorado, sometimes herein referred
to as "building".
2. DESCRIPTION OF LEASES PREMISES: Landlord does hereby lease unto
--------------------------------
the Tenant and the Tenant hereby takes and rents from the Landlord, upon and
subject to the terms and conditions herein, that certain portion of the building
located upon the real property herein above described, as outlined in red on the
plot plan attached hereto as Exhibit "B " known as Suite 112. The leased
premises, hereinafter called the "Leased Premises", covers an area of
approximately 2040 square feet of floor space, and approximately 720 square feet
of loft area.
3. TERM: The primary lease term shall be Twelve months commencing
-----
on the I st day of May, 1998, and ending on the 30th day of April, 1999, unless
sooner terminated under the provisions of the lease. At the end of the primary
lease term there shall be an option for a second Twelve month term at the then
current monthly rental rate, plus a 3% increase.
4. RENTAL
------
(a) Minimum Rental. For the full terms as aforesaid, Tenant agrees
----------------
to pay Landlord the total sum of Thirteen Thousand Two Hundred Sixty DOLLARS
($13,260.00) which, shall be payable in monthly installments of Eleven Hundred,
Five DOLLARS ($1105.00) per month in advance on the first day of each calendar
month during the term of this lease. If the term shall commence on a day other
than the first day of the calendar month, the Tenant shall pay upon the
commencement date of the term, a pro-rata portion of the fixed monthly
installment described above, prorated on a per them basis from the date of
commencement to the first day of the subsequent month. Each monthly installment
thereafter shall be due on the first day of each month during the term of this
lease.
Rent received after the first day of the month shall be deemed delinquent.
If rent is not received by the Landlord by the 10th day of each month, Tenant
shall pay a late charge of $ 75.00 plus a penalty of $1.00 per day until rent is
received in full, provided that this provision shall not be deemed a waiver of
Landlord's right to declare such late payment a material breach or default as
hereinafter set forth.
<PAGE>
Tenant agrees to pay all rent and other sums provided for in this lease to
Landlord without deduction of any sum for any claim or demand of any kind or
nature. All rentals shall be payable at the office of Landlord or such other
place as Landlord may in writing designate.
(b) Personal Property Taxes. Tenant agrees to timely pay all taxes
------------------------
levied upon personal property, including trade fixtures and supplies, kept upon
the Leased Premises and if such taxes on Tenant's personal property, fixtures or
property placed in the Leased Premises of Tenant are levied against Landlord or
Landlord's property and if Landlord pays the same (which Landlord shall have the
right to do regardless of the validity of such levy), Tenant, upon demand, shall
pay to Landlord the taxes so levied against Landlord. All amounts payable to
Landlord under the terms of this paragraph 4 are included within the terms
"rent" and "rental" herein.
5. DEPOSIT. Tenant has deposited with Landlord, and will keep on
--------
deposit at all times during the term of this lease, the sum of $1100.00, the
receipt of which is hereby acknowledged, as security for the payment by Tenant
of the rent herein agreed to be paid, and for the faithful performance of all of
the terms, conditions and covenants of this lease. If, at any time during the
term of this lease, Tenant shall be in default in the performance of any
provision of this lease, Landlord shall have the right to use said deposit, or
so much thereof as necessary, in payment of any rentals in default or other sums
due Landlord hereunder, and in reimbursement of any expense incurred in default
by Landlord, and in payment of any damages incurred by Landlord by reason of
Tenant's default, or, at the option of Landlord, the same may be retained by
Landlord and applied in liquidation of any damages suffered by it by reason of
Tenant's default. In such event, Tenant shall, on written demand of Landlord,
forthwith remit to Landlord a sufficient amount in cash to restore said deposit
to its original amount. Landlord shall have the right to comingle said deposit
and other funds of Landlord. Any portion of said deposit not utilized as
aforesaid shall be refunded to Tenant, without interest, within sixty (60) days
of full performance of this lease by Tenant. Landlord will deliver the funds
deposited herein by Tenant to the purchaser of Landlord's interest in the Leased
Premises in the event such interest be sold and, thereupon, Landlord shall be
discharged from further liability with respect to such deposit.
6. ASSIGNMENT OR SUBLETTING
--------------------------
(a) It is agreed that neither the Leased Premises nor any part thereof
shall be sublet, nor shall this lease be assigned by Tenant, without the written
consent of the Landlord first obtained, which consent may be withheld for any
reason. No assignment for the benefit of creditors , or by operation of law,
shall be effective to transfer any right to an assignee without the written
consent of Landlord first having been obtained.
(b) It is agreed that if this lease be assigned, or if the Leased
Premises or any part thereof be sublet or occupied by anyone other than Tenant,
Landlord may collect rent from the assignee, undertenant or occupant, and apply
the net amount collected to the rent herein reserved, and no such collection
shall be deemed a waiver of the covenant herein against assignment and
subletting, or the acceptance of the assignee, subtenant or occupant as tenant,
or a release of Tenant from the complete performance by Tenant of the covenants
herein contained on the part of Tenant to be performed. Notwithstanding any
assignment or sublease, Tenant shall remain fully liable on this lease and shall
not be released from performing any of the terms, covenants and conditions of
this lease.
<PAGE>
7. SUBORDINATION. Tenant agrees that this lease is, and shall be,
--------------
subordinate to a bona fide mortgage, deed of trust, or any other hypothecation
or security which has been ' or which may hereafter be placed upon the Leased
Premises or building, provided that such subordination shall not adversely
affect the Tenant's right of use and occupancy under this lease in the event of
foreclosure. Tenant agrees to execute any documents which may be requested by
Landlord, in addition to this lease, which may be required to effectuate such
subordination and if Tenant fails to do so within ten (10) days after written
demand from Landlord, Tenant does hereby make, constitute and appoint Landlord
as Tenant's attorney-in-fact to do so. Upon Landlord's written request, Tenant
shall execute, acknowledge and deliver to Landlord a written statement
certifying: (i) that none of the terms of this lease have been changed (or if
they have been changed, stating how they have been changed); (ii) that this
lease has not been canceled or terminated; (iii) the last date of payment of the
rent and other charges and the time period covered by such payment; (iv) that
Landlord is not in default under this lease (or, if Landlord is claimed to be in
default, stating why); and (v) such other matters as may be reasonably required
by Landlord or the holder of a mortgage, deed of trust or lien to which the
Property is or becomes subject. Tenant shall deliver such statement to Landlord
within ten (10) days after Landlord's request. Any such statement by Tenant may
be given by Landlord to any prospective purchaser or encumbrancer of the
Property. Such purchaser or encumbrancer may rely conclusively upon such
statement as true and correct. If Tenant does not deliver such statement to
Landlord within such ten (10) day period, Landlord may execute the same as
Tenants' attorney-in-fact above appointed and/or Landlord, and any prospective
purchaser or encumbrancer, may conclusively presume and rely upon the following
facts: (i) that the terms and provisions of this lease have not been changed
except as otherwise represented by Landlord; (ii) that this lease has not been
canceled or terminated except as otherwise represented by Landlord; (iii) that
not more than one month's rent or other charges have been paid in advance; and
(iv) that Landlord is not in default under the lease. In such event, Tenant
shall be estopped from denying the truth of such facts. If Landlord shall assign
this lease to a mortgagee as additional security for said mortgage, then, during
the continuance in effect of such assignment, Tenant will not, by reason of any
default of Landlord herein, terminate this lease if the mortgagee, within sixty
(60) days after receipt of written notice from Tenant of Tenant's intent to
terminate this lease for such default, shall undertake in writing to perform and
shall thereafter perform with respect to the Leased Premises all of the
covenants of this lease capable of performance by the mortgagee until such time
as the premises shall be sold upon the foreclosure of said mortgage.
8. USE OF PREMISES. Tenant agrees that the Leased Premises shall
------------------
be used and occupied as a Office, Warehouse and Manufacturing facility and for
no other purpose. Tenant will occupy and use the Leased Premises in a careful,
safe, and proper manner, and in compliance with all applicable laws,
regulations, rules or orders of any applicable governmental entity or agency or
court. Tenant will not use the Leased Premises, or permit the Leased Premises to
be used, for any purpose, or use or keep any substance or material in or about
the Leased Premises, which would void any insurance on the Leased Premises or
building or increase the hazard or risk insured by such insurance, or which
would prove offensive or annoying to other tenants of the building. Tenant will
not pen-nit or suffer any disorderly conduct, noise, or nuisance whatsoever on
the Leased Premises, or interfere in any way with other tenants or their
invitees, or keep any animal in or about the Leased Premises. Tenant agrees to
comply with all reasonable rules relating to the use and occupation of the
Leased Premises or building promulgated from time to time by Landlord.
<PAGE>
Tenant covenants and agrees, at Tenant's expense, to protect, defend,
indemnify, save and hold Landlord harmless from and against any and all claims,
demands, losses, expenses, damages, ]abilities, fines, penalties, charges, suits
or other proceeding, and all costs and expenses incurred in connection
therewith, including reasonable attorney's fees, arising directly or indirectly
from any violation by Tenant of the terms of this Paragraph 8 or breach by
Tenant of the other terms of this lease, which covenant shall survive
termination of this lease for any reason.
9. MECHANICS LIEN: Tenant agrees it will promptly pay for any work
---------------
in or about the Leased Premises for alterations or repairs, for installation of
fixtures and will not permit or suffer any mechanic's liens to attach to the
Leased Premises, and shall promptly cause any claim for such liens to be
released, or to secure Landlord in its satisfaction in the event Tenant desires
to contest any such claim. Tenant agrees to indemnify Landlord and hold Landlord
harmless against any loss, costs (including attorney's fees), liability or
damage arising from Tenant's work or mechanic's liens arising from said work.
10. INSURANCE: Landlord shall not be liable to Tenant or Tenant's
----------
employees, agents or visitors, or to any other person whomsoever, for any injury
to person or damage to property on or about the Leased Premises, caused by the
negligence or misconduct of Tenant, its agents, servants, employees or any other
person entering upon the premises with the express or implied invitation of
Tenant, and Tenant agrees to indemnify Landlord and hold it harmless from any
loss, expense or claim arising out of any such damage or injury. Tenant shall,
throughout the term of this lease and any extension, at its sole cost and
expense, provide and keep in force with responsible insurance companies
satisfactory to Landlord, comprehensive general liability insurance relating to
the Leased Premises and its appurtenances with a minimum single limit of
$1,000,000.00; fire casualty flood and theft coverage in an amount adequate to
cover replacement costs of all personal property, fixtures, furnishings,
equipment and contents in or on the Leased Premises; plate glass insurance in an
amount sufficient to cover replacement of any plate glass on the Leased
Premises; and workmen's compensation insurance covering all persons employed
directly or indirectly by Tenant. Landlord, and any mortgagee designated by
Landlord, shall be named as additional insureds on all of the aforesaid
insurance policies, except the workmen's compensation insurance. Copies of said
policies shall be delivered to Landlord forthwith upon commencement of the term
hereof
11. FIRE OR OTHER CASUALTY: It is agreed that if, during the
--------------------------
continuance of this lease or any extension, the Leased Premises shall be so
damaged by fire or other casualty, not arising from the fault or negligence of
the Tenant or those in its employ, so that the Leased Premises shall thereby be
rendered untenantable, then and in such case, the rent herein reserved, or a
just and proportionate part thereof, according to the nature and extent of the
damage which has been sustained, shall be abated until the Leased Premises shall
have been duly repaired and restored, which work of repair and restoration shall
be done with all reasonable diligence. In case the said building shall be
substantially destroyed so that the Leased Premises are not repaired and
restored within 120 days, Landlord shall have the fight to cancel this lease and
end the term hereof, and in case of such cancellation, any rent, and any other
monies due and owing to Landlord at the time of such cancellation, shall be paid
by Tenant, and all further obligations upon the part of either party hereto
shall cease, and the estate hereby created shall thereupon terminate. In the
event the Leased Premises are damaged by fire or other casualty during the last
two years of the term of this lease to an extent which renders the Leased
Premises untenantable, the Landlord
<PAGE>
may, at Landlord's option, within thirty (30) days following the date of such
fire or other casualty, immediately terminate this lease and be relieved of any
obligation to rebuild or repair the Leased Premises. This option, if exercised
by the Landlord, shall be exercised within thirty (30) days after the occurrence
of such fire or other casualty.
If said Leased Premises, without the fault of the Tenant, shall be slightly
damaged by fire or other catastrophe, but not so as to render the same
untenantable, the Landlord, after receiving notice in writing of the occurrence
of the injury, shall cause the same to be repaired with reasonable promptness;
but in such event there shall be no abatement of the rent.
12. INSOLVENCY OF TENANT: If Tenant files a voluntary petition in
----------------------
bankruptcy or shall be declared insolvent or bankrupt, or if any assignment of
Tenant's property shall be made for the benefit of creditors or otherwise, or
Tenant's property leasehold interest herein or property with the Leased Premises
shall be levied upon under execution, or seized under authority of law, or a
trustee in bankruptcy or a receiver be appointed for the property of Tenant,
whether under the operation of State or Federal statutes, then and in any such
case, Landlord may, at his option, immediately, with or without notice (notice
being expressly waived), terminate this lease and immediately retake possession
of said premises, using such force as may be necessary, without being guilty of
any manner of trespass or forcible entry or detainer, and without the same
working any forfeiture of the obligations of the Tenant hereunder.
In case the Tenant files a voluntary petition in bankruptcy or is
adjudicated a bankrupt, or is proceeded against under any laws, State or
Federal, for relief of debtors, or in case a receiver is appointed to Aind up
and liquidate the affairs of the Tenant, the Landlord, at his election, shall
have a provable claim in bankruptcy or receivership in an amount equal to at
least the sum of the last six (6) months payments of the rental provided for
herein_ which sum is fixed and liquidated by the parties hereto as the minimum
amount of damages sustained by the Landlord as a result of the bankruptcy or
receivership of the Tenant, and the amount of said damages may be set aside, at
the election of the Landlord, out of any monies for security deposited hereunder
as security for the payment by the Tenant of the rent herein provided for.
13. EVENTS OF DEFALTLT;REMEDIES:
------------------------------
(a) Default by Tenant. The occurrence of any of the following shall
------------------
constitute a material default and breach of this Lease by Tenant:
(1) Any failure by Tenant to pay any rental or any other sum due
hereunder within ten (10) days of the date the same is due.
(ii) Any failure by Tenant to perform or observe any other term,
condition, or covenant to be peformed or observed by it pursuant to this lease
if Tenant shall not commence to cure and correct said default within ten (10)
days after written notice from Landlord and diligently prosecute all efforts
necessary to promptly effect such cure or correction.
(iii) The abandonment or vacation of the Leased Premises.
<PAGE>
(iv) Failure to occupy the Leased Premises upon the commencement date
of the term of this lease.
(b) Remedies. Upon the occurrence of any such material breach or
---------
event of default, Landlord shall have the option to take any or all of the
following actions, at any time thereafter, without further notice or demand of
any kind to Tenant or to any other person:
(i) Immediately re-enter and remove all persons and property from the
Leased Premises, storing said property in a public place, warehouse, or
elsewhere at the cost of, and for the account of, Tenant, all without being
deemed guilty of or liable in trespass. No such re-entry or taking possessions
of the Leased Premises by Landlord shall be construed as an election on its part
to terminate this lease unless a written notice of such intention is given by
Landlord to Tenant. No such action by Landlord shall be considered or construed
to be forcible entry.
(ii) Collect by suit or otherwise each installment of rent or other
sum as it becomes due hereunder, or enforce, by suit or otherwise, any other
term or provision hereof on the part of Tenant required to be kept or performed.
(iii) Terminate this lease by written notice to Tenant. In the event
of such termination, Tenant agrees to immediately surrender possession of the
Leased Premises. Should Landlord terminate this lease, it shall be entitled to
recover from Tenant all damages it may incur by reason of Tenant's breach,
including the cost of recovering the Leased Premises, reasonable attorney's
fees, and the balance of ALL RENTS due hereunder through the rest of the term of
this lease, all of which amounts shall be immediately due and payable by Tenant
hereunder subsequent to default.
(c) Should Landlord re-enter, as provided above, or should it take
possession pursuant to legal proceedings or pursuant to any notice provided by
law, whether or not it terminates this lease, it may be necessary in order to
relet the Premises to relet the same or any part thereof for such term or terms
(which may be for a term extending beyond the term of this Lease) and at such
rental or rentals and upon such other terms and conditions as Landlord in its
sole discretion may deem advisable. Upon each such reletting all rentals
received by the Landlord from such reletting shall be applied, first, to the
payment of any indebtedness other than rent due hereunder from Tenant to
Landlord, second, to the payment of any costs and expense of such reletting,
including brokerage fees and attorney's fees and costs of any alterations and
repairs third, to the payment of rent due and unpaid hereunder, and the residue,
if any, shall be held by Landlord and applied in payment of future rent as the
same may become due and payable hereunder. If such rentals received from such
reletting during any month be less than that to be paid during such month by
Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No such re-entry and reletting
of the Premises by Landlord shall be construed as an election on its part to
terminate this lease unless a written notice of such intention be given to
Tenant pursuant to subsection (i). Notwithstanding any such reletting without
termination, Landlord may at any time thereafler elect to terminate this lease
for such previous breach.
(d) Landlord shall have at all times a valid lien for all rentals and
other sums of money becoming due hereunder from Tenant upon all goods, wares,
equipment, fixtures, furniture, and other personal property of Tenant situated
on the Leased Premises, and such property shall not be removed
<PAGE>
therefrom without the consent of Landlord until all arrearages in rent as well
as any and all other sums of money then due to Landlord hereunder shall first
have been paid and discharged. Upon the occurrence of any event of default by
Tenant, Landlord may, in addition to any other remedies provided herein or by
law, enter upon the Leased Premises and take possession of any and all goods,
wares, equipment, fixtures, furniture and other personal property of Tenant
situated on the Leased Premises without liability for trespass or conversion,
and sell the same with or without notice at public or private sale, with or
without having such property at the sale, at which Landlord or his assigns may
purchase, and apply the proceeds thereof less any and all expenses connected
with the taking of possession and sale of the property, as a credit against any
sums due by Tenant to Landlord. Any surplus shall be paid to Tenant, and Tenant
agrees to pay any deficiency forthwith. Alternatively, the lien hereby granted
may be foreclosed in the manner and form provided by law for foreclosure of
chattel mortgages or in any other form provided by law. The statutory lien for
rent is not hereby waived, the express contractual lien herein granted being in
addition and supplementary thereto. Anything herein to the contrary
notwithstanding, purchase money financing of Tenant's removable trade fixtures
and equipment shall not be a default under this section, nor shall liens
incurred in financing the ordinary cost of business.
(e) The remedies given to Landlord herein shall be in addition and
supplemental to all other rights or remedies which Landlord may have under laws
then in force.
14. SURRENDER OF POSSESSION: The Tenant agrees to deliver up and
--------------------------
surrender to the Landlord possession of the Leased Premises at the expiration or
termination of this lease, by lapse of time or otherwise, in as good repair as
when the Tenant obtained the same at the commencement of said term, excepting
only ordinary wear and tear, or damage by the elements (occurring without the
fault of the Tenant or other persons permitted by the Tenant to occupy or enter
the Leased Premises or any part thereof), or by act of God.
15. LOSS OR DAMAGE TO TENANT'S PROPERTY: All personal property of
--------------------------------------
any kind or description whatsoever in the Leased Premises shall be at the
Tenant's sole risk, and Landlord shall not be held liable for any damage done to
or loss of such personal property, or for damage or loss suffered by the
business or occupation of the Tenant arising from any act or neglect of
co-tenants or other occupants of the building, or of their employees or the
employees of the Landlord or of other persons, or from bursting, overflowing or
leaking of water, sewer or steam pipes, or from the heating, or plumbing
fixtures, or from electric wires, or from gases, or odors, or caused in any
other manner whatsoever, except in the case of wilful neglect on the part of the
Landlord. Tenant shall keep Leased Premises locked and secure when not in use.
Tenant shall be solely responsible, at Tenant's expense, for locks and keys to
the Leased Premises, together with such other security devices as Tenant elects,
and Tenant shall be solely responsible for distribution of any keys, codes or
alarm system information and liable for the acts or omissions of the persons
possessing the same. Upon termination of this lease for any reason whatsoever,
Tenant shall provide Landlord with keys or other items or information necessary
to gain access to the Leased Premises.
16. MAINTENANCE AND ALTERATIONS:
------------------------------
(a) Tenant shall at all times keep the interior of the Leased Premises
(which term shall include all doors and windows, including those located in
exterior walls) in a state of thorough good
<PAGE>
order and repair. Tenant shall, at Tenant's expense, perform routine maintenance
and service at least annually all heating and air-conditioning equipment located
in the Leased Premises. Tenant shall be responsible for making "readily
achievable" changes in the Leased Premises to comply with the Title III
Provisions of the Americans with Disabilities Act or other applicable laws or
regulations, at Tenant's expense.
(b) Landlord shall have the right at any time to enter the Leased
Premises to examine and inspect the same, or to make such repairs or additions
or alterations as it may deem necessary or proper for the safety, improvement of
preservation thereof and shall at all times have the right, at its election, to
make such alterations or changes in other portions of said building as it may
from time to time deem necessary and desirable.
(c) Tenant shall make no alterations and/or additions to the Leased
Premises without first obtaining the written consent of Landlord, and all
additions or improvements made by Tenant (except only movable office furniture)
shall be deemed a part of the real estate and permanent structure thereon and
shall remain upon and be surrendered with said premises as a part thereof at the
end of said term, by lapse of time or otherwise. Should Tenant fail to remove
any furniture or fixtures or personal property of any kind, then the same shall
be considered as abandoned and become the property of Landlord. In the event
Landlord may desire Tenant to remove additions or alterations, Tenant, at its
expense, shall, upon the expiration or termination of this lease, restore the
Leased Premises to the same and as good order and condition as when the same
were entered upon by Tenant, ordinary wear and tear excepted, and in default
thereof, Landlord may effect such removals and repairs and Tenant shall pay
Landlord the cost thereof
17. UTILITIES: Tenant agrees to pay, as the same becomes due, all
----------
charges for heat, gas, electricity or any other utility used or consumed on the
Leased Premises. Should Landlord elect to supply the gas, heat, electricity and
other utilities used or consumed in the Leased Premises, Tenant agrees to
purchase and pay for the same as additional rent at the applicable rates filed
by the Landlord with the proper regulatory agency, provided such rate is no
higher than Tenant could obtain for like services from the utility company.
Landlord shall not be liable for any interruption or failure in the supply of
such utilities to the Leased Premises.
18. ADDITIONAL COVENANTS BY TENANT:
----------------------------------
(a) Tenant agrees to keep the Leased Premises in a clean and sanitary
condition as required by law and applicable ordinances and health and police
regulations.
(b) Tenant agrees not to permit or suffer the Leased Premises or the
walls or floors thereof to be endangered by overloading.
(c) Tenant agrees to permit Landlord to place a "For Rent" sign upon
the Leased Premises, at any time after thirty (30) days before the end of this
lease; and Landlord may, at any reasonable hour of the day, enter into or upon
or go through and view and inspect the Leased Premises.
(d) Tenant agrees to install no electrical equipment which overloads
the lines or interferes with other equipment in the building, or any part
thereof, and if said lines are overloaded by such
8
installation, to immediately remedy the same at its own expense, and to comply
with all requirements of the insurance underwriters or governmental authorities-
(e) Tenant agrees that no sign, advertisement, notice or other
lettering shall be exhibited, inscribed, painted or affixed by Tenant on any
part of the outside of the Leased Premises or the building of which they form a
part, without the prior written consent of Landlord.
(f) It is agreed that if, after the expiration of this lease, Tenant
shall, with Landlord's consent, remain in possession of the Leased Premises and
shall continue to pay rent without written agreement as to such, Tenant shall be
regarded as a Tenant from month to month, at a monthly rental, payable in
advance, equal to one hundred ten percent (I 10%) of the last monthly
installment payable hereunder prior to expiration of the term of this lease, and
shall otherwise be subject to all the terms and conditions of this lease.
(g) Tenant agrees to pay for all janitorial service to the Leased Premises.
19. EMWENT DOMAIN: In the event any portion of the Leased Premises
--------------
shall be taken or condemned for public use, Landlord shall rebuild and restore
the remaining portion thereof so as to make an architecturally complete unit,
and the Minimum Rental provided for under the terms of this lease and other
charges based on the area of the Lease Premises shall be reduced in the
proportion which the actual area of the leased space bears to the entire
rentable area, provided, however, that in the event twenty-five percent (25%) or
more of the total floor area of the Leased Premises shall be taken, either
Tenant or Landlord may cancel and terminate this lease by serving upon the other
party a written notice of its intention to do so within thirty (30) days after
the condemnation proceedings shall be completed, in which event Landlord shall
not be required to restore or rebuild the Leased Premises. It is agreed,
however, that in the event less than twenty-five percent (25%) of the Leased
Premises shall be taken or if more than twenty-five percent (25%) is taken and
the lease is not cancelled or terminated by either party hereto, then the Leased
Premises shall be restored as aforesaid. Tenant shall have no right to or claims
for any portion of Landlord's award or damages upon any taking provided,
however, that so long as any claim by Tenant shall not reduce the award or
damages to which Landlord would otherwise be entitled, Tenant shall have the
fight to be represented in the condemnation proceedings and to make claim
against the condemnor for the amount of damages done to Tenant's leasehold
estate. Tenant may assert against the condemnor any claims Tenant may have for
its personal property damaged, destroyed or reduced in value by reason of the
condemnation and for the expenses incurred by Tenant in removing its personal
property from the land condemned.
20. CONDEMNATION OF COMMON AREAS: If any part of the Common Area
--------------------------------
should be taken for any public or quasi-public use under any governmental law,
ordinance or regulation, or by right of eminent domain, or by private purchase
in lieu thereof, this lease shall not terminate, nor shall the rent payable
hereunder be reduced, nor shall Tenant be entitled to any part of the award made
for such taking, except that either Landlord or Tenant may terminate this lease
if the area of the Common Area remaining following such taking plus any
additional parking area provided by Landlord in reasonable proximity to the
building shall be less than seventy percent (70%) of the original area of the
Common Area.
<PAGE>
21. NO IMPLIED SURRENDER OR WAIVER: No act or thing done by
-----------------------------------
Landlord or Landlord's agents during the term hereof, or any extension thereof,
shall be deemed an acceptance of a surrender of the Leased Premises, and no
agreement to accept such surrender shall be valid unless in writing, signed by
Landlord. The mention in this lease of any particular remedy shall not preclude
Landlord from any other remedy Landlord might have, either in law or in equity,
nor shall the waiver of or redress for any violations of any covenant or
condition in this lease contained, or any of the rules or regulations set forth
herein or hereafter adopted by Landlord prevent a subsequent act, which would
have originally constituted a violation, from having all the force and effect of
any original violation. The receipt by Landlord of rent with knowledge of the
breach of any covenant in this lease contained, shall not be deemed a waiver of
such breach. The failure of Landlord to enforce any of the rules and regulations
set forth herein, or hereafter adopted against Tenant and/or any other Tenant in
the building, shall not be deemed a waiver of such rules and regulations or any
part thereof The receipt by Landlord of rent from any assignee, subtenant or
occupant of said premises shall not be deemed a waiver of the covenant in this
lease contained against assignment and subletting, or any acceptance of the
assignee, subtenant or occupant as Tenant, or a release of Tenant from the
further observance or performance by Tenant of the covenants in this lease
contained on the part of Tenant to be observed and performed. No provision of
this lease shall be deemed to have been waived by Landlord unless such waiver
shall be in writing signed by Landlord. No payment by Tenant, or receipt by
Landlord, of a lesser amount than the monthly rent herein stipulated, shall be
deemed to be other than on account of the earliest stipulated rent, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment as rent, be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to landlord's right to recover
the balance of such rent or pursue any other remedy available to Landlord.
22. COSTS AND ATTORNEYS FEES: If by reason of any default on the
---------------------------
part of Tenant it becomes necessary for the Landlord to employ an attorney, or
in case Landlord shall bring suit to recover any rent due hereunder, or for
breach of any provision of this lease or to recover possession of the Leased
Premises, or if Tenant shall bring any action for any relief against Landlord,
declaratory or otherwise, arising out of this lease, and Landlord shall prevail
in such action, then and in any such event, Tenant shall pay Landlord a
reasonable attorney's fee and all costs and expenses expended or incurred by the
Landlord in connection with such default or action. Tenant agrees that if any
rent or other amount payable to Landlord under this lease is not paid when due,
Tenant shall pay Landlord interest on said amount at the rate of twelve percent
(12%) per annum from the due date until paid in full.
23. AMENDMENT AND MODIFICATION: No amendment or modification of
-----------------------------
this lease, or any approvals or permissions of Landlord required under this
lease, shall be valid or binding unless reduced to writing and executed by the
parties hereto in the same manner as the execution of this lease.
24. SEVERABILITY: If any clause or provision of this lease is
-------------
illegal, invalid and unenforceable under present or future laws effective during
the term of this lease, then and in that event, it is the intention of the
parties hereto that the remainder of this lease shall not be affected thereby.
The caption of each paragraph hereof is added as a matter of convenience only
and shall be considered to be of little effect in the construction of any
provision or provisions of this lease.
<PAGE>
25. NOTICE: Any notice which may be required to be given hereunder
-------
from either of the parties to the other shall be in writing. Said notice may be
served personally or shall be deemed duly served by Landlord upon Tenant if
mailed Certified Mail, Return Receipt Requested, with proper postage prepaid,
addressed to Landlord at the below address or delivered in person to Landlord,
or at such other addresses as either party may hereinafter fix by notice in
writing to the other.
The addresses of the parties are as follows:
Landlord:
4740 Forge Road, LLP.
4740 Forge Road, Ste. 104
Colorado Springs, CO. 80907
Tenant:
Doublecase Corporation.
4740 Forge Road, Ste. 112
Colorado Springs, CO. 80907
26. COMMON AREAS: The "Common Area" of the building is that part of
-------------
the building designated by Landlord for the common use of all tenants which
includes parking areas, sidewalks, landscaping, curbs, driveways, delivery
passages, loading areas, private streets and easements, lighting facilities,
drinking fountains, meeting rooms, public toilets, and the like. Landlord
reserves the right to change from time to time the dimensions and location of
the Common Area as well as the dimensions identity and type of any buildings
(except the Leased Premises) and to construct additional buildings or additional
stories on existing buildings or other improvements. Landlord also reserves the
right to dedicate portions of the Common Area and other portions of the building
(except the Leased Premises) for street, park, utility and other public
purposes. Tenant, and its employees, customers, sublessees, concessionaires and
licensees shall have the nonexclusive right to use the Common Area as
constituted from time to time, such use to be in common with Landlord, other
tenants of the building and other persons entitled to use the same, and subject
to such reasonable rules and regulations governing use as Landlord may from time
to time prescribe, including the designation of specific areas in which
automobiles owned by Tenant, its employees, sublessees, concessionaires and
licensees shall be parked. Upon request of Landlord, Tenant will furnish to
Landlord a complete list of the license numbers of all automobiles operated by
Tenant, its employees, sublessees, concessionaires or licensees. Tenant shall
not take any action which would interfere with the rights of other persons to
use the Common Area. Landlord may temporarily close any part of the Common Area
for such periods of time as may be necessary to prevent the public from
obtaining prescriptive fights or to make repairs or alterations.
27. SUCCESSORS, TERMS: The provisions, covenants, conditions and
-------------------
agreements herein shall extend to and be binding upon the heirs, successors,
legal representatives, and assigns of the parties hereto. Time is of the essence
of this Agreement.
<PAGE>
28. GENERAL PROVISIONS: All terms and words in this lease shall be
-------------------
deemed and construed to include any other number, singular or plural and any
other gender, masculine, feminine or neuter, as the context or sense of this
lease or any paragraph or clause herein may require, the same as if such words
had been fally and properly written in such number and gender.
IN WITNESS WHEREOF, said Landlord and Tenant have caused this lease to be
executed the day and year first above written.
NOTICE TO TENANT: Do not sign this agreement before you read it and fully
understand the covenant and conditions contained herein. Keep a copy of this
agreement to protect your legal rights. Tenant hereby acknowledges by signing
this agreement that Tenant has read, understood and accepts all of the terms and
conditions expressed in this agreement, and has received a signed copy of this
agreement.
4740 Forge Road,LLP.
by
LANDL6RD
Doublecase Corporation
By: /s/ Cameron Yost
------------------
it's: President
TENANT
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION:
Lot 1, Garden of the Gods Industrial Center, in the City of Colorado
Springs, El Paso County, Colorado, according to the plat therof recorded in Plat
Book B - 5 at Page 160 , El Paso County records, together with the easements for
access as described in Book 3779 at Page 746.
4740 Forge Road.
<PAGE>
EXHIBIT B
[PLOT PLAN OF WAREHOUSE ON 4740 FORGE ROAD]
Re-Capitalization
Of
ANYTHING, INC.
August 19, 1998
Banyan Corporation hereby proposes the following plan of re-capitalization of
Anything, Inc. (hereafter "Anything");
1. Issued additional Class A common stock on a pro rata basis to Anything
shareholders of record August 21, 1998, so that the total number of shares
outstanding in Anything is 500,000.
2. Issue Options to purchase 500,000 shares of Class A common stock of
Anything at $1.00. Said Options shall be distributed on a pro rata basis to
Anything shareholders of record August 20, 1998, and shall expire February 29,
2000.
3. Sell 1,000,000 shares of Anything to Banyan Corporation for consideration
comprising of 200,000 shares of Banyan Corporation Class A common stock, issued
under Rule 144, at time of closing and Options, at time of closing, to purchase
additional shares of Banyan Corporation Class A common stock (Rule 144) as
follows:
<TABLE>
<CAPTION>
<C> <S>
100,000 shares @ $.50 Expires February 28,1999
100,000 shares @ $1.00 Expires August 31, 1999
100,000 shares @ $2.00 Expires August 31, 2000
</TABLE>
Said shares and Options to be distributed on a pro rata basis to Anything
shareholders of record on August 20, 1998.
4. Engage J. Scott Sitra to contract Investor Public Relations and
Management Consulting services for the company. For said contract services,
Anything shall issue a total of 1,300,000 shares to whomever Sitra engages for
said services.
5. Authorize Units comprising of one share of Anything Class A common stock
and an Warrant to purchase on share of Anything Class A common stock for $3.00.
Said Warrant shall expire twelve months after issue. Said Unit shall sell for
$1.00 consideration and there will be no more than 200,000 Units issued.
/s/ Cameron B. Yost
- ------------------------
Cameron B. Yost, President
Banyan Corporation
<PAGE>
Ronald R. Chadwick, P.C.
Certified Public Accountant
3025 S. Parker Road
Suite 109
Aurora, Colorado 80014
----------------------------
Telephone: (303) 306-1967
Telephone: (303) 306-1944
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the use in this Form 10-SB filing by Banyan Corporation, of
my report dated April 18, 1999 relating to the consolidated financial statements
of Banyan Corporation which appear in said filing. I also consent to the
reference to my firm under the heading "Experts" in said filing.
/s/ Ronald R. Chadwick, P.C.
RONALD R. CHADWICK, P.C.
Aurora, Colorado
May 7, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE FOR FISCAL YEAR ENDING DECEMBER 31, 1998
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 30256
<SECURITIES> 0
<RECEIVABLES> 47495
<ALLOWANCES> 0
<INVENTORY> 42956
<CURRENT-ASSETS> 125621
<PP&E> 16691
<DEPRECIATION> 16105
<TOTAL-ASSETS> 278692
<CURRENT-LIABILITIES> 496734
<BONDS> 0
<COMMON> 2942795
0
334906
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 278692
<SALES> 206467
<TOTAL-REVENUES> 206467
<CGS> 125503
<TOTAL-COSTS> 125503
<OTHER-EXPENSES> 516820
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (22913)
<INCOME-PRETAX> (494910)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (494910)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
INTERIM FINANCIAL DATA SCHEDULE FOR THREE-MONTHS ENDING MARCH 31, 1999
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 14409
<SECURITIES> 0
<RECEIVABLES> 210821
<ALLOWANCES> 0
<INVENTORY> 43775
<CURRENT-ASSETS> 273919
<PP&E> 17569
<DEPRECIATION> 16295
<TOTAL-ASSETS> 391247
<CURRENT-LIABILITIES> 501878
<BONDS> 0
<COMMON> 3142795
0
334906
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 391247
<SALES> 31037
<TOTAL-REVENUES> 31037
<CGS> 20133
<TOTAL-COSTS> 20133
<OTHER-EXPENSES> 67196
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2797)
<INCOME-TAX> (92589)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (92589)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
