SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. For the Quarterly Period
ended March 31, 1996.
--------------
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. For the Transition Period to
--
Commission File Number 2-31438
NUKO Information Systems, Inc.
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New York 16-0962874
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(State of Other Jurisdiction or (I.R.S. Employer
Incorporation or Organization) Identification No.)
2235 Qume Drive, San Jose, California 95131
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(Address of Principal Executive Offices) (Zip Code)
408/526-0288
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(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [ X ] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of the latest feasible date:
CLASSES Outstanding as of May 8, 1996
-------------------------------------------------------------------
Common Stock ($0.001 par Value) 10,250,918
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
Index to Quarterly Report on Form 10-QSB
For the Period Ended March 31, 1996
PART I FINANCIAL INFORMATION PAGE NO.
- - ------ -------------------------------------------------------- --------
Item 1. Financial Statements
Interim Condensed Consolidated Balance Sheets as of
March 31, 1996 (unaudited) and December 31, 1995 (audited). 3
Interim Condensed Consolidated Statement of Operations for the
three months ended March 31, 1996 and 1995 (unaudited). 5
Interim Condensed Consolidated Statement of Cash Flows for the
three months ended March 31, 1996 and 1995 (unaudited). 6
Notes to Interim Condensed Consolidated Financial Statements. 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II OTHER INFORMATION Page No.
- - ------- -------------------------------------------------------- --------
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 15
(a) Exhibits
Exhibit No. Description
----------- -----------
10.1* 1996 Director Stock Option Plan
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no Current Reports on Form 8-K filed by
the Registrant during the subject quarter.
SIGNATURE 16
- - --------------------
*Managerial contract or compensatory plan or arrangement in which the Company's
directors or officers participate.
2
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
The financial statements and attached notes which are an
integral part of these statements represent the current
quarterly financial condition of the Company.
On May 27, 1994, Growers Express Incorporated ("Growers")
acquired all of the outstanding common stock of NUKO
Technologies, Inc. (the "Merger"). For accounting purposes,
the acquisition has been treated as a recapitalization of
NUKO Technologies, Inc. with NUKO Technologies, Inc. as the
acquirer (a reverse acquisition). Prior to May 27, 1994,
the historical financial statements are those of NUKO
Technologies, Inc. Concurrent with the Merger, Growers
changed its name to NUKO Information Systems, Inc.
Subsequent to the Merger, the consolidated financial
statements include the accounts of NUKO Information
Systems, Inc. and its wholly owned subsidiary NUKO
Technologies, Inc. (collectively the "Company").
In preparation for the Merger, Growers made several changes
in its structure. It effected a one-for-three reverse split
of its common stock, sold off its two subsidiaries (Orchid
Express, Inc. and Santa Barbara's Finest) to Equity
Exchange Associates (a Nevada corporation owned by an
officer and director) and arranged with Equity Exchange
Associates for the indemnification of the Company from all
creditor claims against the Company for all prior
obligations of Growers. In consideration for the transfer
of stock in NUKO Technologies, Inc., the Company issued an
additional 3,900,000 shares of restricted common stock to
the shareholders of NUKO Technologies, Inc.
3
<PAGE>
<TABLE>
NUKO Information Systems, Inc. and Subsidiary
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1996 1995
-------------- ---------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS:
Current Assets
Cash and cash equivalents $ 111,449,908 $ 11,255,820
Short term investments 1,668,634 --
Accounts receivables, trade 62,437 120,000
Receivables from officers/directors -- 27,931
Share subscriptions receivable including
interest of $30,567 at December 31, 1995 -- 341,967
Inventories (net) (Note 3) 755,929 758,552
Other current assets 376,124 110,762
------------- -------------
Total Current Assets $ 14,313,032 12,615,032
------------- -------------
Property and Equipment -- at cost
Leased assets 211,417 211,417
Computer hardware and software 478,200 312,059
Office furniture and other equipment 135,304 23,203
Leasehold improvements 46,915 11,033
------------- -------------
871,836 557,712
Less accumulated depreciation (153,689) (98,215)
------------- -------------
718,147 459,497
------------- -------------
Other Assets 239,132 253,340
------------- -------------
TOTAL ASSETS $ 15,270,311 $ 13,327,869
============= =============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
NUKO Information Systems, Inc. and Subsidiary
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (cont.)
<CAPTION>
March 31, December 31,
1996 1995
------------ -------------
(Unaudited) (Audited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,541,479 $ 1,319,959
Accrued liabilities 532,852 108,719
Current portion -- capital lease obligation 99,135 95,273
------------ ------------
Total current liabilities 2,173,466 1,523,951
Senior notes 325,000 325,000
Capital lease obligation 75,406 101,686
------------ ------------
Total liabilities 2,573,872 1,950,637
SHAREHOLDERS' EQUITY
Common stock, $0.001 par value, 20,000,000 shares
authorized: 10,250,918 shares issued and outstanding
at March 31, 1996; and 9,128,418 shares issued and
outstanding at December 31, 1995 10,250 9,128
Additional paid-in capital 20,124,578 15,741,718
Accumulated deficit (7,438,389) (4,373,614)
------------ ------------
Total shareholders' equity 12,696,439 11,377,232
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 15,270,311 $ 13,327,864
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
5
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
INTERIM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THREE MONTHS ENDED
March 31, March 31,
1996 1995
----------- -----------
(Unaudited) (Unaudited)
Net Sales
Product sales $ 181,800 $ 1,261
Rental income 152,613 --
Software Licensing 125,000
Software Maintenance 15,000
----------- -----------
Total Net Sales 474,413 1,261
Cost of goods sold 142,321 --
Research and development 2,188,047 328,597
Selling, general and administrative expenses 1,305,480 92,737
----------- -----------
3,635,848 421,334
Loss from operations (3,161,435) (420,073)
Other income (expense), net 96,860 (20,714)
----------- -----------
Loss before income taxes (3,064,575) (440,787)
Provision for income taxes (200) (200)
----------- -----------
Net loss for period $(3,064,775) $ (440,987)
=========== ===========
Net loss per share (Note 5) ($0.37) ($0.18)
=========== ===========
Average number of shares and equivalents 8,180,602 2,447,327
=========== ===========
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Month Period Ended March 31,
----------------------------------
1996 1995
------------- --------------
(Unaudited) (Unaudited)
Net cash used in operating activities $ (2,207,136) $ (241,666)
Net cash used in financing activities (1,982,758) (12,640)
Net cash provided by financing activities 4,383,982 188,250
Increase (decrease) in cash
and cash equivalents 194,088 (66,056)
Cash and cash equivalents at beginning
of period 11,255,820 85,807
------------ ------------
Cash and cash equivalents at
end of period $ 11,449,908 $ 19,751
============ ============
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. BASIS OF PRESENTATION
The accompanying unaudited, interim condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accurals)
considered necessary for the fair presentation, have been included.
Operating results for the three months ended March 31, 1996 and 1995
are not necessarily indicative of the results that may be expected for
a full fiscal year. For further information, refer to the financial
statements and accompanying footnotes for the year ended December 31,
1995 included in the Company's Form 10-KSB submission.
2. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less to be cash equivalents. Cash equivalents consists
principally of United States Treasury securities and commercial paper.
3. SHORT TERM INVESTMENTS
The Company adopted Statement of Financial Accounting Standards No.
115, Accounting for Certain Investments in Debt and Equity Securities
("SFAS" 115), in 1995. There was no cumulative effect as a result of
adopting SFAS 115.
Management determines the appropriate classification of its investments
in debt securities at the time of purchase and re-evaluates such
determination at each balance sheet date. Debt securities for which the
Company has both the intent and ability to hold to maturity are
classified as held to maturity. These securities are carried at
amortized cost. At March 31, 1996, the Company had no investments that
qualified as trading or available for sale.
At March 31, 1996, the Company's investments in debt securities were
classified as cash and cash equivalents and short-term investments. The
Company maintains cash and cash equivalents and short-term investments
principally of Unites State Treasury securities and commercial paper
with a maturity date of less than twelve months with various financial
institutions. These financial institutions are located in different
areas of the United States and Company practice is designed to limit
exposure to any one institution.
8
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. SHORT TERM INVESTMENTS (cont.)
The following is a summary of cash and cash equivalents and short-term
investments by balance sheet classification for March 31, 1996, and
December 31, 1995:
March 31, December 31,
1996 1995
----------- ------------
Cash and cash equivalents
Demand deposit accounts $ 558,353 $ 8,363,940
Commercial paper 12,560,189 2,891,880
----------- -----------
$13,118,542 $11,255,820
=========== ===========
The estimated fair value of each investment approximates the amortized
cost and, therefore, there are no unrealized gains or losses as of
March 31, 1996.
4. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market.
5. NET LOSS PER SHARE
The net loss per share is governed by APB15. Under this guidance,
options, warrants, convertible debt and securities as well as other
common stock equivalents are considered as outstanding only if their
effect is dilutive.
6. STOCK OPTION PLANS
The Company accounts for its employee stock option plans in accordance
with Accounting Principle Board Opinion No. 25, Accounting for Stock
Issued to Employees ("APB 25"). Under APB 25, no compensation expense
has been recognized since the exercise price of the Company's employee
stock options equals the market price of the underlying stock on the
date of grant.
7. SUBSEQUENT EVENTS
The Company has adopted a 1996 NUKO Information Systems, Inc. Stock
Option Plan and a 1996 Director Stock Option Plan. The Plans allow the
Company to grant options to employees, consultants and others for up to
1,300,000 shares of common stock and to directors for up to 100,000
shares of Common Stock, respectively. Options, which have a term of
five years when issued, were granted in March 1996 to certain officers
and directors and vest over three years starting after a six-month
period of time has elapsed.
9
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. SUBSEQUENT EVENTS (Cont.)
As outlined in Footnote 6 of these financial statements, the Company
accounts for its stock options under APB 25 and related interpretations
and has not recorded any compensation since the exercise price of the
options granted equals the market price of the underlying stock on the
date of the grant.
10
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
PART II OTHER INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
NET SALES AND NET LOSS
Net sales for the first quarter of 1996 were $ 474,413 compared to $
1,261 for the same period in 1995. Sales for the quarter included
shipments of the Company's products which included software, billings
for the rental of its Highlander equipment, software licensing fees and
software maintenance charges. The net loss for the quarter was
$3,064,775 or $0.37 per share, compared with $440,987 or $0.18 per
share for the same period in 1995. Net losses reflect the Company's
continued investment in its Highlander product line through research
and development efforts as well as the hiring of additional personnel
to enable the Company to support the market and their customer's
requirements.
COST OF SALES
Cost of sales for the three months ending March 31, 1996, was $142,321
compared to no cost for the same period in 1995. The gross margin
resulting from the cost of sales as a percentage of net sales for the
first quarter of 1996 was 70%. This percentage was inflated by the
non-product revenue for the quarter. The change in volume invalidated
comparison with the same period in 1995.
RESEARCH AND DEVELOPMENT EXPENSE
Research and development expenses for the three months ended March 31,
1996, were $2,188,047 compared to $328,597 for the same period in 1995.
The increase in the current year reflects the Company's commitment to
invest in the development and enhancement of its Highlander product
line.substantial increase in the current quarter as compared to the
prior year is a result of receiving adequate funds thereby enabling the
Company to hire a substantial number of qualified engineers capable of
finishing its Highlander product development efforts.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the three months
ending March 31, 1996, were $1,305,480 compared to $92,737 for the same
period in 1995. The expenses increased substantially as a result of
an increase in management, marketing and sales personnel.
OTHER INCOME (EXPENSE)
Other income consists primarily of interest income and interest
expense. Other income for the three month period ended March 31, 1996,
was $96,860 compared to an expense of $20,714 for the same period in
the prior year. Interest income arises from investment activities
enabled by cash balances available during the period. The increase in
interest income received in the period ended March 31, 1996, compared
to the same period in 1995 was the result of a higher cash balances
available to invest.
11
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
PART II OTHER INFORMATION (cont.)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (cont.)
LIQUIDITY AND CAPITAL RESOURCES
During the three-month period ended March 31, 1996, cash and
cash equivalents consisting of investments in demand deposits
and commercial paper, with a maturity of less than 90 days,
were $11,449,908. Short term investment totalling $1,668,634
was invested in commercial paper with maturities of less than
120 days. The ending balance at March 1996 totaled $13,118,542
compared to a balance of $11,255,820 at December 31, 1995.
The increase is related to the final closing of a second
successful private placement resulting in the Company
receiving $4,112,500 in exchange for 822,500 shares of the
Company's common stock. In addition the Company received
$540,000 from the exercise of 300,000 previously issued
warrants.
During the period, cash required for research and development
and other operating activities represents the majority of the
Company's cash usage during the quarter.
Based on the current projections of operations, management
expects cash and cash equivalents at March 31, 1996, and cash
generated from operations will be adequate to fund operating
requirements and property and equipment purchases in 1996.
However, management recognizes the dynamic nature of the
telecommunications-communications industry and the possibility
that the Company's product offerings may achieve better than
expected market acceptance which could increase working
capital requirements. In such event, the Company would
consider appropriate financing alternatives.
OTHER FINANCIAL INFORMATION
The Company's backlog includes sales orders received by the
Company that have a scheduled delivery date prior to March 31,
1997. The aggregate sales price of orders received and
included in backlog was approximately $3,100,000 at March 31,
1996. The Company believes the orders included in the backlog
are firm orders and will be shipped prior to March 31, 1997.
However, some orders may be canceled by the Customer without
penalty where management believes it is in the Company's best
interest to do so.
12
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
PART II. OTHER INFORMATION
Item 5. Other Information
RISK FACTORS
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, readers of this
document, and any document referenced herein, are advised that
this document and documents referenced herein contain both
statements of historical facts and forward looking statements.
Forward looking statements are subject to certain risks and
uncertainties, which could cause actual results to differ
materially from those indicated by the forward looking
statements.
Ownership of the Company's common stock is subject to a number
of risks including the following: The Company's business is
directly impacted by capital spending and funding of the
Regional Bell Operating Companies and other major customers in
the telecommunications industry. The capital budgets of these
customers or potential customers is beyond the control of the
Company and can be impacted by numerous factors completely
unrelated to the performance quality or price of the Company's
products. In recent years, the purchasing behavior of the
Company's large customers has increasingly been characterized
by the use of fewer larger contracts. This trend is expected
to intensify and will contribute to the variability of the
Company's results. Such larger purchase contracts typically
involve longer negotiating cycles, require dedication of
substantial amounts of working capital and other Company
resources and, in general, require investments which may
substantially precede recognition of associated revenues.
Moreover, in return for larger, longer-term purchase
agreements, customers often demand more stringent acceptance
criteria which may also cause revenue recognition delays. For
example, customers that request products be priced based on
volume estimates of customer's future requirements, but the
failure of such customers to take delivery of product
comparable to volume anticipated, could result in negative
margins on product sales.
The Company has to date sold its initial product only in
limited quantities primarily for use in development,
demonstration and testing of prototypes. Certain contracts may
relate to new technologies which may not have been previously
deployed on a large-scale commercial basis. The Company's
products are based on technologies that have not been widely
deployed and there can be no assurance that the Company will
be able successfully to market its initial products, generate
the substantially increased revenues necessary to sustain full
scale commercial production or that the Company's products
will be well received when introduced into the marketplace on
a full commercial scale.
The Company competes against many larger companies that have
significantly greater resources than the Company. There is no
assurance that the Company will be able to compete
successfully with such other companies. The Company, which has
an accumulated deficit of approximately $7.4 million as of
March 31, 1996, has never been profitable and may never
achieve profitability. The Company may require additional
capital and may not be able to raise such capital or may be
able to raise such capital only on unfavorable terms.
13
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
RISK FACTORS (cont.)
The ability of the Company to compete effectively depends on
its ability to attract and retain highly skilled key
employees. The loss of key personnel could have a material
adverse effect on the Company's business. The Company believes
that, as its requirements change in character, it will be
necessary to retain the services of additional, experienced
personnel. Competition for such personnel is intense and there
is no assurance that these people will be available when
required at the market price of the securities of the Company.
Since early 1994, the Company has been primarily engaged in
research and development of its technologies, product design
and establishment of strategic alliances on which the Company
expects to depend for manufacturing, sales and distribution of
its potential products. The Company has not yet begun to
generate significant revenues from the commercialization of
products. The Company has to date sold its initial product
only in limited quantities, primarily for use in development,
demonstration and testing of prototypes. The Company's
potential products are based on technologies that have not
been widely used or commercially proven, and there can be no
assurance that the Company will be able successfully to market
its initial products, generate the substantially increased
revenues necessary to sustain full scale commercial production
or that the potential products will be well received when
introduced into the marketplace on a full commercial scale.
Moreover, management of the Company has limited experience
with the distribution of technologically-complex products in
commercial quantities and there can be no assurance that the
Company will be able to make necessary adaptations to
successfully move from the development stage to full
commercial production and distribution.
14
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
10.1* 1996 Director Stock Option Plan
11.1 Statement re Computation of
Per Share Earnings
27 Financial Data Schedule
b) Reports on Form 8-K
There were no current reports on Form 8-K filed by
the Registrant during the subject quarter.
- - --------------------
* Managerial contract or compensatory plan or arrangement in which the
company's directors or officers participate.
15
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NUKO INFORMATION SYSTEMS, INC.
DATE: May 14, 1996 By: /s/ John Gorman
------ ----------------------------------
Name: John Gorman
Title: Vice President, Finance and Chief
Financial Officer
(Chief Accounting and Financial Officer)
16
<PAGE>
NUKO Information Systems, Inc. and Subsidiary
EXHIBIT INDEX
Exhibit No. Description Page
10.1* 1996 Directors Stock Option Plan
11 Statement re Computation of Per
Share Earnings
27 Financial Data Schedule
- - --------------------
*Managerial contract or compensatory plan or arrangement in which the company's
directors or officers participate.
17
NUKO INFORMATION SYSTEMS, INC.
1996 DIRECTOR STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Stock Option Plan
are:
o to attract and retain the best available management;
o to provide additional incentive to Directors; and
o to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.
2. Definitions. As used herein, the following terms have the
following meanings:
(a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 5 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to
the administration of stock option plans under state corporate and securities
laws and the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means a Committee appointed by the Board in
accordance with Section 5 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means NUKO Information Systems, Inc., a New York
corporation.
(h) "Continuous Status as a Director" means the employment or
consulting relationship in the capacity of Director is not interrupted or
terminated by the Company, any Parent or Subsidiary. Continuous Status as a
Director shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave, military leave or any other
personal leave; provided, however, that for purposes of Incentive Stock Options,
any such leave may not exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract (including certain Company
policies) or statute; or (ii) transfers
<PAGE>
between locations of the Company or between the Company, its Parent, its
Subsidiaries or its successor.
(i) "Director" means a duly elected member of the Board or any
Parent or Subsidiary of the Company.
(j) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(k) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(l) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation, the
Nasdaq National Market(TM) of the National Association of Securities Dealers,
Inc. (the "National Market"), its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or system (or the exchange with the greatest volume of trading
in Common Stock) on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is quoted on the Nasdaq
SmallCap MarketSM (but not on the National Market thereof) or is regularly
quoted by a recognized securities dealer but selling prices are not reported,
its Fair Market Value shall be the mean between the closing bid and closing
asked prices for the Common Stock on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such other
source as the Administrator deems reliable; or,
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.
(m) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(n) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
(o) "Notice of Grant" means a written notice evidencing
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.
-2-
<PAGE>
(p) "Option" means an option granted by the Board under the
Plan as set forth in an Option Agreement.
(q) "Option Agreement" means a written stock option agreement
duly executed on behalf of the Company, delivered to an Optionee, and executed
by such Optionee, evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(r) "Optioned Stock" shall mean the authorized but unissued
Common Stock subject to an Option.
(s) "Optionee" means a Director who has been granted an
Option.
(t) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in subsection 425(e) of the Code.
(u) "Plan" means the NUKO Information Systems, Inc. 1996
Director Stock Option Plan as set forth herein.
(v) "Public Company" means the Company when the Company has a
class of equity securities registered under Section 12 of the Exchange Act.
(w) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(x) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(y) "Subsidiary" means a subsidiary corporation, whether now
or hereafter existing, as defined in subsection 425(f) of the Code.
3. Stock Subject to the Plan.
(a) The maximum aggregate number of shares which may be
optioned and sold under the Plan is One Hundred Thousand (100,000) shares,
subject to adjustment as provided for in section 13 below. The Shares may be
authorized, but unissued, or reacquired Common Stock. However, should the
Company reacquire Shares that were issued pursuant to the exercise of an Option,
such Shares shall not become available for future grant under the Plan.
(b) If any shares of Common Stock are delivered to the Company
in payment of the exercise price of an Option as provided under section 10
hereof, or if any Option granted under the Plan shall expire or terminate
without having been exercised in full for any reason
-3-
<PAGE>
including, without limitation, cancellation, surrender or exchange (whether or
not in connection with the regranting or substitution of an Option or
otherwise), the unpurchased shares subject to such expired or terminated Option
or the shares delivered in payment of an Option, as the case may be, shall
immediately become available for the grant of additional Options under the Plan
(unless the Plan has terminated).
4. Form of Option.
(a) Options issued under the Plan may be either Nonstatutory
Stock Options or Incentive Stock Options or a combination of both. Whether an
Option or a portion thereof is a Nonstatutory Stock Option or an Incentive Stock
Option shall be clearly stated in the Option Agreement.
(b) Any Incentive Stock Option may be reclassified into a
Nonstatutory Stock Option upon the written request of the Optionee and the
consent of the Company (which consent may be withheld in the sole discretion of
the Administrator) by the amendment of its designation and the deletion or
modification of any provision which, under the terms of the Plan, is applicable
only to Incentive Stock Options. The number of shares which may be purchased
pursuant to an Incentive Stock Option which is so reclassified into a
Nonstatutory Stock Option may be increased by amendment but not in excess of the
number of additional shares necessary to provide the Optionee with the same
economic benefit after federal income taxes upon the exercise of the Option as a
Nonstatutory Stock Option as the Optionee would have obtained upon the exercise
of the Option as an Incentive Stock Option. In no event shall (i) the provisions
of this subsection be interpreted or construed to grant any rights, powers or
privileges to reclassify or otherwise amend an Incentive Stock Option to any
person or body other than the Administrator; or (ii) any Option Agreement
contain any provision which purports to grant any such rights, powers or
privileges.
(c) With the Optionee's consent, the Administrator may cancel
any Option issued under the Plan and issue a new Option to such Optionee.
5. Administration of the Plan.
(a) Administration with Respect to Directors. With respect to
Option grants made to Directors when the Company has a class of equity
securities registered under Section 12 of the Exchange Act (in which case the
Company shall be referred to herein as a "Public Company"), the Plan shall be
administered by (i) the Board, if the Board may administer the Plan in
compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3 or (B) a Committee designated by the Board
to administer the Plan, which Committee shall be constituted (1) in a manner as
to permit the Plan to comply with Rule 16b-3 as it applies to a plan intended to
qualify thereunder as a discretionary grant or award plan and (2) in such a
manner as to satisfy the Applicable Laws. Once appointed, such Committee shall
continue to
-4-
<PAGE>
serve in its designated capacity until otherwise directed by the Board. From
time to time, the Board may increase the size of the Committee and appoint
additional members, remove members (with or without cause) and substitute new
members, fill vacancies (however caused) and remove all members of the Committee
and thereafter directly administer the Plan, all to the extent permitted by the
rules governing a plan intended to qualify as a discretionary plan under Rule
16b-3 and Applicable Laws. The foregoing notwithstanding, if, before the grant
of Options the Board determines that the Plan shall not be administered so as to
qualify as a discretionary plan under Rule 16b-3, then as to all participants,
the Plan shall be administered in accordance with subsection (b) below.
(b) Administration with Respect to Non-Public Company. With
respect to Option grants made when the Company is not a Public Company, the Plan
shall be administered by (i) the Board or (ii) a Committee designated by the
Board, which Committee shall be constituted to satisfy Applicable Laws. Once
appointed, such Committee shall serve in its designated capacity until otherwise
directed by the Board. The Board may increase the size (with or without cause)
and substitute new members, fill vacancies (however caused) and remove all
members of the Committee and thereafter directly administer the Plan, all to the
extent permitted by Applicable Laws.
As to Option grants made when the Company is not a Public Company or if
the Board determines that the Plan shall not be a discretionary Plan under
Section 16 of the Exchange Act, Directors who are either eligible for Options or
have been granted Options may vote on any matters affecting administration of
the Plan or the grant of Options pursuant to the Plan; provided, however, no
Director shall act upon the granting of an Option to himself or herself, but any
such member may be counted in determining the existence of a quorum at any
meeting of the Board during which action is taken with respect to the granting
of Options to him.
(c) Powers of the Administrator. Subject to the provisions of
the Plan and, in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to grant Incentive Stock Options, in accordance with
Section 422 of the Code or
Nonstatutory Stock Options;
(ii) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(n) of the Plan;
(iii) to determine whether and to what extent Options
are granted hereunder;
(iv) to select the Directors to whom Options may be
granted hereunder;
(v) to determine the number of shares of Common Stock to
be covered by
-5-
<PAGE>
each Option granted hereunder;
(vi) to approve forms of Option Agreement;
(vii) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options may be exercised (which may be based on performance
criteria) and any restriction or limitation, or any vesting acceleration or
waiver of forfeiture restrictions regarding any Option or the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator
shall determine, in its sole discretion (and such terms and conditions may
differ among Optionees); provided, however, that in the event of a merger or
asset sale, the applicable provisions of Section 13(c) of the Plan shall govern
vesting acceleration;
(viii) to determine whether and under what circumstances
an Option may be settled in cash under subsection 11(f) instead of Common Stock;
(ix) to reduce the exercise price of an Option to the
then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall be declined since the date the Option was granted;
(x) to construe and interpret the terms of the Plan;
(xi) to prescribe, amend and rescind rules and
regulations relating to the Plan;
(xii) to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xiii) to make all other determinations deemed necessary
or advisable for administering the Plan.
(d) Effect of the Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holder of Options granted under the Plan.
6. Eligibility. Incentive and Nonstatutory Stock Options.
Incentive and Nonstatutory Stock Options may be granted to Directors who are
employees. Non-employee Directors may be granted only Nonstatutory Stock
Options. Directors who have been granted an Option may, if he is otherwise
eligible, be granted additional Options.
-6-
<PAGE>
7. Limitations.
(a) Each Option shall be designated in the Notice of Grant as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value: (i) of Shares subject to an Optionee's incentive stock options granted by
the Company, any Parent or Subsidiary, which (ii) become exercisable for the
first time during any calendar year (under all plans of the Company and any
Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 7(a), incentive stock
options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares shall be determined as of the time of grant.
(b) Neither the Plan nor any Option shall confer upon any
Optionee any right with respect to continuing the Optionee's management
relationship with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate his management relationship
at any time, with or without cause.
8. Term of the Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval by
the shareholders of the Company as described in Section 19 of the Plan. It shall
continue in effect for a term of ten (10) years unless terminated earlier under
Section 15 of the Plan.
9. Term of Option. The term of each Option shall be stated in the
Notice of Grant; provided, however, that in the case of an Incentive Stock
Option, the term shall be ten (10) years from the date of grant or such shorter
term as may be provided in the Notice of Grant. However, in the case of an
Incentive Stock Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Option shall be five (5) years from the date of grant or such shorter term
as may be provided in the Notice of Grant.
10. Option Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be such price as
determined by the Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option:
(A) granted to an Optionee who, at the time
of the grant of such Incentive Stock Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than One
Hundred Ten Percent (110%) of the Fair Market Value per Share
-7-
<PAGE>
on the date of grant.
(B) granted to an Optionee, the per Share
exercise price shall be no less than One Hundred Percent (100%) of the Fair
Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option granted
to an Optionee, the per Share exercise price shall be no less than Eighty-five
Percent (85%) of the Fair Market Value per Share on the date of Grant.
(b) Form of Consideration. The consideration to be paid for
the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Administrator. In the case of an Incentive
Stock Option, the Administrator shall determine the acceptable form of
consideration at the time of grant. Such consideration may consist entirely of
(i) cash, (ii) check, (iii) promissory note, (iv) other Shares which (a) in the
case of Shares acquired upon exercise of an option, have been owned by the
Optionee for more than six (6) months on the date of surrender, and (b) have a
Fair Market Value on the date of surrender at least equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised, (v)
authorization for the Company to retain from the total number of Shares as to
which the Option is being exercised that number of Shares having a Fair Market
Value on the date of exercise equal to the exercise price for the total number
of Shares as to which the Option is exercised; (vi) if there is a public market
for the Shares and they are registered under the Securities Act of 1933, as
amended, delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price, (vii)
delivery of an irrevocable subscription agreement for the Shares which
irrevocable obligates the Optionee to take and pay for the Shares not more than
twelve (12) months after the date of delivery of the subscription agreement
(viii) any combination of the foregoing methods of payment or (ix) such other
consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
If the consideration for the exercise of an Option is the surrender of
previously acquired and owned Common Stock, the Optionee will be required to
make representations and warranties satisfactory to the Company regarding his or
her title to the Common Stock used to effect the purchase, including without
limitation representations and warranties that the Optionee has good and
marketable title to such Common Stock free and clear of any and all liens,
encumbrances, charges, equities, claims, security interests, options or
restrictions and has full power to deliver such Common Stock without obtaining
the consent or approval of any person or governmental authority other than those
which have already given consent or approval in a form satisfactory to the
Company. Optionees electing to pay all or part of the exercise price of an
Option by delivery
-8-
<PAGE>
of Common Stock shall not be entitled to receive fractional shares to the
extent, if any, that the Fair Market Value of such Common Stock exceeds such
exercise price, but instead shall be entitled to cash in lieu thereof. Any
applicable federal or state withholding tax shall be paid in full in cash by the
Optionee to the Company upon the exercise of an Option.
If the consideration for the exercise of an Option is a promissory
note, it shall be a full recourse promissory note executed by the Optionee,
bearing interest at a rate (compounded semi-annually) which is not less than the
rate required to ensure that there will be no "unstated interest" with respect
to the purchase of Shares under an Option, pursuant to the applicable provisions
of the Code and the rules and regulations in effect thereunder at the time of
purchase, and shall be secured by a pledge of the Shares purchased by the
promissory note and additional collateral, if required by the Administrator. In
such an instance, the Administrator may retain in escrow the Shares purchased
upon exercise of the Option as security for payment of the promissory note.
Payment by promissory note may be made only by Directors who are employees.
11. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the Administrator.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i)
written notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment consists of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 13 of the
Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
-9-
<PAGE>
(b) Termination of Directorship. In the event an Optionee's
Continuous Status as a Director terminates (other than upon the Optionee's death
or Disability), the Optionee may exercise his or her Option, but only within
such period of time as is determined by the Administrator, and only to the
extent that the Optionee was entitled to exercise it at the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant). In the case of an Incentive Stock Option, the
Administrator shall determine such period of time (in no event to exceed ninety
(90) days from the date of termination) when the Option is granted. If, at the
date of termination, the Optionee is not entitled to exercise his or her entire
Option, the Shares covered by the unexercisable portion of the Option shall
revert to the Plan. To the extent, after termination, that the Optionee does not
exercise the exercisable portion of his or her Option within the time specified
in the Notice of Grant, the Option shall terminate, and the Shares covered by
such exercisable portion of such Option shall revert to the Plan. Within the
limits set forth herein, the Administrator may agree in writing to a longer
period for post-termination exercise than set forth in the Notice of Grant,
unless prohibited by Applicable Laws.
(c) Disability of Optionee. In the event an Optionee's
Continuous Status as a Director terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option, but only within twelve
(12) months from the date of such termination, and only to the extent that the
Optionee was entitled to exercise it at the date of such termination (but in no
event later than the expiration of the term of such Option as set forth in the
Notice of Grant). If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. To the extent, after
termination, that the Optionee does not exercise the exercisable portion of his
or her Option within the time specified herein, the Option shall terminate, and
the Shares covered by such exercisable portion of such Option shall revert to
the Plan. Within the limits set forth herein, the Administrator may agree in
writing to a longer period for post-disability exercise than set forth in the
Notice of Grant, unless prohibited by Applicable Laws.
(d) Death of Optionee. In the event of the death of an
Optionee:
(i) If the Optionee dies during the term of his Option,
where such Optionee is at the time of his death a Director of the Company and
such Optionee, at the date of death shall have been in Continuous Status as a
Director since the date of the grant of the Option, the Option may be exercised
at any time within six (6) months (or such other period of time not less than
six (6) months nor more than twelve (12) months as determined by the
Administrator and specified in writing in the Notice of Grant) following the
date of death (but in no event later than the expiration of the term of the
Option), by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that would have accrued had the Optionee continued living and
remained in Continuous Status as a Director for six (6) months after the date of
death; or
-10-
<PAGE>
(ii) If the Optionee dies within three (3) months after
the termination of such Optionee's Continuous Status as a Director, then the
Option may be exercised at any time within six (6) months (or such other period
of time not less than six months nor more than the period that ends twelve (12)
months after termination, as determined by the Administrator and specified in
writing in the Notice of Grant) following the date of death (but in no event
later than the expiration of the term of the Option), by the Optionee's estate
or by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option was vested as of the date of
termination. Within the limits set forth herein, the Administrator may agree in
writing to a longer period for post-death exercise than set forth in the Notice
of Grant, unless prohibited by Applicable Laws.
(e) Rule 16b-3. If the Company is a Public Company at the time
of grant of an Option, Options granted to persons subject to Section 16(b) of
the Exchange Act must comply with the applicable provisions of Rule 16b-3 and
shall contain such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions. The foregoing notwithstanding, if the
Company is a Public Company and, prior to the grant of any Options to persons
subject to Section 16(b) of the Exchange Act, the Administrator determines that
the Plan is not intended to be a discretionary plan exempt from Section 16,
Option grants to Director subject to Section 16 need not necessarily comply with
the restrictions and conditions set forth in Rule 16b-3.
(f) Buyout Provisions. The Administrator may, at any time,
offer to buy out, for a payment in cash or Shares, an Option previously granted,
based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
12. Non-transferability of Options. An Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than be will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
13. Adjustments upon Changes in Capitalization, Dissolution,
Merger or Asset Sale.
(a) Splits, Dividends, Combinations or Reclassifications.
Subject to any required action by the shareholders of the Company, the number of
Shares covered by each outstanding Option, and the number of Shares that have
been authorized for issuance under the Plan but as to which no Option shave yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per Share covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares effected
without receipt of consideration by the Company; provided, however, that
-11-
<PAGE>
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, shall effect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Shares subject to
an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, any outstanding Options shall
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Board, and may give each Optionee the right to exercise his
Option as to all or any part of the Optioned Stock, including Shares as to which
the Option would not otherwise be exercisable.
(c) Sale or Merger. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, Options shall be assumed or an equivalent
option or right shall be substituted by such successor corporation or a parent
or subsidiary of such successor corporation, unless, in the case of an Option,
the Board determines, in the exercise of its sole discretion and in lieu of such
assumption of substitution, that the Optionee shall have the right to exercise
the Option as to all of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable. If the Board makes an Option fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Board shall notify the Optionee that the Option shall be
fully exercisable for a period of thirty (30) days from the date of such notice,
and the Option will terminate upon the expiration of such period.
14. Time of Granting Options or Stock Purchase Rights. The date of
grant of an Option shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option, or such later date
as is determined by the Administrator. Notice of the determination shall be
given to each Optionee within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend, alter,
suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the
-12-
<PAGE>
Common Stock is listed or quoted). Such shareholder approval, if required, shall
be obtained in such a manner and to such a degree as is required by the
applicable law, rule or regulation.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company.
16. Conditions Upon Issuance of the Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange or quotation system upon which the Shares may
then be listed or quoted, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise
of an Option, the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such
representation is required by any of the aforementioned relevant provisions of
law.
17. Liability of Company.
(a) Inability to Obtain Authority. The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock
covered by an Option exceeds, as of the date of grant, the number of Shares that
may be issued under the Plan without additional shareholder approval, such
Option shall be void with respect to such excess Optioned Stock, unless
shareholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with Section 14(b)
of the Plan.
18. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
-13-
<PAGE>
19. Shareholder Approval. Continuance of the Plan shall be subject
to approval by the shareholders of the Company within twelve (12) months before
or after the date the Plan is adopted.
20. Information to Optionees. The Company shall provide each
Optionee, while such Optionee has one or more Options outstanding, with copies
of all annual reports and other information that are provided to all
shareholders of the Company. The Company shall not be required to provide such
information if the issuance of Options under the Plan is limited to key officers
whose duties in connection with the Company assure their access to equivalent
information.
21. Other Provisions. Notwithstanding the express provisions of
the Plan, any Option may be granted on such additional or more restrictive terms
as the Administrator shall deem advisable consistent with the Plan.
22. Registration and Resale. The Plan, the shares of Common Stock
subject thereto, and the Options granted thereunder may, in the discretion of
the Board, be registered under the Securities Act of 1933, as amended, or
qualified for sale under the securities laws of any state. As a condition to the
grant of any Option under the Plan or the issuance of shares of Stock upon the
exercise thereof, the Board may require that the Optionee agree to comply with
such provisions of federal and state securities laws as may be applicable to
such grant or issuance or to the sale of shares acquired thereby and deliver to
the Company a written agreement in form and substance satisfactory to the
Company and its counsel implementing such agreement.
23. Effective Date of the Plan. The Plan shall become effective
upon approval of the Board and shall be subject to stockholder approval, as
required by Section 19 above. Options may be granted and exercised under the
Plan only after there has been compliance with all applicable federal and state
securities laws.
-14-
NUKO Information Systems, Inc. and Subsidiary
Exhibit 11.1 Computation of Loss per Share for the Three Month
Period Ended March 31
1996 1995
----------- ------------
PRIMARY LOSS PER SHARE
Net loss for period $ 3,064,775 $ 440,987
=========== ===========
Shares outstanding at the beginning
of the period 9,128,418 5,413,941
Weighted average effect of shares
issued during period 433,846 35,334
Weighted average effect of warrants
exercised in the period 75,824 --
Weighted average effect of share
subscriptions paid in the period (1,457,486) --
Weighted average effect of shares
issued for services -- 3,568
Weighted average effect of debt to
equity conversion -- 8,831
Weighted average effect of share
subscriptions (excluded due to anti-
dilutive effect) -- (3,014,347)
----------- -----------
Weighted average shares outstanding
for the period 8,180,602 2,447,327
=========== ===========
Primary loss per share $ 0.37 $ 0.18
=========== ===========
FULLY DILUTED LOSS PER SHARE
This computation was not made as the result is anti-dilutive
due to the Company having incurred net losses for the periods.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 11,449,908
<SECURITIES> 1,668,634
<RECEIVABLES> 62,437
<ALLOWANCES> 0
<INVENTORY> 755,929
<CURRENT-ASSETS> 376,124
<PP&E> 871,836
<DEPRECIATION> 153,689
<TOTAL-ASSETS> 15,270,317
<CURRENT-LIABILITIES> 2,173,466
<BONDS> 0
<COMMON> 10,250
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,270,311
<SALES> 334,413
<TOTAL-REVENUES> 474,413
<CGS> 142,321
<TOTAL-COSTS> 3,635,848
<OTHER-EXPENSES> (96,860)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,064,575)
<INCOME-TAX> (200)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,064,775)
<EPS-PRIMARY> (0.37)
<EPS-DILUTED> 0.00
</TABLE>
