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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
JULY 2, 1999
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
REGISTRATION STATEMENT UNDER THE SECURITIES EXCHANGE ACT OF 1934
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SIMEX TECHNOLOGIES, INC.
(Name of Small Business Issuer as Specified in its Charter)
DELAWARE 58-2465647
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
Suite 995, 3475 Lenox Road, NE, Atlanta, GA 30326
- --------------------------------------------------
(Address of principal executive offices and zip code)
Issuer's telephone number, including area code: (404) 812-3130.
SECURITIES TO BE REGISTERED UNDER SECTION 12(B) OF THE ACT
NONE
SECURITIES TO BE REGISTERED UNDER SECTION 12(G) OF THE ACT
COMMON STOCK, $.001 PAR VALUE
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(TITLE OF CLASS)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS. SIMEX Technologies, Inc., a Delaware
corporation together with its subsidiaries, is referred to herein as the
"Company." The principal operating subsidiary is SIMEX A/S and is referred to
herein as "SIMEX A/S," a Norwegian corporation.
All statements, other than statements of historical fact, included in
this Registration Statement, including, without limitation, the statements under
"Description of Business" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" are, or may be deemed to be,
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934. Important factors that could cause actual results to
differ materially from those discussed in such forward-looking statements
("Cautionary Statements") include: the general strength or weakness of the
Company's products industry, and the pricing policies of competitors. All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on behalf of the Company are expressly qualified in
their entirety by such Cautionary Statements.
All amounts throughout this Registration Statement are expressed in
U.S. dollars unless otherwise indicated.
OVERVIEW
The Company is a diversified engineering and service company. The
Company performs design, engineering, fabrication, production, installation and
maintenance services on commercial projects for the off-shore oil and gas
industry, and for on-shore commercial, industrial, and government projects that
require engineering or technical expertise. In addition, the Company is engaged
in concrete post-tensioning construction for off-shore oil and gas drilling
platforms, bridges and other related concrete construction projects utilizing a
unique system known as the "SIMCON Post-tensioning" system. The Company holds
all of the certifications available for a civil engineering company. The Company
derives its revenues primarily from customers in Norway and, to a lesser extent,
the United Kingdom.
The Company's predecessor corporation was originally organized in 1983
with limited operations until its reorganization with SIMEX A/S on April 28,
1998. Under the terms of the reorganization, the principal shareholders of SIMEX
A/S became the majority shareholders of the Company and SIMEX A/S became a
wholly-owned subsidiary of the Company. Substantially all of the Company's
revenues are derived from the operations of SIMEX A/S.
SIMEX A/S began operations in 1980 as an engineering and service
company based in Stavanger, Norway. In May of 1998, SIMEX A/S acquired Norsk
Kjoleindustri A/S ("Norwegian Cooling Industries"), which is an HVAC equipment
design, manufacturer and maintenance organization that, among its products,
manufactures and installs ice machines and other cooling equipment for a variety
of applications. In late 1998, SIMEX A/S also acquired four (4) other companies
engaged in welding, manufacturing and service businesses, which compliment and
diversify the materials and services that SIMEX A/S offers to its existing
customers as a full-house service organization. This expansion of the number of
products and services positions the Company to compete with other engineering
and construction companies and to expand its services to other markets. SEE
"RECENT ACQUISITIONS."
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In April of 1999, the Company reincorporated as a Delaware corporation
and changed its name to SIMEX Technologies, Inc.
INDUSTRY BACKGROUND
The Company is engaged in construction, engineering, installation and
maintenance of large-scale projects with a significant presence in the off-shore
oil and gas production service industry. SIMEX A/S has participated in the
construction and maintenance of a majority of the large-scale off-shore oil and
gas production platforms that were built during the 1980s and early 1990s. Oil
production in the North Sea area of Norway is second in the world, with the
Middle Eastern Region of the World ranking first. There are approximately
30 off-shore oil and gas production platforms operating in the North Sea.
These platforms are owned by the major oil companies of the world including
Shell Oil, Exxon, Statoil (the Norwegian State oil company), Conoco, Phillips
Petroleum, Amarada Hess and others.
Concrete oil and gas production platforms, bridges, and tunnels require
a construction reinforcing technique known as "post-tensioning." To meet this
requirement, SIMEX A/S purchased the license to produce spiral duct products and
redeveloped this system for post-tensioning concrete construction, including
that for concrete oil and gas production platforms. Prior to pouring concrete
into forms, cables are inserted through the ducts inside the concrete. After
pouring, the cables are mechanically tightened, considerably strengthening the
concrete as it cures. The Company markets the spiral ducts and post-tensioning
services as the SIMCON Post-tensioning system through its subsidiary, SIMCON UK
Ltd. The Company has established strategic alliances with contractors for
large-scale projects that include such companies as Taylor Woodrow Civil
Engineering LTD, (United Kingdom), Philip Holtzmann A.G. (Germany), Doris
Engineering (France), Dywidag Systems International (Germany), VSL International
Ltd. (Switzerland), Skanska AB (Sweden), and other international civil
engineering companies and general contractors worldwide.
The Company also produces the spiral duct product "SIMDUCT" in
galvanized aluminum and stainless steel for heating, ventilation and air
conditioning systems ("HVAC"). The system is specified for and installed in
construction for the off-shore oil and gas industry, for new and re-furbished
oil production facilities and for system upgrades in existing buildings and
structures. Contractors for large-scale projects for this product include such
companies as ABB, Aker Marine, Kvaerner Oil & Gas, Hyundai, Elf Oil and other
international contractors. These contractors as well as others have previously
engaged the Company and continue to utilize its products and services. SIMDUCT
has been installed in several platforms in the North Sea including Ekofisk 2,
Heidrun TLP, and Oseberg. The system has also been installed in land-based
commercial oil and gas facilities.
MARKET FOR PRODUCTS AND SERVICES
The demand for large-scale construction projects such as off-shore oil
and gas platforms, bridges, water towers and tunnels is cyclical and dependent
upon numerous economic and political factors including the worldwide demand for
oil and gas production, hydro-electric power from dams and infrastructure
requirements of political subdivisions.
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In addition to participating in the design and construction phases of
new projects, there is a continuing need for maintenance of HVAC systems,
plumbing, electrical and other mechanical systems for both on-shore and
off-shore commercial projects. Other products and services remain in continuous
demand for existing customers and the Company constantly seeks strategic
partners and joint ventures to meet the demands of its customers that include
general contractors, oil companies, government and private owners of public
facilities such as schools, hospitals and municipalities.
The development and implementation of solutions as well as new products
and services requires the successful integration of strategic consultation,
creative design and systems engineering abilities. Historically, expertise in
these areas has been fragmented and, accordingly, many businesses outsource or
subcontract with numerous companies to meet its overall requisites. The
subcontracting and outsourcing create opportunities for companies that can offer
a complete line of services to an end user. While there are a number of
companies in the Scandinavian market that may provide a single service, such as
HVAC, there is a limited number of companies that have assimilated the technical
expertise to offer multiple disciplines such as engineering, design,
construction, installation and monitoring in the fields of HVAC, plumbing,
electrical, welding and mechanical while simultaneously providing products that
complement these services, such as spiral duct pipes, cooling plants, integrated
ice plants, specialized industrial doors and others.
While the Company operates in an industry with a relatively low barrier
to entry, there is a high demand for technical services of qualified personnel
and a need for operating capital to purchase manufacturing equipment, supplies
and other general overhead.
The Company believes that a market for the products and service that it
offers will continue and that it will be able to compete in the world market
because of the experience and technical skills it possess which are required for
new infrastructure construction.
STRATEGY
The Company's goal is to expand, acquire and develop additional
products and technical services to transform the business from a regional
specialty contractor to a worldwide provider of technical expertise and
innovative products to the construction and other industries. To achieve this
objective, the Company is pursuing a defined operating segment strategy.
OPERATING SEGMENTS. The Company has organized its products and services
into four operating segments, namely:
CONSTRUCTION. This segment includes all of the Company's
operations involved in the design, engineering and installation of HVAC,
cooling, plumbing and electrical systems and products, both on-shore and
off-shore. It is comprised of the operations of the Company's subsidiaries:
SIMEX A/S, Norwegian Cooling Industries, Hordaror and other related business
units. Management believes that grouping these operations into a single segment
will provide greater opportunity for integration of skills and product
development initiatives, and more meaningful financial reporting.
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SERVICE. This segment includes operations related to service
and maintenance contracts worldwide. Management's goal is to establish and
market its service capabilities as a separate operating unit.
PRODUCTION. This segment includes the design, engineering and
production of various technical products, such as the Simprofile ducts as well
as other products and services offered by the Company's subsidiaries: SIMEX
A/S, Norwegian Cooling Industries, Weld Tech A/S and Vest Norge Doors.
Management believes there are significant benefits to be derived from
integrating product development and production personnel within this segment.
POST-TENSIONING. This segment includes the SIMCON division and
other post-tensioning operations. This group represents a unique technical
skill provided by a relatively few companies throughout the world. Management
intends to market and manage this capability as a separate technical service.
ISO 9000. The Company has adopted and operates under the ISO 9000
specifications and other specialty quality norms for the industry. This
accreditation allows the Company to participate with other civil and mechanical
engineering firms in joint ventures or acting alone as a subcontractor to large
multinational general contracting firms. Health, safety and environmental
concerns are integrated parts of the system.
To obtain the designated quality certification, the Company were
required to developed a quality management system which is necessary to ensure
that the products and services offered meet the expectations of the customer
and that the expectation is continuously maintained to the prescribed standard,
specification, contract or order agreement. The quality assurance standard must
be met in accordance with a quality assurance manual developed and monitored by
the Company and subject to peer review and testing.
With the ISO 9000 accreditation, the Company intends to expand its
business by entering into additional joint ventures with contractors requiring
the designation as well as to acquire certain other companies that complement
its civil and mechanical engineering services who are not presently accredited
as an ISO 9000 or other quality service provider.
BUSINESS OPERATIONS. The Company is involved in new construction
projects, and it supplies products and materials and performs maintenance for
numerous customers. A description of these operations is as follows:
NEW CONSTRUCTION. The Company recently completed (April 1999) its
contract with Taylor Woodrow Civil Engineering (UK) for post-tensioning and
engineering for the construction of an oil and gas platform that has been
placed in service in the Danish oil field, South Arne. The Company manufactured
all of the post-tensioning steel ducts in its manufacturing facility in
Stavanger, Norway. The Company will continue to implement certain maintenance
contracts for this platform through its operator, Amarada Hess.
The Company is currently providing engineering, design and technical
advice to a general contractor for the construction of a commercial shopping
center with 150,000 square feet in Narvik, Norway.
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The Company is also providing pre-stressing equipment and material,
supervision and engineering services and technical advice related to the
construction of a mile-long service pier in Dabhol, India. Besix S/A Belgium is
the general contractor for this project. The pier will allow the servicing of
vessels loading cargo from a Liquified Natural Gas (LNG) plant in Dabhol.
MAINTENANCE & SERVICE CONTRACTS. The Company has entered into over 250
HVAC, electrical, refrigeration, and plumbing system maintenance contracts with
various customers which include the City of Stavanger, Norway (for its local
hospitals, schools and governmental facilities), Conoco Oil, Phillips Petroleum,
Statoil Norway, Elf Oil Company and other large-scale production customers.
Because of the large number of maintenance and service customers, the Company
has established a computer system for monitoring the systems remotely.
OTHER BUSINESS OPERATIONS. The Company also manufactures and sells its
spiral duct tubing for HVAC system installation to third-party contractors and
users. The spiral duct tubing is manufactured with galvanized steel. The Company
is one of a limited number of companies that manufactures both galvanized and
stainless steel duct tubing in the region.
The Company sells, through its subsidiary, Norwegian Cooling
Industries, a variety of ice and refrigeration products for various uses,
including the fishing industry for which there is a growing worldwide demand.
Ice-making machines also require maintenance, which is provided by the Company
on a continuous basis. The refrigeration products and services also complement
the Company's HVAC business.
The Company's subsidiary, Weld Tech A/S, provides sophisticated welding
services for off-shore and on-shore projects. It has recently acquired a
sophisticated, computer-operated water plasma jet steel-cutting machine which is
leased out to third-party contractors for a daily rate. The backlog for its use
is over 90 days.
ACQUISITIONS. The Company embarked on an acquisition plan in 1998
designed to develop additional technical capabilities and products to supplement
its traditional areas of expertise. Through acquisitions in the steel
fabrication, HVAC design and installation and cooling products industries in
Norway, the Company was able to assemble additional production and service
capabilities, merge them into its operating structure and facilities to insure
quality and efficiency, and will begin developing worldwide markets for these
products and services. The Company's near-term objective is to continue and
expand this strategy to provide more global recognition and opportunities for
its niche capabilities and products.
RECENT ACQUISITIONS. Principal acquisitions during 1998 were based on
the Company's objective of augmenting its product and service capabilities in
the Norwegian/North Sea region with a plan to expand its markets for these
products and services into North America and worldwide. With the
Norwegian Cooling Industries at Weld Tech acquisitions described herein, the
Company's pro forma 1998 revenues were approximately $30,700,000.
Principal among the 1998 acquisitions were the following:
Norwegian Cooling Industries is an HVAC equipment design, manufacturer,
and maintenance company located in Stavanger, Norway. Founded in 1938, it has
fifty (50) employees with 1998 revenues of approximately $7,100,000 since the
acquisition which occurred in June 1998. Norwegian Cooling Industries'
production, service and engineering are directly connected with SIMEX A/S's
business with the additional benefits of its own developed
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ice-cooling system for the marine and off-shore industries. Norwegian Cooling
Industries additionally manufactures and distributes high capacity ice machines
for off-shore as well as on-shore uses. Norwegian Cooling Industries also
produces the "Kuldevakten" monitoring and control systems for a variety of
applications, including supermarkets, food production and distribution, marine
vessels and hospitals. Norwegian Cooling Industries was purchased in May, 1998,
and its administrative offices have been moved to the offices of SIMEX A/S. This
company was purchased for approximately $2.7 million in cash.
Weld Tech A/S is a metal fabrication company in Stavanger, Norway. Weld
Tech was purchased in November, 1998. It is a specialized fabrication and
welding contractor in the oil and gas service industry. Weld Tech A/S owns
certain welding and cutting equipment including a new "water plasma cutter" that
it leases to general contractors on a fee basis. Engineering, production and
administration have been relocated within SIMEX A/S operations in Stavanger.
Since the date of its acquisition in September, 1998, Weld Tech's 1998 revenues
were approximately $117,000. Weld Tech was acquired for approximately $1.3
million in cash, plus 450,000 shares of the Company's common stock and an option
to acquire an additional 200,000 shares of the Company.
Hordaror A/S, a commercial plumbing and mechanical contractor located
in Bergen, Norway, is a former competitor of SIMEX A/S in the HVAC field and has
been relocated with other SIMEX A/S operations in Bergen. It provides
sophisticated support systems for the projects that it undertakes. Since
acquisition, Hordaror A/S had revenues of approximately $51,000 in 1998.
Hordaror was purchased for approximately $104,000 plus 9,400 of the Company's
shares.
Vest Norge Doors A/S is a specialty manufacturer of over-sized canvas
door systems in Stavanger, Norway. Vest Norge Doors A/S has recently developed a
proprietary horizontal folding door used for combustible containment and
protection in extreme weather conditions and emergency use in accordance with
international standards. These doors have been used on several oil and gas
platforms, helicopter hangars and other related facilitates. Since the date of
acquisition, Vest Norge Doors A/S had 1998 revenues of approximately $71,000.
Vest Norge Doors was purchased for approximately $135,000 plus 38,000 of the
Company's shares.
In September of 1998, SIMEX A/S purchased the assets of OIN Sprinkler
A/S, including its inventory and accounts receivable. This company designs and
installs sprinkler systems for fire prevention both for off-shore and on-shore
construction projects. As a division of SIMEX A/S, the business had revenues of
approximately $200,000 since its acquisition date in September 1998. The OIN
assets were purchased for approximately $60,000 plus 22,400 shares of the
Company's common stock.
MARKETING. The Company markets its product lines directly through its
own sales force to major general contractors and other users of its services.
The Company's products and services are primarily marketed in Norway and the
United Kingdom.
PRODUCT DEVELOPMENT. The Company maintains an engineering and
development department to conduct research activities relating to the
improvement of existing products and the development of new products.
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RAW MATERIALS. The Company expects to have multiple sources of supply
for substantially all of its material requirements. The raw materials and
various purchased components required for its products have generally been
available in sufficient quantities.
PATENTS. The Company holds a number of patents on various inventions,
but the overall business is not dependent upon any single patent or group of
patents.
COMPETITION. The market for construction services of the type that are
offered by the Company is highly competitive and numerous companies offer
mechanical engineering services as sub-contractors for large multi-national
contractors. Many of the companies with which the Company competes are larger in
terms of capital and employees. As a result, the Company's competitors may be
better positioned to provide the types of services that the Company also
provides. There are a limited number of large-scale projects offered in Norway
and Great Britain, the two (2) principal markets in which the Company operates
today. The Company competes on the basis of a number of factors including its
pricing, creative design, engineering expertise, technological innovation and
others. Many of these factors are beyond the Company's control. Existing or
future competitors may offer products or services that provide significant
technological, performance, price or other advantages over the products and
services currently offered by the Company.
The Company may also compete directly with the general contractors who
offer the same types of services that it offers in-house. Many of the Company's
current and potential competitors have longer operating histories, longer
relationships with general contractors and significantly greater financial,
marketing and public relations resources than the Company. The list of the
Company's competitors consists primarily of smaller subcontracting companies.
The list also varies depending on the specific product or service offering. For
example, the primary competitors for the Company in the HVAC sector are ABB and
HVAC Marine. For post-tensioning products and services, the primary competitors
are VSL (Switzerland) and DSI (Germany).
Products similar to that which the Company manufactures and sells are
available through other suppliers. Accordingly, profitability depends upon the
prices offered by competitive companies that offer similar products at lower
prices.
Additionally, in pursuing acquisition opportunities, the Company may
compete with other companies with similar growth strategies and certain
competitors of the Company may be larger and have greater financial and other
resources. Competition for these acquisition targets could also result in
increased prices for acquisition targets in a diminished pool of companies
available for acquisition. Further, because the Company has adopted a strategy
of acquiring companies in exchange for its common stock, the ability to acquire
companies is dependent upon the market and price for its stock.
RESEARCH AND DEVELOPMENT. The Company has incurred research and
development expenses of approximately $450,000 for the two years ended December
31, 1998 and 1997, respectively.
REGULATION. The Company is subject to federal, state and local laws and
regulations concerning the environment, occupational safety and health, and
consumer products safety in
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each of the countries and local government areas in which it operates. The
Company has not experienced significant difficulty in complying with such
regulations and compliance has not had a material adverse effect on the
Company's business.
EMPLOYEES. As of June 1, 1999, the Company had approximately 215
employees, including 40 engineers, 15 technicians and 10 office personnel.
Employees of SIMEX A/S are members of Lands Organisationen Union, Norway. The
Company has experienced no work stoppages and rates its relationship with its
employees as good. SEE RISK FACTORS - RISK RELATED TO OUR DEPENDENCE ON KEY
PERSONNEL AND THE ABILITY TO ATTRACT EMPLOYEES.
PROPERTY AND FACILITIES. The Company's executive offices are located in
Atlanta, Georgia consisting of approximately 1,600 square feet of leased space,
the lease for which expires in 2000. SIMEX A/S, located in Stavanger, Norway,
currently owns a building which it expects to sell in exchange for the purchaser
constructing a new production and office facility in Stavanger that will
accommodate the local operations employees of SIMEX A/S as well as the local
operations employees of its recent acquisitions. The new facility will contain
approximately 99,155 square feet and will have a lease term that will expire in
2020 with an option to purchase the facility at any time during the term of the
lease or at its termination.
RISK FACTORS
The risks and uncertainties described below are not the only ones which
may impact the operations of the Company. The occurrence of any of the following
risks could materially and adversely affect the Company's business, financial
condition and the results of operations. In such case, the trading price of the
Company's common stock could decline, and shareholders may lose all or a part of
their investment in the Company.
HOLDING COMPANY STRUCTURE
The Company is a holding company with limited assets of its own.
Substantially all business is conducted through SIMEX A/S, a wholly-owned
subsidiary whose principal place of business is located in Stavenger, Norway.
Any dividends which SIMEX A/S pays to the Company are subject to Norwegian
income taxes and United States income taxes. However, the Company may reduce the
amount of United States income taxes payable by the amount of Norwegian income
taxes paid upon such dividends. Thus, the amount of taxes payable upon such
dividends will reduce the amount of funds that will flow from SIMEX A/S to the
Company.
LIMITED CAPITAL/NEED FOR ADDITIONAL CAPITAL
The Company presently has limited operating capital with which to
engage in its business endeavors. From time to time, the Company may conduct
fundraising activities in order to raise sufficient funds to conduct its
business operations. At this time, there are no commitments for additional cash
funding. There are currently outstanding bank loans in the amount of
approximately $6,000,000. The loans are secured by real estate, furniture,
fixtures and equipment and accounts receivable. The lender has required that the
Company seek additional equity investors as a condition for increased financing.
If the Company elects to seek new equity investors to raise additional capital,
the additional equity investors will dilute shareholder ownership interests.
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RISKS ASSOCIATED WITH POSSIBLE MERGERS OR CONSOLIDATIONS
The Company's future performance will depend in part upon the ability
to integrate with other companies and businesses. Mergers and consolidations of
businesses involve numerous risks and uncertainties, including:
- adverse effects on reported results of operations from merger-related
charges and amortization of goodwill and purchased technology;
- inability to maintain customers or goodwill of a consolidated
business;
- difficulties in the integration of operations, personnel,
technologies, products and the information systems of the consolidated
companies;
- diversion of management's attention from other business concerns;
- risks of entering geographic and business markets in which we have no
or limited prior experience; and
- potential loss of key employees of consolidated organizations.
There can be no assurance that the Company will be able to merge or
consolidate any businesses, or that if done, it will be able to integrate the
merged or consolidated businesses. Such failures would have a material adverse
effect on the Company's business, results of operations and financial condition.
In addition, the Company may have to compete for merger or consolidation targets
with other companies with similar growth strategies. Some of these competitors
may be larger and have greater financial and other resources. Competition for
these merger or consolidation targets could also result in increased prices of
such targets and a diminished pool of companies available for merger or
consolidation. If the Company chooses to use a material amount of cash for
merger or consolidation, we may be required to obtain additional financing, and
there can be no assurance that such financing will be available on favorable
terms, if at all.
Currently, the Company believes that its cash flow from operations are
adequate to fund its capital needs for the next twelve months and that it will
be capable thereafter of continuing as a going concern.
THE COMPANY RELIES ON STRATEGIC MARKETING ALLIANCES
The Company is generally dependent on relationships with third parties.
The Company is employing alliances with third parties as a core strategy to
accomplish its objectives. There can be no assurance that such third parties
will regard their relationship with the Company as important to their own
business and operations, that they will not reassess their commitment to the
business at any time in the future, or that they will not develop their own
competitive services or products, either during their relationship with the
Company or after their relations expire. In addition, there can be no assurance
that any party to a strategic alliance agreement will perform its obligations as
agreed or that any strategic agreement will be enforceable. The Company's
arrangements with its strategic partners generally do not establish minimum
performance
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requirements and most agreements with strategic partners may be terminated by
either party with little notice. Accordingly, there can be no assurance that the
Company's existing relationships or future relationships will result in
sustained business partnerships, successful service offerings, or significant
revenues.
RISK OF OPERATIONS AND INSURANCE
Because the Company engages in construction in the oil and gas industry
as well as other large-scale projects, it encounters inherent risks in
operations including accidents, environmental mishaps, risks of off-shore marine
activity, and risks related to electrical installations. Any of these
occurrences could result in the following:
- significant personal injury or loss of life;
- severe damage to or destruction of property and equipment;
- pollution or environmental damage; and
- suspension of operations.
Claims arising from problems associated with products and systems sold
by the Company may also result in product liability lawsuits. Litigation could
result in the expenditure of significant financial and managerial resources. The
Company maintains insurance coverage against most, but not all, potential
losses. Insurance coverage is not always economically feasible and cannot always
be obtained, without significant exclusions, in amounts sufficient to cover all
types of operational risks and product liability claims. The occurrence of a
significant event that is not fully insured could have a material adverse effect
on the Company's financial condition, results of operations, or liquidity.
OTHER RISKS ASSOCIATED WITH OPERATIONS
- DEPENDENCE UPON OIL PRICES. The demand for the Company's
engineering services and the construction of new off-shore oil
and gas platforms depends upon the world demand for oil and
gas and the corresponding prices for oil and gas. If the price
of oil drops below the level at which oil or gas can be
economically extracted, the demand for off-shore oil and gas
platforms will decline. If the demand for new off-shore oil
and gas platforms declines, the materials and services that
the Company supplies may also decline.
- GOVERNMENTAL REGULATION. The Company's operations may be
subject to numerous international, federal, state, provincial
and local laws. The costs associated with compliance of these
laws and regulations may prevent the Company from selling some
or all of its products and services.
- EFFECT OF THE WEATHER. The weather may adversely affect the
construction activities of the Company and may cause periodic
interruptions in operations. In addition, the climate impacts
the demand for the HVAC services offered by the Company.
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DEPENDENCE ON NEW CONSTRUCTION
The Company generates a large portion of its revenues from a limited
number of construction contracts for large-scale projects. For example, in first
quarter of 1999, the Company had at least one contract that accounted for 4% or
more of the total revenues in such quarter. The Company expects to continue to
depend upon new construction for a significant percentage of its revenues in the
future. The failure to secure contracts for large-scale projects in the future
may adversely affect the Company's results of operations or financial condition.
DEPENDENCE ON KEY PERSONNEL AND ABILITY TO ATTRACT EMPLOYEES
Growth and development of the Company depends on the continued service
of its executive officers and managers (i.e., key personnel). The Company has
not entered into employment contracts with its key personnel. It does, however,
carry key person life insurance. The loss of key personnel for any reason could
harm the Company's business.
Future success of the Company also depends upon the ability to attract
persons with technical expertise and experience to enable it to provide
technical services to customers. There is a substantial demand for persons who
have engineering degrees in the disciplines that the Company requires,
especially in the Scandinavian countries. In addition, there exists a limited
number of qualified personnel which demonstrate the ability to perform these
services. If the Company is not able to attract and retain qualified personnel,
its business may suffer.
DEPENDENCE UPON WORLD ECONOMIC FACTORS
The Company is dependent upon forming strategic alliances and
relationships with joint venture partners and securing subcontracts with large
multi-national companies in order to generate revenues. In turn, the ability of
the large multi-national contractors to secure contracts for infrastructure
construction such as bridges, dams and tunnels depends upon the economic factors
affecting the particular country in which the project is located. These
international economic factors include the following:
- The impact of recessions in economies outside of the United
States;
- Currency exchange rate fluctuations;
- Uncertain intellectual property rights protection;
- Political and economic instability;
- Policy, legal, regulatory or other changes affecting the oil
and gas industry, the HVAC, plumbing, mechanical contracting,
refrigeration, and engineering industries;
- Potential adverse tax consequences;
- Tariffs, export controls and other trade barriers;
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- Difficulties of administering foreign operations; and
- Seasonality.
TECHNOLOGICAL CHANGES
Continued growth of the Company depends upon the ability to meet
technological changes in the construction industry and to develop and utilize
technologically advanced engineering practices for HVAC, plumbing, mechanical,
and refrigeration systems, as well as engineering and post-tensioning concrete
work. To remain competitive with other full-service engineering firms, the
Company must continue to develop and employ new techniques for its engineering
services, and the Company must continue to develop products and services
demanded by customers at prices that generate a profit.
FAILURE TO PROTECT PROPRIETARY TECHNOLOGY MAY IMPAIR COMPETITIVE
POSITION
Although the Company seeks to protect its intellectual property rights
through patents, copyrights, trade secrets and other measures, the Company
cannot be certain that:
- it will be able to protect its proprietary technology
adequately;
- its patents and any other issued patents will not be
successfully challenged by one or more third parties, which
could result in the loss of the right to prevent others from
exploiting the Company's technology;
- competitors will not be able to develop similar or superior
technology independently;
- intellectual property laws will protect the Company's
intellectual property rights; and
- third parties will not assert that the Company's products
infringe upon their patents, copyrights or trade secrets.
If the Company is not successful in protecting its proprietary
technology and intellectual property, there could be a material adverse effect
on the Company's business, financial condition or results of operations.
COMPETITION
The Company competes with many companies that offer similar products
and services. Many of these companies possess greater assets and greater
financial and personnel resources than the Company's. Some of these competitors
also carry product lines which the Company does not carry and offer services
which the Company does not provide. The competitive pressures of these companies
may have a material adverse effect on the Company's business and upon its
financial condition. In the event that more companies begin to compete with the
Company by carrying similar products and services, the price competition with
competitors will increase. These competitive pressures could cause the Company
to reduce the prices of its
12
<PAGE> 14
products and services which will, in turn, decrease the amount of profits it
generates. Prolonged price competition with competitors could produce a material
adverse effect on the Company's operating results and financial condition. In
addition, if the Company's competitors develop new or enhanced products or
services, the Company may also suffer adverse effects on business operations.
Because of the intense competition in the engineering industry, the Company
cannot assure shareholders that it will compete successfully with other
competitors in the future.
INTEGRATION OF ACQUIRED BUSINESSES AND ACQUISITION STRATEGY
In a short period of time, the Company has experienced rapid growth and
development through a series of acquisitions. The Company intends to continue
its strategy of continued acquisitions in the future in order to remain
competitive. The management of such growth will require the following:
- Development of financial and management controls;
- Control of costs;
- Increased marketing activities; and
- Retention of qualified management personnel.
If the Company identifies an appropriate acquisition candidate, it may
not be able to negotiate the terms of the acquisition successfully, finance the
acquisition or integrate the acquired business into existing business.
Completing a potential acquisition and integrating the acquired businesses will
cause significant diversions of management time and resources. If the Company
consummates one or more significant acquisitions in which the consideration
consists of stock or other securities, shareholders' equity could be
significantly diluted. If the Company elects to proceed with one or more
significant acquisitions in which the consideration includes cash, it may
utilize a substantial portion of available cash to consummate the acquisition.
INVESTMENT RISKS
The Company invests a portion of its capital in higher risk instruments
such as government-secured obligations or money market accounts. While this
investment strategy allows the Company to obtain a higher yield on its capital,
the Company also assumes the risk that it may lose all or part of its investment
capital in addition to the loss of interest.
ANTI-TAKEOVER PROVISIONS
The Articles of Incorporation of the Company contain certain provisions
which could impede a change of control of the Company. The Board of Directors of
the Company may issue up to 5,000,000 shares of preferred stock with rights
preferences determined by the Board of Directors without the approval of the
shareholders. These provisions may prevent stockholders from obtaining a premium
for their common stock. See "Description of Securities."
13
<PAGE> 15
NO DIVIDENDS
The Company does not currently intend to pay cash dividends on its
common stock and does not anticipate paying such dividends at any time in the
foreseeable future. At present, the Company will follow a policy of retaining
all of its earnings, if any, to finance the development and expansion of its
business.
LIMITED LIABILITY OF MANAGEMENT
The Company has adopted provisions in its Articles of Incorporation
which limit the liability of its officers and directors. In addition, the Bylaws
of the Company provide for indemnification by the Company of officers and
directors to the full extent permitted by Delaware corporate law. The Articles
of Incorporation generally provide that directors shall have no personal
liability to the Company or shareholders for monetary damages for breaches of
their fiduciary duties as directors, except for:
- breaches of their duties of loyalty;
- acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law;
- acts involving unlawful payment of dividends or unlawful stock
purchase or redemptions; or
- transactions from which a director derives an improper
personal benefit.
Such provisions substantially limit the shareholders' ability to hold
directors and officers liable for breaches of fiduciary duty. See
"Indemnification of Directors and Officers."
SALES OF A SUBSTANTIAL NUMBER OF SHARES OF COMMON STOCK IN THE PUBLIC
MARKET COULD IMPACT THE MARKET PRICE
If the Company's shareholders sell substantial amounts of their common
stock, including shares issued upon the exercise of outstanding warrants, in the
public market, then the market price of the Company's common stock could
decline. In addition, the sale of substantial amounts of common stock in the
public market could impair the ability to raise additional capital through the
sale of equity securities. Certain lock-up agreements with two (2) principal
shareholders limit the number of shares of common stock available for sale in
the public market. There are approximately 12,823,873 shares of common stock
outstanding, of which approximately 2,500,000 shares of common stock are freely
transferable without restriction or registration under the Securities Act of
1933.
EXISTING SHAREHOLDERS WILL CONTINUE TO CONTROL THE COMPANY AND EXERT
CONTROL OVER CORPORATE ACTIONS
Principal shareholders beneficially own approximately 54% of the
Company's outstanding common stock. See "Security Ownership of Certain
Beneficial Owners and
14
<PAGE> 16
Management." As a result, these shareholders, acting together, will be able to
control the outcome of all maters submitted for shareholder action, including
the following:
- Electing members of the Board of Directors;
- Approving significant change-in-control transactions;
- Determining the amount and timing of dividends paid; and
- Controlling management and operations.
POTENTIAL ISSUANCE OF ADDITIONAL COMMON AND PREFERRED STOCK
The Company has the authority to issue up to 50,000,000 shares of
common stock. The Board of Directors has the ability, without seeking
shareholder approval, to issue additional shares of common stock in the future
(up to 50,000,000 shares) for such consideration as the Board of Directors may
consider sufficient. The issuance of additional common stock in the future
dilutes current existing ownership in the Company as well as voting power. The
Company also has the authority to issue up to 5,000,000 shares of preferred
stock, and the Board of Directors may designate the rights and preferences of
such preferred stock without seeking shareholder approval. If the Company issues
preferred stock in the future, the designation and issuance of such preferred
stock would create additional securities which may have dividend and liquidation
preferences over common stock.
APPLICABILITY OF LOW PRICED STOCK RISK DISCLOSURE REQUIREMENTS
The Company's common stock may be considered a low priced security
under rules promulgated under the Exchange Act. Under these rules,
broker-dealers participating in transactions in low priced securities must first
deliver a risk disclosure document which describes:
- the risks associated with such stocks;
- the broker-dealer's duties;
- the customer's rights and remedies; and
- certain market and other information.
Based upon this information, the broker-dealer must make a suitability
determination approving the customer for low priced stock transactions based on
the customer's financial situation, investment experience and objectives.
Broker-dealers must also disclose these restrictions in writing to the customer,
obtain specific written consent of the customer, and provide monthly account
statements to the customer. These restrictions may decrease the willingness of
broker-dealers to make a market for the stock, to decrease the liquidity of the
stock and to increase the transaction cost of sales and purchases of such stock
as compared to other securities.
15
<PAGE> 17
THE COMPANY'S BUSINESS COULD BE AFFECTED BY YEAR 2000 ISSUES
The risks posed by Year 2000 issues could adversely affect the
Company's business in a number of significant ways. The Year 2000 issue is the
result of computer programs being written using two digits rather than four to
define the applicable year. As a result, the Company's computer systems that
have date-sensitive software and software of companies with which the Company's
network is interconnected may recognize a date using "00" as the year 1900,
rather than the Year 2000. This error 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. The Company has assessed its systems and
it believes the majority of them to be Year 2000 compliant. However, the Company
relies on information technology supplied by third parties. If the systems of
other companies on whose services the Company depends or with whom the Company's
systems interconnect are not Year 2000 compliant, it could have a material
adverse effect on the Company's business operations, financial condition and the
results of operations. Given the pervasive nature of the Year 2000 problem, the
Company cannot guarantee that disruptions in other industries and market
segments will not adversely affect the Company's business. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations-Year
2000 Risk."
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(Dollars in thousands, except per share data)
The following Summary Historical Consolidated Financial Information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's Audited
Consolidated Financial Statements included elsewhere in this Registration
Statement. The Consolidated Statement of Operations Data set forth below for the
years ended December 31, 1998 and 1997 are derived from and qualified by
reference to the Company's Audited Consolidated Financial Statements, which
appear elsewhere in this Registration Statement. The Consolidated Statement of
Operations Data for the three (3) months ended March 31, 1999 and 1998 and the
Consolidated Balance Sheet Data at March 31, 1999 are derived from and are
qualified by reference to the Company's Unaudited Consolidated Financial
Statements, which appear elsewhere in this Registration Statement and, in the
opinion of Management, include all adjustments, consisting of only normal
recurring adjustments, necessary to present fairly the financial data for such
periods. The results of operations for the three (3) months ended March 31, 1999
are not necessarily indicative of the results to be expected for the full year
or for any future period. All of the Company's acquisitions have been accounted
for using the purchase method and accordingly, the actual Consolidated Statement
of Operations Data reflects the results of operations of these businesses from
their respective acquisition dates.
16
<PAGE> 18
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(IN THOUSANDS, EXCEPT THREE MONTHS ENDED
PER SHARE DATA) YEARS ENDED DECEMBER 31, MARCH 31,
1998 1997 1999 1998
-------- ------- ------ ------
==================================================================================================
<S> <C> <C> <C> <C>
Revenues $ 24,403 13,740 8,265 3,433
Cost of revenues 20,757 12,418 6,747 2,836
-------- ------- ------ ------
Gross profit 3,646 1,322 1,518 597
Selling, general and administrative expenses 2,245 765 1,567 387
-------- ------- ------ ------
Operating income (loss) 1,401 557 (49) 210
Other income (expense):
Interest income 105 31 13 2
Interest expense (385) (207) (113) (29)
Other 7 -- -- --
-------- ------- ------ ------
Total other expense (273) (176) (100) (27)
-------- ------- ------ ------
Income (loss) before income taxes 1,128 381 (149) 183
Income taxes 377 168 14 71
-------- ------- ------ ------
Net income (loss) $ 751 213 (163) 112
======== ======= ====== ======
Earnings (loss) per share:
Diluted $ .06 .02 (.01) .01
======== ======= ====== ======
Basic $ .06 .02 (.01) .01
======== ======= ====== ======
</TABLE>
17
<PAGE> 19
CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
================================================================================
<S> <C> <C>
Cash and cash equivalents $ 877 1,100
Total assets $20,946 20,521
Total long-term debt, including current portion $ 5,864 5,850
Total shareholders' equity $ 7,071 6,798
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion of the financial condition and results of
operations of the Company should be read with "Selected Consolidated Financial
Data" and the Company's Consolidated Financial Statements, including the Notes
included elsewhere in this Registration Statement.
OVERVIEW. The Company is a diversified engineering, consulting,
mechanical contracting, technical services and maintenance company. It also
manufactures products for commercial projects for the off-shore oil and gas
industry and on-shore commercial, industrial and government projects. In
addition, the Company is engaged in concrete post-tensioning construction for
off-shore oil and gas production platforms, bridges and other related concrete
construction projects.
The Company is the successor by way of reorganization to a predecessor
public shell company. Since the reorganization in April 1998, the Company,
through its wholly-owned subsidiary, SIMEX A/S, has acquired five companies. All
of the Company's acquisitions have been accounted for using the purchase method.
Therefore, the historical financial data includes the results of operations of
companies acquired from their respective acquisition dates. The Company operated
with a profit for the year ending December 31, 1998, but incurred a loss for the
period ending March 31, 1999 as a result of the cost incurred for administration
charges, assimilation of acquisitions, the installation of a Year 2000 compliant
computer network, as well as the recognition of fees related to the filing of
this Registration Statement.
The Company is involved in new construction projects as well as
long-term maintenance arrangements. On new construction projects, the Company is
generally retained by a project general contractor. Revenue is recognized
primarily using the percentage-of-completion method on a contract-by-contract
basis. The Company's use of the percentage-of-completion method for revenue
recognition requires management to estimate the degree of completion of each
project. To the extent that these estimates prove to be inaccurate, the revenues
and gross profits reported for periods during which work on the project is
ongoing may not accurately reflect the final
18
<PAGE> 20
results of the project. Any anticipated losses on projects are charged to
earnings when identified. The Company primarily prices its projects on a time
and materials basis plus a percentage for its profit. Costs include standard
personnel billing rates, project implementation risk and overall technical
complexity of a project. Accordingly, there is no standard pricing for a
particular project.
The Company has also secured in excess of 250 maintenance contracts
which provide ongoing preventive maintenance for HVAC, plumbing and electrical
systems of commercial facilities and users. A significant number of the
maintenance contracts are for customers located in Stavanger, Norway, the
headquarters of SIMEX A/S. Because of the large number of customers, no customer
accounts for more than 5% of the Company's revenues.
The Company's revenues are comprised of its engineering and technical
services as well as from the products it manufactures and sells. In particular,
SIMEX A/S manufactures spiral ducts for installation of HVAC systems as well as
for the concrete post-tensioning projects. The SIMDUCT system has a large
potential market due to the Company's production technologies and many years of
experience. In addition, through the subsidiaries that have been acquired, other
products are offered to existing customers as well as customers of SIMEX A/S.
Norwegian Cooling Industry designs and manufactures ice machines, cooling
systems and products utilized in commercial refrigeration. Weld Tech provides
welding services to many of the customers of SIMEX A/S as well as its existing
customers. Hordaror was a former competitor of SIMEX A/S in the HVAC sector.
Vest Norge Doors manufactures very large and complex specialty doors for
off-shore oil platforms, helicopter hangers, and other manufacturing facilities.
Historically, a majority of the Company's revenues have been derived
from traditional engineering consulting services as well as maintenance
contracts which include private and public facilities such as hospitals and
schools.
The Company's expenses include cost of revenues and selling, general
and administrative expenses. Costs of revenues include salaries, benefits and
related overhead expenses associated with the generation of revenues. Selling
expenses include promotion, new business generation expenses and the salary and
benefits costs of personnel in these functions. General and administrative
expenses include management, accounting, legal and human resources costs. In
accordance with Norwegian law, SIMEX A/S provides a defined benefit pension plan
for all of its employees. Moreover, expenses for salaries include paid vacations
for most of its employees for a period of a minimum of four weeks per year
including the entire month of July of each year and the last two weeks of
December of each year.
The Company's future success will depend largely on its ability to
secure contracts with general contractors for the construction of new projects
that require its products and services. Future success will also depend on its
ability to attract, train and retain highly-skilled engineers as well as
technical, consulting and sales personnel. Competition for such personnel is
intense, and there is a shortage of personnel having the requisite skills to
meet the qualifications for the job descriptions.
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<PAGE> 21
Historically, the Company has been able to attract and retain qualified
personnel. However, in order to expand its operations and to offer its products
and services to other markets, it will be dependent on its ability to attract
other qualified personnel.
The Company also requires capital expenditures to continue to upgrade
its manufacturing capabilities as well as its maintenance contracts. The Company
leases approximately 90 service vehicles and must maintain its fleet in good
working order and repair. In addition, it must continue to add to and replace
the fleet on a regular basis.
To reduce the overhead associated with the production faculties and
office space of the recently acquired companies, SIMEX A/S has entered into an
agreement to sell its current facilities and to lease, on a long-term basis, a
new facility that will accommodate its production facility and office needs for
all of its personnel on a combined basis. A binding letter of intent describes
the terms of the lease agreement, which includes a duration of twenty (20) years
with an option to purchase the facility at fair market value at the end of the
term. Other terms will not be finalized until the Company takes occupancy, which
is scheduled for September 1999.
The Company intends to implement a stock option plan in 1999 for its
employees, directors and consultants. In connection with the issuance of option
grants, it may incur non-cash stock compensation expenses. The amount is
unknown.
ACQUISITION PROGRAM
The Company has acquired five (5) businesses since April 1998 and
intends to continue acquiring similar businesses. The Company evaluates
acquisitions based on numerous quantitative and qualitative factors.
Quantitative factors include historical and projected revenues and
profitability, geographic and customer-based coverage and contract backlog.
Qualitative factors include strategic and cultural fit, management skills,
customer base and technical proficiency. The Company intends to continue to
expand the number of technical services that it can offer to its customer base.
If a business is capable of meeting its criteria, the Company intends to acquire
these businesses. With the Norwegian Cooling Industry, at Weld Tech
acquisitions, the Company's pro forma 1998 revenues were approximately $30.7
million.
Most of the consideration paid by the Company for the 1998 acquisitions
has been in the form of cash and common stock. The Company anticipates that
common stock and options or warrants to acquire common stock will continue to
constitute much of the consideration used to make future acquisitions. The
Company's acquisition program will result in additional ownership dilution to
its existing investors.
All of the Company's acquisitions have been accounted for using the
purchase method. The results of operations of the acquired entities are
consolidated with those of the Company from the date of the acquisition. For
each acquisition, a portion of the purchase price is allocated to the tangible
and identifiable intangible assets acquired and liabilities assumed based on
their respective fair market values as of the acquisition date. A portion of the
purchase price in excess of tangible and identifiable intangible assets and
liabilities assumed is allocated to goodwill and amortized on a straight-line
basis over the estimated period of benefit, which is primarily twenty (20)
years. For the year ended December 31, 1998, amortization expense was $128,000.
The
20
<PAGE> 22
Company expects additional acquisition-related amortization expense as a result
of its acquisition program.
The Company believes that its acquisitions have contributed to its
growth by rapidly expanding its customer base, employee base, geographic
coverage, industry expertise and technical skills. Our acquisitions may be
summarized as follows:
Norwegian Cooling Industries. From the time of acquisition forward,
1998 revenues for Norwegian Cooling Industries were approximately $7,100,000.
The Company paid $2.7 million in cash.
Weld Tech A/S. From the time of acquisition forward, 1998 revenues for
Weld Tech were approximately $1 million. The Company paid $1.3 million in cash
plus 450,000 shares of the Company's common stock and an option to acquire an
additional 200,000 shares to complete this acquisition.
Hordaror A/S. From the time of acquisition forward, 1998 revenues for
Hordaror were approximately $51,000. The Company paid $ 104,000 in cash
plus 9,400 shares of the Company's common stock to complete this acquisition.
Vest Norge Doors A/S. From the time of acquisition forward, 1998
revenues for Vest Norge Doors were $71,000. The Company paid $135,000 in cash
plus 38,000 shares of the Company's common stock to complete this acquisition.
OIN Sprinkler A/S. From the time of acquisition forward, 1998 revenues
for the sprinkler division were approximately $200,000. The Company paid $60,000
in cash plus 22,400 shares of the Company's common stock to complete the
acquisition of OIN Sprinkler's assets.
21
<PAGE> 23
RESULTS OF OPERATIONS. COMPARISON OF THREE MONTHS ENDED MARCH 31, 1999
AND THREE MONTHS ENDED MARCH 31, 1998.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS DATA THREE MONTHS ENDED PERCENTAGE
(IN THOUSANDS) MARCH 31, OF REVENUES
1999 1998 1999 1998
=================================================================================================
<S> <C> <C> <C> <C>
Revenues $ 8,265 3,433 100.0% 100.0
Cost of revenues 6,747 2,836 81.6 82.6
------- ------ ------ ------
Gross profit 1,518 597 18.4 17.4
Selling, general and administrative expenses 1,567 387 19.0 11.3
------- ------ ------ ------
Operating income (loss) (49) 210 (.6) 6.1
Other income (expense):
Interest income 13 2 .2 --
Interest expense (113) (29) (1.4) (.8)
------- ------ ------ ------
Total other expense (100) (27) (1.2) (.8)
------- ------ ------ ------
Income (loss) before income taxes (149) 183 (1.8) (5.3)
Income taxes 15 71 .2 2.0
------- ------ ------ ------
Net income (loss) $ (164) 112 (2.0)% 3.3
======= ====== ====== ======
</TABLE>
REVENUES (IN THOUSANDS). Revenues increased by 141% for the three
months ended March 31, 1999, up $4,832 from revenues of $3,443 for the three
months ended March 31, 1998. This increase in revenues primarily reflects the
Company's increase in revenues from the companies that it acquired in 1998.
During both periods in 1999 and 1998, foreign revenues were approximately 99% of
revenues, and domestic revenues were approximately 1% of revenues. The Company
believes that it will continue to generate revenues primarily in international
markets in the future.
COST OF REVENUES. Cost of revenues increased $3,911 or 138%, to $6,747
for the quarter ended March 31, 1999 from $2,836 for the quarter ending March
31, 1998. As a percentage of
22
<PAGE> 24
revenues, cost of revenues decreased 1.0% for the quarter ended
March 31, 1999 to 81.6% as compared to 82.6% for the quarter ending March 31,
1998. The increase in dollar amounts was primarily attributable to the
continuing integration of the companies acquired by the Company in 1998, and, to
a lesser extent, for operating costs incurred by the holding company for its
limited revenue generating activities in the United States.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative (SG&A) expenses increased from period to period both in absolute
dollars and as a percentage of net sales. SG&A for the three month period ending
March 31, 1999 includes approximately $94 in expenses related to the filing of
this Registration Statement. There was no comparable expense during 1998.
Additionally, SG&A for the 1999 three-month period reflects increased costs
associated with the acquisitions. As a result of these factors, SG&A expenses
for the 1999 period were $1,567 (19.0% of revenues) compared with $387
(11.3% of revenues) for the same period in 1998.
OPERATING INCOME (LOSS). As a result of the factors set forth above,
operating income (loss) for the 1999 three-month period was $(49) compared to
operating income $210 for the same period in 1998.
OTHER INCOME (EXPENSE). Other income (expense), net decreased during
the 1999 three-month period to $(100) from $(27) in the 1998 period. This
decrease primarily results from increased interest costs related to increased
borrowings in 1999 to finance the Company's growth. The Company intends to repay
a portion of its indebtedness during 1999.
Net income (loss) for the three-months ended March 31, 1999 was $(164)
compared to $112 for the three months ended March 31, 1998. Had the Registration
Statement expenses not been incurred, net income (loss) for the three-month
period ending March 31, 1999 would have been $(70).
23
<PAGE> 25
ANNUAL HISTORICAL RESULTS OF OPERATIONS, YEAR ENDED DECEMBER 31, 1998
COMPARED TO YEAR ENDED DECEMBER 31, 1997.
<TABLE>
<CAPTION>
CONSOLIDATED YEARS ENDED PERCENTAGE
STATEMENT OF OPERATIONS DATA DECEMBER 31, OF REVENUES
(IN THOUSANDS)
1998 1997 1998 1997
-------- ------- ------ ------
====================================================================================================
<S> <C> <C> <C> <C>
Revenues $ 24,403 13,740 100.0% 100.0
Cost of revenues 20,757 12,418 85.1 90.4
-------- ------- ------ ------
Gross profit 3,646 1,322 14.9 9.6
Selling, general and administrative expenses 2,245 765 9.2 5.5
-------- ------- ------ ------
Operating income 1,401 557 5.7 4.1
-------- ------- ------ ------
Other income (expense):
Interest income 105 31 .5 .2
Interest expense (385) (207) (1.6) (1.5)
Other 7 -- -- --
-------- ------- ------ ------
Total other expense (273) (176) (1.1) (1.3)
-------- ------- ------ ------
Income before income taxes 1,128 381 4.6 2.0
Income taxes 377 168 1.5 1.2
-------- ------- ------ ------
Net income $ 751 213 3.1% 1.6
======== ======= ====== ======
</TABLE>
The following discussion relates to the Company's actual operating
results for the periods noted. These operating results include the operations of
the companies acquired by the Company during the periods referenced from the
date of acquisition. As a result, the Company believes the operating results for
the year ending December 31, 1998 are not comparable to the year ended December
31, 1997.
REVENUES (IN THOUSANDS). Revenues increased $10,663 or 78%, to $24,403
for the year ended December 31, 1998 from $13,740 for the year ended December
31, 1997. This increase was attributable to the Company's acquisition program,
an increase in the size and number of
24
<PAGE> 26
client engagements, and, to a lesser extent, the development and growth of the
construction segment.
COST OF REVENUES. Cost of revenues increased $8,339 or 67%, to $20,757
for the year ended December 31, 1998 from $12,418 for the year ended December
31, 1997. As a percentage of revenues, cost of revenues decreased from 90.4% for
the year ended December 31, 1997 to 85.1% for the year ended December 31, 1998.
The increase in dollar amounts was primarily attributable to the integration of
the companies acquired by the Company since May 1998, and, to a lesser extent,
for costs incurred by the holding company for its limited revenue generating
activities in the United States.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $1,480 or 193%, to $2,245 for the year ended
December 31, 1998 from $765 for the year ended December 31, 1997. As a
percentage of revenues, selling, general and administrative for expenses
increased from 5.5% for the year ended December 31, 1997 to 9.2% for the year
December 31, 1998. This increase in dollar and percentage terms was primarily
attributable to the acquisitions and increase in the number of employees at the
end of 1998. In addition, with the operating reorganization of the Company,
certain expenses for office overhead and related expenses in the United States
were incurred. The dollar increase was primarily attributable to the companies
acquired by the Company since May 1998, associated integration costs, and the
expansion of management infrastructure to support the growth in the Company's
operations.
OTHER INCOME (EXPENSE). Other income (expense) increased by $97. This
increase in other expense is attributed largely to the acquisitions since May
1998. Interest expense increased from $(207) for the year ended December 31,
1997 to $(385) for the year ended December 31, 1998 as a result of the increase
in the Company's borrowings.
Net income for 1998 increased by $538 to $751 for the year ended
December 31, 1998 from $213 for the year ended December 31, 1997. This increase
was attributable to the increase in net income from the acquisitions as well as
the increase in revenues generated by SIMEX A/S.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES (IN THOUSANDS).
Historically, the Company has financed its operations primarily with cash flows
from operations and proceeds from its available credit lines. Cash flows
provided by operating activities for the year ended December 31, 1997 aggregated
$836, while cash used in operating activities for the year ended December 31,
1998 aggregated $(691). For the three months ended March 31, 1998, cash used in
operating activities was $(535); for the three months ended March 31, 1999, cash
flows provided by operating activities were $448. The impact on cash flows for
the year ended December 31, 1998 and for the three months ended March 31, 1999
were primarily due to the acquisitions.
With the reorganization, the Company raised additional capital through
the sale of common and preferred stock, the net proceeds of which aggregated
$2,506.
Cash used in investing activities which was related to additions to
property and equipment and for acquisitions for business, net of cash acquired,
for the years ended December
25
<PAGE> 27
31, 1997 and 1998 aggregated $(516) and $(5,265), respectively. For the three
months ended March 31, 1998 and 1999, cash used in investing activities was
$(49) and $(115), respectively. The significantly higher additions to property,
plan and equipment for the three months ended March 31, 1999 and the year ended
December 31, 1998 resulted from the acquisition of businesses and integration of
these businesses into the Company.
Cash flows used in financing activities for the year ended December 31,
1997 were $(243); for the year ended December 31, 1998, cash flows provided by
financing activities were $6,686. For the three months ended March 31, 1999,
cash flows used in financing activities were $(98); for the three months ended
March 31, 1998, cash flows provided by financing activities were $548. While
cash flows provided by financing activities for the year ended December 31, 1998
were $6,686, net borrowings by the Company under its line of credit provided
$203 for year ended December 31, 1998 and $626 and $285 for the three months
ended March 31, 1998 and 1999, respectively; for the year ended December 31,
1997, net cash repayments under the Company's line of credit aggregated $(273).
During 1997, the Company borrowed $30. In 1998, the Company borrowed $5,247 and
repaid $2,598.
Cash flows provided by the issuance of preferred and common stock for
the year ending December 31, 1998, net of dividends, was $3,834 and $0 for the
year ending December 31, 1997. The effect of exchange rate changes and cash and
cash equivalents for the year ending December 31, 1997 was $(23), and for the
year ending December 31, 1998 was $(38). For the three months ended March 31,
1998, the effective exchange rate changes and cash and cash equivalents was $(4)
and for the three months ended March 31, 1999 was $(12).
At March 31, 1999, the Company had $1,100 in cash and cash equivalents.
In addition, at March 31, 1999, the Company had outstanding commitments
for capital expenditures totaling approximately $1,000,000, primarily related to
the proposed lease of its new headquarters facility in Stavanger, Norway. The
remainder of the Company's significant commitments consists of obligations
outstanding under operating leases.
The Company believes that its available cash resources and credit
facilities, combined with its cash flows from operations will be sufficient to
meet its anticipated working capital and capital expenditure requirements for at
least the next twelve months. However, the Company will need to raise
significant additional equity in order to increase its line of credit with its
Bank to support growth, respond to competitive pressures, acquire complimentary
businesses or technologies or to take advantage of unanticipated opportunities.
SEE RISK FACTORS - LIMITED CAPITAL/NEED FOR ADDITIONAL CAPITAL.
SEASONALITY
Revenues of the Company generally reflect the weather-related
construction periods as well as the extended vacation terms in Norway in July
and December of each year.
YEAR 2000 RISK. The Company has completed its Year 2000 testing and
believes that the majority of its systems are Year 2000 compliant. The Company
does not generally intend to examine third-party readiness, although it is
examining the readiness of third parties that provide date-
26
<PAGE> 28
sensitive information critical to its business. The Company is also not
researching its customers' readiness, except to the extent those customers
request it to examine work that it delivers.
ITEM 3. DESCRIPTION OF PROPERTY. The following table shows the
location, general character, square footage, annual rent and lease expiration
date of the principal operating facilities owned or leased by the Company as of
March 31, 1999. The executive offices are located in Atlanta, Georgia, which is
a leased facility occupying approximately 1,643 square feet. The Company
considers its properties to be in generally good condition and well-maintained,
and are generally suitable and adequate to carry on the Company's business.
<TABLE>
<CAPTION>
SQUARE
LOCATION CITY GENERAL CHARACTER FEET ANNUAL RENT LEASE EXPIRATION
=======================================================================================================================
<S> <C> <C> <C> <C> <C>
Suite 995, 3475 Lenox Atlanta, Principal Executive Office 1,643 $29,830 January 31, 2001
Road, NE Georgia
Godesetdalen 24 Forus Production Facility and 23,606 Owned, subject to
(Stavanger), European Administrative Office mortgage
Norway indebtedness.
Fabrikkveien 28 Forus Production Facility, 12,600 Owned, subject to
(Stavanger), Norwegian Cooling Industries. mortgage
Norway indebtedness.
Fjosangerveien 70A Bergen, Norway Production Facility and 10,730 $55,000 May 31, 2004
Satellite Administrative
Office
Gregorius Dagssons GT Skien (Oslo), Telefrost Kjoleindustri A/S 5,365 $47,000 April 2003
207 Norway
</TABLE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of June 30, 1999 certain information
regarding beneficial ownership of common stock by:
- Each person known to the Company who owns beneficially more than five
percent (5%) of the common stock;
- The directors;
- The executive officers; and
- All executive officers and directors as a group.
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<PAGE> 29
Beneficial ownership is determined in accordance with the rules and
regulations of the Securities and Exchange Commission. In computing the number
of shares beneficially owned by a person and the percentage ownership of that
person, shares of common stock subject to options held by that person that are
currently exercisable or exercisable within sixty (60) days of the date of this
Registration Statement are deemed outstanding. These shares, however are not
deemed outstanding for the purposes of computing the percentage ownership of any
other person. Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, each shareholder named in the table has sole
voting and investment power with respect to the shares set forth opposite such
shareholder's name. Unless otherwise indicated, the address for the following
shareholders is c/o SIMEX Technologies, Inc.
<TABLE>
<CAPTION>
COMMON
STOCK BENEFICIALLY OWNED
NAME AND ADDRESS OF BENEFICIAL OWNER (1) NO. OF SHARES % OF CLASS
==================================================================================================
<S> <C> <C>
MR. ELMER LUNDE 5,265,000 41.06%
Roaldsoyveien 44
N-4085 Hundvag
Norway
MR. KNUT ROSVOLD 742,500 5.79%
Eiganesveien 57
4009 Stavanger
Norway
MR. OYSTEIN FRAFJORD 742,500 5.79%
Slettmyrhagen 14
N-4033 Forus
Norway
LANCER OFFSHORE, INC. 1,167,500 9.10%
Suite 2006
375 Park Avenue
New York, New York 10152
MR. KJELL INGE JAGELID(2) 117,500 .09%
140 South Falcon Bluff
Alpharetta, Georgia 30022
MR. WARREN L. TRAVER(3) 117,500 .09%
21 Middleton Road
Savannah, Georgia 31411
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A 6,985,000 54%
GROUP (3 Persons)
</TABLE>
(1) Unless otherwise noted, the Company believes that all persons named in
the table have sole voting and investment power with respect to all
shares of common stock beneficially owned by them. Under the rules of
the Securities and Exchange Commission, a person is
28
<PAGE> 30
deemed to be a "beneficial" owner of securities if he or she has or
shares the power to vote or direct the voting of such securities or the
power to direct the disposition of such securities. A person is deemed
to be the beneficial owner of any securities of which that person has
the right to acquire beneficial ownership within 60 days. More than one
person may be deemed to be a beneficial owner of the same securities.
(2) Mr. Kjell Inge Jagelid owns 25,000 shares of common stock in his own
name and is Trustee of the Jagelid Family Trust of which he may be
deemed to be the "beneficial" owner of 92,500 shares of common stock by
virtue of his family relationships.
(3) Mr. Warren L. Traver is the Trustee of the Traver Family Trust of which
he may be deemed to be the "beneficial" owner of 75,000 shares of
common stock and is the Trustee of the Stewart Wigton Traver Trust of
which he may be deemed to be the beneficial owner of 42,500 shares of
common stock by virtue of his family relationships.
29
<PAGE> 31
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Our executive officers, directors and certain key employees, their ages as of
June 30, 1999 and their position(s) with SIMEX are as follows:
NAME AGE POSITION
MR. ELMER LUNDE 43 Director and Chairman of the Board since
April 28, 1998. Mr. Lunde is also the
founder of SIMEX A/S, the principal
subsidiary of the Company. Since 1980 and
prior to his appointment as Director, Mr.
Lunde served as director of SIMEX A/S and
has been involved in the development and
implementation of all aspects of that
business. Mr. Lunde serves as Chief
Financial Officer of Simex, A/S. Mr. Lunde
has an extensive background in HVAC, having
performed an extensive apprenticeship in
these disciplines. Mr. Lunde is a resident
of Stavanger, Norway.
MR. KJELL JAGELID 55 Director since April 28, 1998. Mr. Jagelid
has also served as President and Treasurer
of the Company since that time. Prior to
being elected as director and officer of the
Company, Mr. Jagelid worked as Manager of
Special Projects for SIMEX A/S and as an
independent business consultant. He was
actively involved in these posts since 1991.
From 1991 to 1993, Mr. Jagelid also owned
and operated Watkins Industries, Inc., a
precision parts manufacturer for the
aerospace and automotive industries. Mr.
Jagelid is also responsible for the
invention of the J.M. Matic spiral duct
machine for HVAC and post-tensioning ducts
used in heavy construction currently
utilized by SIMEX A/S. Mr. Jagelid has been
associated with several large engineering
and construction firms involving concrete
construction for bridges, oil and gas
drilling platforms and other civil
engineering projects. Mr. Jagelid holds
approximately fifteen patents in the
manufacturing and construction industries.
He received a Bachelor's Degree in Finance,
PHF, Goteborg, Sweden and a Masters Degree
in Civil and Mechanical Engineering, GTI,
Sweden. Mr. Jagelid is fluent in English and
the Scandinavian languages.
MR. WARREN L. TRAVER 53 Director since April 28, 1998. Mr. Traver
also serves as Executive Vice-President and
General Counsel of the Company. Mr. Traver
has been instrumental in structuring the
Company and has become part of the
management team with responsibilities
including mergers, acquisitions and legal
matters. In addition to serving as a
director of the Company, Mr. Traver has been
engaged in the private practice of law with
emphasis in corporate finance and securities
regulation since 1970. Mr. Traver received a
B.A. degree from the University of the South
and a J.D. from Mercer University. Mr.
Traver is a member of the State Bar of
Georgia and the Florida Bar.
30
<PAGE> 32
MR. C. MICKLE MOYE 63 Director since May 1999. Mr. Moye has served
as the President and Chief Executive Officer
of three bank and trust companies over the
past 15 years. In December 1998, Mr. Moye
retired as President and CEO of Security
State Bank, Canton, Georgia after 10 years
of employment. Mr. Moye holds a B.S. degree
in Industrial Management from the Georgia
Institute of Technology and has pursued
post-graduate studies at the Harvard
Business School.
MR. JOHN P. O'BRIEN 32 Secretary. Mr. O'Brien acts as Corporate
Secretary and consultant to the Company. He
began working with the Company in February
1999. Prior to his engagement at the
Company, Mr. O'Brien worked as a consultant
to numerous businesses and business
organizations on matters related to
technology, internet communications
strategy, and Latin American public policy
issues. Mr. O'Brien holds a B.A. degree from
Baylor University, a J.D. degree from South
Texas College of Law in Houston, Texas, and
a M.A. in Latin American Studies from the
University of Texas at Austin. He is a
member of the Georgia and Texas state bar
associations. Mr. O'Brien also speaks
Spanish and French.
MR. KNUT T. ROSVOLD 55 President and Director of SIMEX A/S. Mr.
Rosvold is an HVAC and plumbing engineer.
Prior to beginning his employment at SIMEX
A/S in 1988, Mr. Rosvold worked as the
manager of the HVAC Division in Stavanger,
Norway for ABB. Mr. Rosvold has been General
Manager of SIMEX A/S since 1988.
MR. BJORN HILLEROY OKLAND 36 Secretary and Director of Finance of SIMEX
A/S. Mr. Okland has been the Director of
Finance at SIMEX A/S since the acquisition
of Norwegian Cooling Industries in 1998.
Prior to the acquisition, he was employed
for three years as the Director of Finance
for that company. Mr. Okland holds the
equivalent of a Bachelor of Business
Administration and a Masters degree in
Science. He received the latter from the
University of Surrey in England.
MR. FRODE LASTAD 42 General Manger, Norwegian Cooling
Industries. Mr. Lastad has served as General
Manager since June of 1988. He graduated
from the Norwegian Technical University with
a civil engineering degree in refrigeration
in 1982. Mr. Lastad has been employed by
Norwegian Cooling Industries since 1984.
MR. OYSTEIN FRAFJORD 34 Manager, Ventilation Division, and Director
of SIMEX A/S. Mr. Frafjord began his
employment at SIMEX A/S in 1981 as a
blacksmith apprentice. In 1988, Mr. Frafjord
was promoted to manager for the Ventilation
Division. In this capacity, he is
responsible for sales, planning, and project
management. Mr. Frafjord has five years of
technical training in metal technology.
31
<PAGE> 33
BOARD COMPOSITION
Each member of the Board of Directors is elected on an annual basis by
the shareholders. At each annual meeting of shareholders, directors are elected
for the next year. Each director serves for a one (1) year term.
Each officer is elected by, and serves at the discretion of, the Board
of Directors. There are no family relationships among any of the directors or
executive officers.
COMMITTEES OF THE BOARD
The Board of Directors has not created any committees. However, prior
to filing an application for listing of the common stock with any stock
exchange, the Board of Directors will establish an Audit committee and a
Compensation committee. The Audit Committee will review, act on and report to
the Board of Directors with respect to various auditing and accounting matters,
including the selection of our independent auditors, the scope of the annual
audits, fees to be paid to the independent auditors, the performance of our
independent auditors and our accounting practices.
The Compensation Committee will establish salaries, incentives and
other forms of compensation for our officers and other employees and administers
our incentive compensation and benefit plans.
DIRECTOR COMPENSATION
Outside Directors receive $1,000 per meeting. Other Directors receive
no cash remuneration for serving on the Board of Directors but are reimbursed
for reasonable expenses incurred by them in attending Board and Committee
meetings.
EMPLOYEE CONTRACTS
The Company has not entered into any employment agreements with its
officers or key employees.
LOCK-UP AGREEMENTS
The Company has entered into shareholder lock-up agreements with its
Chairman of the Board of Directors, Mr. Elmer Lunde, the President of SIMEX A/S,
Mr. Knut Rosvold, and Mr. Oystein Frafjord, Director of SIMEX A/S which limits
the number of shares that may be sold during any twelve (12) month period to 5%
of the number of shares owned. No shares have been disposed of by any
shareholder/officer since the date of the reorganization.
32
<PAGE> 34
ITEM 6. EXECUTIVE COMPENSATION. No executive officer, director or other
individual received compensation of more than $100,000 for the prior fiscal
year.
COMPENSATION TABLES
The compensation paid in 1998 to the Chief Executive Officer of the
Company and to SIMEX A/S is set forth in the table below. No other executive
officers or any officer of a subsidiary had total compensation that exceeded
$100,000.
<TABLE>
<CAPTION>
1998 SUMMARY COMPENSATION TABLE
THE COMPANY
ANNUAL
COMPENSATION LONG-TERM COMPENSATION
AWARDS PAYOUTS
OTHER ANNUAL RESTRICTED OPTIONS LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION STOCK SARS PAYOUT COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) AWARDS (#) ($) ($)
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kjell I. Jagelid(1) 1998 0 0 0 0 0 0 0
Elmer Lunde(2) 1998 80,000 0 0 0 0 0 0
</TABLE>
There were no options granted to the Executive Officers of the Company
and its subsidiaries during the year ending December 31, 1998. The Company has
no stock appreciation rights ("SARs") outstanding.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
THE REORGANIZATION. The Company was originally organized under the laws
of the State of Utah on January 27, 1983 under the name Medical Technologies,
Inc. The Company subsequently changed its name several times and in January
1996, changed the state of incorporation to Nevada and the name to Maile
International, Inc. ("Maile"). On April 28, 1998, the shareholders of SIMEX A/S,
the Company's principal operating subsidiary in Norway, exchanged all of its
shares of stock for 6,000,000 shares representing approximately sixty percent
(60%) of all of the outstanding stock of Maile prior to the receipt of 1,500,000
shares placed in escrow. At the closing of the exchange of shares, Maile changed
its name to SIMEX/NK Technologies, Inc. Simultaneously with the exchange of the
shares, 357,142 common stock and 1,130,000 shares of its 8% Series A Convertible
Preferred Stock were sold in a private offering. The price paid for the common
stock was $1.90 per share and $1.40 per share for the Preferred Stock. The
preferred stock was convertible into shares of common stock on a one-for-one
basis after 90 days. The preferred stock accrued dividends of $47,000 which were
- -----------
(1) Mr. Jagelid is presently compensated as a consultant to the Company. See
Certain Relationships and Related Transactions.
(2) Mr. Lunde is a participant in the Defined Benefit Pension Plan of the
Company's subsidiary, SIMEX A/S.
33
<PAGE> 35
paid in connection with the conversion of all of the outstanding preferred stock
into common stock in August 1998.
The common stock issued in the Private Placement and the common stock
converted from the preferred stock are subject to registration rights of the
holders.
At the time of the exchange, the persons serving as the management of
SIMEX A/S became the management of the Company. The remaining 2,512,857 shares
of common stock are owned by approximately 200 shareholders.
In April 1999, the Company reincorporated in the State of Delaware and
changed its name to SIMEX Technologies, Inc.
THE ESCROW SHARES. In addition to the 6,000,000 shares issued to the
original SIMEX A/S shareholders, 1,500,000 shares of stock were deposited into
escrow pending release at the earlier of (i) the Company achieving earnings
before interest, income taxes, depreciation and amortization ("EBITDA") of at
least $1,800,000 after certain unusual items such as currency exchange
fluctuations, excess depreciation and unusual losses during the year ended
December 31, 1998 or 1999 or (ii) five (5) years from the date of the depositing
of the shares into escrow. The shares were released in May 1999 to the original
SIMEX A/S shareholders.
THE PRIVATE PLACEMENT. In July 1998, the Company authorized the
issuance of an additional 1,200,000 shares. The Company sold 789,474 shares to a
group of four (4) investors designated by the Company as the Lauer Group for a
purchase price of $1.90 per share. The Lauer Group has certain registration
rights with respect to the shares of the common stock. In September and December
1998, the Company issued 10,000 shares at $3.25 per share and 4,600 shares at
$3.25 per share, respectively. Proceeds to the Company were $47,000. The
purchases were not related to the Lauer Group.
THE ACQUISITIONS. The Company acquired five (5) companies in 1998 and
in connection therewith paid for the acquisitions in cash or a combination of
cash and issuance of common stock. A description of the acquisitions are as
follows:
- In June 1998, the Company's subsidiary, SIMEX A/S, acquired
all of the outstanding shares of Norwegian Cooling Industries.
In connection with that transaction, the Company paid the
shareholders of Norwegian Cooling Industries $2.7 million in
cash.
- In September 1998, SIMEX A/S purchased the assets of OIN
Srinklers A/S, including its inventory and accounts. In
connection with that transaction, the Company paid
approximately $60,000 plus 22,400 shares of the Company's
common stock in exchange for these assets.
- In November 1998, SIMEX A/S acquired all of the outstanding
shares of Weld Tech A/S. In connection with that transaction,
the Company paid the shareholders approximately $1.3 million
cash and issued 450,000 shares of common stock with an option
to acquire an additional 200,000 shares at a par of $2.75 per
share. The option expires in two (2) years.
34
<PAGE> 36
- In November 1998, SIMEX A/S acquired all of the outstanding
share of Hordaror A/S. In connection with that transaction,
the Company paid the shareholders approximately $104,000 cash
and issued 9,400 shares of common stock.
- In November 1998, SIMEX A/S acquired all of the outstanding
share of Vest Norge Doors. In connection with that
transaction, the Company paid the shareholders approximately
$135,000 cash and issued 38,000 shares of common stock.
LOANS TO SHAREHOLDERS. The Company has loaned four (4) of our
shareholders money during 1998. The loans are payable on demand. The total
amount of the loans equals $245,000. The loans carry interest at six percent
(6%) per annum. The purpose of these loans was to pay personal income tax
(Norwegian) on the value of the stock received in the reorganization.
FUTURE TRANSACTIONS. All future transactions, including loans between
the Company and its officers, directors, principal shareholders and their
affiliates, are required to be approved by a majority of the Board of Directors,
including a majority of the independent and disinterested outside directors on
the Board and will be on terms no less favorable than could be obtained from
unaffiliated third parties.
CONSULTANTS. In September of 1997, SIMEX A/S engaged Mr. Kjell Inge
Jagelid and Mr. Warren L. Traver to assist the Company in securing capital in
the United States. The services of Mr. Jagelid and Mr. Traver are compensated on
a basis that has been developed by the Company's Board of Directors, which
includes a fixed monthly component for services. Messieurs Jagelid and Traver
also beneficially own shares of the Company. See "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT."
35
<PAGE> 37
ITEM 8. DESCRIPTION OF SECURITIES. The authorized capital stock of the
Company consists of 50,000,000 shares of common stock $.001 par value, and
5,000,000 shares of preferred stock, $.001 par value. As of the date of this
Registration Statement, there are outstanding:
- 12,823,873 shares of common stock, held of record by
approximately 200 shareholders;
- Options to purchase an aggregate of 200,000 shares of common
stock at an exercise price of $2.75 per share. The options
expire on November 30, 2000.
COMMON STOCK
The holders of common stock are entitled to one (1) vote per share on
all matters to be voted upon by the shareholders. Subject to preferences that
may be applicable to any outstanding preferred stock, the holders of common
stock are entitled to receive ratably such dividends, if any, that may be
declared from time to time by the Board of Directors out of funds legally
available therefor. In the event of our liquidation, dissolution or winding up,
the holders of common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of
holders of preferred stock, if any. The common stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the common stock.
PREFERRED STOCK
The Company's Board of Directors has the authority to issue preferred
stock in one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series or the designation
of such series, without further vote or action by the shareholders.
36
<PAGE> 38
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS.
(A) MARKET INFORMATION. Prior to the filing of this Form 10-SB
Registration Statement, the shares of stock have been traded in over-the-counter
market transactions.
The following is the range of high and low SALES PRICES for each
quarter for the two (2) years ended December 31, 1997 and 1998 and three months
ended March 31, 1999 is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1998 MARCH 31, 1999
QUARTER HIGH LOW HIGH LOW HIGH LOW
- -------------------- ---------------- --------------- ---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
First N/A N/A .26 .26 6.25 3.75
Second N/A N/A 4.50 .26
Third N/A N/A 4.50 3.25
Fourth N/A N/A 6.25 3.00
</TABLE>
The quotation reflects inter-dealer prices without retail mark-up,
mark-down or commissions and may not represent actual transactions.
The shares may also be sold by one or more of the following methods,
without limitation, (a) block trades in which a broker or dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker and dealer for its account
pursuant to this Prospectus; (c) ordinary brokerage transactions (which may
include long or short sales) and transactions in which a broker solicits
purchases; (d) "at the market" to or through market makers and into an existing
market for the shares; (e) in other ways not involving market makers or
established trading markets, including direct sales to purchasers or sales
effected through agents; (f) through transactions in options, swaps or other
derivatives (including transactions with broker-dealers or other financial
institutions that require the delivery by such broker-dealers or institutions of
the shares, which shares may be resold thereafter pursuant to this Prospectus);
or (g) any combination of the foregoing, or by any other legally available
means. In effecting sales, brokers or dealers engaged by a shareholders may
arrange for other brokers or dealers to participate. Such brokers or dealers may
receive commissions or discounts from a shareholder in amounts to be negotiated.
Such brokers and dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the 1933 Act in connection
with such sales.
37
<PAGE> 39
(B) HOLDERS. The approximate number of holders of the common stock of
Company is 200 as of March 31, 1999.
(C) DIVIDENDS. The Company has not paid any dividends on its common
shares in the past, and it is not expected to pay any dividends in the
foreseeable future.
ITEM 2. LEGAL PROCEEDINGS. There are no pending legal proceedings
incidental to the business of the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE. There have been no disagreements with independent auditors
nor any changes in the Company's independent auditors.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Other than the exchange of stock during the preceding three (3) years,
the Company has issued and sold or otherwise transferred the below listed
unregistered securities. These issuances were deemed exempt from registration
under the Securities Act in reliance on either (a) Section 4(2) of the
Securities Act, as transactions not involving any public offering, or (b) Rule
701 promulgated under the Securities Act. No underwriters were involved in
connection with the sales of securities referred to in this Part II Item 4.
1. On April 28, 1998, the Company issued and sold 1,130,000
shares of convertible preferred stock to four (4) investors in a private
placement for an aggregate of $2,147,000 in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act.
2. On April 28, 1998, the Company issued and sold 357,142 shares
of common stock to 35 investors in a private placement for an aggregate of
$500,000 in reliance on the exemption from registration provided by Section 4(2)
of the Securities Act and Rule 506 of Regulation D promulgated thereunder.
3. In August 1998, the Company issued and sold 789,474 shares of
common stock to four (4) investors in a private placement for an aggregate of
$1,500,000 in reliance on the exemption from registration provided by Section
4(2) of the Securities Act.
4. In September 1998 and December 1998, the Company issued and
sold 10,000 and 4,600 shares, respectively, of common stock to two (2) investors
in a private placement for an aggregate of $47,450 in reliance on the exemption
from registration provided by Section 4(2) of the Securities Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has authority under Title 8 Section 145 of the General
Business Act of Delaware (the "DBCA") to indemnify its directors and officers to
the extent provided for in such statute. The Company's Restated Articles of
Incorporation permit indemnification of directors and officers to the fullest
extent permitted by law.
38
<PAGE> 40
The DBCA provides in part that a corporation may indemnify a director
or officer or other person who was, is, or is threatened to be made a named
defendant or respondent in a proceeding because the person is or was a director,
officer, employee or agent of the corporation, if it is determined that such
person (a) conducted himself in good faith; (b) reasonably believed, in the case
of conduct in his official capacity as a director or officer of the corporation,
that his conduct was in the corporation's best interests, and, in all other
cases, that his conduct was at least not opposed to the corporation's best
interests; and (c) in the case of any criminal proceeding, had no reasonable
cause to believe that his conduct was unlawful.
A corporation may indemnify a person under the DBCA against judgments,
penalties, (including excise and similar taxes), fines, settlement, and
reasonable expenses actually incurred by the person in connection with the
proceeding. If the person is found liable to the corporation or is found liable
on the basis that personal benefit was improperly received by the person, the
indemnification is limited to reasonable expenses actually incurred by the
person in connection with the proceeding, and shall not be made in respect of
any proceeding in which the person shall have been found liable for willful or
intentional misconduct in the performance of his duty to the corporation.
A corporation may also pay or reimburse expenses incurred by a person
in connection with his appearance as a witness or other participation in a
proceeding at a time when he is not a named defendant or respondent in the
proceeding.
Article 5.03 of the Company's Articles of Incorporation provides that,
to the fullest extent permitted by the DBCA as the same exists or as it may
hereafter be amended, no director of the Company shall be personally liable to
the Company or its shareholders for monetary damages for breach of fiduciary
duty as a director.
The Company's Certificate of Incorporation indemnifies its officers and
directors to the fullest extent permitted by the DBCA. Under Section 145 of the
DBCA, a corporation may indemnify its directors, officers, employees and agents
and those who serve, at the corporation's request, in such capacities with
another enterprise, against expenses (including attorneys' fees), as well as
judgments, fines and settlements in nonderivative lawsuits, actually and
reasonably incurred in connection with the defense of any action, suit or
proceeding in which they or any of them were or are made parties are threatened
to be made parties by reason of their serving or having served in such capacity.
The DBCA provides, however, that such person must have acted in good faith and
in a manner such person reasonably believed to be in (or not opposed to) the
best interests of the corporation and, in the case of a criminal action, such
person must have had no reasonable cause to be believe his or her conduct was
unlawful. In addition, the DBCA does not permit indemnification in an action or
suit by or in the right of the corporation, where such person has been adjudged
liable to the corporation, unless, and only to the extent that, a court
determines that such person fairly and reasonably is entitled to indemnity for
costs the court deems proper in light of liability adjudication. Indemnity is
mandatory to the extent a claim, issue or matter has been successfully defended.
The Certificate of Incorporation and the DBCA also prohibit limitations on
officer or director liability for acts or omissions which resulted in a
violation of a statute prohibiting certain dividend declarations, certain
payments to shareholders after dissolution and particular types of loans. The
effect of these provisions is to eliminate the rights of SIMEX and its
shareholders (through shareholders' derivative suits on behalf of
39
<PAGE> 41
SIMEX) to recover monetary damages against an officer or director for breach of
fiduciary duty as an officer or director (including breaches resulting from
grossly negligent behavior), except in the situations described above. These
provisions will not limit the liability of directors or officer under the
federal securities laws of the United States. The foregoing summary of the
Company's Certificate of Incorporation, as amended, is qualified in its entirety
by reference to the relevant provisions thereof (filed as Exhibit 3.1).
40
<PAGE> 42
INDEX TO FINANCIAL STATEMENTS FOR THE COMPANY AND ITS SUBSIDIARIES
SIMEX TECHNOLOGIES, INC.
HISTORICAL:
Independent auditors' report
Consolidated balance sheets as of December 31, 1998 and March 31, 1999
(unaudited)
Consolidated statements of operations for the years ended December 31, 1998 and
1997 and the (unaudited) three months ended March 31, 1999 and 1998
Consolidated statements of shareholders' equity for the years ended December 31,
1998 and 1997 and the three months ended March 31, 1999 (unaudited)
Consolidated statements of cash flows for the years ended December 31, 1998 and
1997 and the (unaudited) three months ended March 31, 1999 and 1998
Notes to consolidated financial statements
PRO FORMA:
Unaudited pro forma consolidated financial information
Unaudited pro forma consolidated statement of operations for the year ended
December 31, 1998
Notes to unaudited pro forma consolidated statement of operations
NORSK KJOELEINDUSTRI A/S
Independent auditors' report
Consolidated statements of operations for the years ended December 31, 1997 and
1996 and the (unaudited) three months ended March 31, 1998 and 1997
Consolidated Statements of cash flows for the years ended December 31, 1997 and
1996 and the (unaudited) three months ended March 31, 1998 and 1997
Notes to consolidated financial statements
WELD TECH A/S
Independent auditors' report
Statement of profit and loss for the years ended December 31, 1997 and 1996 and
the (unaudited) nine months ended September 30, 1998 and 1997
Reconciliations between NGAAP and US GAAP for the years ended December 31, 1997
and 1996 and the (unaudited) nine months ended September 30, 1998 and 1997
Statement of cash flows for the year ended December 31, 1997 and 1996 and the
(unaudited) nine months ended September 30, 1998 and 1997
General accounting policies
41
<PAGE> 43
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
SIMEX Technologies, Inc.:
We have audited the accompanying consolidated balance sheet of SIMEX
Technologies, Inc. and subsidiaries as of December 31, 1998, and the related
consolidated statements of operations, shareholders' equity and comprehensive
income, and cash flows for each of the years in the two-year period ended
December 31, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of SIMEX Technologies,
Inc. and subsidiaries as of December 31, 1998, and the results of their
operations and their cash flows for each of the years in the two-year period
ended December 31, 1998 in conformity with generally accepted accounting
principles.
KPMG LLP
March 26, 1999
Atlanta, Georgia
42
<PAGE> 44
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share data)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1998 1999
------------ -----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 877 1,100
Trade accounts receivable, less allowance for
doubtful accounts of $70 in 1998 and $66 in 1999 6,037 5,345
Costs and estimated earnings in excess of billings on
uncompleted contracts (note 3) 1,528 2,043
Inventories 1,515 1,330
Prepaid expenses and other current assets 14 34
------- ------
Total current assets 9,971 9,852
Notes receivable - officers (note 4) 245 245
Investments (note 5) 1,271 1,175
Investments in affiliated companies (note 6) 281 284
Property, plant, and equipment, net (note 7) 5,589 5,504
Goodwill, less accumulated amortization of $128 in 1998
and $172 in 1999 3,589 3,461
------- ------
Total assets $20,946 20,521
======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
43
<PAGE> 45
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share data)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
Current liabilities:
Note payable - bank (note 8) $ 1,723 1,967
Current portion of long-term debt (note 9) 2,430 2,536
Accounts payable 2,066 2,577
Accrued salaries and wages 551 816
Accrued taxes other than income 1,251 875
Accrued income taxes 397 308
Deferred income taxes (note 10) 127 127
Other current liabilities 867 680
------------- ------------
Total current liabilities 9,412 9,886
Long-term debt, less current portion (note 9) 3,434 3,314
Deferred income taxes (note 10) 437 458
Other liabilities 592 65
------------- ------------
Total liabilities 13,875 13,723
------------- ------------
Shareholders' equity:
Preferred stock, $.001 par value. Authorized 5,000 shares;
none issued or outstanding (note 11) -- --
Common stock, $.001 par value. Authorized 50,000 shares;
12,824 shares issued and outstanding in 1998
and 1999 (note 12) 13 13
Additional paid-in capital 6,465 6,381
Retained earnings 892 728
Accumulated other comprehensive loss - foreign currency
translation adjustment (299) (324)
------------- ------------
Total shareholders' equity 7,071 6,798
------------- ------------
Commitments and contingencies (notes 4, 5, and 9)
Total liabilities and shareholders' equity $ 20,946 20,521
============= ============
</TABLE>
44
<PAGE> 46
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------ ------------------
1998 1997 1999 1998
-------- ------ ----- -----
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues $ 24,403 13,740 8,265 3,433
Cost of sales 20,757 12,418 6,747 2,836
-------- ------ ----- -----
Gross profit 3,646 1,322 1,518 597
Selling, general, and administrative expenses (note 6) 2,245 765 1,567 387
-------- ------ ----- -----
Operating income (loss) 1,401 557 (49) 210
-------- ------ ----- -----
Other income (expense):
Interest income (note 4) 105 31 13 2
Interest expense (385) (207) (113) (29)
Other 7 -- -- --
-------- ------ ----- -----
Total other expense (273) (176) (100) (27)
-------- ------ ----- -----
Income (loss) before income taxes 1,128 381 (149) 183
Income taxes (note 10) 377 168 15 71
-------- ------ ----- -----
Net income (loss) $ 751 213 (164) 112
======== ====== ===== =====
Earnings (loss) per share (note 13):
Basic $ .06 .02 (.01) .01
======== ====== ===== =====
Diluted $ .06 .02 (.01) .01
======== ====== ===== =====
</TABLE>
See accompanying notes to consolidated financial statements.
45
<PAGE> 47
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Years ended December 31, 1998 and 1997 and
Three Months ended March 31, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
RETAINED
PREFERRED STOCK COMMON STOCK ADDITIONAL EARNINGS
------------------- ---------------- PAID-IN (ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT)
-------- ------ ------ ------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1996,
effected for the reorganization (note 2) -- $-- 10,013 $10 425 (25)
Comprehensive income:
Net income -- -- -- -- -- 213
Foreign currency translation adjustments -- -- -- -- -- --
Total comprehensive income
------- --- ------ --- ----- ---
Balances at December 31, 1997 -- -- 10,013 10 425 188
Issuance of preferred stock (note 11) 1,130 1 -- -- 2,055 --
Preferred stock dividends (note 11) -- -- -- -- -- (47)
Conversion of preferred stock to
common stock (note 11) (1,130) (1) 1,130 1 -- --
Issuance of common stock (note 12) -- -- 1,161 1 1,824 --
Issuance of common stock and options in
connection with acquisitions (note 14) -- -- 520 1 2,161 --
Comprehensive income:
Net income -- -- -- -- -- 751
Foreign currency translation adjustments -- -- -- -- -- --
Total comprehensive income
------- --- ------ --- ----- ---
Balances at December 31, 1998 -- -- 12,824 13 6,465 892
Comprehensive loss:
Net loss -- -- -- -- -- (164)
Foreign currency translation adjustments -- -- -- -- -- --
Total comprehensive loss
------- --- ------ --- ----- ---
Balances at March 31, 1999 (unaudited) -- $-- 12,824 $13 6,465 728
======= === ====== === ===== ===
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
LOSS - FOREIGN
CURRENCY TOTAL
TRANSLATION SHAREHOLDERS'
ADJUSTMENT EQUITY
-------------- -------------
<S> <C> <C>
Balances at December 31, 1996,
effected for the reorganization (note 2) -- 410
Comprehensive income:
Net income -- 213
Foreign currency translation adjustments (24) (24)
-----
Total comprehensive income 189
---- -----
Balances at December 31, 1997 (24) 599
Issuance of preferred stock (note 11) -- 2,056
Preferred stock dividends (note 11) -- (47)
Conversion of preferred stock to
common stock (note 11) -- --
Issuance of common stock (note 12) -- 1,825
Issuance of common stock and options in
connection with acquisitions (note 14) -- 2,162
Comprehensive income:
Net income -- 751
Foreign currency translation adjustments (275) (275)
Total comprehensive income 476
---- -----
Balances at December 31, 1998 (299) 7,071
Comprehensive loss:
Net loss -- (164)
Foreign currency translation adjustments (109) (109)
-----
Total comprehensive loss (273)
---- -----
Balances at March 31, 1999 (unaudited) (408) 6,798
==== =====
</TABLE>
See accompanying notes to consolidated financial statements.
46
<PAGE> 48
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------- --------------------
1998 1997 1999 1998
-------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 751 213 (164) 112
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 538 386 211 68
Earnings from affiliated companies (15) -- -- --
Deferred income taxes 85 96 -- --
Other 75 -- -- --
Changes in operating assets and liabilities, net of
effects of acquisitions:
Accounts receivable (1,594) (747) (254) (1,171)
Inventories 428 (61) 150 (86)
Prepaid expenses and other current assets (1,346) 309 246 (116)
Other assets -- -- (5) --
Accounts payable (714) 406 560 212
Accrued salaries and wages 477 -- 277 35
Accrued taxes other than income 651 (27) (56) 71
Accrued income taxes 247 72 -- --
Other current liabilities (274) 189 (517) 340
------- ---- ----- ---
Net cash provided by (used in) operating activities (691) 836 448 (535)
------- ---- ----- ---
Cash flows from investing activities:
Acquisitions of property, plant, and equipment (907) (516) (211) (49)
Proceeds from sale of property, plant, and equipment 180 -- -- --
Acquisitions of businesses, net of cash acquired of $406 (3,925) -- -- --
Acquisition of investments (117) -- -- --
Acquisition of investments in affiliated companies (266) -- -- --
Proceeds from investments -- -- 96 --
Increase in notes receivable - employees (230) -- -- --
------- ---- ----- ---
Net cash used in investing activities (5,265) (516) (115) (49)
------- ---- ----- ---
Cash flows from financing activities:
Proceeds from (repayments of) note payable - bank, net 203 (273) 285 626
Proceeds from long-term debt 5,247 30 -- --
Payments on long-term debt (2,598) -- (383) (78)
Issuance of preferred stock 2,056 -- -- --
Issuance of common stock 1,825 -- -- --
Dividends paid (47) -- -- --
------- ---- ----- ---
Net cash provided by (used in) financing activities 6,686 (243) (98) 548
------- ---- ----- ---
Effect of exchange rate changes in cash and cash equivalents (38) (23) (12) (4)
------- ---- ----- ---
Net change in cash and cash equivalents 692 54 223 (40)
Cash and cash equivalents at beginning of period 185 131 877 185
------- ---- ----- ---
Cash and cash equivalents at end of period $ 877 185 1,100 145
======= ==== ===== ===
</TABLE>
(Continued)
47
<PAGE> 49
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
December 31, March 31,
------------------ -------------------
1998 1997 1999 1998
------- ---- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C>
Supplemental disclosure of cash flows information:
Cash paid during the years for:
Interest $ 361 207 113 29
======= ==== ====== ======
Income taxes $ 56 -- 70 --
======= ==== ====== ======
Supplemental disclosure of noncash investing and financing
activities:
Acquisition of investment in exchange for receivable $ 1,154 -- -- --
======= ==== ====== ======
Conversion of preferred stock to common stock $ 1 -- -- --
======= ==== ====== ======
In 1998, the Company acquired the capital stock of
four companies (note 14):
Fair value of net assets acquired, net of cash received $11,730 -- -- --
Liabilities assumed (5,643) -- -- --
Common stock and options issued (2,162) -- -- --
------- ---- ------ ------
$ 3,925 -- -- --
======= ==== ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
48
<PAGE> 50
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
(A) DESCRIPTION OF BUSINESS
SIMEX Technologies, Inc. and subsidiaries (collectively, the
"Company") principally operates through its wholly owned
subsidiary, Simex AS, located in Norway. The Company is engaged in
construction and services, including design, engineering,
fabrication, production, installation, and maintenance for both
off-shore for the oil and gas industry, and on-shore in
commercial, industrial, and government projects. In addition, the
Company is engaged in concrete post tensioning construction for
off-shore oil and gas drilling platforms. The Company has derived
its revenues primarily from customers in Norway and the United
Kingdom (see note 18).
(B) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the financial
statements of SIMEX Technologies, Inc. and its subsidiaries. All
significant intercompany balances and transactions have been
eliminated in consolidation.
(C) CASH EQUIVALENTS
Cash equivalents of $249 at December 31, 1998 consist of money
market accounts. For purposes of the consolidated statements of
cash flows, the Company considers all highly liquid debt
instruments with original maturities of three months or less to be
cash equivalents.
(D) INVENTORIES
Inventories are stated at the lower of cost or market and consist
principally of raw materials. Cost is determined using the
last-in, first-out method for all inventories other than supplies,
for which the first-in, first-out method is used to determine
cost.
(E) INVESTMENT
Investment in nonmarketable equity security in which the ownership
amount and circumstances do not justify use of the consolidation
or equity methods of accounting is carried at cost.
(F) INVESTMENTS IN AFFILIATED COMPANIES
Investments in the common stock of two affiliated companies are
accounted for by the equity method. The excess of cost of the
stock of those affiliates over the Company's share of their net
assets at the acquisition date is being amortized straight-line
over 20 years.
49 (Continued)
<PAGE> 51
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
(G) PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. Depreciation on
plant and equipment is calculated on the straight-line method over
the estimated useful lives of the assets ranging from five to 39
years. Leasehold improvements are amortized straight-line over the
shorter of the lease term or estimated useful life of the asset.
(H) GOODWILL
Goodwill, which represents the excess of purchase price over fair
value of net assets acquired, is amortized on a straight-line
basis over the expected periods to be benefited, generally 20
years. The Company assesses the recoverability of this intangible
asset by determining whether the amortization of the goodwill
balance over its remaining life can be recovered through
undiscounted future operating cash flows of the acquired
operation. The amount of goodwill impairment, if any, is measured
based on projected discounted future operating cash flows using a
discount rate reflecting the Company's average cost of funds. The
assessment of the recoverability of goodwill will be impacted if
estimated future operating cash flows are not achieved.
(I) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE
DISPOSED OF
The Company accounts for long-lived assets in accordance with the
provisions of SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to
be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair
value of the assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.
(J) REVENUE AND COST RECOGNITION
Revenues from fixed-price and modified fixed-price contracts are
recognized on the percentage-of-completion method, measured by the
cost-to-cost method. This method is used because management
considers the cost-to-cost method to be the best available measure
of progress on these contracts. Revenues from cost-plus-fee
contracts are recognized on the basis of costs incurred during the
period plus the fee earned, measured by the cost-to-cost method.
50 (Continued)
<PAGE> 52
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
Contracts to manage, supervise, or coordinate the construction
activity of others are recognized only to the extent of the fee
revenue. The revenue earned in a period is based on the ratio of
hours incurred to the total estimated hours required by the
contract.
Contract costs include all direct material and labor costs and
those indirect costs related to contract performance, such as
indirect labor, supplies, tools, repairs, and depreciation costs.
Selling, general, and administrative costs are charged to expense
as incurred. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are
determined. Changes in job performance, job conditions, and
estimated profitability, including those arising from contact
penalty provisions, and final contract settlements may result in
revisions to costs and income and are recognized in the period in
which the revisions are determined. Profit incentives are included
in revenues when their realization is reasonably assured. An
amount equal to contract costs attributable to claims is included
in revenues when realization is probable and the amount can be
reliably estimated.
The asset, if any, "Costs and estimated earnings in excess of
billings on uncompleted contracts," represents revenues recognized
in excess of amounts billed. The liability, if any, "Billings in
excess of costs and estimated earnings on uncompleted contracts,"
represents billings in excess of revenues recognized.
(K) INCOME TAXES
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
(L) RESEARCH AND DEVELOPMENT, AND ADVERTISING
Research and development, and advertising costs are expensed as
incurred. Research and development costs amounted to $450 in 1998
and 1997. Advertising costs amounted to $65 and $49 in 1998 and
1997, respectively.
51 (Continued)
<PAGE> 53
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
(M) PENSION PLAN
On January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 132, Employers' Disclosures
About Pension and Other Postretirement Benefits. SFAS No. 132
revises employers' disclosures about pension and other
postretirement benefit plans. SFAS No. 132 does not change the
method of accounting for such plans.
The Company has a defined benefit pension plan covering
substantially all of its employees. The benefits are based on
years of service and the employee's compensation before
retirement. The cost of this program is being funded currently.
(N) COMPREHENSIVE INCOME
On January 1, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes standards for
reporting and presentation of comprehensive income and its
components in a full set of financial statements. Comprehensive
income consists of net income and foreign currency translation
adjustment and is presented in the consolidated statements of
shareholders' equity and comprehensive income. The Statement
requires only additional disclosures in the consolidated financial
statements; it does not affect the Company's financial position or
results of operations. Prior year financial statements have been
reclassified to conform to the requirements of SFAS No. 130.
(O) FOREIGN CURRENCY TRANSLATION ADJUSTMENT
The Company applies Financial Accounting Standards Board Statement
No. 52, Foreign Currency Translation (FAS 52) for its subsidiaries
outside the United States. Assets and liabilities denominated in
foreign functional currencies are translated at the exchange rate
as of the balance sheet date. Translation adjustments are recorded
as a separate component of shareholders' equity. Revenues, costs,
and expenses are translated at the weighted average exchange rate
for the period.
(P) EARNINGS PER SHARE
The Company applies the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 128, Earnings Per Share. Basic
earnings per share is computed by dividing net earnings by the
weighted average number of shares of common stock outstanding
during the year. Diluted earnings per share is computed by
dividing net earnings by the sum of (1) the weighted average
number of shares of common stock outstanding during the period,
(2) the dilutive effect, if any, of convertible preferred stock,
(3) the dilutive effect, if any, of stock options using the
treasury stock method, and (4) dilutive effect, if any, of other
potentially dilutive securities.
52 (Continued)
<PAGE> 54
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
(Q) USE OF ESTIMATES
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities to prepare
these financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those
estimates.
(R) INTERIM FINANCIAL INFORMATION
The accompanying unaudited consolidated financial information as
of March 31, 1999 and for the three-month periods ended March 31,
1999 and 1998 have been prepared in accordance with instructions
to interim financial information and do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of the Company's management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair
presentation have been included. Results for interim periods may
not be indicative for the full year.
(2) REORGANIZATION
On April 28, 1998, Simex AS, the Norwegian principal operating subsidiary
of the Company, acquired Maile International, Inc. ("Maile"), a U.S.
public shell company, in a transaction accounted for as a reverse
acquisition. For accounting purposes, Simex AS was deemed to be the
acquiring company and Maile, the acquiree. Accordingly, the transaction
was accounted for as a reorganization using historical costs and the
consolidated historical financial statements represent those of Simex AS
after giving retroactive effect to the issuance of common stock and a
reverse stock split in connection with the reverse acquisition. In
addition, Maile's name was ultimately changed to SIMEX Technologies, Inc.
and became the U.S. holding company for Simex AS.
53 (Continued)
<PAGE> 55
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
(3) COST AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED
CONTRACTS
Cost and estimated earnings in excess of billings on uncompleted
contracts consists of the following at December 31, 1998:
<TABLE>
<S> <C>
Cost incurred on uncompleted contracts $ 7,912
Estimated earnings 2,139
-------
10,051
Less billings to date 8,523
-------
$ 1,528
=======
Costs and estimated earnings in excess of billings on
uncompleted contracts $ 1,528
Billings in excess of costs and estimated earnings
on uncompleted contracts --
-------
$ 1,528
=======
</TABLE>
(4) NOTES RECEIVABLE
At December 31, 1998, the notes receivable for $245 is due from certain
officers of Simex AS. The annual interest rate is 6% and the notes are
due December 31, 2002. Interest income for 1998 and 1997 was $5 and $-0-,
respectively.
(5) INVESTMENT
At December 31, 1998, the Company has a 16.0% ownership in Geoambiente
Mining Group International, AVV, a coal and mineral mining operation
located in Venezuela. The carrying amount of the investment is $1,175 and
is stated at cost.
(6) INVESTMENTS IN AFFILIATED COMPANIES
Investments in affiliated companies consist of 40% of the common stock of
Jotronic Data AS and Unitron Management AS. The shares were acquired in
1998, and the Company has included its share of net income from the date
of acquisition. Such equity in earnings is not significant.
54 (Continued)
<PAGE> 56
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
The unamortized portion of the excess of the cost over the Company's
share of net assets of affiliated companies is $241 at December 31, 1998.
Jotronic Data provides its services for the Company under the terms of a
management services agreement. The cost of these services aggregates $227
in 1998. Fees charged to the Company for these services are set at the
level of fees that Jotronic Data charges to unrelated parties.
(7) PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consists of the following at December 31,
1998:
<TABLE>
<S> <C>
Land $ 445
Buildings and leasehold improvements 3,194
Machinery and equipment 4,108
------
7,747
Less accumulated depreciation and amortization 2,158
------
Net property, plant, and equipment $5,589
======
</TABLE>
(8) NOTE PAYABLE - BANK
Note payable - bank amounted to $1,723 at December 31, 1998. The Company
had amounts outstanding under the note payable - bank which has two
components, a $2,447 overdraft facility which bears interest at NIBOR
(Norwegian) plus .75% (8.97% at December 31, 1998) and a $1,000 overdraft
facility which bears interest at LIBOR plus 1.0% (6.125% at December 31,
1998). Both note payable - bank overdraft facilities are due on demand
and are secured by certain accounts receivable and property, plant and
equipment of the Company.
55 (Continued)
<PAGE> 57
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
(9) LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1998:
<TABLE>
<S> <C>
Mortgage payable, NIBOR (Norwegian) plus .9% (9.12% at December
31, 1998), payable in 1999 contingent upon sale of certain
buildings with interest due quarterly. Mortgage payable is
secured with accounts receivable and property, plant and
equipment $ 1,187
Mortgage payable, NIBOR (Norwegian) plus 1.0% (9.22% at December
31, 1998), payable in quarterly principal payments of $33
through 2008 with interest due quarterly. Mortgage payable is
secured with accounts receivable and property, plant and
equipment 1,250
Mortgage payable, NIBOR (Norwegian) plus .9% (9.12% at December
31, 1998), payable in monthly principal payments of $33
through 2004 with interest due monthly. Mortgage payable is
secured with accounts receivable and property, plant and
equipment 1,974
Mortgage payable, NIBOR (Norwegian) plus .9% (9.12% at December
31, 1998), payable in 1999 with interest due quarterly.
Mortgage payable is secured with accounts receivable and
property, plant and equipment 1,041
Mortgage payable, NIBOR (Norwegian) plus .9% (9.12% at December
31, 1998), payable in quarterly principal payments of $9
through 2007 with interest due quarterly. Mortgage payable
secured by accounts receivable, inventories, and property,
plant and equipment 278
Mortgage payable, NIBOR (Norwegian) plus .9% (9.12% at December
31, 1998), payable in quarterly principal payments of $2
through 2002 with interest due quarterly. Mortgage payable
secured by accounts receivable, inventories, and property,
plant and equipment 33
11% notes payable, payable in monthly installments of $3 through
2007 with interest due monthly. Note payable secured by
inventories and equipment 101
-------
5,864
Less current portion of long-term debt 2,430
-------
Long-term debt, less current portion $ 3,434
=======
</TABLE>
The aggregate maturities of long-term debt for each of the five years
subsequent to December 31, 1998 are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
----------------
<S> <C>
1999 $ 2,430
2000 599
2001 597
2002 578
2003 568
</TABLE>
56 (Continued)
<PAGE> 58
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
(10) INCOME TAXES
Income tax expense attributable to income from continuing operations
consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
<S> <C> <C> <C>
Year ended December 31, 1998:
U.S. Federal $ -- -- --
State -- -- --
Foreign 397 (20) 377
---- --- ---
Total $397 (20) 377
==== === ===
Year ended December 31, 1997:
U.S. Federal $ -- -- --
State -- -- --
Foreign 72 96 168
---- --- ---
Total $ 72 96 168
==== === ===
</TABLE>
Income tax expense attributable to income from continuing operations was
$377 and $168 for the years ended December 31, 1998 and 1997,
respectively, and differed from the amounts computed by applying the U.S.
Federal income tax rate of 34% to income before income taxes as a result
of the following:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Computed "expected" tax expense $384 130
Increase (reduction) in income taxes resulting from:
Difference in U.S. and foreign tax rates (79) (23)
Increase in valuation allowance for deferred
tax assets 75 --
Other (3) 61
---- ----
$377 168
==== ====
</TABLE>
57 (Continued)
<PAGE> 59
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1998
are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Accounts receivable $ 22
Pension 10
Net operating loss carryforward 75
----
Gross deferred tax assets 107
Less valuation allowance 75
----
Net deferred tax assets 32
----
Deferred tax liabilities:
Property, plant, and equipment 447
Cost and estimated earnings in
excess of billings on uncompleted
contracts 149
----
Total deferred tax liabilities 596
----
Net deferred tax liability $564
====
</TABLE>
The valuation allowance for deferred tax assets as of January 1, 1998 and
1997 was $-0-. The net change in the total valuation allowance for the
years ended December 31, 1998 and 1997 was an increase of $75. In
assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized.
At December 31, 1998, the Company has net operating loss carryforwards
for U.S. Federal income tax purposes of $188 which are available to
offset future Federal taxable income, if any, through 2008.
(11) PREFERRED STOCK
The Company issued 1,130 shares of 8% Series A cumulative preferred stock
in April 1998 for $1.90 per share in a private placement. Proceeds to the
Company were $2,056, net of offering expenses of $91. The preferred stock
was convertible into shares of common stock of the Company on a
one-for-one basis after 90 days. The preferred stock accrued dividends of
$47 which were paid in connection with the conversion of all of the
outstanding preferred stock into the Company's common stock in August
1998.
58 (Continued)
<PAGE> 60
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
(12) COMMON STOCK AND OPTIONS
In April 1998, the Company issued 357 shares at $1.40 per share pursuant
to a private placement. Proceeds to the Company amounted to $450, net of
offering expenses of $50.
In July 1998, the Company issued 789 shares at $1.90 per share pursuant
to a private placement. Proceeds to the Company amounted to $1,328, net
of offering expenses of $172.
In September and December 1998, the Company issued 10 shares and 5
shares, respectively, at $3.25 per share. Proceeds to the Company
amounted to $47.
In connection with the acquisition of Weld Tech AS, the Company issued
the former owner of Weld Tech AS an option to acquire 200,000 shares of
common stock of the Company at $2.75 per share (see note 14).
(13) EARNINGS PER SHARE
The following table sets forth the computations of basic and diluted
earnings per share for the years ended December 31, 1998 and 1997 and the
three months ended March 31, 1999 and 1998:
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
--------------------- --------------------
1998 1997 1999 1998
------- ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) $ 751 213 (164) 113
Preferred stock dividends (47) -- -- --
------- ------ ------ ------
Numerator for basic and diluted earnings
per share $ 704 213 (164) 113
======= ====== ====== ======
Denominator:
Denominator for basic earnings per share - weighted-
average shares outstanding 11,138 10,013 12,824 10,013
Effect of dilutive securities - stock options 11 -- -- --
------- ------ ------ ------
Denominator for diluted earnings per share 11,149 10,013 12,824 10,013
======= ====== ====== ======
</TABLE>
The effect of the "as if" conversion for the preferred stock on the
diluted earnings per share is anti-dilutive and therefore has been
excluded.
59 (Continued)
<PAGE> 61
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
(14) ACQUISITIONS
In May 1998, the Company acquired all the outstanding capital stock of
Norsk Kjoleindustri AS ("Norwegian Cooling") located in Norway for $2,683
in cash. The acquisition was accounted for under the purchase method of
accounting and accordingly, the results of operations are included from
the date of acquisition. The acquisition resulted in goodwill of $494
which is being amortized over 20 years using the straight-line method.
In September 1998, the Company acquired certain assets of OIN Sprinklers
AS ("OIN") located in Norway for $144 consisting of $60 in cash and 22
shares of common stock of the Company. The acquisition was accounted for
using the purchase method of accounting and, accordingly, the results of
operations are included from the date of acquisition. The acquisition
resulted in goodwill of $118 which is being amortized over 20 years using
the straight-line method.
In November 1998, the Company acquired all the outstanding stock of Weld
Tech AS ("Weld Tech") located in Norway for $3,237 consisting of $1,349
in cash, 450 shares of common stock of the Company and an option to
acquire 200 shares of the Company at $2.75 per share. The acquisition was
accounted for using the purchase method of accounting and accordingly,
the results of operations are included from the date of acquisition. The
acquisition resulted in goodwill of $2,545 which is being amortized over
20 years using the straight-line method.
In November 1998, the Company acquired all the outstanding capital stock
of Vest Norge Doors AS ("Vest Norge") located in Norway for $277
consisting of cash of $135 and 38 shares of common stock of the Company.
The acquisition was accounted for under the purchase method of accounting
and accordingly, the results of operations are included from the date of
acquisition. The acquisition resulted in goodwill of $296 which is being
amortized over 20 years using the straight-line method.
In December 1998, the Company acquired all the outstanding capital stock
of Hordaror AS ("Hordaror") located in Norway for $152 consisting of $104
in cash and 14 shares of common stock of the Company. The acquisition was
accounted for using the purchase method of accounting and accordingly,
the results of operations are included from the date of acquisition. The
acquisition resulted in goodwill of $154 which is being amortized over 20
years using the straight-line method.
60 (Continued)
<PAGE> 62
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
The following represents the summary (unaudited) pro forma results of
operations, for the more significant acquisitions, as if the Norwegian
Cooling and Weld Tech acquisitions had occurred at the beginning of 1997:
<TABLE>
<CAPTION>
1998 1997
-------- ------
<S> <C> <C>
Revenues $ 30,719 28,198
Net income 844 325
Earnings per share:
Basic .07 .03
Diluted .07 .03
</TABLE>
Such pro forma information is not necessarily indicative of the results
of operations which would have occurred or will occur in the future.
(15) LEASES
The Company has noncancelable leases, primarily for transportation
equipment, that expire over the next three years. Rent expense for
operating leases during 1998 and 1997 was $379 and $314, respectively.
Future minimum lease payments under noncancelable operating leases as of
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
------------
<S> <C>
1999 $ 318
2000 214
2001 91
-----
$ 623
=====
</TABLE>
(16) PENSION PLAN
The Company has a defined benefit plan covering substantially all its
employees. The benefits are based upon years of service and the
employees' compensation during the years before retirement. Net pension
costs for the years ended December 31, 1998 and 1997 were $14 and $-0-,
respectively. The plan is unfunded and pension liabilities at December
31, 1998 were $38. The assumptions used to calculate such pension
information were: discount rate of 7% and expected increase in
compensation of 3%.
61 (Continued)
<PAGE> 63
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
(17) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts for cash and cash equivalents, trade accounts
receivable, cost and estimated earnings in excess of billings on
uncompleted contracts, note payable - bank, accounts payable, accrued
salaries and wages, accrued taxes other than income, accrued income
taxes, and other current liabilities approximate fair value because of
the short maturity of these instruments.
The carrying amount for notes receivable - employees approximate fair
value based upon a discounted cash flow analysis. The carrying amount for
long-term debt which bears a variable rate approximates fair value based
upon current borrowing rates for similar instruments.
(18) OPERATING SEGMENTS
The Company adopted SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information, in 1998 which changes the methodology
by which the Company reports information about its operating segments.
The information for 1997 has been restated from the prior year's
presentation in order to conform to the 1998 presentation.
The Company has four reportable operating segments consisting of
construction, service, production, and post tensioning. Each segment
represents a strategic business unit that offers a different type of
service. These business units are managed separately because each
business requires different technology and/or marketing strategies.
Construction consists of all of Simex's operations involved in the
design, engineering, installation and maintenance of HVAC,
plumbing and electrical products and services, both onshore and offshore.
Service consists of operations related to service and maintenance
contracts worldwide.
Production consists of design, engineering and production of various
technical and nontechnical products, such as the Simprofile Ducts.
Posting tensioning consists of construction reinforcing techniques for
concrete oil and gas production platforms, bridges, tunnels and other
post and bolt tensioning operations.
62 (Continued)
<PAGE> 64
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
The accounting policies of the four operating segments are the same as
those described in note 1. The Company evaluates the performance of its
operating segments based upon revenues and gross profit. Intersegment
revenues are not significant.
<TABLE>
<CAPTION>
POST OTHER AND
CONSTRUCTION SERVICE PRODUCTION TENSIONING ELIMINATIONS TOTAL
------------ ------- ---------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
1998:
Revenues $ 12,302 4,824 3,565 3,850 (138) 24,403
Gross profit 992 381 574 1,282 417 3,646
Total assets 3,723 2,129 5,712 999 8,383 20,946
Long-lived asset expenditures 465 660 4,043 56 3,322 8,546
Depreciation and amortization 192 18 139 13 82 444
1997:
Revenues $ 8,415 1,405 2,779 -- 1,141 13,740
Gross profit 524 162 166 -- 470 1,322
Total assets 1,907 377 1,380 -- 2,004 5,668
Long-lived asset expenditures 73 32 6,730 -- 1,606 1,119
Depreciation and amortization 169 11 130 -- 79 389
Three months ended March 31,
1999 (unaudited):
Revenues $ 4,298 708 1,581 1,514 164 8,265
Gross profit 371 84 265 702 95 1,517
Three months ended March 31,
1998 (unaudited):
Revenues $ 2,075 310 613 435 -- 3,433
Gross profit 307 41 124 126 -- 598
</TABLE>
The following table represents revenues by country based upon the
location of domicile:
<TABLE>
<CAPTION>
1998 1997
------- ------
<S> <C> <C>
Norway $20,261 13,626
United Kingdom 3,850 --
United States 292 114
------- ------
$24,403 13,740
======= ======
</TABLE>
63 (Continued)
<PAGE> 65
SIMEX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1998 and 1997 and (Unaudited) March 31, 1999 and 1998
(In thousands, except per share data)
The following table presents long-lived assets by country based on the
location of domicile:
<TABLE>
<CAPTION>
1998 1997
------ -----
<S> <C> <C>
Norway $9,091 2,398
United Kingdom 43 --
United States 44 --
------ -----
$9,178 2,398
====== =====
</TABLE>
64
<PAGE> 66
SIMEX Technologies, Inc.
Unaudited Pro Forma Consolidated Financial Information
(In thousands, except per share data)
In May 1998, SIMEX Technologies, Inc. and subsidiaries (the "Company") acquired
100% of Norsk Kjoleindustri AS ("Norwegian Cooling"), a Norwegian Company
providing refrigeration services in Norway. The transaction was accounted for as
a purchase with consideration of $2,683 in cash.
In November 1998, the Company acquired 100% of WeldTech AS ("Weld Tech"), a
Norwegian Company providing welding services in Norway. The transaction was
accounted for as a purchase with consideration of $1,349 in cash and 450 shares
of the Company's common stock and an option to acquire 200 shares of the Company
at $2.75 per share.
The following unaudited pro forma consolidated statement of operations for the
year ended December 31, 1998 present the consolidated historical accounts of the
Company, adjusted to give effect to the acquisitions of Norwegian Cooling and
Weld Tech as of the beginning of the period presented.
The unaudited pro forma financial data and accompanying notes should be read in
conjunction with the consolidated financial statements of the Company and
related notes, as well as the consolidated financial statements and related
notes of Norwegian Cooling and Weld Tech, all of which are included elsewhere in
this registration statement. The Company believes that the pro forma adjustments
set forth in the related notes provide a reasonable basis on which to present
the pro forma financial data, which is provided for informational purposes only
and should not be construed to be indicative of the Company's result of
operations had the transactions and events described above been consummated on
the dates assumed. The unaudited pro forma financial data is not intended to
project the Company's results of operations for any future period.
65
<PAGE> 67
SIMEX Technologies, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
Year ended December 31, 1998
(In thousands, except per share data)
<TABLE>
<CAPTION>
SIMEX Norwegian Weld Pro forma
Technologies, Inc. Cooling Tech adjustments Pro forma
------------------ --------- ------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues $ 24,403 5,638 823 (145)(1) 30,719
(145)(1)
Cost of revenues 20,757 1,929 621 49 (2) 26,211
-------- ------ ------- ----- -------
Gross profit 3,646 709 202 (49) 4,508
Selling, general, and
administrative expenses 2,245 447 65 130(2) 2,887
-------- ------ ------- ----- -------
Operating income 1,401 262 137 (179) 1,621
Other expense (273) (38) (10) -- (321)
-------- ------ ------- ----- -------
Income before income taxes 1,128 224 127 (179) 1,300
Income taxes 377 45 34 -- 456
-------- ------ ------- ----- -------
Net income $ 751 179 93 (179) 844
======== ====== ======= ===== =======
Earnings per share:
Basic $ .06 .07
======== =======
Diluted $ .06 .07
======== =======
Weighted average common and
dilutive shares outstanding:
Basic 11,138 396 11,534
======== ===== =======
Diluted 11,149 475 11,624
======== ===== =======
</TABLE>
See accompanying notes to unaudited pro forma consolidated statement of
operations.
66
<PAGE> 68
Simex Technologies, Inc.
Notes to Unaudited Pro Forma Consolidated Statement of Operations
Year ended December 31, 1998
The following explanations describe the unaudited pro forma adjustments
necessary to present the historical results of operations, giving effect to the
acquisitions of Norwegian Cooling and Weld Tech.
(1) Elimination of intercompany sales.
(2) Adjustment relates to depreciation of fair value adjustment for
property, plant and equipment and amortization of the goodwill over 20
years.
67
<PAGE> 69
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and shareholders of Norsk Kjoeleindustri AS:
We have audited the accompanying consolidated statements of operations and of
cash flows of Norsk Kjoeleindustri AS (the Company) for each of the years in the
two-year period ended December 31, 1997. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with standards generally accepted in
Norway, the Company's local standards, that are substantially equivalent to
auditing standards generally accepted in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects the results of operations and cash flows of
Norsk Kjoeleindustri AS for each of the years in the two-year period ended
December 31, 1997, in conformity with generally accepted accounting principles
in Norway.
Accounting principles generally accepted in Norway vary in certain significant
respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States
would have affected results of operations for each of the years in the two-year
period ended December 31, 1997 to the extent summarized in Note 6 to the
financial statements.
DELOITTE & TOUCHE AS
Stavanger, Norway
May 17, 1998
68
<PAGE> 70
NORSK KJOELEINDUSTRI AS
Consolidated Statements of Operations
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
- ------------------------------------------------------------------------------------- --------------------------
NOTE 1997 1997 1996 1998 1998 1997
- ------------------------------------------------------------------------------------- --------------------------
USD NOK NOK USD NOK NOK
<S> <C> <C> <C> <C> <C> <C> <C>
Sales 12 118 93 649 87 003 3 252 25 131 15 732
Operating expenses
Materials 7 425 57 378 53 476 1 859 14 370 9 869
Personnel costs 2 774 21 439 20 874 752 5 811 6 264
Other operating expenses 1 424 11 005 9 841 424 3 280 1 977
Depreciation and Amortization 3 191 1 478 1 256 31 239 370
Bad debts 2 49 377 129 7 52 0
--------------------------------------------------------------------
Total operating expenses 11 863 91 677 85 576 3 073 23 752 18 480
Operating income (loss) 255 1 972 1 427 179 1 379 -2 748
Financial items
Financial income 12 94 290 0 0 0
Financial expenses -137 -1 063 -1 043 -21 -161 -183
--------------------------------------------------------------------
Net financial items -125 -969 -753 -21 -161 -183
Income (loss) before income taxes 130 1 003 674 157 1 218 -2 931
--------------------------------------------------------------------
Income taxes 4 44 340 317 47 361 -128
Minority interests 15 118 -28 20 156 -2
- ----------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) 71 545 385 91 701 -2 801
======================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Translation of amounts from Norwegian Kroner (NOK) into U.S. Dollar (USD) for
the convenience of the reader has been made at the noon buying rate by the
Federal Reserve Bank of New York on March 31, 1999 of USD 1 = 7.728.
69
<PAGE> 71
NORSK KJOELEINDUSTRI AS
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
- -------------------------------------------------------------------------------------- -------------------------
NOTE 1997 1997 1996 1998 1998 1997
- -------------------------------------------------------------------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
USD NOK NOK USD NOK NOK
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) 71 545 385 71 701 -2 801
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 191 1 478 1 256 31 239 370
Gain (loss) on disposal -13 -98 33 0 0 0
Deferred income taxes 35 270 9 0 0 0
Changes in operating assets and
liabilities, net of effects of
acquisitions:
Accounts receivable -104 -807 -1 095 -604 -4 668 -9
Inventories -139 -1 074 -977 -235 -1 819 -3 311
Accounts payable 37 289 -776 897 6 778 6 014
Other current liabilities 208 1 608 1 027 -572 -4 415 1 338
------------------------------------ ------------------------------
Net cash provided by (used in) operating 286 2 211 -138 -412 -3 184 1 601
activities
------------------------------------ ------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of investment 1 10 0 0 0 10
Proceeds from sale of fixed assets 44 340 84 28 219 0
Purchase of fixed assets -108 -834 -1 031 0 0 -458
------------------------------------ ------------------------------
Net cash flow provided by (used in) -63 -484 -947 28 219 -448
investing activities
------------------------------------ ------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of indebtedness -141 -1 090 -140 -77 -590 -578
Proceeds from long-term debt 1 693 162 1 250
Change in temporary bank overdraft 95 734 -121
------------------------------------ ------------------------------
Net cash flow provided by (used in) -141 -1 090 1 553 180 1 394 -699
financing activities
------------------------------------ ------------------------------
Net change in cash and cash equivalents 82 637 468 -204 -1 571 454
Cash and cash equivalents at the beginning 326 2 521 2 053 409 3 158 2 521
of period
------------------------------------ ------------------------------
CASH AND CASH EQUIVALENTS AT THE END OF 408 3 158 2 521 205 1 587 2 975
PERIOD
====================================================================================== ==============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
INFORMATION:
Cash paid during the period for:
Interest 137 1 063 1 043 21 161 183
Income taxes 39 304 788 14 104 0
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Translation of amounts from Norwegian Kroner (NOK) into U.S. Dollar (USD) for
the convenience of the reader has been made at the noon buying rate by the
Federal Reserve Bank of New York on March 31, 1999 of USD 1 = 7.728.
70
<PAGE> 72
NORSK KJOELEINDUSTRI AS
Notes to Consolidated Financial Statements
December 31, 1997 and 1996 and March 31, 1998 and 1997
(In NOK thousands)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statement of Norsk Kjoeleindustri AS (the Company)
and its subsidiaries have been prepared in accordance with accounting principles
generally accepted in Norway.
Consolidation
The consolidated financial statements included Norsk Kjoeleindustri ASA and
subsidiaries owned more than 50 percent. All material intercompany transactions
have been eliminated.
REVENUE RECOGNITION
Revenue is recognized as goods are delivered or services are rendered. Revenue
under fixed price contract is accounted for by the percentage-of-completion
method, whereby income is recognized based on the estimated stage of completion
of the individual contracts. Losses on contract are provided for in the period
in which loss become determinable.
INCOME TAXES
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets are recognized only to the extent of recognized deferred tax liabilities.
Income tax expense includes both current income tax expense and deferred income
tax expense.
ACCOUNTS RECEIVABLE
Accounts receivable are recorded at its nominal value after deductions of bad
debts.
INVENTORIES
Inventories are valued at the lower of purchased cost and net realizable value.
FIXED ASSETS
Depreciation expense is based on the estimated useful life of the asset.
FOREIGN CURRENCY TRANSACTIONS
Realized and unrealized gains and losses on monetary assets and liabilities are
included in net income.
71
<PAGE> 73
(2) ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Accounts receivable at face value 15 006 14 108
Provision for bad debts -354 -263
------ ------
Accounts receivable - net 14 652 13 845
------ ------
Realized losses 286 49
Change in provision for bed debt 91 80
------ ------
Bad debt expense 377 129
------ ------
</TABLE>
(3) GOODWILL
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Goodwill 2 879 2 879
Accumulated amortization -2 139 -1 851
------ ------
Goodwill - net 740 1 028
------ ------
Amortization expense at 10% 288 288
------ ------
</TABLE>
(4) INCOME TAXES
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Current income tax expense 67 305
Deferred income tax expense 271 9
Other 2 3
--- ---
Income tax expense 340 317
--- ---
</TABLE>
The tax effects of temporary differences and tax loss carryforwards giving rise
to deferred tax assets and liabilities were as follows for December 31, 1997 and
1996.
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Operating loss carryforwards -126 0
Shares in investments -94 -94
Guarantees -750 -700
Inventory -143 -244
Work in progress 1 360 247
Receivables 79 -111
Fixed assets 1 099 1 359
----- -----
Basis for calculation of deferred taxes 1 425 457
Tax rate 28% 28%
----- -----
Deferred taxes 399 128
----- -----
</TABLE>
(5) SUBSEQUENT EVENT
On May 15, 1998, an agreement was reached whereby the Simex AS, a Norwegian
company, acquired all of the outstanding shares of the Company for approximately
NOK 19,999.
72
<PAGE> 74
(6) SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES IN NORWAY (NGAAP) AND THE UNITED STATES (USGAAP)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1997 1996 1998 1997
<S> <C> <C> <C> <C>
Net earnings (loss) according to NGAAP 545 385 700 -2 801
None 0 0 0 0
------------ -----------------
Net earnings (loss) according to USGAAP 545 385 700 -2 801
------------ -----------------
</TABLE>
73
<PAGE> 75
To the Annual Shareholders' Meeting of Weld Tech AS
AUDITORS REPORT FOR 1997 AND 1996
We have audited the accompanying statements of profit and loss account and cash
flows of Weld Tech AS for each of the years in the two-year period ended
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with standards generally accepted in
Norway, the Company's local standards, that are substantially equivalent to
auditing standards generally accepted in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Weld Tech AS
for each of the years in the two-year period ended December 31, 1997, in
conformity with generally accepted accounting principles in Norway.
Accounting principles generally accepted in Norway vary in certain significant
respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States
would have affected results of operations for each of the years in the two-year
period ended December 31, 1997 to the extent summarized in the reconciliation
from NGAAP to USGAAP.
Stavanger, Norway, February 25, 1999
ERNST & YOUNG
Bjorn Fossan
State Authorised Public Accountant
74
<PAGE> 76
WELD TECH AS
PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
(USD 1000) Note 1997 1996 30.09.98 30.09.97
- ---------- ---- ---- ---- -------- --------
<S> <C> <C> <C> <C> <C>
Sales 1,217 821 755 941
Operating expenses
Materials 405 258 233 293
Personnel costs 405 426 284 316
Other operating expenses 121 93 70 71
Depreciation 29 40 15 16
Bad debts 5 0 0 0
----- ---- ---- ----
Total operating expenses 965 817 602 696
Operating income 252 4 153 245
Financial items
Financial income 3 5 8 0
Financial expenses 23 27 15 17
----- ---- ---- ----
Net financial items -20 -22 -7 -17
Income (loss) before income taxes 232 -18 146 228
Income taxes 2 67 0 41 64
----- ---- ---- ----
NET INCOME (LOSS) 165 -18 105 164
===== ==== ==== ====
Transferred to dividends 81 0
Transferred to/from legal reserve 84 -11
Transferred from general reserve 0 -7
----- ----
Total transferred 165 -18
----- ----
</TABLE>
75
<PAGE> 77
WELD TECH AS
CASH FLOWS STATEMENT
<TABLE>
<CAPTION>
(USD 1 000) 1997 1996 30.09.98 30.09.97
---- ---- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) 165 -18 105 164
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 29 40 15 16
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable -61 11 14 -345
Inventories -1 -3 -14 0
Prepaid expenses and other current assets 12 -10 -17 0
Accounts payable 10 2 -4 32
Accrued taxes other than income 65 -16 53 62
Other current liabilities 12 4 -9 20
---- --- ---- ----
Net cash flow provided by (used in) operating activities 231 10 143 -51
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of tangible fixed assets
Investment in tangible fixed assets -31 -3 -18 -32
---- --- ---- ----
Net cash flow used in investing activities -31 -3 -18 -32
---- --- ---- ----
CASH FLOW FROM FINANCING ACTIVITIES
Payment long term loans -14 -16 -10 -11
Dividends paid 0 -16 -76 0
---- --- ---- ----
Net cash flow used in financing activities -14 -32 -86 -11
---- --- ---- ----
Effect of changes in exchange rates on cash and cash equivalents -32 1 -26 -31
---- --- ---- ----
Net change in cash and cash equivalents 154 -24 13 -125
Cash and cash equivalents at the beginning of period 208 232 362 208
---- --- ---- ----
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD 362 208 375 83
---- --- ---- ----
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Interest 23 27 16 17
Income taxes 0 16 0 0
</TABLE>
76
<PAGE> 78
WELD TECH AS
RECONCILIATION FROM NGAAP TO USGAAP
<TABLE>
<CAPTION>
(USD 1 000) 1997 1996 30.09.98 30.09.97
- ----------- ---- ---- -------- --------
<S> <C> <C> <C> <C>
Net earnings according to NGAAP 165 -18 105 164
Change in deferred tax asset not recognized 2 5 2 4
Work in progress -3 4
---- ---- -------- --------
Net earnings according to USGAAP 164 -9 107 168
---- ---- -------- --------
</TABLE>
77
<PAGE> 79
NOTES TO THE FINANCIAL STATEMENTS FOR 1997 AND 1996
NOTE 1 - INVENTORIES/WORK IN PROGRESS
The inventories are valued at the lower of cost and real value. Work in progress
is valued according to percentage completion without profits. The calculated
earned profits at year end is not recognized as revenue.
NOTE 2 - TAX (USD)
Tax expense, deferred tax
Income before income taxes 232.423
Permanent differences 636
Change in temporary differences 8.934
Loss carry forward - 199
---------
Taxable income 241.794
---------
The tax expense for 1997 consist solely of taxes payable.
241.794 x 28% = 67.702
Temporary differences as of 31.12.97
Provision for losses on accounts receivable - 9.568
Fixed assets - 20.386
---------
Net negative temporary differences - 29.954
---------
Deferred tax is calculated on the basis of temporary differences. The company
has net negative temporary differences which leads to a deferred tax asset.
According to the Norwegian company act, it is not allowed to recognize this
deferred tax asset in the balance sheet.
78
<PAGE> 80
PART III
ITEM 1. INDEX TO EXHIBITS.
A. EXHIBITS
(2) 2.1 Certificate of Merger
2.2 Plan of Merger
2.3 Escrow Agreement for Escrow of 1,500,000 shares of
stock of SIMEX/NK Technologies, Inc.*
(3) 3.1 Certificate of Incorporation
3.2 Bylaws
(4) Form of Common Stock Certificate*
(10) 10.1 Agreements with Material Suppliers, Customers, etc.*
10.2 Acquisition Documents*
10.3 Material Leases*
10.4 Other Material Contracts*
(21) 21.1 List of the Company's Subsidiaries
(27) 27.1 Financial Data Schedules (for SEC use only)
27.2 Restated Financial Data Schedules (for SEC use only)
27.3 Restated Financial Data Schedules (for SEC use only)
27.4 Restated Financial Data Schedules (for SEC use only)
-------------------------------------------------
(*) These Exhibits will be filed as an Amendment.
79
<PAGE> 81
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
SIMEX TECHNOLOGIES, INC.
Date July 2, 1999
---------------------------------------
By /s/ Kjell I. Jagelid
---------------------------------------
Director and President
By /s/ Warren L. Traver
---------------------------------------
Director and Executive Vice-President
By /s/ Elmer Lunde
---------------------------------------
Chairman of the Board of Directors
80
<PAGE> 1
CERTIFICATE OF MERGER OF
DOMESTIC CORPORATION AND
FOREIGN CORPORATION
Pursuant to Section 252(c) of the Delaware General Corporation Law and
pursuant to Section 92A.200 of the Nevada General Corporation Law, the
undersigned corporations have executed the following Certificate of Merger:
FIRST: The name of the surviving corporation is SIMEX Technologies, Inc., a
Delaware corporation (the "Surviving Corporation"), and the name of the
corporation being merged into this surviving corporation is Simex/NK
Technologies, Inc., a Nevada corporation ("Simex").
SECOND: The Agreement of Merger has been approved, adopted, certified, executed
and acknowledged by each of the constituent corporations. Of the 12,808,580
shares of common stock of Simex issued and outstanding, 6,750,000 shares of
common stock were voted in favor of the Agreement of Merger all in accordance
with the provisions of the Nevada General Corporation Act. Such shares of Simex
common stock were voted as a class; no shares of any class of stock were issued
and outstanding and entitled to vote thereon.
THIRD: The name of the Surviving Corporation is SIMEX Technologies, Inc., a
Delaware corporation.
FOURTH: The Certificate of Incorporation of the surviving corporation shall be
its Certificate of Incorporation which is attached hereto as Exhibit A.
FIFTH: The authorized common stock of Simex is Fifty-Five Million (55,000,000)
with $0.001 par value and the authorized preferred stock of Simex is Five
Million (5,000,000) with $0.001 par value, amounting to an aggregate par value
of Fifty-Five Thousand Dollars ($55,000).
SIXTH: The merger is to become effective on April 8, 1999.
SEVENTH: The Agreement of Merger is on file at Suite 995, 3475 Lenox Road, N.E.,
Atlanta, Georgia 30326, the principal place of business of the Surviving
Corporation.
EIGHTH: A copy of the Agreement of Merger will be furnished by the Surviving
Corporation on request, without cost, to any stockholder of the constituent
corporations.
<PAGE> 2
IN WITNESS WHEREOF, said surviving corporation has caused this
certificate to be signed by an authorized officer, as of the day of April, 1999.
SIMEX TECHNOLOGIES, INC.,
a Delaware corporation
By
------------------------------------
Kjell I. Jagelid
President
Attest
----------------------------------
John P. O'Brien
Secretary
[SEAL]
SIMEX/NK TECHNOLOGIES, INC.,
a Nevada corporation
By
------------------------------------
Kjell I. Jagelid
President
Attest
----------------------------------
Warren L. Traver
Secretary
[SEAL]
2
<PAGE> 3
STATE OF GEORGIA )
) ss.
COUNTY OF FULTON )
On this day of April, 1999, before me, a Notary Public in and for said
county, personally came Kjell I. Jagelid and John P. O'Brien, President and
Secretary, respectively, of Simex Technologies, Inc., a Delaware corporation,
who, being duly sworn each for himself, did depose and say that they are the
above-described officers of said corporation and did acknowledge the execution
of the foregoing instrument as their voluntary act and deed and the voluntary
act and deed of said corporation.
WITNESS my notarial seal this ___ day of April, 1999.
-------------------------------
Notary Public
My commission expires:
---------
[SEAL]
STATE OF GEORGIA )
) ss.
COUNTY OF FULTON )
On this ___ day of April, 1999, before me, a Notary Public in and for
said county, personally came Kjell I. Jagelid and Warren L. Traver, President
and Secretary, respectively, of Simex/NK Technologies, Inc., a Nevada
corporation, who, being duly sworn each for himself, did depose and say that
they are the above-described officers of said corporation and did acknowledge
the execution of the foregoing instrument as their voluntary act and deed and
the voluntary act and deed of said corporation.
WITNESS my notarial seal this ___ day of April, 1999.
-------------------------------
Notary Public
My commission expires:
---------
[SEAL]
3
<PAGE> 1
AGREEMENT OF MERGER
BETWEEN
SIMEX TECHNOLOGIES, INC.,
A DELAWARE CORPORATION,
AND
SIMEX/NK TECHNOLOGIES, INC.,
A NEVADA CORPORATION
THIS AGREEMENT OF MERGER (the "Agreement") is made and entered into as
of the 19th day of April, 1999, by and between SIMEX TECHNOLOGIES, INC.
("SIMEX"), a Delaware corporation, and SIMEX/NK TECHNOLOGIES, INC. ("SNKT"), a
Nevada corporation.
W I T N E S S E T H:
WHEREAS, SIMEX is a corporation organized and existing under the laws
of the State of Delaware, its Certificate of Incorporation having been filed in
the Office of the Secretary of State of the State of Delaware on April 6, 1999;
WHEREAS, SNKT is a corporation organized and existing under the laws of
the State of Nevada;
WHEREAS, the aggregate number of shares of common stock which SNKT has
authority to issue is Fifty Million (50,000,000) shares and the aggregate number
of shares of preferred stock which SKNT has authority to issue is Five Million
($5,000,000); and
WHEREAS, the Board of Directors of each of the constituent corporations
deems it advisable that SNKT be merged into SIMEX on the terms and conditions
hereinafter set forth, in accordance with the applicable provisions of the
statutes of the States of Delaware and Nevada respectively, which permit such
merger.
NOW, THEREFORE, in consideration of the premises and of the agreements,
covenants and provisions hereinafter contained, SIMEX and SNKT by their
respective Boards of Directors, have agreed and do hereby agree, as follows:
ARTICLE I
SURVIVING CORPORATION
SNKT and SIMEX shall be merged into a single corporation, in accordance
with applicable provisions of the laws of the State of Nevada and the State of
Delaware, by SNKT merging into SIMEX, whereby SIMEX shall be the surviving
corporation (the "Surviving Corporation"). SIMEX's name shall not be changed as
a result of the merger.
<PAGE> 2
ARTICLE II
MERGER OF CONSTITUENT CORPORATIONS
Upon the merger becoming effective as provided in the applicable laws
of the State of Nevada and of the State of Delaware (the "Effective Date of the
Merger"):
(a) The two constituent corporations shall be a single
corporation, and the separate existence of SNKT shall cease except to
the extent provided by the laws of the State of Nevada in the case of a
corporation after its merger into another corporation.
(b) The Surviving Corporation shall thereupon and thereafter
possess (i) all rights, privileges, immunities and franchises, of a
public as well as a private nature, of each of the constituent
corporations and (ii) all property, real, personal and mixed, and all
debts due of whatever account, including subscriptions to share, and
all and every other interest, of or belonging to or due to each of the
constituent corporations shall be taken and deemed to be transferred to
and vested in the Surviving Corporation without further act or deed. In
addition, the title to any real estate, or any interest therein, vested
in either constituent corporation shall not revert or be in any way
impaired by reason of the merger, and the Surviving Corporation shall
be responsible and liable for all liabilities and obligations of each
of the constituent corporations. Neither the rights of creditors nor
any liens on the property of either of the constituent corporations
shall be impaired by this merger.
(c) On the Effective Date of the merger, the board of
directors of the Surviving Corporation shall consist of the members of
the board of directors of Surviving Corporation immediately prior to
the merger, to serve thereafter in accordance with the bylaws of the
Surviving Corporation until their respective successors shall have been
duly elected and qualified in accordance with such bylaws and the laws
of the State of Delaware. In addition, on the Effective Date of the
merger, the officers of the Surviving Corporation shall be the officers
of SIMEX immediately prior to the merger, with such officers to serve
thereafter in accordance with the bylaws of the Surviving Corporation
until their respective successors shall have been duly elected and
qualified in accordance with such bylaws and the laws of the State of
Delaware.
ARTICLE III
ARTICLES OF INCORPORATION AND
BYLAWS OF SURVIVING CORPORATION
The Certificate of Incorporation of the Surviving Corporation shall not
be amended in any respect by reason of this Agreement of Merger. The bylaws of
SIMEX, on the merger becoming effective, shall be and constitute the bylaws of
the Surviving Corporation amended in the manner provided by law.
2
<PAGE> 3
ARTICLE IV
CONVERSION OF SHARES
The manner and basis of converting the outstanding shares of each of
the constituent corporations shall be as follows:
(a) Each share of common stock of SNKT outstanding on the
Effective Date of the merger shall, without any action on the part of
the holder thereof, be converted into one fully paid and nonassessable
share of common stock of the Surviving Corporation which shall, on such
conversion, be validly issued and outstanding, fully paid, and
nonassessable, and shall not be liable to any further call, nor shall
the holder thereof be liable for any further payments with respect
thereto. After the Effective Date of the merger, each holder of an
outstanding certificate which prior thereto represented shares of
common stock of SKNT shall be entitled, upon surrender thereof along
with the payment of Fifteen Dollars ($15.00) to SNKT's transfer agent,
Colonial Stock Transfer, 440 East 400 South, Suite 1, Salt Lake City,
Utah, to receive in exchange for a certificate or certificates
representing the number of whole shares of common stock of SNKT a
certificate or certificates evidencing the number of whole shares of
the Surviving Corporation. Until so surrendered, each such outstanding
certificate which represents shares of common stock of SNKT shall for
all purposes evidence the ownership of shares of the Surviving
Corporation into which such shares shall have been converted.
(b) All shares of common stock of SNKT which have been
converted into shares of common stock of the Surviving Corporation
pursuant to this Article IV shall be issued in full satisfaction of all
rights to the shares of common stock of SNKT, as applicable.
(c) If any certificate for shares of the Surviving Corporation
is to be issued in a name other than that in which the certificate
surrendered in exchange therefor is registered, it shall be a condition
of issuance thereof that (i) the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer, (ii) the
transfer be in compliance with applicable federal and state securities
laws and (iii) the person requesting such exchange shall pay to the
Surviving Corporation or any agent designated by it any transfer or
other taxes required by reason of the issuance of a certificate for
shares of the Surviving Corporation in any name other than that of the
registered holder of the certificate surrendered, or establish to the
satisfaction of the Surviving Corporation or any agent designated by it
that such tax has been paid or is not payable.
ARTICLE V
MANNER OF ADOPTION AND VOTE
The manner of adoption and vote by which the Plan of Merger was adopted
and approved by each constituent corporation is as follows:
3
<PAGE> 4
(a) ACTION BY THE SIMEX:
(i) Action by Directors. By unanimous written consent dated
as of April , 1999, the Board of Directors of SIMEX authorized the
merger and approved the substance of this Agreement.
(ii) Action by Shareholders. No shareholder approval was
required pursuant to Section 252 of the Delaware Corporate Code.
(b) ACTION BY SNKT:
(i) Action by Directors. By unanimous written consent dated
as of April 19, 1999, the Board of Directors of SNKT authorized the
merger, approved the substance of this Agreement, recommended the
merger to the shareholders and directed that this Agreement be
submitted to the shareholders entitled to vote in respect thereof to be
approved by a majority vote of the shareholders of SNKT entitled to
vote.
(ii) Action by Shareholders. A majority of the total number of
shares of the issued and outstanding capital stock of SNKT by written
consent dated as of April 19, 1999 authorized the merger and approved
the substance of this Agreement.
(c) COMPLIANCE WITH LEGAL REQUIREMENTS. The manner of the adoption
of this Agreement, and the vote by which it was adopted and approved, constitute
full legal compliance with the provisions of Delaware and Nevada corporate law
and the Articles of Incorporation and Bylaws of each constituent corporation.
[Remainder of page intentionally left blank]
4
<PAGE> 5
IN WITNESS WHEREOF, SIMEX, a Delaware corporation and SNKT, a Nevada
corporation, pursuant to the approval and authority duly given by resolutions
adopted by their respective Boards of Directors have caused this Agreement to be
executed by an authorized officer of each party thereto.
SIMEX TECHNOLOGIES, INC.,
a Delaware corporation
By
---------------------------------------
Kjell I Jagelid
President
SIMEX/NK TECHNOLOGIES, INC.,
a Nevada corporation
By
---------------------------------------
Kjell I Jagelid
President
5
<PAGE> 6
SECRETARY'S CERTIFICATE
I, Warren L. Traver, Secretary of Simex/NK Technologies, Inc., a
corporation organized and existing under the laws of the State of Nevada, hereby
certify, as such Secretary of the said corporation, that the Agreement of Merger
to which this certificate is attached, after having been first duly signed on
behalf of said corporation by an authorized officer of Simex/NK Technologies,
Inc., a corporation of the State of Nevada, was duly approved by a majority of
the shareholders of Simex/NK Technologies, Inc., pursuant to a written consent
dated as of April , 1999, that 12,808,580 shares of common stock of the
corporation were on said date issued and outstanding and that the holder of
6,750,000 shares voted in favor of said Agreement of Merger, the affirmative
vote representing at least a majority of the total number of shares of the
outstanding capital stock of the corporation, and that thereby the Agreement of
Merger was duly adopted as the act of the stockholders of Simex/NK Technologies,
Inc., and the duly adopted agreement of Simex/NK Technologies, Inc.
WITNESS my hand on behalf of Simex/NK Technologies, Inc. on this
day of April, 1999.
By
----------------------------------
Warren L. Traver
Secretary
6
<PAGE> 1
STATE OF DELAWARE
CERTIFICATE OF INCORPORATION
OF SIMEX TECHNOLOGIES, INC.
ARTICLE I
NAME
The name of this corporation is SIMEX Technologies, Inc. (the "Corporation")
ARTICLE II
REGISTERED AGENT AND OFFICE
Its registered office in the State of Delaware is to be located at 1209
Orange Street, in the City of Wilmington, County of New Castle, Zip Code 19801.
The registered agent in charge thereof is The Corporation Trust Company.
ARTICLE III
PURPOSES AND POWERS
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "GCL").
ARTICLE IV
CAPITALIZATION, PREEMPTIVE RIGHTS AND VOTING
SECTION 4.01. AUTHORIZED SHARES. The Corporation shall have authority
to issue two classes of shares to be designated respectively, "Common Stock" and
"Preferred Stock." The total number of shares which the Corporation is
authorized to issue is Fifty-Five Million (55,000,000) shares of which Fifty
Million (50,000,000) shall be Common Stock and Five Million (5,000,000) shall be
Preferred Stock. Each share of Common Stock shall have a par value of One
Thousandth of One Cent ($0.001), and each share of Preferred Stock shall have a
par value of One Thousandth of One Cent ($0.001).
The Preferred Stock authorized by the Certificate of Incorporation may
be issued from time to time in one or more series, each of which shall have such
designation(s) or title(s) as may be fixed by the board of directors of the
Corporation (the "Board of Directors") prior to the issuance of any shares
thereof. The Board of Directors is hereby authorized to fix or alter the
dividend rates, conversion rights, rights and terms of redemption, including
sinking fund provisions, the redemption price or prices, voting rights and
liquidation preferences of any wholly unissued series of Preferred Stock, and
the number of shares constituting any such series
<PAGE> 2
and the designation thereof, or any of them. The rights, powers, preferences,
limitations and restrictions, if any, accompanying such shares of Preferred
Stock shall be set forth by resolution of the Board of Directors providing for
the issue thereof prior to the issuance of any shares thereof, in accordance
with the applicable provision of the GCL. Each share of any series of Preferred
Stock shall be identical with all other shares of such series, except as to the
date from which dividends, if any, shall accrue.
SECTION 4.02. PREEMPTIVE RIGHTS. Unless otherwise determined by the
Board of Directors, no holder of shares of capital stock of the Corporation
shall, as such holder, shall have any right to purchase or subscribe for any
capital stock of any class which the Corporation may issue or sell, whether or
not exchangeable for any capital stock of the Corporation of any class or
classes, whether issued out of unissued shares authorized by this Certificate of
Incorporation as originally filed or by any amendment thereof, or out of shares
of capital stock of the Corporation acquired by it after the issue thereof; nor
unless otherwise determined by the Board of Directors in the manner provided
under the GCL, shall any holder of shares of capital stock of the Corporation,
as such holder, have any right to purchase, acquire or subscribe for any
securities which the Corporation may issue or sell whether or not convertible
into or exchangeable for shares of capital stock of the Corporation of any class
or classes, and whether or not such securities have attached or appurtenant
thereto warrants, options or other instruments which entitle the holders thereof
to purchase, acquire or subscribe for shares of capital stock of any class or
classes.
SECTION 4.03. VOTING. In the exercise of voting privileges, each holder
of shares of the capital stock of the Corporation entitled to voting rights
shall be entitled to one vote for each share held in his/her name on the books
of the Corporation. In all elections of Directors (as defined below) of the
Corporation, cumulative voting is expressly prohibited. As such, each holder of
shares of capital stock of the Corporation entitled to vote at the election of
Directors shall have the right to vote, in person or by proxy, all or any
portion of such shares for or against each individual Director to be elected and
shall not be entitled to vote for or against any one Director more than the
aggregate number of shares held by such holder which are entitled to vote on the
election of Directors. With respect to any action to be taken by the holders of
capital stock of the Corporation (the "Shareholders") as to any matter, the
affirmative vote of the holders of a majority of the shares of the capital stock
of the Corporation entitled to vote thereon and represented in person or by
proxy at a meeting of the Shareholders at which a quorum is present shall be
sufficient to authorize, affirm, ratify or consent to such action. Any action
required by the GCL to be taken at any annual or special meeting of Shareholders
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of a majority of the outstanding shares of the
capital stock of the Corporation entitled to vote thereon.
ARTICLE V
DIRECTORS
SECTION 5.01. BOARD OF DIRECTORS. The Board of Directors shall consist
of one or more members (the "Directors") who need not be residents of the State
of Delaware or Shareholders of
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the Corporation. The number of Directors of the Corporation may from time to
time be changed in accordance with the Bylaws of the Corporation (the "Bylaws")
and the GCL.
SECTION 5.02. NAMES AND ADDRESSES. The names and addresses of the
persons who are to serve as Directors until the next meeting of Shareholders or
until their successors are elected and qualified, or until their earlier death,
resignation, or removal are as follows:
Mr. Elmer Lunde
SIMEX A/S
Godesetdalen 24
N-4033 Forrus
Norway
Mr. Kjell I. Jagelid
SIMEX Technologies, Inc.
Suite 995
3475 Lenox Road, NE
Atlanta, GA 30326
Mr. Warren L. Traver
SIMEX Technologies, Inc.
Suite 995
3475 Lenox Road, NE
Atlanta, GA 30326
SECTION 5.03. LIMITATIONS ON LIABILITY OF DIRECTORS. No Director of the
Corporation shall be personally liable to the Corporation or its Shareholders
for monetary damages for an act or omission in the Director's capacity as a
Director; provided, however, that the foregoing provision shall not eliminate or
limit the liability of a Director to the extent a Director is found liable for
(a) a breach of the Director's duty of loyalty to the Corporation or its
Shareholders, (b) an act or omission not in good faith that constitutes a breach
of duty of the Director to the Corporation or an act or omission that involves
intentional misconduct or a knowing violation of the law, (c) a transaction from
which the Director received an improper benefit, whether or not the benefit
resulted from an action taken within the scope of the Director's office, or (d)
an act or omission for which the liability of the Director is expressly provided
by an applicable statute.
If the GCL or other applicable provision of Delaware law hereafter is
amended to authorize further elimination or limitation of Directors, then the
liability of a Director of the Corporation, in addition to the limitation on the
personal liability provided herein, shall be limited to the fullest extent
permitted by the GCL or other applicable provision of Delaware law as amended.
Any repeal or modification of this Section 5.03 by the Shareholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a Director of the Corporation existing
at the time of such repeal or modification.
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ARTICLE VI
SPECIAL POWERS OF BOARD OF DIRECTORS
In furtherance of, and not in limitation of the powers and authorities
conferred under the GCL, the Board of Directors is expressly authorized:
(a) To make, alter, amend and rescind the Bylaws of the
Corporation; to fix, adjust and maintain from time to time the amount
to be reserved as working capital; and to authorize and cause to be
executed mortgages and liens upon the real and personal property of the
Corporation.
(b) From time to time, to determine whether and to what extent
and at what times and places and under what conditions and provisions
the accounts and books of the Corporation shall be maintained and made
available for inspection of any Shareholder, and no Shareholder shall
have any right to inspect any account or books or records of the
Corporation, except as provided by GCL, or authorized by the Board of
Directors.
(c) If the Bylaws so provide, to designate two or more of
their number to constitute an executive committee, which committee
shall, as provided in said resolution or in the Bylaws of the
Corporation, have and exercise any or all of the powers of the Board of
Directors in the management of the business and affairs of the
Corporation, except to the extent that the GCL requires a particular
matter to be authorized by the Board of Directors.
ARTICLE VII
ADDITIONAL POWERS IN BYLAWS
The Corporation may in its Bylaws confer powers and authorities upon
the Board of Directors in addition to the foregoing and to those expressly
conferred upon them by the GCL.
ARTICLE VIII
TRANSACTIONS WITH DIRECTORS, OFFICERS AND SHAREHOLDERS
The Officers, Directors and Shareholders holding ten percent or more of
the outstanding capital stock of the Corporation ("Insiders") may enter into
business transactions with the Corporation in which they are personally
interested without such transaction being affected or invalidated solely because
of such personal interest; provided, however, that nothing contained herein
shall relieve any Insider from liability for breach of the fiduciary duties of
an Insider or authorize any Insider to enter into any transaction with the
Corporation in which such Insider has a material interest for the purpose of
personal gain to the detriment of the Corporation.
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ARTICLE IX
INDEMNIFICATION
SECTION 9.01. MANDATORY INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
Each person who was or is made a party or is threatened to be made a party to or
is involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative, any
appeal in such action, suit or proceeding, and any inquiry or investigation that
could lead to such an action, suit, or proceeding ("Proceeding"), by reason of
the fact that he/she is or was a Director or officer of the corporation, or who,
while a Director of the Corporation, is or was serving at the request of the
Corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan or other
enterprise, shall be indemnified and held harmless by the Corporation to the
fullest extent permitted by the GCL against all judgments, penalties (including
excise and similar taxes), fines, settlements, and reasonable expenses
(including attorneys' fees) actually incurred by such person in connection with
such Proceeding. Such right shall be a contract right and shall include the
right to require advancement by the Corporation of reasonable expenses
(including attorneys' fees) incurred in defending any such Proceeding in advance
of its final disposition; provided, however, that the payment of such expenses
in advance of the final disposition of such Proceeding shall be made by the
Corporation only upon delivery to the Corporation of a written affirmation by
such person of his/her good faith and belief that he/she has met the standard of
conduct necessary for indemnification under the GCL an d a written undertaking,
by or on behalf of such person, to repay all amounts so advanced if it should be
ultimately determined that such person has not satisfied such requirements.
SECTION 9.02. NATURE OF INDEMNIFICATION. The indemnification and
advancement of expenses provided for herein shall not be deemed exclusive of any
other rights permitted by law to which a person seeking indemnification may be
entitled under any Bylaw, agreement, vote of Shareholders or disinterested
Directors or otherwise, and shall continue as to a person who has ceased to be a
Director or officer of the Corporation and shall inure to the benefit of the
heirs, executors and administrators of such a person.
SECTION 9.03. INSURANCE. The Corporation shall have power to purchase
and maintain insurance or another arrangement 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, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another corporation, partnership joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise against any liability asserted against
him/her and incurred by him/her in any such capacity, or arising out of his/her
status as such, whether or not the Corporation would have the power to indemnity
him/her against such liability under the provisions of this Article Nine or the
GCL.
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ARTICLE X
AMENDMENT OF BYLAWS
The Shareholders of the Corporation hereby delegate to the Board of
Directors the power to adopt, alter, amend or repeal the Bylaws of the
Corporation. Such power shall be vested exclusively in the Board of Directors
and shall not be exercised by the Shareholders.
ARTICLE XI
POWER TO CALL SPECIAL SHAREHOLDERS' MEETINGS
Special meetings of the Shareholders of the Corporation may be called
by the President of the Corporation, the Board of Directors or holders of not
less than ten percent of all the shares entitled to vote at the proposed special
meeting of the Shareholders.
ARTICLE XII
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation or in its Bylaws in
the manner now or hereafter prescribed by the GCL or this Certificate of
Incorporation, and all rights conferred on Shareholders herein are granted
subject to this reservation.
ARTICLE XIII
INCORPORATOR
The name and mailing address of the incorporator are as follows:
Name: Robert E. Altenbach
Mailing Address: Suite 2100
225 Peachtree Street, NE
Atlanta, GA 30303
[Remainder of page intentionally left blank]
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I, the undersigned, for the purpose of forming a corporation under the
laws of the State of Delaware, do make, file and record this Certificate, and do
certify that the facts herein stated are true, and I have accordingly hereunto
set my hand this ___ day of April, 1999.
---------------------------
Robert E. Altenbach
Incorporator
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<PAGE> 1
BYLAWS
OF
SIMEX TECHNOLOGIES, INC.
ARTICLE I
OFFICES
SECTION 1.01. NAME. The name of the Corporation is SIMEX Technologies,
Inc., hereinafter referred to as the "Corporation."
SECTION 1.02. PRINCIPAL OFFICE. The principal office of the Corporation
in the State of Delaware shall be in the City of Wilmington, County of New
Castle, and the resident agent in charge thereof shall be The Corporation Trust
Company. The Corporation may change its registered office or change its
registered agent, or both, upon the filing in the Office of the Secretary of
State of Delaware of a statement setting forth the facts required by law, and
executed for the Corporation by its President or Vice President.
SECTION 1.03. OTHER OFFICES. The Corporation may have offices at such
other place or places as from time to time the Board of Directors may determine
or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.01. ANNUAL MEETINGS. The annual meeting of the stockholders
for the election of directors and for the transaction of such other business as
may come before the meeting shall be held within one hundred twenty (120) days
after the close of the fiscal year of the Corporation on a day during such
period to be selected by the Board of Directors; provided, however, that the
failure to hold the annual meeting within the designated period of time or on
the designated date shall not work a forfeiture or dissolution of the
Corporation.
SECTION 2.02. SPECIAL MEETINGS. Special meetings of the shareholders,
for any purpose or purposes, may be called by the Chairman of the Board of the
President. Special meetings of the shareholders shall be called by the President
or Secretary at the request in writing of a majority of the Board of Directors,
or at the request in writing of a majority of the Board of Directors, or at the
request in writing of shareholders owning ten percent (10%) of the capital stock
of the Corporation issued and outstanding and entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting and the business to
be transacted at any such special meeting of shareholders, and shall be limited
to the purposes stated in the notice therefor.
SECTION 2.03. PLACE OF MEETING. Each meeting of stockholders of the
Corporation, whether annual or special is to be held at the principal offices of
the Corporation or at such other
<PAGE> 2
place either within or without the State of Delaware, as may be, and shall be
held on such date and at such time and place within or specified in the notice
or waiver of notice of said meeting.
SECTION 2.04. NOTICE OF MEETINGS. Except as otherwise provided by law,
notice of each meeting of the stockholders shall be given to each stockholder of
record entitled to vote at such meeting, whether annual or special, not less
than ten (10) nor more than sixty (60) days before the day on which the meeting
is to be held, either personally or by mail, by or at the direction of the
Chairman of the Board or the President, the Secretary or a majority of the
members of the board of Directors calling the meeting. Each such notice shall
state the purpose or purposes for which the meeting is called, and the date and
time when, and the place where such meeting is to be held. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
or Air Mail, with postage thereon prepaid, addressed to the shareholder entitled
thereto at his or her address as it appears on the share transfer records of the
Corporation. Except where expressly required by law, no publication of any
notice of a meeting of stockholders shall be required. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall
attend such meeting in person or by proxy. Notice of any adjourned meeting of
the stockholders shall not be required to be given, except where expressly
required by law.
SECTION 2.05. QUORUM. At each meeting of the stockholders, the
presence, in person or by proxy, of the holders of record of a majority of the
issued and outstanding stock of the Corporation entitled to vote at such meeting
shall constitute a quorum for the transaction of business except as otherwise
provided by statute, the Certificate of Incorporation or by these Bylaws. In the
absence of a quorum, a majority in interest of the stockholders of the
Corporation present in person or by proxy and entitled to vote or, in the
absence of any stockholder entitled to vote, any officer entitled to preside at,
or act as Secretary of, such meeting, shall have the power to adjourn the
meeting from time to time, until stockholders holding the requisite amount of
stock shall be present or represented. At any such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally called. If a quorum is present at the
time of commencement of any meeting, the shareholders present at such duly
convened meeting may continue to transact any business which may properly come
before said meeting until adjournment thereof, notwithstanding the withdrawal
from such meeting of sufficient holders of the shares of Capital Stock entitled
to vote thereat to leave less than a quorum remaining.
SECTION 2.06. REQUISITE VOTE. If a quorum is present at any meeting,
the vote of the holders of a majority of the shares of capital stock having
voting power, present in person or represented by proxy, shall determine any
question brought before such meeting, unless the question is one upon which, by
express provision of the Certificate of Incorporation or of these Bylaws, a
different vote shall be required or permitted, in which case such express
provision shall govern and control the determination of such question.
SECTION 2.07. VOTING AT MEETING. Voting at meetings of shareholders
shall be conducted and exercised subject to the following procedures and
regulations:
(a) VOTING POWER. In the exercise of voting power with respect
to each matter properly submitted to a vote at any meeting of
shareholders, each shareholder of the
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capital stock of the Corporation having voting power shall be entitled
to one (1) vote for each such share held in his or her name on the
records of the Corporation, except to the extent otherwise specified by
the Certificate of Incorporation.
(b) EXERCISE OF VOTING POWER OF PROXIES. At any meeting of the
shareholders, every holder of the shares of capital stock of the
Corporation entitled to vote at such meeting may vote either in person,
or by proxy executed in writing by such shareholder. A telegram, telex,
cablegram, or similar transmission by a shareholder, or a photographic,
photostatic, facsimile, or similar reproduction of a writing executed
by a shareholder, shall be treated as an execution in writing. No proxy
shall be valid after the expiration of eleven (11) months from the date
of its execution, unless otherwise stated therein. A proxy shall be
revocable unless expressly designated therein as irrevocable and
coupled with an interest. Proxies coupled with an interest include the
appointment as proxy of: (i) pledges; (ii) a person who purchased or
agreed to purchase or owns or holds an option to purchase the shares
voted; (iii) a creditor of the Corporation who extended its credit
under terms requiring the appointment; (iv) an employee of the
Corporation whose employment contract requires the appointment; or (v)
a party to a voting agreement created under Section 218 of the Delaware
General Corporation Law, as amended. Each proxy shall be filed with the
Secretary of the Corporation prior to or at the time of the meeting.
Voting for directors shall be in accordance with the provisions of
paragraph (c) below of this Section 2.07. Any vote may be taken by
voice vote or by show of hands unless someone entitled to vote at the
meeting objects, in which case written ballots shall be used.
(c) ELECTION OF DIRECTORS. In all elections of Directors
cumulative voting shall be prohibited.
SECTION 2.08. RECORD DATE FOR MEETINGS; CLOSING TRANSFER RECORDS. As
more specifically provided in Section 8.04 hereof, the Board of Directors may
fix in advance a record date for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such record date
to be not less than ten (10) nor more than sixty (60) days prior to such
meeting, or the Board of Directors may close the share transfer records for such
purpose for a period of not less than ten (10) nor more than sixty (60) days
prior to such meeting. In the absence of any action by the Board of Directors,
the date upon which the notice of the meeting is mailed shall be deemed the
record date.
SECTION 2.09. ACTION WITHOUT MEETINGS. Any action permitted or required
to be taken at a meeting of the shareholders of the Corporation may be taken
without a meeting, without prior notice, and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by all
of the shareholders of the capital stock of the Corporation entitled to vote
with respect to the subject matter thereof, and such written consent shall have
the same force and effect as the requisite vote of the shareholders thereon. Any
such executed written consent, or an executed counterpart thereof, shall be
placed in the minute book of the Corporation. Every written consent shall bear
the date of signature of each shareholder who signs the consent.
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SECTION 2.10. RECORD DATE FOR ACTION WITHOUT MEETINGS. Unless a record
date shall have previously been fixed or determined by the Board of Directors as
provided in Section 8.04 hereof, whenever action by shareholders is proposed to
be taken by consent in writing without a meeting of shareholders, the Board of
Directors may fix a record date for the purpose of determining shareholders
entitled to consent to that action, which record date shall not precede, and
shall not be more than ten (10) days after, the date upon which the resolution
fixing the record date is adopted by the Board of Directors. If no record date
has been fixed by the Board of Directors and the prior action of the Board of
Directors is not required by statute or the Certificate of Incorporation, the
record date for determining shareholders entitled to consent to action in
writing without a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation by delivery to its registered office, its principal place of
business, or an officer or agent of the Corporation having custody of the books
in which proceedings of meetings of shareholders are recorded. Delivery shall be
by hand or by certified or registered mail, return receipt requested. Delivery
to the Corporation's principal place of business shall be addressed to the
President or principal executive officer of the Corporation. If no record date
shall have been fixed by the Board of Directors and prior action of the Board of
Directors is required by statute, the record date for determining shareholders
entitled to consent to action in writing without a meeting shall be at the close
of business on the date in which the Board of Directors adopts a resolution
taking such prior action.
SECTION 2.11. PREEMPTIVE RIGHTS. Unless otherwise determined by the
Board of Directors in the manner provided under the Delaware General Corporation
Law, as amended, no holder of shares of capital stock of the Corporation shall,
as such holder, have any right to purchase or subscribe for any capital stock of
any class which the Corporation may issue or sell, whether or not exchangeable
for any capital stock of the Corporation of any class or classes, whether issued
out of unissued shares authorized by the Certificate of Incorporation, as
amended, or out of shares of capital stock of the Corporation acquired by it
after the issue thereof; nor, unless otherwise determined by the Board of
Directors in the manner provided under the Delaware General Corporation Law, as
amended, shall nay holder of shares of capital stock of the Corporation, as such
holder, have any right to purchase, acquire or subscribe for any securities
which the Corporation may issue or sell whether or not convertible into or
exchangeable for shares of capital stock of the Corporation of any class or
classes, and whether or not any such securities have attached or appurtenant
thereto warrants, options or other instruments which entitle the holders thereof
to purchase, acquire or subscribe for shares of capital stock of any class or
classes.
SECTION 2.12. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of its stock
ledger, either directly or through a transfer agent or transfer clerk appointed
by the Board of Directors, to prepare and make, at least ten (10) days before
every meeting of the stockholders, a complete list of the stockholders entitled
to vote at such meeting, arranged in alphabetical order and showing the address
of each stockholder and the number of shares registered in the name of each
stockholder which list shall be kept on file at the registered office or
principal place of business of the Corporation for a period of not less than ten
(10) days prior to such meeting and shall be subject to inspection by any
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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 during the whole
time thereof and subject to the inspection of any stockholder present at the
meeting. Upon the willful neglect or refusal of the directors to produce such
list at any election, they shall be ineligible for any office at such election.
The original or duplicate stock ledger shall be the only evidence as to the
identity of the stockholders entitled to examine such list or transfer ledger or
the books of the Corporation or to vote in person or by proxy at such election.
SECTION 2.13. JUDGES OF ELECTION. The Board of Directors may appoint
judges of election to serve at any election of directors and at balloting on any
other matter that may properly come before a meeting of stockholders. If no such
appointment shall be made, or if any of the judges so appointed shall fail to
attend, or refuse or be unable to serve, then such appointment may be made by
the presiding officer at the meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. GENERAL POWERS. The property, affairs and business of the
Corporation shall be managed by or under the direction of the Board of
Directors.
SECTION 3.02. NUMBER, ELECTION, QUALIFICATIONS AND TERM OF OFFICE. The
number of directors shall be as fixed from time to time by resolution of the
Board of Directors or stockholders (any such resolution of either the Board of
Directors or stockholders being subject to the later resolution of either of
them) provided, however, no decrease shall have the effect of shortening the
term of any incumbent Director. Directors need not be residents of the State of
Delaware nor shareholders of the Corporation. Until changed as provided herein,
the initial Board of Directors and all subsequent boards of directors shall
consist of that number of directors set forth in the Certificate of
Incorporation. Except as otherwise provided in the Certificate of Incorporation
or in these Bylaws, directors shall be elected by a plurality of the votes of
the stockholders entitled to vote at each meeting of stockholders for the
election of a director or directors. Cumulative voting in the election of
Directors is expressly prohibited. Directors need not be stockholders. Each
director shall hold office until his or her successor shall have been duly
elected and qualified, or until his or her death, or until he or she shall
resign, or until he or she shall have been removed in the manner hereinafter
provided.
SECTION 3.03. RESIGNATION. Any director of the Corporation may resign
at any time by giving written notice to the President or to the Secretary of the
Corporation. The resignation of any director shall take effect at the time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 3.04. REMOVAL OF DIRECTORS. Any director or the entire Board of
Directors may be removed, either with or without cause, at any time by the
holders of a majority of the shares then entitled to vote at an election of
directors provided notice of intention to act upon such matter shall have been
given in the notice calling such meeting. Any vacancy in the Board of Directors
caused by any such removal may be filled by a plurality of the votes of the
stockholders at such meeting, or, if the stockholders shall fail to fill such
vacancy, by the Board of Directors.
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SECTION 3.05. VACANCIES. Any vacancy in the Board of Directors caused
by death, resignation, disqualification, removal, an increase in the number of
directors, or any other cause, may be filled by the affirmative vote of a
majority of the remaining directors (though less than a quorum), unless filled
by the stockholders pursuant to Section 3.02 hereof; and each director so chosen
shall hold office until his or her successor shall be duly elected and qualified
or until his or her earlier death, resignation or removal.
SECTION 3.06. NEW DIRECTORSHIPS. Any directorship to be filled by
reason of an increase in the number of Directors actually serving as such shall
be filled by election at an annual meeting of the shareholders or at a special
meeting of shareholders called for that purpose, or by the Board of Directors
for a term of office continuing only until the next election of one or more
Directors by the shareholders, provided that the Board of Directors may not fill
more than two (2) such directorships during the period between any two (2)
successive annual meetings of shareholders.
SECTION 3.07. PLACE OF MEETINGS, ETC. Except as otherwise specifically
provided by law, the Board of Directors may hold its meetings at the principal
office or place of business of the corporation or such place within or without
the State of Delaware as may be specified in the respective notices, or waivers
of notice, thereof.
SECTION 3.08. ANNUAL MEETING. The Board of Directors shall meet each
year immediately after the annual meeting of the shareholders, at the place
where such meeting of the shareholders has been held (either within or without
the State of Delaware), for the purpose of organization, election of officers,
and consideration of any other business that may properly be brought before the
meeting. No notice of any kind to either old or new members of the Board of
Directors for such annual meeting shall be required.
SECTION 3.09. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such time and such place or places as
shall from time to time be determined.
SECTION 3.10. SPECIAL MEETINGS; NOTICE. Special meetings of the Board
of Directors shall be held whenever called by the President or by the Chairman
of the Board. At least three (3) calendar days before the day on which any
special meeting is to be held, notice of such meeting shall be sent to each
director by first class mail, addressed to him or her at his or her residence or
usual place of business, or shall be sent to him or her at such place via
facsimile or shall be delivered personally or by telephone at least one day
before the day on which the meeting is to be held. Each such notice shall state
the time and place of the meeting but need not state the purposes thereof,
except as otherwise herein expressly provided. Notice of any meeting of the
Board of Directors need not be given to any director who shall be present at
such meeting or who shall, either before or after such meeting, waive notice of
such meeting in writing; and any meeting of the Board of Directors shall be a
legal meeting without any notice thereof having been given if all of the
directors of the Corporation then in office shall be present thereat.
SECTION 3.11. NOTICE AND WAIVER OF NOTICE. Attendance of a Director at
any meeting shall constitute a waiver of notice of such meeting, except where a
Director attends for the express purpose of objecting to the transaction of any
business because the meeting is not
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lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular meeting of the Board of Directors need be specified in
the notice or waiver of notice of such meeting.
SECTION 3.12. QUORUM AND MANNER OF ACTING. Except as otherwise provided
by statute or by these Bylaws, a majority of the total number of directors shall
be required to constitute a quorum for the transaction of business at any
meeting, and the act of a majority of the directors present at any meeting at
which a quorum shall be present shall be the act of the Board of Directors. In
the absence of a quorum, a majority of the directors present may adjourn any
meeting from time to time until a quorum be had. Notice of any adjourned meeting
need not be given, except as required by law.
SECTION 3.13. REMUNERATION. By appropriate resolution of the Board of
Directors, the Directors may be reimbursed their expenses, if any, of attendance
at each meeting of the Board of Directors and may be paid a fixed sum (as
determined from time to time by the vote of a majority of the Directors then in
office) for attendance at each meeting of the Board of Directors or a stated
salary as Director. Nothing herein contained shall be construed so as to
preclude any director from serving the Corporation in any other capacity and
receiving remuneration therefor.
SECTION 3.14. ACTION WITHOUT MEETING. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board or
of such committee, as the case may be, consent thereto in writing and such
writing or writings are filed with the minutes of proceedings of the Board or
committee.
SECTION 3.15. MAINTENANCE OF RECORDS. The Directors may keep the books
and records of the Corporation, except such as are required by law to be kept
within the State, outside the State of Delaware or at such place or places as
they may, from time to time, determine.
SECTION 3.16. INTERESTED DIRECTORS AND OFFICERS. No contract or other
transaction between the Corporation and one or more of its Directors or
officers, or between the Corporation and any firm of which one or more of its
Directors or officers are members or employees, or in which they are interested,
or between the Corporation and any corporation or association of which one or
more of its Directors or officers are shareholders, members, directors,
officers, or employees, or in which they are interested, shall be void or
voidable solely for this reason, solely because of the presence of such Director
or Directors or officer or officers at the meeting of the Board of Directors of
the Corporation, which acts upon, or in reference to, such contract, or
transaction, or solely because his, her or their votes are counted for such
purpose, if (a) the material facts of such relationship or interest shall be
disclosed or known to the Board of Directors and the Board of Directors shall,
nevertheless in good faith, authorize, approve and ratify such contract or
transaction by a vote of a majority of the Directors present, such interested
Director or Directors to be counted in determining whether a quorum is present,
but not to be counted in determining calculating the majority of such quorum
necessary to carry such vote; (b) the material facts of such relationship or
interest as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by the vote of the shareholders; or (c) the
contract or transaction is fair to the Corporation as of the time it is
authorized, approved or ratified by the
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Board of Directors, a committee thereof or the shareholders. The provisions of
this Section shall not be construed to invalidate any contract or other
transaction which would otherwise be valid under the common and statutory law
applicable thereto.
SECTION 3.17. TELEPHONIC MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
subsection shall constitute presence in person at such meeting.
ARTICLE IV
COMMITTEES
SECTION 4.01. DESIGNATION OF COMMITTEES, ALTERNATE MEMBERS AND TERM OF
OFFICE. The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, including an executive committee,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who, in the order specified by the Board, may replace any
absent or disqualified member at any meeting of the committee. In the absence or
disqualification of a member or members of a committee, and in the event there
are not sufficient alternate members present at such meeting, the member or
members thereof, including alternates, present at any meeting and not
disqualified from voting, whether or not he, she or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. The term of
office of the members of each committee shall be as fixed from time to time by
the Board, subject to these Bylaws; provided, however, that any committee member
who ceases to be a member of the Board shall ipso facto cease to be a committee
member. Each committee shall appoint a secretary, who may be the Secretary of
the Corporation or any Assistant Secretary thereof.
SECTION 4.02. POWERS OF COMMITTEES. Any committee designated by the
Board of Directors pursuant to Section 4.01 hereof, to the extent provided in
the resolution of the Board of Directors, shall have and may exercise such of
the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation as the Board of Directors may direct and
delegate, except, however, those matters which are required by statute to be
reserved unto or acted upon by the entire Board of Directors.
SECTION 4.03. MEETINGS, NOTICES AND RECORDS. Each committee may provide
for the holding of regular meetings, with or without notice, and may fix the
time and place at which such meetings shall be held. Special meetings of each
committee shall be held upon call by or at the direction of its chairman or, if
there be no chairman, by or at the direction of any two of its members, at the
time and place specified in the respective notices or waivers of notice thereof.
Notice of each special meeting of a committee shall be mailed to each member of
such committee, addressed to him or her at his or her residence or usual place
of business, at least one day before the day on which the meeting is to be held,
or shall be sent by facsimile addressed to him or her at such place, or
telephoned or delivered to him or her personally, not later than the
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day before the day on which the meeting is to be held. Notice of any meeting of
a committee need not be given to any member thereof who shall attend the meeting
in person or who shall waive notice thereof in writing. Notice of any adjourned
meeting need not be given. Each committee shall keep a record of its proceedings
and report the same to the Board of Directors when required.
SECTION 4.04. ACTION WITHOUT MEETINGS. Any action required or permitted
to be taken at a meeting of any committee may be taken without a meeting if a
consent in writing, setting forth the action so taken, is signed by all members
of such committee. Such consent shall have the same force and effect as a
unanimous vote at a meeting. The signed consent, or a signed copy, shall become
a part of the record of such committee.
SECTION 4.05. QUORUM AND MANNER OF ACTING. At each meeting of any
committee the presence of one-third of its members then in office shall be
necessary and sufficient to constitute a quorum for the transaction of business,
and the act of a majority of the members present at any meeting at which a
quorum is present shall be the act of such committee; in the absence of a
quorum, a majority of the members present at the time and place of any meeting
may adjourn the meeting from time to time until a quorum shall be present.
Subject to the foregoing and other provisions of these Bylaws and except as
otherwise determined by the Board of Directors, each committee may make rules
for the conduct of its business. Any determination made in writing and signed by
all the members of such committee shall be as effective as if made by such
committee at a meeting.
SECTION 4.06. RESIGNATIONS. Any member of a committee may resign at any
time by giving written notice of such resignation to the Board of Directors, the
President or the Secretary of the Corporation. Unless otherwise specified in
such notice, such resignation shall take effect upon receipt thereof by the
Board or any such officer.
SECTION 4.07. REMOVAL. Any member of any committee may be removed at
any time by the Board of Directors with or without cause.
SECTION 4.08. VACANCIES. If any vacancy shall occur in any committee by
reason of death, resignation, disqualification, removal or otherwise, the
remaining members of such committee, though less than a quorum, shall continue
to act until such vacancy is filled by the Board of Directors.
SECTION 4.09. COMPENSATION. Appropriate compensation for members and
alternate members of any committee appointed pursuant to the authority hereof
may be authorized by the action of a majority of the entire Board of Directors
pursuant to the provisions of Section 3.13 hereof.
SECTION 4.10. RESPONSIBILITY. Notwithstanding any provision to the
contrary herein, the designation and appointment of a committee and the
delegation of authority to it shall not operate to relieve the Board of
Directors, or any member or alternate member thereof, of any responsibility
imposed upon it or him by law.
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ARTICLE V
NOTICES
SECTION 5.01. METHOD OF NOTICE. Whenever under the provisions of the
Delaware General Corporation Law or of the Certificate of Incorporation or of
these Bylaws, notice is required to be given to any Director or shareholder, it
shall not be construed to mean personal notice, but such notice may be given in
writing, by mail, addressed to such Director or shareholder, at his or her
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States Mail. Notice to Directors or
shareholders may also be given by telegram.
SECTION 5.02. WAIVER. Whenever any notice is required to be given under
the provisions of the Delaware General Corporation Law or under the provisions
of the Certificate of Incorporation or these Bylaws, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice. Attendance by such person or persons, whether in person or by proxy, at
any meeting requiring notice shall constitute a waiver of notice of such
meeting, except as provided in Section 3.11 hereof.
ARTICLE VI
OFFICERS
SECTION 6.01. NUMBER. The officers of the Corporation shall be a
President, one or more Vice Presidents, a Secretary, a Treasurer and, if the
Board shall so elect, such other officers and agents as may be appointed by the
Board of Directors pursuant to Section 6.04 hereof. No officer or agent need to
be a shareholder of the Corporation or a resident of Delaware. No officer or
agent is required to be a Director, except the Chairman of the Board. Any two or
more offices may be held by the same person. No officer or agent need to be a
shareholder of the Corporation or a resident of Delaware. No officer or agent is
required to be a Director, except the Chairman of the Board.
SECTION 6.02. ELECTION, TERM OF OFFICE. The officers shall be elected
annually by the Board of Directors and, except in the case of officers appointed
in accordance with the provisions of Section 6.04 hereof, each shall hold office
until the next annual election of officers or until his or her successor shall
have been duly elected and qualified, or until his or her death, or until he or
she shall resign, or until he or she shall have been removed in the manner
hereinafter provided.
SECTION 6.03. AUTHORITY. Officers and agents shall have such authority
and perform such duties in the management of the Corporation as are provided in
these Bylaws or as may be determined by resolution of the Board of Directors not
inconsistent with these Bylaws.
SECTION 6.04. OTHER OFFICERS. The Corporation may have such other
officers and agents as may be deemed necessary by the Board of Directors,
including without limitation one or more
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Assistant Vice Presidents, one or more Assistant Secretaries and one or more
Assistant Treasurers. Such other officers and agents shall be appointed in such
manner, have such duties and hold their offices for such terms as may be
determined by the Board of Directors. The Board of Directors may delegate to any
officer or agent the power to appoint any such subordinate officers or agents
and to prescribe their respective terms of office, authorities and duties.
SECTION 6.05. RESIGNATIONS. Any officer may resign at any time by
giving written notice of his or her resignation to the Board of Directors, to
the President or to the Secretary of the Corporation. Unless otherwise specified
in such written notice, any such resignation shall take effect at the time of
receipt thereof by the Board of Directors or any such officer.
SECTION 6.06. REMOVAL. Any officer specifically designated in Section
6.0l hereof may be removed, either with or without cause, by a vote of a
majority of the whole Board of Directors. Any officer or agent appointed in
accordance with the provisions of Section 6.03 hereof may be removed, either
with or without cause, by the Board of Directors at any meeting, by the vote of
a majority of the directors present at such meeting, or by any superior officer
or agent upon whom such power of removal shall have been conferred by the Board
of Directors. Such removal shall be without prejudice to the contract rights, if
any, of the person so removed. Election or appointment of an officer or agent
shall not itself create contract rights.
SECTION 6.07. VACANCIES. A vacancy in any office by reason of death,
resignation, removal or any other cause shall be filled for the unexpired
portion of the term by the Board of Directors.
SECTION 6.08. COMPENSATION. The compensation of all officers and agents
of the Corporation shall be fixed from time to time by the Board of Directors.
SECTION 6.09. CHAIRMAN OF THE BOARD. If a Chairman of the Board is
elected, he or she shall be chosen from among the Directors and shall be the
chief executive and principal officer of the Corporation. He or she shall have
the power to call special meetings of the shareholders and of the Directors for
any purpose or purposes, and he or she shall preside at all meetings of the
shareholders and of the Board of Directors, unless he or she shall be absent or
unless he or she shall, at his or her election, designate the President to
preside in his or her stead. The Chairman of the Board shall be responsible for
the operations and business affairs of the Corporation and shall possess all of
the powers granted by the Bylaws to the President, including the power to make
and sign contracts and agreements in the name and on behalf of the Corporation.
He or she shall, in general, have supervisory power over the President and all
other officers and the business activities of the Corporation, subject to the
discretion of the Board of Directors.
SECTION 6.10. THE PRESIDENT. Subject to the supervision of the Chairman
of the Board, or in the absence of the election of a Chairman of the Board, the
President shall be the chief executive officer of the Corporation and shall
preside at all meetings of the stockholders and of the Board of Directors and of
the Executive Committee at which he or she shall be present. He or she shall see
that all orders and resolutions of the Board of Directors are carried into
effect. He or she may sign, with the Secretary or any other officer thereunto
duly authorized by the Board of Directors, certificates for shares of stock of
the Corporation, deeds, mortgages, bonds,
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contracts, agreements or other instruments duly authorized by the Board of
Directors except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent.
From time to time he or she shall report to the Board of Directors all matters
within his or her knowledge which the interests of the Corporation may require
to be brought to their attention. The President shall do and perform all such
other duties and may exercise such other powers as from time to time may be
assigned to him or her by these Bylaws or by the Board of Directors or by the
Executive Committee. The officers of the Corporation shall be responsible to the
President for the proper and faithful discharge of their several duties and
shall make such reports to him or her as he or she may from time to time
require.
SECTION 6.11. THE VICE PRESIDENTS. In the event of the death, absence,
unavailability or disability of the President or at the request of the
President, the Vice President or, in case there shall be more than one Vice
President, the Vice President designated by the President (or in the absence of
such designation, the Vice President designated by the Board of Directors) shall
perform all the duties of the President and, when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the President. Except
where by law the signature of the President is required, each of the Vice
Presidents shall possess the same power as the President to sign all
certificates, contracts, obligations and other instruments of the Corporation.
Any Vice President shall perform such other duties and may exercise such other
powers as from time to time may be assigned to him or her by these Bylaws or by
the Board of Directors or by the Executive Committee or by the President.
SECTION 6.12. THE ASSISTANT VICE PRESIDENTS. The Assistant Vice
Presidents shall exercise such powers as may be assigned to them from time to
time by the Board of Directors or by the Executive Committee or by the
President.
SECTION 6.13. THE SECRETARY AND THE ASSISTANT SECRETARIES. The
Secretary shall:
(a) Keep the minutes of the meetings of the stockholders, the
Board of Directors and the Executive Committee, and cause the same to
be recorded in books provided for that purpose;
(b) Prepare, or cause to be prepared, and submit to the
Chairman of each meeting of the stockholders a certified list, in
alphabetical order, of the names of the stockholders entitled to vote
at such meeting, together with the number of shares of stock held by
each;
(c) See that all notices are duly given in accordance with
the provisions of these Bylaws or as required by statute;
(d) Be custodian of the records of the Corporation, the Board
of Directors and the Executive Committee, and of the seal of the
Corporation; see that the seal is affixed to all stock certificates
prior to their issuance and to all documents the execution of which on
behalf of the Corporation under its seal shall have been duly
authorized, and attest the seal when so affixed;
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(e) See that all books, reports, statements, certificates and
the other documents and records required by law to be kept or filed are
properly kept or filed;
(f) In general, perform all duties and have all powers
incident to the office of the Secretary and perform such other duties
and have such other powers as from time to time may be assigned to him
or her by these Bylaws or by the Board of Directors or by the
President;
(g) Whenever any committee shall be appointed in pursuance of
a resolution of the Board of Directors, furnish the chairman of such
committee with a copy of such resolution;
(h) Have charge of the stock and transfer books of the
Corporation, and exhibit such stock book at all reasonable times to
such persons as are entitled by statute to have access thereto; and
(i) Sign (unless the Treasurer or any Assistant Secretary or
an Assistant Treasurer shall sign) certificates representing stock of
the Corporation the issuance of which shall have been duly authorized
(the signature to which may be a facsimile signature).
At the request of the Secretary, or in his or her absence or
disability, any Assistant Secretary shall perform any of the duties of the
Secretary and, when so acting, shall have all the powers of, and be subject to
all the restrictions upon, the Secretary. Except where by law the signature of
the Secretary is required, each of the Assistant Secretaries shall possess the
same power as the Secretary to sign certificates, contracts, obligations and
other instruments of the Corporation, and to affix the seal of the Corporation
to such instruments, and attest the same. In addition, 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 or her signature. The Assistant
Secretaries shall perform such other duties as from time to time may be assigned
to them respectively by the Board of Directors, the President or the Secretary.
SECTION 6.14. THE TREASURER AND THE ASSISTANT TREASURERS. The Treasurer
shall:
(a) Have charge of and supervision over and be responsible
for the funds, including the borrowing thereof, the securities,
receipts and disbursements of the Corporation;
(b) Cause all moneys and other valuable effects of the
Corporation to be deposited in the name and to the credit of the
Corporation in such banks or trust companies or with such bankers or
other depositaries as shall be selected by the Board of Directors or
Executive Committee, or pursuant to authority conferred by the Board of
Directors or Executive Committee;
(c) Cause the funds of the Corporation to be disbursed by
checks or drafts upon the authorized depositaries of the Corporation;
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(d) Cause to be taken and preserved proper vouchers for all
moneys disbursed;
(e) Cause to be kept correct books of account of all the
business and transactions of the Corporation and upon application cause
such books of account to be exhibited to any director;
(f) Render to the President, the Board of Directors or the
Executive Committee, whenever requested, an account of the financial
conditions of the Corporation and of his or her transactions as
Treasurer;
(g) Be empowered, from time to time, to require from the
officers or agents of the Corporation reports or statements giving such
information as he or she may desire with respect to any and all
financial transactions of the Corporation;
(h) Sign (unless the Secretary or an Assistant Secretary or
an Assistant Treasurer shall sign) certificates representing stock of
the Corporation the issuance of which shall have been duly authorized
(the signature to which may be a facsimile signature); and
(i) In general, perform all duties and have all powers
incident to the office of Treasurer and perform such other duties and
have such other powers as from time to time may be assigned to him or
her by these Bylaws or by the Board of Directors or by the President.
At the request of the Treasurer or, in his or her absence or
disability, the Assistant Treasurer or, in case there shall be more than one
Assistant Treasurer, the Assistant Treasurer designated by the Board of
Directors or by the Executive Committee or by the President shall perform any of
the duties of the Treasurer and, when so acting, shall have all the powers of,
and be subject to all the restrictions upon, the Treasurer. Except where by law
the signature of the Treasurer is required, each of the Assistant Treasurers
shall possess the same power as the Treasurer to sign all certificates,
contracts, obligations and other instruments of the Corporation. The Assistant
Treasurers shall perform such other duties as from time to time may be assigned
to them respectively by the Board of Directors, the President or the Treasurer.
SECTION 6.15. SALARIES. The salaries of the officers shall be fixed
from time to time by the Board of Directors, except that the Board of Directors
may delegate to any person the power to fix the salaries or other compensation
of any officers or agents appointed in accordance with the provisions of Section
6.04 hereof. No officer shall be prevented from receiving such salary by reason
of the fact that he or she is also a director of the Corporation.
SECTION 6.16. SURETY BONDS. If the Board of Directors shall so require,
any officer or agent of the Corporation shall execute to the Corporation a bond
in such sum and with such surety or sureties as the Board of Directors may
direct, conditioned upon the faithful discharge of his or her duties, including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his or her hands.
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ARTICLE VII
CONTRACTS, CHECKS, LOANS, DEPOSITS AND PROXIES
SECTION 7.01. CONTRACTS, CHECKS, ETC. All contracts and agreements
authorized by the Board of Directors, and all checks, drafts, bills of exchange
or other orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the Corporation shall be signed by such
officer or officers, or agent or agents, as may from time to time be designated
by the Board of Directors, which designation may be general or confined to
specific instances. The President or a Vice President and the Treasurer shall
have the power and authority to bind the Corporation by contract or engagement
or to pledge its credit or to render it liable pecuniarily for any purpose or
for any amount; and no other officer, agent or employee of the Corporation shall
have any such power and authority unless so designated by the Board of Directors
or in or pursuant to the provisions of these Bylaws.
SECTION 7.02. PROXIES IN RESPECT OF SECURITIES OF OTHER CORPORATIONS.
Unless otherwise provided by resolution adopted by the Board of Directors, the
President or a Vice President may from time to time appoint an attorney or
attorneys, or an agent or agents, to exercise in the name and on behalf of the
Corporation the powers and rights which the Corporation may have as the holder
of stock or other securities in any other corporation to vote or to consent in
respect of such stock or other securities; and the President or any Vice
President may instruct the person or persons so appointed as to the manner of
exercising such powers and rights and the President or any Vice President may
execute or cause to be executed in the name and on behalf of the Corporation and
under its corporate seal, or otherwise, all such written proxies, powers of
attorney or other written instruments as he or she may deem necessary in order
that the Corporation may exercise such powers and rights.
SECTION 7.03. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to its credit in such banks or
trust companies or with such bankers or other depositaries as the Board of
Directors may select, or as may be selected by any officer or officers or agent
or agents authorized so to do by the Board of Directors. Endorsements for
deposit to the credit of the Corporation in any of its duly authorized
depositaries shall be made in such manner as the Board of Directors from time to
time may determine.
ARTICLE VIII
CERTIFICATES OF STOCK
SECTION 8.01. FORM; SIGNATURE. The shares of the capital stock of the
Corporation shall be represented by certificates in the form approved by the
Board of Directors and signed in the name of the Corporation by the President or
a Vice President and the Secretary or an Assistant Secretary of the Corporation
and sealed with the seal of the Corporation or a facsimile thereof. The
certificates of stock of the Corporation shall be numbered and shall be entered
in the books of the Corporation as they are issued. They shall exhibit the
holder's name and number of shares and class of shares and the designation of
the series, if any, which such certificate represents and such other matters as
required by law. At such time as the Corporation may be authorized to issue
shares of more than one class or any class in series, every certificate shall
set forth upon the
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face or back of such certificate a statement of the designations, preferences,
limitations and relative rights of the shares of each class or series authorized
to be issued, as required by the laws of the State of Delaware.
SECTION 8.02. DELIVERY. Every holder of the capital stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation by the President or a Vice President and the Secretary or an
Assistant Secretary of the Corporation, certifying the class of capital stock
and the number of shares represented thereby as owned or held by such
shareholder in the Corporation.
SECTION 8.03. TRANSFER. Transfers of stock shall be made on the books
of the Corporation only by the person named in the certificate or by his or her
attorney, lawfully constituted in writing, and upon surrender of the certificate
therefor.
SECTION 8.04. RECORD DATES. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may, in its discretion, fix, in
advance, a record date, which shall be not more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. If the share transfer records are not closed and no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, or shareholders entitled to receive a
distribution (other than a distribution involving a purchase or redemption by
the Corporation of any of its own shares) or a share dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the Board
of Directors declaring such distribution or share dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
Only those stockholders of record on the date so fixed shall be entitled to any
of the foregoing rights, notwithstanding the transfer of any such stock on the
books of the Corporation after any such record date fixed by the Board of
Directors. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 8.05. CLOSING OF TRANSFER BOOKS. The Board of Directors may
close the transfer books in its discretion for a period not exceeding sixty (60)
days preceding any meeting, annual or special, of the stockholders or the day
appointed for the payment of a dividend.
SECTION 8.06. RECORD OWNER. Prior to due presentment for registration
of transfer of a certificate evidencing shares of the capital stock of the
Corporation in the manner set forth in Section 8.08 hereof, the Corporation
shall be entitled to recognize the person registered as the owner of such shares
on its records (or the records of its duly appointed transfer agent, as the case
may be) as the person exclusively entitled to vote, to receive notices and
dividends with respect to, and otherwise exercise all rights and powers relative
to such shares; and the Corporation shall not be bound or otherwise obligated to
recognize any claim, direct or indirect,
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legal or equitable, to such shares by any other person, whether or not it shall
have actual, express or other notice thereof, except as otherwise provided by
the laws of Delaware.
SECTION 8.07. LOST CERTIFICATES. Any person claiming a certificate of
stock to be lost or destroyed shall make an affidavit or affirmation of that
fact and advertise the same in such manner as the Board of Directors may
require, and shall if the directors so require give the Corporation a bond of
indemnity, in form and with one or more sureties satisfactory to the Board of
Directors, in at least double the value of the stock represented by said
certificate, whereupon a new certificate may be issued of the same tenor and for
the same number of shares as the one alleged to be lost or destroyed. In
addition, all requests for replacement certificates must be given before the
Corporation has notice that the certificate has been acquired by a purchaser for
value in good faith and without notice of an adverse claim and any such requests
must satisfy any other reasonable requirements imposed by the Corporation. In
the event a certificate has been lost, apparently destroyed or wrongfully taken,
and the registered owner of record fails to notify the Corporation within a
reasonable time after he or she has notice of such loss, destruction, or
wrongful taking, and the Corporation registers a transfer (in a manner
hereinbelow set forth) of the shares represented by the certificate before
receiving such notification, such prior registered owner of record shall be
precluded from making any claim against the Corporation for the transfer
required hereunder or for a new certificate.
SECTION 8.08. REGISTRATION OF TRANSFERS. Subject to the provisions
hereof, the Corporation shall register the transfer of a certificate evidencing
shares of its capital stock presented to it for transfer if:
(a) ENDORSEMENT. Upon surrender of the certificate to the
Corporation (or its transfer agent, as the case may be) for transfer,
the certificate (or an appended stock power) is properly endorsed by
the registered owner, or by his or her duly authorized legal
representative or attorney-in-fact, with proper written evidence of the
authority and appointment of such representative, if any, accompanying
the certificate; and
(b) GUARANTY AND EFFECTIVENESS OF SIGNATURE. The signature of
such registered owner or his or her legal representative or
attorney-in-fact, as the case may be, has been guaranteed by a national
banking association or member of the New York Stock Exchange, and
reasonable assurance in a form satisfactory to the Corporation is given
that such endorsements are genuine and effective; and
(c) ADVERSE CLAIMS. The Corporation has no notice of an
adverse claim or has otherwise discharged any duty to inquire into such
a claim; and
(d) COLLECTION OF TAXES. Any applicable law (local, state or
federal) relating to the collection of taxes relative to the
transaction has been complied with; and
(e) ADDITIONAL REQUIREMENTS SATISFIED. Such additional
conditions and documentation as the Corporation (or its transfer agent,
as the case may be) shall reasonably require, including without
limitation thereto, the delivery with the surrender of such stock
certificate or certificates of proper evidence of succession,
assignment or other authority to obtain transfer thereof, as the
circumstances may require, and such
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legal opinions with reference to the requested transfer as shall be
required by the Corporation (or its transfer agent) pursuant to the
provisions of these Bylaws and applicable law, shall have been
satisfied.
SECTION 8.09. RESTRICTIONS ON TRANSFER AND LEGENDS ON CERTIFICATES.
(a) SHARES IN CLASSES OR SERIES. If the Corporation is
authorized to issue shares of more than one class, the certificate
shall set forth, either on the face or back of the certificate, a full
or summary statement of all of the designations, preferences,
limitations, and relative rights of the shares of each such class and,
if the Corporation is authorized to issue any preferred to special
class in series, the variations in the relative rights and preferences
of the shares of each such series so far as the same have been fixed
and determined, and the authority of the Board of Directors to fix and
determine the relative rights and preferences of subsequent series. In
lieu of providing such a statement in full on the certificate, a
statement on the face or back of the certificate may provide that the
Corporation will furnish such information to any shareholder without
charge upon written request to the Corporation at its principal place
of business or registered office and that copies of the information are
on file in the office of the Secretary of State.
(b) RESTRICTION ON TRANSFER. Any restrictions imposed or
agreed to by the Corporation on the sale or other disposition of its
shares and on the transfer thereof must be copied at length or in
summary form on the face, or so copied on the back and referred to on
the face, of each certificate representing shares to which the
restriction applies. The certificate may, however, state on the face or
back that such a restriction exists pursuant to a specified document
and that the Corporation will furnish a copy of the document to the
holder of the certificate without charge upon written request to the
Corporation at its principal place of business.
(c) PREEMPTIVE RIGHTS. Any preemptive rights of a shareholder
to acquire unissued or treasury shares of the Corporation which are
limited or denied by the Certificate of Incorporation must be set forth
at length on the face or back of the certificate representing shares
subject thereto. In lieu of providing such a statement in full on the
certificate, a statement on the face or back of the certificate may
provide that the Corporation will furnish such information to any
shareholder without charge upon written request to the Corporation at
its principal place of business and that a copy of such information is
on file in the office of the Secretary of State.
(d) UNREGISTERED SECURITIES. Any security of the Corporation,
including, among others, any certificate evidencing shares of the
Common Stock or warrants to purchase Common Stock of the Corporation,
which is issued to any person without registration under the Securities
Act of 1933, as amended, or the Blue Sky laws of any state, shall not
be transferable until the Corporation has been furnished with a legal
opinion of counsel with reference thereto, satisfactory in form and
content to the Corporation and its counsel, to the effect that such
sale, transfer or pledge does not involve a violation of the Securities
Act of 1933, as amended, or the Blue Sky laws of any state having
jurisdiction. The certificate representing the security shall bear
substantially the following legend:
18
<PAGE> 19
THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAW BUT HAVE BEEN ACQUIRED FOR THE
PRIVATE INVESTMENT OF THE HOLDER HEREOF AND MAY NOT
BE OFFERED, SOLD OR TRANSFERRED UNTIL EITHER (I) A
REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR
SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE
BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE
CORPORATION SHALL HAVE RECEIVED AN OPINION OF COUNSEL
ACCEPTABLE TO THE CORPORATION AND ITS COUNSEL THAT
REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED OFFER, SALE OR TRANSFER.
ARTICLE IX
DIVIDENDS
SECTION 9.01. DISTRIBUTIONS. Subject to the provisions of the Delaware
General Corporation Law, as amended, and the Certificate of Incorporation,
distributions of the Corporation shall be declared and paid pursuant to the
following regulations:
(a) DECLARATION OF PAYMENT. Distributions on the issued and
outstanding shares of capital stock of the Corporation may be declared
by the Board of Directors at any regular special meeting and may be
paid in cash, in property, or in shares of capital stock. Such
declaration and payment shall be at the discretion of the Board of
Directors.
(b) RECORD DATE. The Board of Directors may fix in advance a
record date for the purpose of determining shareholders entitled to
receive payment of any distribution, such record date to be not more
than sixty (60) days prior to the payment date of such distribution, or
the Board of Directors may close the stock transfer books for such
purpose for a period of not more than sixty (60) days prior to the
payment date of such distribution. In the absence of action by the
Board of Directors, the date upon which the Board of Directors adopts
the resolution declaring such distribution shall be the record date.
SECTION 9.02. RESERVES. There may be created by resolution of the Board
of Directors out of the surplus of the Corporation such reserve or reserves as
the Directors from time to time, in their discretion, think proper to provide
for contingencies, or to equalize distributions, or to repair or maintain any
property of the Corporation, or for such other purposes as the Directors shall
think beneficial to the Corporation, and the Directors may modify or abolish any
such reserve in the manner in which it was created.
SECTION 9.03. BOOKS AND RECORDS. The Corporation shall maintain books
and records of account and shall prepare and maintain minutes of the proceedings
of its shareholders, its
19
<PAGE> 20
Board of Directors and each committee of its Board of Directors. The Corporation
shall keep at its registered office or principal place of business, or at the
office of its transfer agent or registrar, a record of the original issuance of
shares issued by the Corporation and a record of each transfer of those shares
that have been presented to the Corporation for registration of transfer. Such
records shall contain the names and addresses of all past and present
shareholders of the Corporation and the number and class of shares issued by the
Corporation held by each of them.
SECTION 9.04. ANNUAL STATEMENT. The Board of Directors shall present at
or before each annual meeting of shareholders a full and clear statement of the
business and financial condition of the Corporation, including a reasonably
detailed balance sheet and income statement under current date.
SECTION 9.05. CONTRACTS AND NEGOTIABLE INSTRUMENTS. Except as otherwise
provided by law or these Bylaws, any contract or other instrument relative to
the business of the Corporation may be executed and delivered in the name of the
Corporation and on its behalf by the Chairman of the Board, the Chief Executive
Officer, or the Chief Operating Officer, if any, or the President of the
Corporation. The Board of Directors may authorize any other officer or agent of
the Corporation to enter into any contract or execute and deliver any contract
in the name and on behalf of the Corporation, and such authority may be general
or confined to specific instances as the Board of Directors may determine by
resolution. All bills, notes, checks or other instruments for the payment of
money shall be signed or countersigned by such officer, officers, agent or
agents and in such manner as are permitted by these Bylaws and/or as, from time
to time, may be prescribed by resolution of the Board of Directors. Unless
authorized to do so by these Bylaws or by the Board of Directors, no officer,
agent or employee shall have any power or authority to bind the Corporation by
any contract or engagement, or to pledge its credit, or to render it liable
pecuniarily for any purpose or to any amount.
ARTICLE X
RELIANCE ON RECORDS AND REPORTS
Each director, officer or member of any committee designated by, or by
authority of, the Board of Directors shall, in the performance of his or her
duties, be fully protected in relying in good faith upon the books of account or
other records of the Corporation or of any of its subsidiaries or upon reports
made to the Corporation or any of its subsidiaries by any official of the
Corporation or of a subsidiary or by an independent certified public accountant
or by an appraiser selected with reasonable care by the Board of Directors or by
any such committee.
ARTICLE XI
CORPORATE SEAL
The corporate seal shall be circular in form and shall bear the name of
the Corporation and words and figures denoting its organization under the laws
of the State of Delaware and otherwise shall be in such form as shall be
approved from time to time by the Board of Directors. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in nay manner
reproduced.
20
<PAGE> 21
ARTICLE XII
FISCAL YEAR
The fiscal year of the Corporation shall be such twelve (12) month
period of each calendar year as may be fixed from time to time by resolution of
the Board of Directors.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice whatsoever is required to be given by these Bylaws
or the Certificate of Incorporation of the Corporation or any of the corporate
laws of the State of Delaware, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE XIV
INDEMNIFICATION
SECTION 14.01. MANDATORY INDEMNIFICATION. Each person who was or is
made a party or is threatened to be made a party, or who was or is a witness
without being named a party, to any threatened, pending or completed action,
claim, suit or proceeding, whether civil, criminal, administrative or
investigative, any appeal in such an action, suit or proceeding, and any inquiry
or investigation that could lead to such an action, suit or proceeding (a
"Proceeding"), by reason of the fact that such individual is or was a Director
officer of the Corporation, or while a Director or officer of the Corporation is
or was serving at the request of the Corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar functionary
of another corporation, partnership, trust, employee benefit plan or other
enterprise, shall be indemnified and held harmless by the Corporation from and
against any judgments, penalties (including excise taxes), fines, amounts paid
in settlement and reasonable expenses (including court costs and attorneys'
fees) actually incurred by such person in connection with such Proceeding if it
is determined that he or she acted in good faith and reasonably believed (a) in
the case of conduct in his or her official capacity on behalf of the Corporation
that his or her conduct was in the Corporation's best interests, (b) in all
other cases, that his or her conduct was not opposed to the best interests of
the Corporation, and (c) with respect to any Proceeding which is a criminal
action, that he or she had no reasonable cause to believe his or her conduct was
unlawful; provided, however, that in the event a determination is made that such
person is liable to the Corporation or is found liable on the basis that
personal benefit was improperly received by such person, the indemnification is
limited to reasonable expenses actually incurred by such person in connection
with the Proceeding and shall not be made in respect of any Proceeding in which
such person shall have been found liable for willful or intentional misconduct
and/or gross negligence in the performance of his or her duty to the
Corporation. The termination of any Proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself be determinative of whether the person did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any proceeding which is a
criminal action, had no
21
<PAGE> 22
reasonable cause to believe that his or her conduct was unlawful. A person shall
be deemed to have been found liable in respect of any claim, issue or matter
only after the person shall have been so adjudged by a court of competent
jurisdiction after exhaustion of all appeals therefrom.
SECTION 14.02. DETERMINATION OF INDEMNIFICATION. Any indemnification
under the foregoing Section 14.01 (unless ordered by a court of competent
jurisdiction) shall be made by the Corporation only upon a determination that
indemnification of such person is proper in the circumstances by virtue of the
fact that it shall have been determined that such person has met the applicable
standard of conduct. Such determination shall be made (a) by a majority vote of
a quorum consisting of Directors who at the time of the vote are not named
defendants or respondents in the Proceeding; (b) if such quorum cannot be
obtained, by a majority vote of a committee of the Board of Directors,
designated to act in the matter by a majority of all Directors, consisting
solely of two (2) or more Directors who at the time of the vote are not named
defendants or respondents in the Proceeding; (c) by special legal counsel (in a
written opinion) selected by the Board of Directors or a committee of the Board
of Directors by a vote as set forth in subsection (a) or (b) of this Section,
or, if such quorum cannot be obtained and such committee cannot be established,
by a majority vote of all Directors (in which Directors who are named defendants
or respondents in the Proceeding may participate, or (d) by the shareholders of
the Corporation in a vote that excludes the shares held by Directors who are
named defendants or respondents in the Proceeding.
SECTION 14.03. ADVANCE OF EXPENSES. Reasonable expenses, including
court costs and attorneys' fees, incurred by a person who was or is a witness or
who was or is named as a defendant or respondent in a Proceeding, by reason of
the fact that such individual is or was a Director or officer of the
Corporation, or while a Director or officer of the Corporation is or was serving
at the request of the Corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another
corporation, partnership, trust employee benefit plan or other enterprise, shall
be paid by the Corporation at reasonable intervals in advance of the final
disposition of such Proceeding, and without the determination specified in the
foregoing Section 14.02, upon receipt by the Corporation of a written
affirmation by such person of his or her good faith belief that he or she has
met the standard of conduct necessary for indemnification under this Article 14,
and a written undertaking by or on behalf of such person to repay the amount
paid or reimbursed by the Corporation if it is ultimately determined that he or
she is not entitled to be indemnified by the Corporation as authorized in this
Article 14. Such written undertaking shall be an unlimited obligation of such
person and it may be accepted without reference to financial ability to make
repayment.
SECTION 14.04. PERMISSIVE INDEMNIFICATION. The Board of Directors of
the Corporation may authorize the Corporation to indemnify employees or agents
of the Corporation, and to advance the reasonable expenses of such persons, to
the same extent, following the same determinations and upon the same conditions
as are required for the indemnification of and advancement of expenses to
Directors and officers of the Corporation.
SECTION 14.05. NATURE OF INDEMNIFICATION. The indemnification and
advancement of expenses provided hereunder shall not be deemed exclusive of any
other rights to which those seeking indemnification may be entitled under the
Certificate of Incorporation, these Bylaws, any agreement, vote of shareholders
or disinterested Directors or otherwise, both as to actions taken in an official
capacity and as to actions
22
<PAGE> 23
taken in any other capacity while holding such office, shall continue as to a
person who has ceased to be a Director, officer, employee or agent of the
Corporation and shall inure to the benefit of the heirs, executors and
administrators of such person.
SECTION 14.06. INSURANCE. The Corporation shall have the power and
authority to purchase and maintain insurance or another arrangement on behalf of
any person who is or was a Director, officer, employee or agent of the
Corporation, or who is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan or other
enterprise against any liability, claim, damage, loss or risk asserted against
such person and incurred by such person in any such capacity or arising out of
the status of such person as such, irrespective of whether the Corporation would
have the power to indemnify and hold such person harmless against such liability
under the provisions hereof. If the insurance or other arrangement is with a
person or entity that is not regularly engaged in the business of providing
insurance coverage, the insurance or arrangement may provide for payment of a
liability with respect to which the Corporation would not have the power to
indemnity the person only if including coverage for the additional liability has
been approved by the shareholders of the Corporation. Without limiting the power
of the Corporation to procure or maintain any kind of insurance or other
arrangement, the Corporation may, for the benefit of persons indemnified by the
Corporation, (a) create a trust fund; (b) establish any form of self-insurance;
(c) secure its indemnity obligation by grant of a security interest or other
lien on the assets of the Corporation; or (d) establish a letter of credit,
guaranty, or surety arrangement. The insurance or other arrangement may be
procured, maintained, or established within the Corporation or with any insurer
or other person deemed appropriate by the Board of Directors regardless of
whether all or part of the stock or other securities of the insurer or other
person are owned in whole or in part by the Corporation. In the absence of
fraud, the judgment of the Board of Directors as to the terms and conditions of
the insurance or other arrangement and the identity of the insurer or other
person participating in the arrangement shall be conclusive and the insurance or
arrangement shall not be voidable and shall not subject the Directors approving
the insurance or arrangement to liability, on any ground, regardless of whether
Directors participating in the approval are beneficiaries of the insurance or
arrangement.
SECTION 14.07. NOTICE. Any indemnification or advance of expenses to a
present or former director of the Corporation in accordance with this Article 14
shall be reported in writing to the shareholders of the Corporation with or
before the notice or waiver of notice of the next shareholders' meeting or with
or before the next submission of a consent to action without a meeting and, in
any case, within the next twelve (12) month period immediately following the
indemnification or advance.
ARTICLE XV
AMENDMENTS
The Bylaws of the Corporation, regardless of whether made by the
stockholders or by the Board of Directors, may be amended, added to or repealed
at any meeting of the Board of
23
<PAGE> 24
Directors or of the stockholders provided that notice of the proposed
alteration, amendment or repeal be contained in the notice of such meeting. No
change of the time or place for the annual meeting of the stockholders for the
election of directors shall be made except in accordance with the laws of the
State of Delaware.
ADOPTED as the Bylaws of the Corporation on this __ day of April, 1999.
24
<PAGE> 1
EXHIBIT 21
LIST OF SUBSIDIARIES
OF
SIMEX TECHNOLOGIES, INC.
- - SIMEX Capital Corp., a corporation duly organized on October 27, 1998,
and validly existing under the laws of the State of Georgia.
- - SIMEX Resources Group, Inc., a corporation duly organized on August 24,
1998, and validly existing under the laws of the State of Georgia.
- - SIMEX Energy Services Group, Inc., a corporation duly organized on
August 24, 1998, and validly existing under the laws of the State of Georgia.
- - SIMEX AS, Organization No. 937 454 104, a limited company duly
organized and validly existing under the laws of Norway.
- SIMEX AS is the sole shareholder of the following entities:
- Hordaror AS, Organization No. 963 070 098, a limited
company duly organized and validly existing under the
laws of Norway.
- Weld Tech AS, Organization No. 961 931 681, a limited
company duly organized and validly existing under the
laws of Norway.
- Vest Norge Doors AS, Organization No. 977 054 370, a
limited company duly organized and validly existing
under the laws of Norway.
- Simex Simcom UK, a limited company duly organized and
validly existing under the laws of the United
Kingdom.
- SIMEX AS is the minority shareholder of the following
entities:
- Fifty-six percent (56%) shareholder of Jotronic Data
AS, Organization No., 963 530 323, a limited company
duly organized and validly existing under the laws of
Norway.
- Forty percent (40%) shareholder of Unitron Data AS,
Organization No. 965 513 280, a limited company duly
organized and validly existing under the laws of
Norway.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SIMEX TECHNOLOGIES FOR THE YEAR ENDED DECEMBER 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 877
<SECURITIES> 0
<RECEIVABLES> 6,037
<ALLOWANCES> 70
<INVENTORY> 3,043
<CURRENT-ASSETS> 9,971
<PP&E> 7,747
<DEPRECIATION> 2,158
<TOTAL-ASSETS> 20,946
<CURRENT-LIABILITIES> 9,412
<BONDS> 3,434
0
0
<COMMON> 13
<OTHER-SE> 7,058
<TOTAL-LIABILITY-AND-EQUITY> 20,946
<SALES> 24,403
<TOTAL-REVENUES> 24,403
<CGS> 20,757
<TOTAL-COSTS> 20,757
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105
<INCOME-PRETAX> 1,128
<INCOME-TAX> 377
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 751
<EPS-BASIC> .06
<EPS-DILUTED> .06
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SIMEX TECHNOLOGIES FOR THE YEAR ENDED DECEMBER 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 13,740
<TOTAL-REVENUES> 13,740
<CGS> 12,418
<TOTAL-COSTS> 12,418
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31
<INCOME-PRETAX> 381
<INCOME-TAX> 168
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 213
<EPS-BASIC> .02
<EPS-DILUTED> .02
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SIMEX TECHNOLOGIES FOR THE 3 MONTHS ENDED MARCH 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,100
<SECURITIES> 0
<RECEIVABLES> 5,345
<ALLOWANCES> 66
<INVENTORY> 3,373
<CURRENT-ASSETS> 9,852
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,521
<CURRENT-LIABILITIES> 9,886
<BONDS> 3,314
0
0
<COMMON> 13
<OTHER-SE> 6,785
<TOTAL-LIABILITY-AND-EQUITY> 20,521
<SALES> 8,265
<TOTAL-REVENUES> 8,265
<CGS> 6,747
<TOTAL-COSTS> 6,747
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 113
<INCOME-PRETAX> (149)
<INCOME-TAX> 15
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (164)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SIMEX TECHNOLOGIES FOR THE 3 MONTHS ENDED MARCH 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 3,433
<TOTAL-REVENUES> 3,433
<CGS> 2,836
<TOTAL-COSTS> 2,836
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29
<INCOME-PRETAX> 183
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
