U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUER
PURSUANT TO SECTION 12 (B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934
AUTOLOGOUS WOUND THERAPY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 23-2958959
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1527 BOWMAN ROAD, SUITE G
LITTLE ROCK, ARKANSAS 72211
(501) 225-8400
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
DENNIS G. HENDREN
PRESIDENT AND CHIEF OPERATING OFFICER
1523 BOWMAN ROAD, SUITE A
LITTLE ROCK, ARKANSAS 72211
(501) 225-8400
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, $.0001 Par Value
(Title of Class)
<PAGE>
FORWARD-LOOKING STATEMENTS
The Company's management cautions readers that certain
important factors may affect the Company's actual results
and could cause such results to differ materially from any
forward-looking statements that may be deemed to have been
made in this Form 10-SB or that are otherwise made by or on
behalf of the Company. For this purpose, any statements
contained in the Form 10-SB that are not statements of
historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the
foregoing, words such as"may," "expect," "believe,"
"anticipate," "intend," "could," "estimate,""plans," or
"continue" or the negative or other variations thereof or
comparable terminology are intended to identify forward-
looking statements. Factors that may affect the Company's
results include, but are not limited to, the Company's lack
of operating history, its ability to produce additional
products, governmental regulation of its proprietary wound
therapy, the availability of third party payment or
reimbursement for its wound care therapy, its need for
additional financing and competition. Any forward-looking
statements in this report should be evaluated in light of
the important risk factors contained in this registration
statement. The Company is also subject to other risks
detailed herein or that will be set forth from time to time
in the Company's filings with the Commission. FOR A COMPLETE
UNDERSTANDING OF SUCH FACTORS, THIS ENTIRE DOCUMENT,
INCLUDING THE FINANCIAL STATEMENTS AND THE ACCOMPANYING
NOTES, SHOULD BE READ IN ITS ENTIRETY.
PART I.
ITEM 1. BUSINESS.
OVERVIEW
Autologous Wound Therapy, Inc. (the "Company") is a
Delaware corporation formed on April 29, 1998. Formerly
known as Informatix Holdings, Inc., the Company is the
successor in interest by merger of Music and Entertainment
Network, Inc., a Nevada corporation, which had previously
been named Blue Grizzly Truck, Inc., Sable Palm Airways,
Inc. and U. S. Retail, Inc. The Company is the surviving
corporation in a merger between Informatix Holdings, Inc.
and Autologous Wound Therapy, Inc., an Arkansas corporation
formed December 11, 1998 ("Old AWT"), pursuant to a Plan and
Agreement of Merger and Reorganization dated October 22,
1999 (the "Merger").
<PAGE>
The Merger was consummated on November 4, 1999 with Old
AWT being merged with and into the Company. In the merger,
each share of issued and outstanding Old AWT common stock
was converted into fifty (50) shares of Company common stock
and fifty (50) shares of the Company's Series B convertible
preferred stock after giving effect to a 1:2 reverse common
stock split on the Company's common stock effective
November 8, 1999. Simultaneous with the consummation of
the merger, the name of the surviving corporation was changed
to Autologous Wound Therapy, Inc.
The Company was originally intended to serve as a public
shell company, defined as an inactive publically-quoted
company with nominal assets and liabilities. It was intended
that such a public shell would be attractive to privately-
held companies, such as Old AWT, interested in becoming
publicly traded by means of a business combination with
the Company rather that by offering their own securities to
the public. Prior to the Merger, the Company did not
engage in any business of any kind. From 1996 to January 13
1998, the Company was inactive and had its corporate charter
revoked by the Secretary of State of Nevada. On January 14,
1998, all of the Company's outstanding filing fees, licenses
and penalties were paid and the Company's charter was
reinstated.
Prior to the Merger, the Company's most recent activity had
been the execution of a letter of intent in March, 1999, to
acquire 100% of the outstanding common stock of Videonet
Corporation in exchange for certain convertible preferred
stock. Negotiations with respect to the purchase of
Videonet Corporation were discontinued and, at that time,
the Company was pursuing other viable operating businesses
or enterprises. On October 22, 1999, the Company entered
into the Plan and Agreement of Merger and Reorganization
with Old AWT and consumated the merger on November 4, 1999.
Old AWT was formed on December 11, 1998, to develop, market
and sell a proprietary system for the treatment for chronic
wounds. By virtue of the Merger, the Company continues
the business conducted by Old AWT to develop, market and
sell a proprietary system for the treatment for chronic
wounds using the AuTolo-Cure TM System (the Business ).
<PAGE>
THE AUTOLO-CURE TM SYSTEM
Webster's defines "autologous" as " derived from the
same individual". Prior to forming Old AWT, Charles
Worden ("Worden"), the inventor of AuTolo-Gel TM, was
engaged in research and development of autologous products
for the treatment of wounds. The AuTolo-Cure TM system is
based upon the use of a process developed by Worden for the
application of an autologous platelet-rich concentrated gel
to chronic wounds. The process removes platelets from the
individual, applies a process developed by Worden to create
AuTolo-Gel TM and then applies the gel to the wound. By
using the patient's own platelets to create the gel, the
system is an autologous process. The Company intends to
market and sell its proprietary system for the treatment of
chronic wounds presently identified by the servicemark,
AuTolo-Cure TM ("the AuTolo-Cure TM system") . The
process is identified by the servicemarks, AUTOLOGOUS
PLATELET GEL TM and AuTolo-Gel TM. The AuTolo-Cure TM
system will be used by physicians and other health
<PAGE>
facilities and providers to treat various types of chronic
wounds.
A chronic wound is defined as a wound of three or more
months duration. The three foremost types of chronic wounds
are diabetic ulcers, venous stasis wounds and pressure sores
(such as bedsores). People suffering from these afflictions
are commonly affected by debilitating diseases (i.e.
diabetes) that affect the circulatory system, resulting in a
decreased ability to heal through the body's natural
mechanism. The result is a chronic, nonhealing wound that,
should its progression not be controlled, could lead to
amputation and, ultimately, death. The AuTolo-Cure TM
system is a designed to be a turnkey package that will
enable a qualified health care provider to use the AuTolo-
Gel TM product in the treatment of chronic wounds. In the
sense of "turnkey," the Company will provide the user with
the machine necessary to remove the patients blood platelets,
the disposable products used in that process, the components
necessary to formulate the AuTolo-GEL TM, the wound dressings
to be applied after the treatment and the necessary training,
licensing and support of the user and it's personnel. The
AuTolo-Cure TM system will consist of the lease of a
machine, an agreement to purchase a monthly minimum number
of packs (disposable blood recovery components required for
each application of AuTolo-Gel TM), training, authorization
and licensing in the preparation of AuTolo-Gel TM, state-of-
the-art wound care software (optional) and ongoing technical
support by the Company's wound care professionals.
THE CHRONIC WOUND CARE MARKET
The chronic wound care market is estimated to be in
excess of $ 6.2 billion annually. It is estimated that
there were as many as 67,000 chronic wound-related
amputations in 1998 in the United States alone. Management
believes that with the aging population, these diseases and
wounds are on the rise and are expected to continue
impacting the health care market at an increased rate of
nearly 10% a year. Management also believes that
traditional methods of treatment (inert dressings,
whirlpools, etc.) have had limited effectiveness in treating
chronic wounds. Recently, advances in biotechnologies have
made the possibility of proactive therapies and produced an
alternative to traditional methods of treatment. Health
care manufacturers have invested large sums of money and
attention in the proactive market. The health care system,
as it turns more toward managed care from fee-for-service,
is demanding more cost effective means of treatment and
personnel interaction. The outpatient industry, and health
care as a whole, is being affected by changing reimbursement
environments. The traditional methods of chronic wound
<PAGE>
treatment call for frequent dressing changes and personnel
interaction to control infection and advancement.
Management believes that the proactive approach, in part,
has the potential of not only accelerating healing rates,
but also providing relief to the traditional labor-intensive
treatments.
The Company believes that the chronic wound market is
best suited for introduction to AuTolo-GelTM The three most
common types of chronic wounds are diabetic foot ulcers,
venous stasis ulcers, and decubitus ulcers (bedsores).
Following are some facts and estimates regarding these most
common types of chronic wounds:
Diabetic Foot Ulcers
Diabetes mellitus is a group of diseases
characterized by high levels of blood glucose
as a result of defects in insulin secretion
or insulin action. The US estimates are that
15.7 million people, or 5.9% of the
population, have diabetes. There are four
types of diabetes:
Type 1
Previously called insulin dependent
diabetes mellitus (IDDM) or juvenile-
onset diabetes. Type 1 diabetes may
account for 5% to 10% of all diagnosed
cases. Generally, risk factors of Type
1 diabetes are less than Type 2.
Type 2
Previously called non insulin-dependent
diabetes mellitus (NIDDM) or adult-onset
diabetes. It is believed that Type 2
diabetes accounts for up to 95% of all
diagnosed cases in the U.S. African-
Americans, Native American Indians and
Pacific Islanders are at particularly
high risk for Type 2 diabetes. Risk
factors include older age, obesity,
family history and race/ethnicity. This
type has a greater risk for developing
chronic ulcers.
<PAGE>
Type 3
Gestational diabetes.
Type 4
All other specific types.
Complications of diabetes include heart
disease, stroke, blindness, high blood
pressure, kidney disease, nervous system
disease, amputations (from ulcers, etc.) and
others. Treatments such as education and
prevention knowledge are more prevalent today
as the disease is on the increase. There is
currently no cure for diabetes.
It has been estimated that Type 1 diabetic
patients spend over $1 billion on insulin,
consume $300 million in bandages and
dressings, and account for $1.2 billion in
nursing services on an annual basis.
Worldwide estimates of the foot ulcer market
are as follows:
Patients
US Europe ROW* TOTAL
___________________________________________________________
750,000 980,000 1.1 million 2.8 million
($ Spent $450 million $590 million $400 million $1.4 billion
annually)
* Rest of World
The large manufacturing companies, such as
Johnson & Johnson, Smith & Nephew, Chiron and
<PAGE>
3M dominate the market for products for the
treatment of foot ulcers. With diabetes on
the rise and an increasing and aging
population, the number of annual foot ulcers
is expected to increase. As stated earlier,
the changing environment and the need for
better treatments is expected to continue to
fuel a change from traditional (inert) to a
proactive philosophy. AuTolo-Gel. TM, the
Company believes, can be used in the
treatment of foot ulcers, improving cost
containment and treatment efficacy.
Venous stasis ulcers (VSUs)
Several elements and diseases may contribute
to VSUs. Typically they occur just above the
ankles on sedentary elderly people. Blood
flow becomes sluggish, leading to skin cell
deaths. As the skin cells die from oxygen
starvation brought on by poor circulation, an
open wound is left with a poor chance of
healing. Management believes that the market
should, under current treatment regimens,
continue to grow for the same population
issues as the diabetic ulcer market. Some
worldwide annual estimates for the VSU market
are:
Patients
US Europe ROW* TOTAL
__________________________________________________________
800,000 980,000 1.9 million 3.6 million
($ Spent $730 million $820 million $1.4 billion $2.9 billion
annually)
* Rest of World
The VSU market is expected to be an early
target for the Company. Management believes
that AuTolo-Gel TM may be applicable to a
greater percentage of venous stasis patients
than diabetics, as there appear to be less
symptoms of disease that may exclude them
<PAGE>
from treatment.
The Company is attempting to develop a joint
study program utilizing AuTolo-Gel TM on VSUs
with a nationally recognized teaching
institution. Although the cooperative
program is yet to be finalized, management is
hopeful that the study could begin within a
few months.
Decubitus ulcers
Decubitus ulcers (bedsores) form when the
skin is under pressure via immobility for
10-12 hours. Normally healthy people tend
to move throughout the night, keeping the
blood flow balanced. Paraplegics and immobile
elderly people lack the ability to shift body
weight on their own, and thus account for
the vast percentage of decubitus ulcers.
Again due to the aging population, the
decubitus ulcer market is expected to grow at
an increased rate relative to the other main
chronic wound types. The 55 and over segment
of the US population is anticipated to grow
at an estimated 2.5 times the rate of the
general population in the next six years.
Nursing home bed capacity (US) is 1.7
million, with an average occupancy of 90%.
Some estimates indicate that up to 60% of the
nursing home population (not to mention
hospital and home patients) have open
bedsores at any one time. Management
believes that the problem is immense, as
generally the rest of the world's elderly
care is, on the average, less than that in
the U.S. Some of the worldwide market
estimates are:
Patients
US Europe ROW* TOTAL
_________________________________________________________
690,000 900,000 4.5 million 6.1 million
($ Spent $220 million $285 million $1.4 billion $1.9 billion
annually)
* Rest of World
<PAGE>
Management believes that many nursing home
patients are too advanced in age and/or malnutrition to
make good candidates for treatment with AuTolo-Gel. TM
. The market is almost entirely dominated by
traditional dressings. Prevention regimens are still
the best deterrent. Because of the proactive status of
AuTolo-Gel TM, the treatment involving venous entry
(which may not be possible on some nursing home
patients) and nutrition playing a major role in
healing, the Company believes this market to be the
least likely of the three for initial entry. However,
management believes that there is a certain percentage
of these people that can benefit from AuTolo-Gel TM .
The Company intends to integrate long term care
facilities into the early stage marketing plan.
These three markets represent the bulk of the
chronic wound market as a whole. The combined
estimates from these sources are: 12.5 million annual
patients accounting for $6.2 billion in annual health
care dollars. At this time, management believes that
there is no other product available on the market that
employs the amount of growth factors and is autologous.
The Company believes that, if its case studies and
marketing efforts prove successful, AuTolo-Gel TM will
become widely accepted as a cost-effective and
successful alternative to other treatments for chronic
wounds.
MARKETING PLAN
Autologous Wound Therapy, Inc., as a developing
entity, is just beginning to enter the initial
marketing stages. The Company will initially self-
market. From the home office in Little Rock,
management believes that the Company can have a
potential sales presence covering Arkansas, Eastern
Oklahoma, Southern Missouri, Southern Kansas, Northern
Texas, Louisiana, Northern Mississippi, and Eastern
Tennessee, without additional personnel.
The Company intends to market the AuTolo-Cure TM
system by means of providing end-users (health care
providers and facilities) with AuTolo -Cure License
packages. The License package consists of sequestration
machine used to isolate platelets, an agreement to
purchase a set monthly minimum number of packs
(disposable blood recovery components required for each
<PAGE>
application of AuTolo-Gel. TM ), training,
authorization and licensing in the preparation of
AuTolo-Gel TM, state-of-the-art wound care software
software (optional) and ongoing technical support by
the Company's wound care professionals.
Management anticipates the AuTolo -Cure Licenses
will have a term of three years, with renewal
capability. The AuTolo -Cure License will provide a
facility with the ability to prepare and administer
AuTolo-Gel TM to its patients within its own location
in a turnkey manner. The license will be a non-
exclusive arrangement; however, in some areas, an
exclusive market license package may be offered.
Management believes that this method of product
implementation will be cost-effective and attractive,
as existing physicians and personnel will be utilized,
eliminating outsourced, high-expense management
contracts. The Company has executed licenses in Texas,
Arkansas and is negotiating other licenses for the
AuTolo-Cure TM system.
The company intends to grant development rights to
certain agents authorizing the agents to market the
AuTolo-Cure TM system on behalf of the Company. Agents
will present potential candidates for licensing to the
Company for consideration and the Company will
determine whether or not to grant such license in its
sole and absolute discretion. The company intends to
pay a commission of approximately twenty-eight percent
(28%) of the intial license fees received to the
developer that is responsible for presenting the
licensee to the Company. A potential licensee may
purchase multiple licenses based upon the number
sequestration machines needed at the licensee's
facility. Each license only includes the authoitity
to use one sequestration machine.
The Company's marketing strategy is to reach all
levels of wound care providers. The traditional
targets of hospitals and large specialty facilities are
part of the Company's targeted markets; however,
management believes that these entities are subject to
significant amounts of corporate and regulatory
requirements, such that it generally take some time for
such organization to make and implement a decision.
The Company has identified additional potential end-
users that are not traditionally targeted and believes
that a strategy of approaching them with a state of the
art, turnkey system as a catalyst into the larger
targets is an efficient means of obtaining market share
for its process.
<PAGE>
The chronic wound care market has been broken down
into three segments, which are being developed
simultaneously by the Company:
1. Global Marketing Partners
This segment includes the large manufacturing
companies, pharmaceuticals and major health care
concerns.
2. Hospitals and Wound Care Providers
This segment includes acute care facilities,
<PAGE>
wound care centers, nursing homes, wound care
provider chains and companies.
3. Private Operators
Including home health service companies, family
practitioners, podiatrists, private practice
groups and potential start-up initiatives.
Because of the potential offered by each segment
and the operational strategy of the Company, an initial
entry plan has been developed for each.
Global Marketing Partners
The Company is currently exploring the possibility
of securing one or more marketing partners in this
segment. Because of the obvious reasons of existing
sales forces and customer bases, as well as resources
for product protection, the Company believes that a
strategic partnering would be the quickest route to
worldwide market. The wound care industry appears to
be shifting focus from traditional methods of wound
care to new, proactive approaches. Currently, the
Company has contacted two such entities and serious
discussions are ongoing with one. A partnership or
strategic alliance would likely involve a licensing of
the AuTolo-Cure System and AuTolo-Gel in exchange for
an initial licensing fee and continuing royalties on
future sales and revenues. The Company intends to
continue these efforts.
Hospitals and Wound Care Providers
The American Hospital Association reports that
there are approximately 6,100 hospitals in the United
States which collectively operate 1,035,390 staffed
beds with admissions in excess of 33,500,000 in 1998.
The total expenses of these AHA registered hospitals in
1998 was in excess of $340,000,000,000.00.
The Company has devised, what it believes, the
best route into these end-users relative to the nature
of the business. The plan contains two parts, phase A
and phase B.
<PAGE>
Phase A
Several hospitals with wound care centers are now
being approached with a user-friendly, 90-day, no
further obligation review period of AuTolo-Gel.
TM Under the plan, a targeted facility will be
given the chance to review the efficacy of AuTolo-
Gel TM for 90 days with minimum pack usage
obligations. The Company will provide the machine
and technicians for production of AuTolo-Gel TM at
the facility. The physician or attending
personnel will apply the gel to the selected wound
care patients.
After the 90-day period, the Phase A participants
will be afforded the opportunity to become fully
certified and licensed as AuTolo -Cure facilities.
Because of the high-profile status of the phase A
targets, and their affiliations with hundreds of
additional facilities, management believes that
the trickle-down effect from these hospitals
will be significant, thus allowing further
licensing of the AuTolo -Cure system.
Phase B
Phase B includes the licensing and further
contracting with hospitals and wound treatment
centers following Phase A and further AuTolo -Cure
license marketing efforts. As the corporate
goals of additional documentation and wide
recognition of the product are met, it is
anticipated that the rigors of a 90-day review
period will not be necessary and Phases A and
B will be merged and hospitals and wound
treatment centers will immediately acquire
licensing for the AuTolo -Cure system.
The Company continues to evaluate the need for a
Phase A program given the clinical results and
acceptance of the AuTolo -Cure System. It is likely
that the Phase A program would be discontinued prior to
<PAGE>
December 31, 2000.
Private Operators
In the Company's initial test marketing efforts in
Arkansas, it is apparent that there is a major market
available in the private sector. Private
practitioners, such as family doctors, podiatrists and
home health care providers have shown very high
interest in AuTolo-Gel TM and the AuTolo -Cure system.
These physicians and service providers are seeing the
vast number of the patients with wounds prior to their
being referred to acute care facilities. With access to
the latest technology, the potential of retaining
patients, increasing patient base and new treatment
opportunities, management believes that the potential
income stream from an AuTolo -Cure license can be
extremely attractive to the private practitioners.
In the case of the individual practitioners and
podiatrists, the largest drawback is the number of
patients seen that could benefit from AuTolo-Gel TM .
Although these professionals are seeing the largest
percentage of wounds prior to the hospitals, the number
of patients is spread out among many providers. For
example, a single podiatrist may see 40 to 60 patients
annually who are potential cases for AuTolo-Gel TM.
When multiplied by ten area podiatrists, there would be
a combined total of 400 to 600 potential cases within a
geographic area. The potential individual cases of 40
to 60 are not enough to sustain an AuTolo-Cure TM
license, but the combined cases would be more than
sufficient.
In order to address this dispersion of potential
AuTolo-Gel TM patients among multiple providers, the
Company is considering the possibility of licensing
private operators such as home health providers. A
private operator in any given area could make the
process available to multiple private facilities by
means of mobile AuTolo -Cure units. The machine and
necessary packs, as well as ancillary equipment, are
portable (they fit in the back seat of a compact car)
and through proper scheduling, a single unit could
serve several facilities.
In addition to the private physician offices,
management believes that nursing homes are a viable
target market for private operators. Notwithstanding
<PAGE>
the possible limitations to treatment in the decubitus
market (as described above), management feels that the
possibility of drawing patients from this environment
is significant. Nursing homes generally have staff
doctors providing the health care needs of the
patients. These doctors may prescribe AuTolo-Gel TM
treatment. Possible civil liability, regulatory fines
and censures regarding bedsores may overshadow
reimbursement issues for a nursing home. AuTolo-Gel TM
may be a way to address these exposures for nursing
homes.
Home health companies are also part of the private
operator market for AuTolo-Gel TM. Management believes
that home health companies treating patients with
chronic wounds spend significant amounts on nursing
through daily regimens of dressing changes. The put
it on and leave it alone protocols of AuTolo-Gel TM
may provide a major positive impact on operating
expenses while increasing the efficacy of treatment.
Management believes that some additional
incentives are:
* Quick route to market
* New treatment and revenue capability (physicians)
in a reducing reimbursement environment
* Cost effective (apply AuTolo-Gel TM and do not
revisit for 5-7 days)
* Effective back-door to hospitals (the hospitals
will begin to feel the revenue loss from decreased
referrals)
* Incentive for franchisees to protect the
technology from infringement.
The possibility of contracting with one or more distributors
is being explored to quickly cover the largest portions of
segments 2 and 3.
The Company is beginning to contact potential operators
in segment 3 and plans to advertise through trade shows and
publications. It is important to understand that, due to
the fledgling status of the Company and product and the
<PAGE>
enormity of the market, the Company intends to maintain
flexibility in the final determination of marketing
strategies and pricing.
The Company is approaching each of the three market
segments simultaneously. Segment 1 is underway with
discussions being initiated. Segment 2 is underway with
the Company and consultants actively approaching high
profile, chain-affiliated hospitals and wound care
centers with the user-friendly phase A entry plan.
Segment 3 is developing, with the first developer programs
going into effect in Arkansas and Texas. The possibility
of entering the long-term care facilities is also being
explored.
The Company believes that through a planned schedule of
public education and awareness of the product campaigns,
patient word of mouth will be the catalyst to introduce
AuTolo-Gel. TM into each market segment. Management
further believes that with market awareness, people
suffering from chronic wounds will request AuTolo-Gel TM as
an alternative to long, costly traditional care methods and
certainly as one to amputation.
INTELLECTUAL PROPERTY RIGHTS
Worden developed and was the owner of certain
intellectual property rights, including the exclusive rights
to use, market and exploit the process of treatment of
chronic wounds. Pursuant to an Assignment from Worden
effective as of April 27, 1999, the Company has the
exclusive right to utilize the process to make and apply
AuTolo-Gel TM and full and exclusive right, title and
interest, both national and international, to certain patent
applications identified as the Patent Cooperation Treaty
Application entitled Enriched Platelet Wound Healant, filed
February 13, 1999, Serial No. PCT/US99/02981; United States
Provisional Patent Application entitled Autologous Platelet
Gel Preservation, filed June 22, 1998, Serial No. 60/090,
167; and United States Provisional Patent Application
entitled Autologous Platelet Gel Antibiotic, filed August
26, 1998, Serial No. 60/097, 897 (collectively, the
"Applications"), together with all Letters Patents issued in
the United States and elsewhere on any other Applications
(the "Patents"). The Applications and the Patents being
collectively referred to as the "Technology". As
consideration for such Assignment, the Company has agreed to
<PAGE>
pay Worden pursuant to a Royalty Agreement described in Item
7 below.
In addition to the Technology, the Company has the
exclusive rights to the use of certain trademarks and
servicemarks including Autologous Platelet Gel, AuTolo-Gel
TM, and AuTolo-Cure TM. The Company considers its
trademarks to be material to its business. The Company's
rights to such trademarks will last indefinitely so long as
the Company continues to use and police the marks and to
renew filings with the applicable agencies. The Company is
not aware of any adverse claim concerning any of its owned
or licensed marks.
The failure of the Company to obtain the Patents could
have an adverse effect on the Company's ability to compete
in the wound care market given its size and resources
compared to that of its competitors descirbed below.
COMPETITION
The following information regarding competing products
has been compiled by the Company from public sources
believed to be reliable. It is not intended to infer
independent knowledge of the products, other than AuTolo-Gel
TM. The following is not intended to be a complete
independent survey of any and all potential competing
products, rather a synopsis of the products that the Company
believes are the closest competitors to AuTolo-Gel TM .
Independent research of the markets and products is
encouraged.
Currently, to the Company's knowledge, there are no
other multi-growth factor products (products stimulating
multiple cell regeneration versus a single conversion)
widely available on the market that are comparable to
AuTolo-Gel TM. The autologous nature of AuTolo-Gel TM and
being within the practice of medicine (physician applied)
represents a deviation from the norm of packaged topical
products and opens a door that has not previously been
available. To management's knowledge, there are two products
available today that employ growth factor(s).
Regranex is a single growth factor product bioengineered
from baker's yeast. Johnson & Johnson and Ortho-McNeil are
jointly marketing Regranex. Having received FDA approval in
late 1997, Regranex went to market in 1998. Inquiry by the
Company into the effectiveness of Regranex on chronic wounds
has provided little support for efficacy. However, being
the only widely available growth factor product on the
market, Regranex sales figures surpassed 50 million in its
first year. Estimates put prescriptions for Regranex in
1998 at over 133,000 tubes at an average cost of $375.00 per
<PAGE>
tube. Management believes that the commercial success of
Regranex is due to the marketing strength of Johnson &
Johnson, and to the fact that Regranex has been the only
widely available growth factor product for chronic wound
treatment.
Procuren is an autologous growth factor topical, owned and
produced by Curative Health Services, Inc (CURE, Nasdaq).
Curative has been focused on total wound care as a whole
through hospital management contracts for outpatient
services and using Procuren as an adjunct therapy. A
patient undergoes screening for blood transmitted diseases
and blood donation criteria. If inclusion criteria is met,
blood is collected for processing. The whole blood is
shipped to one of Curative's processing facilities where
Procuren is produced. The product is then shipped, frozen,
to the patient for self-application. A normal full
treatment cycle would include 75 to 92 (avg.) 10cc doses in
individual tubes. Presently, Procuren is only available
through Curative-managed facilities. Procuren was
introduced into the market in 1989. Management believes
that revenues from sales of Procuren in 1998 generated
approximately $15 million.
There are currently under development by several
companies, new proactive approaches to wound care treatment,
such as bioengineered living tissue for grafting. Because
of the size and increasing nature of the market, the Company
believes that there will be more and more attention given to
proactive solutions. However, at this time and based upon
the limited amount of testing done, management believe that
there is nothing that is more effective than AuTolo-Gel TM
for the treatment of chronic wounds.
The Company has initially priced AuTolo-Gel TM to end-
users at a cost below that of its perceived competitors. In
addition, management believes that the advanced technology
of AuTolo-Gel TM will considerably shorten full treatment
course times from those of its competitors, and, thus,
reduce the full treatment cost significantly below that of
its competitors.
As outlined in the discussion of the Intellectual
Property Rights above, the inability of the Company to
obtain the patent protection necessary for the AuTolo-Cure
TM system could have an adverse effect on the Company and
its business. With Johnson & Johnson, Ortho-McNeil and
Curative as the Company's main competitors in the chronic
wound market, all billion dollar companies, the sheer
enormity of their resources compared to those of the Company
could preclude the Company from effectively competing in
the business without the Patents.
<PAGE>
REGULATION
The Food and Drug Administration ( FDA ) regulates the
development, manufacture, and marketing of drugs and certain
biological products. The Federal Food, Drug and Cosmetic
Act (the FDC Act ) defines a drug as "articles intended
for use in the diagnosis, cure, mitigation, treatment, or
prevention of disease in man or other animals." Thus,
AuTolo-Gel TM would most likely be considered a drug. The
Public Health Service Act (the PHS Act ) regulates
biological products , which are defined as a "virus,
therapeutic serum, toxin, antitoxin, vaccine, blood, blood
component or derivative, allergenic product, or analogous
product, or arsphenamine or derivative of arsphenamine (or
any other trivalent organic arsenic compound), applicable to
the prevention, treatment, or cure of a disease or condition
of human beings." As a blood product, AuTolo-Gel TM would
also be considered a biological product. While biological
products are subject to regulation under both the FDC Act
and the PHS Act, they are required to be licensed under the
PHS Act instead of being treated as a new drug under the FDC
Act. Furthermore, the PHS Act only requires a license for
any biological product that is transported across state
lines (from one state to another).
Generally speaking, the FDA requires testing of a new
'drug' in accordance with regulatory requirements in the
laboratory and, as appropriate, in clinical settings to
establish product performance before marketing. After
marketing has commenced, FDA clearance must be obtained
before making certain types of product changes. While
AuTolo-Gel TM is most likely a biological drug subject to
the FDA's regulation, management believes that since it is
prepared on site and not shipped across state lines that the
FDA will not require any form of premarket approval or
licensing of AuTolo-Gel TM. This is because AuTolo-GelTM,
as a biological drug, is subject to licensure under the PHS
Act, which only requires licensure if the product is
transported across state lines. AuTolo-Gel TM will be made
under the supervision of a physician at the location of the
patient and applied topically to the patient at the same
location.
Although AuTolo-Gel TM may not be subject to premarket
approval or licensing, AuTolo-Gel TM may still be subject to
FDA regulation. The FDA could take enforcement action
against the Company or an AuTolo-Gel TM user alleging that
the product is unsafe or that claims made for the product
are false or misleading. The FDA might also seek to have
a physician or hospital that is using AuTolo-Gel TM
register with the FDA as a drug or blood manufacturing
facility. There is no assurance that the FDA will
agree with management of the Company that AuTolo-Gel TM
is not subject to premarket approval or licensing or that
the FDA will not subsequently change its position and
seek to regulate AuTolo-Gel TM more extensively.
<PAGE>
In the event the FDA takes a position that AuTolo-Gel
TM is subject to licensing and regulation under either the
FDC Act or the PHS Act, such a position could have an
adverse effect on the Company and its business. Although
management believes that it can comply with expected FDA
regulation, increased FDA regulation, including premarket
approval or licensing, the costs of compliance, delays in
getting AuTolo-Gel TM introduced into the market or delays
in licensing activities for the AuTolo-Cure TM system
could have an adverse effect on the Company.
REIMBURSEMENT
Separate reimbursement by Medicare, Medicaid and third
party payors (insurance carriers, etc) for some or all of
the patient costs of AuTolo-Gel TM has not been obtained as
of the date of this filing. As with any new medical
product, device, process or procedure, efficacy and
advantages of use must be shown to secure reimbursement from
Medicare, Medicaid and third party insurance payors. The
Company has formulated a strategic reimbursement plan in
compliance with current reimbursement and payment guidelines
and treatment codes. Additionally, the Company is
developing data on the cost of treatment and savings using
Auto-Gel in an effort to approach Medicare, Medicaid and
third party insurance payors and develop separate
reimbursement for the process. At this time, it is believed
that third party payers will be the first to reimburse the
product. Due to regulatory issues revolving around
reimbursement by the government agencies, reimbursement for
Medicare and Medicaid patients may or may not be ultimately
obtained.
Management believes that the need for AuTolo-Gel TM
exists and the advantages of patient use are being shown in
the Company's initial tests. The Company believes that the
cost-effectiveness of AuTolo-Gel TM compared to traditional,
reimbursable products and procedures currently reimbursed
will be a catalyst for payers to approve AuTolo-Gel TM for
reimbursement approval. However, failure to obtain approval
for reimbursement would adversely affect the Company and its
operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Prior to the Merger, the company had no products or
services and was not conducting any viable enterprise. By
virtue of the Merger, the Company acquired the business
conducted by Old AWT to develop, market and sell the
proprietary AuTolo-Cure system. Since the formation of Old
<PAGE>
AWT, the Company has been engaged in extensive research and
testing of AuTolo-Gel and the development of the AuTolo-Cure
system. The Company's current activities include:
1. Research and clinical testing of AuTolo-Gel.
2. Development of clinical results and case studies.
3. Development of licensing agreements.
4. Patent and trademark applications.
5. Negotiation of licensing agreements.
6. Raising working capital.
7. Negotiation of strategic alliance with Global Marketing
Partners.
8. Development of marketing plan and distribution methods.
9. Recruiting key management and sales representatives.
10. Development of reimbursement strategies, discussions with
third party payors.
11. Testing of sequestration equipment, development of
AuTolo-Cure treatment packs and packaging, negotiation
of equipment leasing arrangement.
For a complete understanding of the foregoing
activities, the Management Discussion and Analysis should be
read in conjunction with Part I. Item 1. Description of the
Business and Part F/S - Financial Statements to this Form
10-SB.
RESULTS OF OPERATIONS
The Company is a development stage company and had only
limited operation through September 30, 1999. During the
period from inception, December 11, 1998, through September
30, 1999, $478,162 of net cash was provided to the Company
through sales of stock described in Part II Item 4
Recent Sales of Unregistered Securities and loans
from stockholders. During the same period, the Company
realized revenues of $1,100 and incurred $746,952 for
salaries and wages, $1,053,681 for consulting expenses,
$69,062 on legal expenses and $120,569 for general and
administrative costs and retained $128,063 in cash
reserves for future operations. Of the $746,952 of salaries
and compensation expense and $1,053,681 for consulting,
$556,875 and $994,950, respectively, represented the
expense recorded as a result of the issuance of stock
options and warrants to employees and consultants and does
not represent cash outlays by the Company.
<PAGE>
The Company, through Old AWT, commenced operations in
the fourth quarter of 1999. As of the date of this Form 10-
SB, the Company has executed two license agreements for the
AuTolo-Cure System and will realize gross revenues of $90,000
from the initial licensing fees over the life of the
licenses. For the remainder of 1999 and the first two
quarters of 2000, the Company expects to incur additional
costs for the testing and development of the AuTolo-Cure
system, clincal testing, legal and professional fees for
licensing, reimbursement and patent and trademark services
and to expand the promotion and marketing of AuTolo-Gel
and the AuTolo-Cure system. Management believes that the
working capital to be provided by the $1,200,000 private
placement described in the Liquidity and Capital Resources
section below and the revenues generated from the intial
licensing fees and sales of the AuTolo-Cure treatment
packs shall be sufficent to meet the operating needs
of the Company through the end of 2000. For a more
complete description of the Company's plan of operation for
the next twelve months, see the "MARKETING PLAN"
discussion under Part I above.
The Company does not anticipate any significant purchases
or sales of plant or significant equipment. The Company
currently leases the sequestration machines provided to
licensees of the AuTolo-Cure system. In the event the
Company is no longer able to obtain leasing agreements and
is required to purchase the machines, the Company could see
an increased need for working capital to fund the acquisition
of such machines. However, since the acquisition of the
machines are variable in nature and required only in
connection with the execution of a license for the
AuTolo-Cure system, Management believes that the initial
licensing fees will provide an adequate source of financing
for the acquisition of the machines, if leasing is not an
alternative.
The Company currently has nine employees and anticipates
adding eight to ten employees, including a chief financial
officer and one additional office/administrative assistant.
The remaining personnel to be added would be site
implementation personnel hired to install and train a
licensee's personnel in the use of the AuTolo-Cure system at
the licensee's location. The timing of the hiring of such
site personnel will be based upon licensing activities and
on an as needed basis. The working capital to fund the cost
of the site implementation teams will be provided from the
intial licensing fees paid by the licensee and is a
variable cost to the Company.
Because of the potential response to the AuTolo-Cure
system and the timing of the awarding of the Patents, these
events could significantly increase demands on the Company's
resources and personnel. While most of the expenses in
connnection with the AuTolo-Cure system and sale of the
treatment packs are variable costs based on demand, the
Company could require significant additional working capital
if the response is as anticipated and specifically if
Patents are issued and third party reimbursement is obtained
for the AuTolo-Gel treatment.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of the date of this Form 10-SB, the Company has not
generated positive cash flow from its operations. This is
due primarily to the start-up nature of its operations,
investment in development and clinical testing of Autolo-Gel
and the building of a corporate infrastructure to support
its future operations. Funding to date has ben in the form
of private placements of common stock and debt financing
from the Company's shareholders. In November, 1999, the
Company converted certain of its existing shareholder loans
to shares of Series A 5% Preferred Stock.
Through a private placement, the Company has received a
commitment to provide $1,200,000 of working capital during
the period beginning January 1, 2000 and ending December 31,
2000. The working capital is to be raised through
subscriptions to the Company's common stock at the rate of
$300,000 per calendar quarter or as otherwise agreed by the
Company's Board of Directors. The issuance of the
additional common stock will be nondilutive to those
stockholders of the Company holding Series B Convertible
<PAGE>
Preferred Stock. Shareholders other than Series B Preferred
Stockholders will be diluted as this equity is raised, but
such dilution is not believed to be substantial. The issue
price shall be the average of the opening and closing market
price for the Company's common stock as of the last trading
day immediately preceding the date such shares are issued.
Management believes that the working capital provided by
this private placement and the revenues generated from the
initial licensing fees and a sales of the AuTolo-Cure
treatment packs shall be sufficient to meet the operating
needs of the Company through the end of 2000.
Th failure of the Company to obtain the $1.2 million in
committed financing on the terms outlined in the preceding
paragraph or the need to raise additional working capital
could require the Company to delay, curtail or terminate
some of its development and clinical testing, sales and
marketing efforts and could otherwise have an adverse impact
on its operations. Any additional equity financing required
in such an event may involve significant dilution to the
Company's shareholders.
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company owns no materially important physical
properties. It leases offices in the United States at 1523
Bowman Road, Suite A, Little Rock, Arkansas 72211.
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(A) Names and addresses of the known beneficial owners
of more than five percent (5%) of the Company's
common voting shares, Series A Prefereed shares
and Series B Preferred shares as of November 10,
1999 were:
Name and Address of Amount and Percent of Class
Title of Class Beneficial Owner Nature of Beneficial Ownership(5)
- -------------- ------------------- ---------- --------------------
Common Quasar Investments, LLC 5,050,000 (1)(2) 49.6%
1527 Bowman Road, Suite G
Little Rock, Arkansas 72201
Common BDR Consulting, Inc. 5,050,000 (2)(3) 49.6%
1527 Bowman Road, Suite G
Little Rock, Arkansas 72201
Common Charles E. Worden 525,000 5.2%
7201 Hwy. 300
Little Rock, AR 72223
Common Keith Bennett, MD
301 Bel Aire
Hot Springs, Arkansas 71901 635,000 (4) 6.2%
Series A
Preferred Rozel International Holdings 575,000 35.38%
Road Town
Tortolla British Virgin Islands
Series A
Preferred FAC Enterprises 125,000 7.69%
4960 S. Virginia #300
Reno, NV 89502
Series A
Preferred Millworth Investments 225,000 13.85%
4960 S. Virginia #300
Reno, NV 89502
Series A
Preferred Ben-CAL Properties 250,000 15.38%
9665 Wilshire Blvd Suite M-19
Beverly Hills, CA 90212
Series A
Preferred SPH Equites 100,000 6.15%
648 Post Road
Wakefield, RI 02879
<PAGE>
Series B
Preferred Quasar Investments, LLC 5,050,000 (1)(2) 82.4%
1527 Bowman Road, Suite G
Little Rock, Arkansas 72201
Series B
Preferred BDR Consulting, Inc. 5,050,000 (2)(3) 82.4%
1527 Bowman Road, Suite G
Little Rock, Arkansas 72201
Series B Charles E. Worden 525,000 8.8%
Preferred 7201 Hwy. 300
Little Rock, AR 72223
Series B
Perferred Keith Bennett, MD
301 Bel Aire
Hot Springs, Arkansas 71901 500,000 (4) 6.9%
(1) Quasar Investments, LLC ( Quasar ) owns directly
2,550,000 common voting shares and 2,550,000 voting
shares of Series B preferred stock of the Company.
Quasar is an Arkansas limited liability company
managed by BDR Consulting, Inc.
(2) Quasar Investments, LLC is a party to a Voting
Agreement dated effective November 4, 1999, and has
voting control of 5,050,000 common voting shares of the
Company in the nomination and election of directors and
decisions regarding the merger, consolidation,
liquidation, reorganization of substantially all of the
Company's assets. BDR Consulting, Inc., as the managing
member of Quasar would exercise the voting rights
with respect to the shares covered by the Voting
Agreement as manager.
(3) BDR Consulting, Inc. owns directly 119,986 common
voting shares and 119,986 voting shares of Series B
preferred stock of the Company and is the managing
member of Quasar would exercise the voting rights
with respect to the 5,050,000 shares covered by the
Voting Agreement.
<PAGE>
(4) Dr. Bennett and Bennett Medical, LLC have been granted
warrants to acquire 250,000 common voting shares and
250,000 voting shares of Series B Preferred stock. The
exercise of each warrant grants Bennett the additional
option to acquire one share of common voting stock
and one share of Series B Preferred stock for each
share acquired as a result of the exercise of the
warrant, up to 250,000 common voting shares and
250,000 voting shares of Series B Preferred stock.
Additionaly, Dr. Bennett has been granted the option
to acquire an additional 135,000 common voting shares
of the Company.
(5) Determined on a fully diluted basis.
<PAGE>
(B) The common voting shares of the Company beneficially
owned by each Director and Executive Officer of the
Company as of November 10, 1999, are set forth below:
Amount and
Nature of
Name and Address of Beneficial
Title and Class Beneficial Owner Ownership Percent of Class(4)
- ----------------- ------------------ ----------- ----------------
Common Dennis G. Hendren 422,969 (1) 4.1%
Common William L.Brown 350,000 (2) 3.4%
Common W. Michael Chunn 150,000 (3) 1.5%
Series B Prefereed Dennis G. Hendren 422,969 (1) 5.4%
Series B Preferred William L. Brown 350,000 (2) 4.7%
Series B Preferred W. Michael Chunn 150,000 (3) 2.0%
(1) Mr. Hendren owns directly 172,969 common voting shares
and 172,969 Series B Preferred shares of the Company.
Mr. Hendren has been granted nonqualified stock
options to acquire 250,000 common voting shares of
the Company which are subject to certain vesting and
other restrictions on exercise.
(2) Mr. Brown has been granted nonqualified stock options
to acquire 350,000 common voting shares 350,000 Series
B Preferred Shares of the Company which are subject
to certain vesting and other restrictions on exercise.
(3) Mr. Chunn has been granted nonqualified stock options
to acquire 150,000 common voting shares 150,000 Series
B Preferred shares of the Company which are subject
to certain vesting and other restrictions on exercise.
(4) Determined on a fully diluted basis.
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND
CONTROL PERSONS.
Mr. Dennis G. Hendren
_____________________
President and CEO, Director
Mr. Hendren, age 52, joined the Company from Curative
Health Services, Inc., a publicly traded company, where he
was employed for eight years, having last served as Vice
President of Processing Operations. Some of his
responsibilities included; staffing, training, operations
and budgetary duties. Previously, Mr. Hendren served as
technical director for two major community blood banks. He
has extensive experience in FDA registration and licensure,
as well as technical aspects of wound care and resulting
product formulation. Mr. Hendren graduated with a BS in
Biology from Emporia State Teachers College. He is a
registered Medical Technologist with a Specialist in Blood
Banking. Mr. Hendren brings a wealth of experience in wound
care management from a corporate perspective to the Company
and will be responsible for overseeing every aspect of the
Company.
Mr. William L. Brown
____________________
Chief Operating Officer, Secretary and Director
Mr. Brown, age 47, joined the Company from Curative Health
Services, where he served as program director for wound
care operations in Arkansas. His duties included;
marketing, physician management, wound care center
operation, hospital protocol and product application. Prior
to this, Mr. Brown served as Administrative Director of
Respiratory Medicine, Sleep Disorders and Hyperbaric
Medicine at Washington Regional Medical Center,
Fayetteville, Arkansas. Mr. Brown holds a BS in Biological
Science from Missouri Southern University and is registered
with the National Board for Respiratory Care. Currently,
Mr. Brown's Master of Health Science thesis is being
reviewed for approval at the University of Arkansas. As COO
of the Company, Mr. Brown will oversee all operational
aspects of the Company including: personnel policy, product
implementation and production, sales and marketing
development, and internal affairs.
<PAGE>
Mr. W. Michael Chunn
____________________
Vice President/Marketing and Operations, Director
Mr. Chunn, age 52, comes to the Company from Conway Regional
Medical Center, where he most recently served as Assistant
Clinical Director. Duties included: Directing transfusion
services, scheduling for clinical activities and
laboratories, continuing education and safety
administration. Prior to 1993, Mr. Chunn served twenty
years with the American Red Cross, including thirteen years
an Administrator. Mr. Chunn's tenure included most aspects
of the Red Cross operation such as budgeting, forecasting,
and blood services marketing management. Mr. Chunn received
a BS-Medical Technology from Middle Tennessee State
University and is a graduate of many continuing education
courses. Mr. Chunn's responsibilities include budget
preparation, marketing, strategic partnership planning, and
internal tech-support.
There is no stated term in the Company's bylaws for the term
of office and each officer shall serve in such capacity
until his successor is duly appointed by the Company's Board
of Directors.
Mr. Charles G. Worden
_____________________
Inventor of the AuTolo-Cure TM System
Mr. Worden, age 64, is the inventor of AuTolo-Gel. TM and
the founder of Autologous Wound Therapy, Inc. A senior
laboratory scientist with over 40 years in the medical
field, Mr. Worden has worked as President/C.E.O. of Arkansas
Reference Laboratory, Inc. as well as President/C.E.O. of
Worden & Associates, Inc. a medical computer software
company. A microbiologist and clinical chemist, Mr. Worden
was the chief bacteriologist for the USDA research station
located in the Little Rock, Arkansas, working in immunology
and vaccine production. A Medical Technologist, Mr. Worden
has worked extensively in the Blood Banking field, first as
the Chief Technologist for the American Red Cross Blood
Bank, and has many years teaching Medical, Nursing and
Technology students through the University of Arkansas
Medical Science campus. Mr. Worden holds a Bachelor
of Science, Bacteriology from the University of Arkansas,
Fayetteville.
Mr. Worden also has thirty hours of post-graduate study in
Microbiology, and is a Medical Technologist registered with
the American Society of Clinical Pathologists. In 1983, Mr.
Worden filed personal bankruptcy. Mr. Worden does not
intend to maintain an active role in the day to day
management and operations of the Company; however, he will
provide consultation as needed.
<PAGE>
Mr. Jim D. Swink, Jr.
_____________________
Controlling Person
Mr. Swink, age 36, served as a director of Old AWT.
Mr. Swink is the President and sole stockholder of BDR,
Consulting Inc., a company providing consulting services to
emerging companies, including the Company. BDR Consulting,
Inc. owns a controlling interest in Quasar Investments,
L.L.C., which owns 29% of the common stock of the
Company. Mr. Swink serves as the manager of Quasar
Investments, L.L.C. Since 1994, Mr. Swink has been engaged
in consulting. Mr. Swink filed personal bankruptcy
in 1996, which case has been settled and discharged.
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION.
As a development stage company, the Company has previously
paid any of its management reduced salaries based on
availability of cash flow. The following is a summary of
salaries paid to the current executives:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year Salary Bonus Other Restricted Securities LTIP All other
Name and $(1) $ Annual Stock underlying Payouts compensation
Position Compensation Awards stock
$ (2) options
/SARs (#)
- -----------------------------------------------------------------------------------------------------
Dennis G. 1999 $37,251 $0 $0 -0- 250,000 $0 $0
Hendren 1998 $0 $0 $0 -0- -0- $0 $0
President 1997 $0 $0 $0 -0- -0- $0 $0
& CEO
William L. 1999 $36,000 $0 $0 -0- 350,000 $0 $0
Brown 1998 $0 $0 $0 -0- -0- $0 $0
Vice 1997 $0 $0 $0 -0- -0- $0 $0
President,
COO &
Secretary
W. Michael 1999 $56,293 $0 $0 -0- 150,000 $0 $0
Chunn 1998 $0 $0 $0 -0- -0- $0 $0
Vice 1997 $0 $0 $0 -0- -0- $0 $0
President
Charles 1999 $31,251 $0 $0 -0- -0- $0 $0
Worden 1998 $0 $0 $0 -0- -0- $0 $0
1997 $0 $0 $0 -0- -0- $0 $0
Darla 1999 $17,520 $0 $0 -0- -0- $0 $0
Bradley 1998 $0 $0 $0 -0- -0- $0 $0
1997 $0 $0 $0 -0- -0- $0 $0
</TABLE>
<PAGE>
(1) All employees joined the Company in 1999 and salary
reflects year to date compensation through October 31,
1999.
(2) Other annual compensation is less than ten percent
(10%) of base salary.
Stock Option Plan
Effective June 7, 1999, Old AWT adopted a Nonqualified Stock
Option Plan ( Stock Option Plan ), which was approved by the
Old AWT shareholders on the same date. The Company assumed
the Stock Option Plan in the Merger. Pursuant to the terms
of the Stock Option Plan shares of the common stock of the
Company have set aside for options which may be issued to
management and others, as determined by the Board of
Directors. The Company intends to grant stock options to
some or all of the management of the Company pursuant to
this Plan. The terms of options granted and the exercise
price of such options is subject to the discretion of the
Board of Directors. As of the date of this filing, the
following options have been issued pursuant to the Stock
Option Plan:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Name Number of Percent of Exercise FMV at Expiration
Securities total of base Date of Date
underlying options / price Grant
options / SARs
SARs granted to ($/sh) (1) ($/sh) (2)
granted employees
in fiscal
(#)(1) year
--------------------------------------------------------------------
Dennis G. 250,000 33.33% $0.02 2.00 December
Hendren 31, 2008
President
& CEO
William L. 350,000 46.67% $0.02 2.00 December
Brown 31, 2008
V. P., COO
&
Secretary
W. Michael 150,000 33.33% $0.02 2.00 December
Chunn 31, 2008
Vice
President
<PAGE>
(1) Options were granted under Old AWT's Stock Option Plan
and the number of securities underlying options,
exercise price per share and grant date market price
have been adjusted to reflect the conversion ratio of
the underlying Old AWT common stock into common stock
of the Company as a result of the Merger.
(2) The options granted above are fully vested on the first
anniversary of the option holder's employment by the
Company. In addition to the expiration date,
unexercised options which have vested terminate
immediately upon the termination of employment by reason
other than death, disability or normal or early
retirement. In the event of the death or disablilty of
the holder, any options remaining unexercised 180 days
following termination of employment by reason of death
or disablity shall be terminated.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company is a party to a Royalty Agreement with
Charles E. Worden, dated April 27, 1999, as amended October
29, 1999, pursuant to which the Company, in consideration
for the assignment by Worden to the Company of certain
Intellectual Property Rights, the Company has agreed to pay
Worden a royalty equal to five percent (5%) of the gross
profit derived by the Company from the sale or use of the
Intellectual Property Rights, not to exceed $1,000,000 in
any four consecutive quarters. The Company also has a
consulting arrangement with Mr. Worden under the Royalty
Agreement which would provide for a maximum payment $50,000
per year until such time as the royalties exceed $150,000
during any four consecutive calendar quarters.
BDR Consulting, Inc., which owns a controlling interest
in Quasar Investments, L.L.C., the majority shareholder
of the Company, has a consulting agreement with the Company
dated October 29, 1999 ( Consulting Agreement ) pursuant to
which BDR Consulting, Inc. is to provide financing and
business related consulting to the Company, for which BDR
Consulting, Inc. is entitled to receive compensation
based on the annualized gross revenues of the Company.
The initial monthly fee is $6,000 per month on annual
revenues of $0 to 7.5 Million; $10,000 per month
if annualized revenues are over $7.5 Million to
$14 Million; $15,000 per month if annualized revenues are
over $14 Million to $25 Million; and $20,000 per month if
annualized revenues are in excess of $25 Million. The
consulting fees shall be based on the rolling twelve month
aggregate gross revenues of the Company measured as of the
close of the month immediately prior to the month for which
the payment is due is being calculated. As of the date of
this filing, BDR has been paid approximately $25,000 for
services by BDR to the Company.
<PAGE>
Under the terms of the Merger Agreement, the Company is
required to raise an additional $1,200,000 during the year
2000, in equal quarterly installments of $300,000. The
raising of the additional equity through private placements
of the Company's common stock will give rise to the
conversion of certain shares of the Company's Series B
Preferred Stock, all as more particularly described in Item 8
below.
ITEM 8. DESCRIPTION OF SECURITIES:
This summary contains a description of all of the
material terms of the Company's capital stock. However, it
does not describe every term of the capital stock contained
<PAGE>
in the Company's amended and restated certificate of
incorporation. The Company refers you to the provisions of
Delaware corporate law and the Company's amended and
restated certificate of incorporation and amended and
restated bylaws, which are attached hereto as exhibits.
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
The Company's amended and restated certificate of
incorporation authorizes the Company to issue 50,000,000
shares of capital stock, of which 40,000,000 shares are
common stock having a par value of $0.0001 per share and
10,000,000 shares are preferred stock having a par value of
$0.0001 per share. The rights and preferences of the
preferred stock are to established by the Board of Directors
in one or more certificate(s) of designation. As of
November 10, 1999, after giving effect to a 1:2 reverse
stock split with respect to the Company's common stock,
there were 8,769,276 shares of common stock issued and
outstanding held by approximately 260 shareholders.
Additionally, on such date, there were 1,625,000 shares of
Series A 5% Cumulative Preferred Stock (the Series A
Preferred Stock ) issued and outstanding held by
approximately 18 shareholders and 6,000,000 shares of Series
B Convertible Preferred Stock (the Series B Preferred
Stock ) issued and outstanding held by approximately 35
shareholders.
Common Stock Voting Rights
Holders of common stock are entitled to one (1) vote per
share on all matters to be voted upon by the stockholders.
The holders of common stock are not entitled to cumulative
voting rights with respect to the election of directors.
Dividend Rights
Subject to preferences that may be applicable to any then
outstanding shares of preferred stock, holders of common
stock are entitled to receive ratably such dividends as may
be declared by the board out of funds legally available.
Liquidation Rights
In the event of the Company's liquidation, dissolution or
winding up, holders of the common stock are entitled to
share ratably in all assets remaining after payment of
<PAGE>
liabilities and the liquidation preference of any then
outstanding preferred stock. Holders of common stock have no
preemptive, conversion or other rights to subscribe for
additional securities of the Company. No redemption or
sinking fund provisions apply to the common stock. All
outstanding shares of common stock are validly issued, fully
paid and nonassessable.
PREFERRED STOCK
The Board of Directors has the authority, without further
action by the stockholders, to issue up to 10,000,000 shares
of preferred stock in one or more series and to fix the
rights, preferences, privileges and restrictions thereof,
including dividend rights, conversion rights, voting rights,
terms of redemption, liquidation preferences, sinking fund
terms and the number of shares constituting any series or
the designation of such series. The issuance of preferred
stock could adversely affect the voting power of holders of
common stock and could decrease the likelihood that such
holders will receive dividend payments and payments upon
liquidation and could have the effect of delaying, deferring
or preventing a change of control of the Company.
Accordingly, the issuance of shares of preferred stock may
discourage offers for the Company's common stock or may
otherwise adversely affect the market price of the common
stock. As of the date of this Registration Statement, there
are two series of preferred stock outstanding with the
following rights, preferences and privileges:
Voting Rights
Holders of the Company's Series A and Series B
Preferred Stock are entitled to 1 vote per share on all
matters to be voted upon by the stockholders.
Dividend Rights
Subject to preferences that may be applicable to any
other outstanding shares of another series of preferred
stock, holders of Series A Preferred Stock are entitled
to a five percent (5%) dividend on its stated
liquidation preference of $1.00 per share in preference
to the holders of common stock and Series B Preferred
Stock. Such dividends are paid as may be declared by
the Board out of funds legally available therefor and
are cumulative. The Series B Preferred Stock has no
dividend preference.
<PAGE>
Liquidation Rights
In the event of the Company's liquidation, dissolution
or winding up, holders of Series A Preferred Stock are
entitled to a liquidation preference of $1.00 per share
in all assets remaining after payment of liabilities.
Holders of the Series B Preferred Stock are entitled to
a liquidation preference of $.0001 per share after the
payment of liabilities and the liquidation preference
of any other then outstanding Series A Preferred
Stock.
Mandatory Redemption
The Company is required to redeem the Series A
Preferred Stock and pay all accumulated but unpaid
dividends on the earlier of the seventh anniversary of
the date of issuance or forty-five days following the
end of the fiscal quarter of the Company as of which
the Company has had aggregate gross revenues for a four
consecutive fiscal quarter period of not less than $50
million.
Conversion Rights
The Series A Preferred Stock has no conversion rights.
The Series B Preferred Stock is subject to mandatory
conversion into shares of common stock upon the
Company's issuance of additional shares in exchange for
cash with the aggregate proceeds to the Company of up
to $1,200,000. For each share of stock issued in such
financing, each share of Series B Preferred Stock shall
automatically be converted into three shares of common
stock. In the event the $1,200,000 has not been raised
by December 31, 2000, then each remaining issued and
outstanding share of Series B Preferred Stock shall be
converted into common stock. The conversion ratio
shall be determined based on the shortfall in raising
the $1,200,000 and determined by converting 7.5 shares
of Series B Preferred Stock into one share of common
stock for each $1.00 of such shortfall.
WARRANTS
In October, 1999, Old AWT issued a warrant to purchase
5,000 shares of Old AWT common stock in connection with
a services agreement between the Company and Dr. Keith
Bennett and Bennett Medical, Inc. subject to anti- dilution
provisions (the "Warrant"). The Warrant is exercisable for
<PAGE>
nominal consideration until October, 2004. The Company
assumed the obligations of Old AWT under the Warrant and the
Warrant represents the right to acquire 250,000 shares of
common stock and 250,000 shares of Series B Preferred Stock
in the Company. In October, 1999, the Company amended the
services agreement and inconsideration of the other party's
release of the right to a five percent commission on certain
sales by the Company, the Company agreed to issue an option
to acquire 135,000 shares of the Company's common stock.
REGISTRATION RIGHTS
There are no outstanding registration rights covering
the Company's capital stock other than the incidental
registration rights granted to the former president and CEO
of the Company in an agreement dated May 31, 1999. Under
the terms of the Registration Rights Agreement, the former
CEO is given the right to require inclusion of his
shares in any registration statement prepared by the
Company using Form S-1,S-2 or S-3. The Company is under
no obligation to file any such registration statement and
the rights of the former CEO are further subject to
restriction on the number of shares that may be registered
based upon the opinion of the managing underwriter in such
offering.
ANTI-TAKEOVER PROVISIONS
Although management is not presently aware of any
takeover attempts, the Company's Certificate of
Incorporation defers to provisions in the Delaware General
Corporations Law (the "DGCL"), which may be deemed to be
"anti-takeover"in nature in that such provisions may deter,
discourage or make more difficult the assumption of control
of the Company by another entity or person.
Delaware Anti-Takeover Law
The Company is subject to Section 203 of the DGCL
(Section 203) which, subject to certain exceptions,
prohibits a Delaware corporation from engaging in any
business combination with any interested stockholder for a
period of three years following the date that such
stockholder became an interested stockholder, unless: (i)
prior to such date, the board of directors of the
corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an
interested stockholder, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding
at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding
<PAGE>
those shares owned by persons who are directors and also
officers and by employee stock plans in which employee
participants do not have the right to determine
confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer; or (iii) at or
subsequent to such date, the business combination is
approved by the board of directors and authorized at an
annual or special meeting of stockholders, and not by
written consent, by the affirmative vote of at least 66-2/3%
of the outstanding voting stock which is not owned by the
<PAGE>
interested stockholder. Section 203 defines business
combinations to include: (i) any merger or consolidation
involving the corporation and the interested stockholder,
(ii) any sale, transfer, pledge or other disposition
involving the interested stockholder of 10% or more of the
assets of the corporation, (iii) subject to certain
exceptions, any transaction which results in the issuance or
transfer by the corporation of any stock of the corporation
to the interested stockholder, (iv)any transaction involving
the corporation which has the effect of increasing the
proportionate share of the stock of any class or series of
the corporation beneficially owned by the interested
stockholder, or (v) the receipt by the interested
stockholder of the benefits of any loans, advances,
guarantees, pledges, or other financial benefits provided by
or through the corporation. In general, Section 203 defines
an interested stockholder as any entity or person
beneficially owned 15% or more of the outstanding voting
stock of the corporation and any entity or person affiliated
with or controlling or controlled by such entity or person.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock,
the Series A Preferred Stock and Series B Preferred Stock is
StockTrans, Inc., whose address is 7 East Lancaster
Avenue, Ardmore, PA 19003.
PART II.
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock currently is trading on the
OTC Bulletin Board under the symbol AWTXE. Prior to the
Merger the common stock traded under the symbol IFXH and
prior to July 1, 1998 under the symbol MENW.
The range of high and low bids for The Company's common
stock for each full quarter since there has been a market
for such stock is as follows:
Quarter Ending High Low
______________ ____ ___
03-31-97 0.3100 0.0300(1)
06-30-97 0.2500 0.0900
<PAGE>
09-30-97 0.1600 0.0900
12-31-97 0.0300 0.0010
03-31-98 0.0170 0.0010
06-30-98 0.0625 0.2500
09-30-98 3.2500 3.2500 (2)
12-31-98 3.7500 1.1250
03-31-99 4.9688 1.1250
06-30-99 6.0000 3.1250
09-30-99 4.0000 1.5000
(1) Quoted as MENW
(2) Quoted as IFXH
On November 22, 1999, the last reported sales price for
the Company's common stock was $7.50 per share.
There were approximately 260 holders of the Company's common
voting stock as of November 4, 1999.
DIVIDENDS
The Company has had no operating income to date and has
never paid any cash dividends on its common stock. The
Board presently intends to retain all earnings for use in
the Company's business. Any future determination as to
payment of dividends will depend upon the financial
condition and results of operations of the Company and such
other factors as are deemed relevant by the Board.
ITEM 2. LEGAL PROCEEDINGS.
There are, to the best knowledge of the Company, no
legal proceedings pending against the Company or any of the
Intellectual Property Rights in which it claims an interest,
that will adversely affect the financial condition of the
Company or the ability to carry on the business of the
Company.
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In November, 1999, pursuant to the Merger, the Company
issued 6,000,000 shares of common stock and 6,000,000 shares
of Series B Convertible Preferred Stock to Old AWT's
stockholders in exchange for the cancellation of the Old AWT
common stock surrendered in the transaction. Additionally,
the Company assumed certain obligations of Old AWT under the
Stock Option Plan with respect to the issuance of 750,000
shares of common stock and 750,000 shares of Series B
Convertible Preferred Stock and warrants representing an
additional 250,000 shares of common stock and 250,000 shares
of Series B Convertible Preferred Stock and an option to
purchase 135,000 shares of common stock. The total number
of shares of common stock and Series B Preferred Stock
committed to be issued in connection with the Merger shall
not exceed 7,500,000 shares of common stock and 7,500,000
shares of Series B Preferred Stock. The Company also
issued 400,000 shares of common stock to SPH Equities, Inc.
as payment of investment banking fees associated with the
Merger.
In November, 1999, the Company issued 1,625,000 shares
of its Series A 5% Cumulative Preferred Stock to certain
stockholders in consideration for the cancellation of
shareholder loans, accrued interest and investment
banking fees made to the Company in the aggregate amount
of approximately One Million Six Hundred Twenty-Five
Thousand and 00/100 Dollars ($1,625,000.00). The
shares were issued to the shareholders in reliance on the
exemption from registration under the 1933 Securities Act
provided by Section 4(2).
In November, 1999, the Company sold 250,000 shares of
common stock to four (4) shareholders for Five Hundred
Thousand and 00/100 Dollars ($500,000.00) to provide working
capital for The Company. Sales were made in reliance on the
exemption from registration as provided in Section 4(2) of
the 1933 Securities Act, as amended.
In October, 1999, Old AWT issued 50,000 shares of Old
AWT common stock (now representing 2,500,000 shares of
Company common stock and 2,500,000 shares of Series B
Preferred Stock) to BDR Investment Partnership in exchange
of its contribution of certain contractual rights to the
Company. The contractual rights consisted of
partnership's right to receive ten percent (10%) of
the gross revenues of the
<PAGE>
Company and any other monies raised on behalf of the
Company, regardless of whether in the form of equity or
debt, through the efforts of BDR Consulting, Inc. By virtue
of the exchange, the Company shall retain the ten
percent otherwise payable under the canceled agreement. The
shares were issued in reliance on the exemption from
registration as provided in Section 4(2) of the 1933
Securities Act, as amended.
In October, 1999, Old AWT completed a private
placement of Old AWT common stock. In the offering 5,000
shares of Old AWT common stock (now representing 250,000
shares of Company common stock and 250,000 shares of Series
B Preferred Stock) were sold to twelve accredited investors
for Five Hundred Thousand Dollars ($500,000.00) to provide
working capital for Old AWT. Sales were made in reliance
on the exemption from registration as provided in Section 4
(2) of the 1933 Securities Act, as amended and Regulation D.
On August 5, 1999, the Company issued 7,500 shares
of its common stock to Linzy Limited in payment for
consulting services in reliance on the exemption from
registration as provided in Section 4(2) of the Securities
Act
On April 27, 1999, The Company issued 25,000 shares
of its common stock to Bel-Cal Holdings Ltd. in partial
consideration for consulting services in reliance on the
exemption from registration as provided in Section 4(2) of
the Securities Act.
On March 11, 1999, the Company issued 510,000 shares
of common stock to the former President and CEO of the
Company, Robert deRose, of which 10,000 shares were
issued pursuant to his employment agreement and 500,000
were issued in consideration of a note payable to
Informatix Holdings, Inc. On August 1, 1999, the terms of
the note were restated to reduce by 450,000 to 50,000 the
number of shares issuable to Mr. deRose. The three-year
note has a principal amount of $83,000 at an annual
interest rate of 5.48%. Under a pledge agreement, the
50,000 shares are being held by the Company until the
note is satisfied in full. The 10,000 shares issued
pursuant to the employment agreement are exempt from
registration in reliance upon Rule 701 promulgated under the
Securities Act. The shares in connection with the note are
exempt from registration as provided in Section 4(2) of the
Securities Act.
<PAGE>
In May, 1998, the Company issued 1,512,500 shares
of common stock to former shareholders of Informatix, Inc.
in connection with a share exchange transaction whereby
the Company acquired 1,512,500 shares of the outstanding
common stock of Informatix, Inc. A portion of the
transaction was subsequently rescinded and 272,905 shares
of the Company's common stock were returned to the
Company. After the recission there were 1,239,595
shares still held by the former Informatix stockholders.
The share exchange was exempt from registration in
reliance on Rule 506 of Regulation D promulgated under
the Securities Act of 1933.
On May 6, 1998, the Company authorized a reverse stock
split of one share of its common stock for each five
shares of outstanding common stock (1:5) which became
effective in June, 1998.
On April 20, 1998 the Company issued 100,000
shares of common stock two overseas investors for an
aggregate purchase price of $700,000 in a private placement
pursuant to Rule 506 of Regulation D promulgated
under the Securities Act of 1933. In connection with
the offering, the Company was obligated to pay $100,000
in investment banking fees.
In March and April, 1998, the Company issued
600,000 shares of common stock to eighteen shareholders
pursuant to Rule 504 promulgated under the Securities Act
for an aggregate of $150,000. The subscription note was
satisfied by Executive Business Services providing
consulting services on behalf of the Company.
On February 23, 1998, the Company issued 10,000
shares of common stock to Executive Business Service in
exchange for a subscription note receivable in the
principal amount of $15,000, payable on demand and bearing
an interest rate of 12%, pursuant to Rule 504 promulgated
under the Securities Act. The subscription note was
satisfied by Executive Business Services providing
consulting services on behalf of the Company.
On January 30, 1998, the Company authorized a reverse
stock split of one share of its common stock for each two
thousand share block of outstanding common stock (1:2,000).
Any share certificate which was reduced below 200 shares as
a result of the reverse stock split was adjusted to 200
share of post split common stock. The subscription note was
satisfied by Executive Business Services providing consulting
services on behalf of the Company.
<PAGE>
On January 20, 1998, the Company issued 750 shares
of common stock to Executive Business Services in
exchange for a promissory note in the principal amount of
$15,000 pursuant to Rule 504 promulgated under the
Securities Act. The subscription note was satisfied by
Executive Business Services providing consulting services on
behalf of the Company.
Unless otherwise noted, the share numbers above have
been adjusted to reflect the reverse stock splits
effective November 8, 1999, May, 1999 and January 30, 1998
respectively, for the Company and for June, 1999 for Old
AWT.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Bylaws of the Company provide that any officer or
director of the Company who was or is a party or is
threatened to be made a party to or is involved in any
action, suit, or proceeding, whether civil, criminal,
administrative or investigative, by reason of service as an
officer or director of The Company, shall be indemnified and
held harmless to the full extent permissible under the
<PAGE>
Delaware General Corporation Law against all expenses,
liability and loss (including attorneys fees, judgments,
fines and amounts paid or to be paid in settlement)
reasonably incurred or suffered by him in connection
therewith. The expenses of officers and directors incurred
in defending a civil or criminal action, suit or proceeding
must be paid by the Company as they are incurred and in
advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the Company.
The right of indemnification is a contract right enforceable
by any means desired by the director or officer and is not
exclusive of any other right such person may have or
hereafter acquire.
PART F/S.
INDEX TO FINANCIAL STATEMENTS.
Independent Auditor's Report
Balance Sheets as of December 31, 1998 (audited) and September 30, 1999
(unaudited)
Statement of Operations for the period ended December 31, 1998 (audited),
September 30, 1999 (unaudited) and December 11, 1998 (Date of Inception)
through September 30, 1999 (unaudited)
Statements of Stockholders' Deficit for the year ended December 31, 1998
(audited) and September 30, 1999 (unaudited)
Statements of Cash Flow for the year ended December 31, 1998 (audited)
and September 30, 1999 (unaudited)
Notes to Financial Statements
Unaudited Pro Forma Condensed Consolidated Combined Balance Sheet as of
November 4, 1999 (unaudited)
Notes to Unaudited Pro Forma Condensed Consolidated Combined Balance
Sheet (Unaudited)
<PAGE>
PART III.
ITEM 1. Index to Exhibits
2. Charter and Bylaws
2.1 Certificate of Incorporation
2.2 Certificate of Amendment to Certificate of Incorporation
2.3 Bylaws
3. Instruments defining the rights of security holders
3.1 Corrected Certificate of Designations of the
Relative Rights and Preferences of the Series
A 5% Cumulative Preferred Stock and the Series
B Convertible Preferred Stock
5. Voting Agreement
5.1 Voting Agreement
6. Material Contracts
6.1 Royalty Agreement with Charles Worden
6.2 First Amendment to Royalty Agreement with
Charles Worden
6.3 Consulting Agreement with BDR, Inc.
6.4 Plan and Agreement of Merger and Reorganization
PURSUANT TO THE REQUIREMENTS OF SECTION 12 OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
AUTOLOGOUS WOUND THERAPY, INC.
By: /s/ Dennis G. Hendren
__________________________
Dennis G. Hendren, President
DATE: December 9, 1999
<PAGE>
Exhibit 2.1 - Certificate of Incorporation
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/29/1998
981164777 - 2890868
CERTIFICATE OF INCORPORATION
OF
INFORMATIX HOLDINGS, INC.
* * * * * *
1. The name of the corporation is:
INFORMATIX HOLDINGS, INC.
2. The address of its registered office in the
State of Delaware is Incorporating Services, 15 East North
Street, Dover, Delaware 19901, located in the County of Kent,
Delaware. The name of its registered agent at such address
is Incorporating Services, Ltd.
3. The nature of the business or purposes to be
conducted or promoted is:
To engage in any lawful act or activity for
which corporations may be organized under the General
Corporation Law of Delaware.
4. The authorized capital stock of the
Corporation shall consist of 50,000,000 shares of capital
stock, of which 49,000,000 shares shall be Common Stock, with
a par value of $.0001 per share and 1,000,000 shares shall be
Preferred Stock, with a par value of $.0001 per share.
5. The name and mailing address of the sole
incorporator is as follows:
Craig F. Zappetti, Esquire
KLEHR, HARRISON, HARVEY, BRANZBURG & ELLERS LLP
1401 Walnut Street
Philadelphia, PA 19102
6. The Corporation is to have perpetual
existence.
7. In furtherance and not in limitation of the
powers conferred by statute, the Board of Directors is
expressly authorized to make, alter or repeal the By-Laws of
<PAGE>
the Corporation. Elections of Directors need not be written
ballot unless the By-Laws of the Corporation shall so
provide.
8. The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
9. A Director of the Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a Director
except for liability (i) for any breach of the Director s
duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the
Director derived any improper personal benefit.
10. Whenever a compromise or arrangement is
proposed between this Corporation and its creditors or any
class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the
application in a summary way of this Corporation or of any
creditor or stockholder thereof or on the application of any
receiver or receivers appointed for this Corporation under
the provision of 291 of Title 8 of the Delaware Code or on
the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under
the provisions of 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors
and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number
representing three fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree
to any compromise or arrangement and to any reorganization
of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which
the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation,
as the case may be, and also on this Corporation.
<PAGE>
I, THE UNDERSIGNED, being the sole incorporator
hereinbefore named, for the purpose of forming a corporation
pursuant to the General Corporation Law of the State of
Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand
this 29th day of April, 1998.
/s/ Craig F. Zappetti
Craig F. Zappetti,
Esquire, Sole Incorporator
<PAGE>
Exhibit 2.2 - Certificate of Amendment to Certificate of
Incorporation
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 11/04/1999
991469846 - 28900868
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
INFORMATIX HOLDINGS, INC.
Under Section 242 of the
General Corporation Law
of the State of Delaware
* * * * * * * * * *
INFORMATIX HOLDINGS, INC., a Delaware corporation (the
"Company"), hereby certifies that:
FIRST: The Company declares a one-for-two reverse
stock split to be effectuated as follows:
As of November 8, 1999 (the "Record Date"),
each share of the common stock, par value $.0001
per share, issued and outstanding immediately
prior to the Record Date (the "Old Common Stock")
shall automatically and without any action on the
part of the holder thereof be reclassified as and
changed into one-half ( ) of a share of the
Company's common stock, par value $.0001 per share
(the "New Common Stock"), with the number of
shares of New Common Stock to be issued to a
stockholder rounded up to the next highest whole
number of shares. Each holder of a certificate or
certificates which immediately prior to the Record
Date represented outstanding shares of Old Common
Stock (the "Old Certificates," whether one or
more) shall be entitled to receive upon surrender
of such Old Certificates to the Company's transfer
agent for cancellation, a certificate or
certificates (the "New Certificates," whether one
or more) representing the number of whole shares
of the New Common Stock into which and for which
the shares of the Old Common Stock formerly
<PAGE>
represented by such Old Certificates so
surrendered, and reclassified under the terms
hereof. From and after the Record Date, Old
Certificates shall represent only the right to
receive New Certificates pursuant to the
provisions hereof. No certificates or scrip
representing fractional share interests in New
Common Stock will be issued. If more than one Old
Certificate shall be surrendered at one time for
the account of the same stockholder, the number of
full shares of New Common Stock for which New
Certificates shall be issued shall be computed on
the basis of the aggregate numbers of shares
represented by the Old Certificates so
surrendered. If any New Certificate is to be
issued in a name other than that in which the Old
Certificates surrendered for exchange are issued,
the Old Certificates so surrendered shall be
properly endorsed and otherwise in proper form for
transfer, and the person or persons requesting
such exchange shall affix any requisite stock
transfer tax stamps on the Old Certificates
surrendered, or provide funds for their purchase,
or establish to the satisfaction of the transfer
agent that such taxes are not payable. From and
after the Record Date the amount of capital
represented by the shares of the New Common Stock
into which and for which the shares of the Old
Common Stock are reclassified under the terms
hereof shall be the same as the amount of capital
represented by the shares of Old Common Stock so
reclassified, until thereafter reduced or
increased in accordance with applicable law.
SECOND: Article 4 of the Certificate of Incorporation
is amended to read in its entirety as follows:
4. The authorized capital stock of the
Corporation shall consist of 50,000,000 shares of
capital stock, of which 40,000,000 shares shall be
Common Stock, with a par value of $.0001 per share
and 10,000,000 shares shall be Preferred Stock,
with a par value of $.0001 per share. The voting
powers, designations, preferences and relative,
participating, optional or other special
qualifications, limitations or restrictions
thereof are set forth as follows:
Shares of the Preferred Stock may be issued
from time to time in one or more series, as
provided for herein or as provided for by the
Board of Directors as permitted hereby. All
shares of Preferred Stock shall be of equal rank
and shall be identical, except as fixed by the
<PAGE>
Board of Directors for any series provided for by
the Board of Directors as permitted hereby. All
shares of any one series shall be identical in all
respects with all the other shares of such series,
except the shares of any one series issued at
different times may differ as to the dates from
which dividends thereon may be cumulative.
The Board of Directors is hereby authorized,
by resolution or resolutions, to establish, out of
the unissued (including previously issued and
subsequently retired) shares of Preferred Stock
not then allocated to any series of Preferred
Stock, additional series of Preferred Stock.
Before any shares of any such additional series
are issued, the Board of Directors shall fix and
determine, and is hereby expressly empowered to
fix and determine, by resolution or resolutions,
the number of shares constituting such series and
the distinguishing characteristics and the
relative rights, preferences, privileges and
immunities, if any, and any qualifications,
limitations or restrictions thereof, so far as
such are not inconsistent with the provisions of
this Article 4. Without limiting the generality
of the foregoing, the Board of Directors may fix
and determine:
a. The designation of such series and the
number of shares which shall constitute
such series of such shares;
b. The rate of dividend, if any, payable on
shares of such series;
c. Whether the shares of such series shall
be cumulative, non-cumulative or
partially cumulative as to dividends,
and the dates from which any cumulative
dividends are to accumulate;
d. Whether the shares of such series may be
redeemed, and, if so, the price or
prices at which and the terms and
conditions on which shares of such
series may be redeemed;
e. The amount payable upon shares of such
series in the event of the voluntary or
involuntary dissolution, liquidation or
winding up of the affairs of the
Corporation;
f. The sinking fund provisions, if any, for
<PAGE>
the redemption of shares of such series;
g. The voting rights, if any, of the shares
of such series;
h. The terms and conditions, if any, on
which shares of such series may be
converted into shares of capital stock
of the Corporation of any other class or
series;
i. Whether the shares of such series are to
be preferred over shares of capital
stock of the Corporation of any other
class or series as to dividends, or upon
the voluntary or involuntary
dissolution, liquidation, or winding up
of the affairs of the Corporation, or
otherwise; and
j. Any other characteristics, preferences,
limitations, rights, privileges,
immunities or terms not inconsistent
with the provisions of this Article 4.
Except as otherwise provided in this
Certificate of Incorporation, each holder of
Common Stock shall be entitled to one vote for
each share of Common Stock held by him or her on
all matters submitted to stockholders for a vote.
THIRD: This Certificate has been duly adopted in
accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Informatix Holdings, Inc. has duly
caused this Certificate to be signed by Lena Donoflio, its
Secretary, this 4th day of November, 1999.
INFORMATIX HOLDINGS, INC.
By: /s/ Lena Donoflio
Secretary
<PAGE>
Exhibit 2.3 - Bylaws
BYLAWS
OF
AUTOLOGOUS WOUND THERAPY, INC.
(Formerly Informatix Holdings, Inc.)
ARTICLE I
OFFICES
Section 1.1 The registered office of the
corporation in the State of Delaware shall be 15 East North
Street, in the City of Dover, Delaware 19901, located in
the County of Kent, Delaware. The registered agent in
charge thereof shall be Incorporating Services, Ltd..
Section 1.2 The corporation may also have
offices at such other places both within and without the
State of Delaware as the board of directors may from time
to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1 All meetings of the stockholders
shall be held at such time and place, within or without the
State of Delaware, as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2.2 A meeting of stockholders shall be
held in each year for the election of directors at such
time and place as the board of directors shall determine.
Any other proper business, notice of which was given in the
notice of the meeting or in a duly executed waiver of
notice thereof, may be transacted at the annual meeting.
Elections of directors shall be by written ballot, unless
otherwise provided in the certificate of incorporation.
Section 2.3 Unless otherwise provided by law,
written notice of the annual meeting shall be given to each
stockholder entitled to vote thereat not less than ten nor
more than sixty days before the date of the meeting.
Section 2.4 The officer who has charge of the
stock ledger of the corporation shall prepare and make, at
least ten days before every election of directors, a
complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order, showing the
address of each stockholder and the number of shares
registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder during
ordinary business hours, for a period of at least ten days
prior to the election, either at a place within the city,
town or village where the election is to be held and which
place shall be specified in the notice of the meeting, or,
if not specified, at the place where said meeting is to be
held, and the list shall be produced and kept at the time
and place of election during the whole time thereof, and
subject to the inspection of any stockholder who may be
present.
<PAGE>
Section 2.5 Special meetings of the
stockholders, for any purpose or purposes, unless otherwise
prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be
called by the president or secretary at the request in
writing of stockholders owning a majority in amount of the
entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state
the purpose or purposes of the proposed meeting.
Section 2.6 Unless otherwise provided by law,
written notice of a special meeting of stockholders,
stating the time, place and purpose or purposes thereof,
shall be given to each stockholder entitled to vote
thereat, not less than ten nor more than sixty days before
the date fixed for the meeting.
Section 2.7 Business transacted at any special
meeting of stockholders shall be limited to the purposes
stated in the notice.
Section 2.8 The holders of a majority of the
stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute
a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by
statute or by the certificate of incorporation. If,
however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled
to vote thereat, present in person or represented by proxy,
shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting,
until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2.9 When a quorum is present at any
meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by
proxy shall decide any question brought before such
meeting, unless the question is one upon which by express
provision of the statutes or of the certificate of
incorporation, a different vote is required in which case
such express provision shall govern and control the
decision of such question.
Section 2.10 Each stockholder shall at every
meeting of the stockholders be entitled to one vote in
person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy
shall be voted on after three years from its date, unless
the proxy provides for a longer period, and, except where
the transfer books of the corporation have been closed or a
date has been fixed as a record date for the determination
of its stockholders entitled to vote, no share of stock
shall be voted on at any election for directors which has
been transferred on the books of the corporation within
twenty days next preceding such election of directors.
<PAGE>
Section 2.11 Any action required to be taken at
any annual or special meeting of stockholders, or any
action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed
by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be
given to those stockholders who have not consented in
writing.
ARTICLE III
DIRECTORS
Section 3.1 The number of directors which shall
constitute the whole board shall be such number as the
board of directors may determine. Except as hereinafter
provided in Section 3.2 of this Article, the directors,
other than those constituting the first board of directors,
shall be elected by the stockholders, and each director
shall hold office until his successor is elected and
qualified or until his earlier resignation or removal.
Directors need not be stockholders.
Section 3.2 Vacancies and newly created
directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the
directors then in office, though less than a quorum, or by
a sole remaining director.
Section 3.3 The business and affairs of the
corporation shall be managed by or under the direction of
its board of directors which may exercise all such powers
of the corporation and do all such lawful acts and things
as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to
be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 3.4 The board of directors of the
corporation may hold meetings, both regular and special,
either within or without the State of Delaware.
Section 3.5 The first meeting of each newly
elected board of directors shall be held immediately after
and at the same place as the meeting of the stockholders at
which it was elected and no notice of such meeting shall be
necessary to the newly elected directors in order legally
to constitute the meeting, provided a quorum shall be
present.
Section 3.6 Regular meetings of the board of
directors may be held without notice at such time and at
such place as shall from time to time be determined by the
board.
Section 3.7 Special meetings of the board may be
called by the president on two days notice to each
<PAGE>
director, either personally or by mail or by telegram;
special meetings shall be called by the president or
secretary in like manner and on like notice on the written
request of two directors. Section 3.8 At all
meetings of the board a majority of directors shall
constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the board of
directors, except as may be otherwise specifically provided
by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of
directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be
present.
Section 3.9 Unless otherwise restricted by the
certificate of incorporation or these by-laws, 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 the writing or writings are filed with the minutes of
proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 3.10 The board of directors may, by
resolution passed by a majority of the whole board,
designate one or more committees, each committee to consist
of one or more of the directors of the corporation. In the
absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not
disqualified from voting, whether or not he 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. Any such
committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the
powers and authority of the board of directors in the
management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed
to all papers which may require it; but no such committee
shall have the power or authority in reference to amending
the certificate of incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders
the sale, lease or exchange of all or substantially all of
the corporation s property and assets, recommending to the
stockholders a dissolution of the corporation or a
revocation of a dissolution or amending the by-laws of the
corporation; and, unless the resolution expressly so
provides, no such committee shall have the power or
authority to declare a dividend or to authorize the
issuance of stock or to adopt a certificate of ownership
<PAGE>
and merger.
Section 3.11 Each committee shall keep regular
minutes of its meetings and report the same to the board of
directors when required.
COMPENSATION OF DIRECTORS
Section 3.12 The board of directors shall have
the authority to fix the compensation of directors.
PARTICIPATION IN MEETING BY TELEPHONE
Section 3.13 Members of the board of directors
or any committee designated by such board may participate
in a meeting of the board or of a committee of the board 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
NOTICES
Section 4.1 Notices to directors and
stockholders shall be in writing and delivered personally
or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation.
Notice by mail shall be deemed to be given at the time when
the same shall be mailed. Notice to directors may also be
given by telegram.
Section 4.2 Whenever any notice is required to
be given under the provisions of the statutes or of the
certificate of incorporation or by these by-laws, 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 to notice.
Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person
attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor
the purpose of, any regular, or special meeting of the
stockholders, directors, or members of a committee of
directors need be specified in any written waiver of
notice.
ARTICLE V
OFFICERS
Section 5.1 The officers of the corporation shall
be chosen by the board of directors and shall be a
president, a vice-president, a secretary and a treasurer.
The board of directors may also choose additional vice-
presidents, and one or more assistant secretaries and
assistant treasurers. Any number of offices may be held by
the same person, unless the certificate of incorporation
otherwise provides.
Section 5.2 The board of directors at its first
meeting after each annual meeting of stockholders shall
choose a president, one or more vice-presidents, a secretary
<PAGE>
and a treasurer.
Section 5.3 The board of directors may appoint
such other officers and agents as it shall deem necessary
who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 5.4 The salaries of all officers and
agents of the corporation shall be fixed by the board of
directors.
Section 5.5 The officers of the corporation shall
hold office until their successors are chosen and qualified.
Any officer elected or appointed by the board of directors
may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring
in any office of the corporation shall be filled by the
board of directors.
THE PRESIDENT
Section 5.6 The president shall be the chief
executive officer of the corporation, shall preside at all
meetings of the stockholders and the board of directors,
shall have general and active management of the business of
the corporation and shall see that all orders and
resolutions of the board of directors are carried into
effect.
Section 5.7 He shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to
be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated
by the board of directors to some other officer or agent of
the corporation.
THE VICE-PRESIDENTS
Section 5.8 The vice-president, or if there
shall be more than one, the vice-presidents in the order
determined by the board of directors, shall, in the absence
or disability of the president, perform the duties and
exercise the powers of the president and shall perform such
other duties and have such other powers as the board of
directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 5.9 The secretary shall attend all
meetings of the board of directors and all meetings of the
stockholders and record all the proceedings of the meetings
of the corporation and of the board of directors in a book
to be kept for that purpose and shall perform like duties
for the standing committees when required. He shall give,
or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of
directors, and shall perform such other duties as may be
prescribed by the board of directors or president, under
whose supervision he shall be. He shall have custody of
the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may
<PAGE>
be attested by his signature or by the signature of such
assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his
signature.
Section 5.10 The assistant secretary, or if there
be more than one, the assistant secretaries in the order
determined by the board of directors, shall, in the absence
or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such
other duties and have such other powers as the board of
directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 5.11 The treasurer shall have the custody
of the corporate funds and securities and shall keep full
and accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by
the board of directors.
Section 5.12 He shall disburse the funds of the
corporation as may be ordered by the board of directors,
taking proper vouchers for such disbursements, and shall
render to the president and the board of directors at its
regular meetings or when the board of directors so requires,
an account of all his transactions as treasurer and of the
financial condition of the corporation.
Section 5.13 If required by the board of
directors, he shall give the corporation a bond (which shall
be renewed every six years) in such sum and with such surety
or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his
office and for the restoration to the corporation, in case
of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his
control belonging to the corporation.
Section 5.14 The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the
order determined by the board of directors, shall, in the
absence or disability of the treasurer, perform the duties
and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of
directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 6.1 Every holder of stock in the
corporation shall be entitled to have a certificate signed
by, or in the name of the corporation by, the chairman or
vice-chairman of the board of directors, or president or a
vice-president and the treasurer or an assistant treasurer,
or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him in
the corporation.
<PAGE>
Section 6.2 Where a certificate is signed (l) by
a transfer agent or an assistant transfer agent or (2) by a
transfer clerk acting on behalf of the corporation and a
registrar, the signature of any such chairman or vice-
chairman of the board of directors, president, vice-
president, treasurer, assistant treasurer, secretary or
assistant secretary may be facsimile. In case any officer
or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or
certificates shall cease to be such officer or officers of
the corporation, whether because of death, resignation or
otherwise, before such certificate or certificates have been
delivered by the corporation, such certificate or
certificates may nevertheless be adopted by the corporation
and be issued and delivered as though the person or persons
who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had
not ceased to be such officer or officers of the
corporation.
LOST CERTIFICATES
Section 6.3 The board of directors may direct a
new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate
or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to
give the corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have
been lost, stolen or destroyed upon the issuance of such new
certificate.
TRANSFERS OF STOCK
Section 6.4 Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and
record the transactions upon its books, unless the
corporation has a duty to inquire as to adverse claims with
respect to such transfer which has not been discharged. The
corporation shall have no duty to inquire into adverse
claims with respect to such transfer unless (a) the
corporation has received a written notification of an
adverse claim at a time and in a manner which affords the
corporation a reasonable opportunity to act on it prior to
the issuance of a new, reissued or re-registered share
certificate and the notification identifies the claimant,
the registered owner and the issue of which the share or
<PAGE>
shares is a part and provides an address for communications
directed to the claimant; or (b) the corporation has
required and obtained, with respect to a fiduciary, a copy
of a will, trust, indenture, articles of co-partnership, by-
laws or other controlling instruments, for a purpose other
than to obtain appropriate evidence of the appointment or
incumbency of the fiduciary, and such documents indicate,
upon reasonable inspection, the existence of an adverse
claim.
Section 6.5 The corporation may discharge any
duty of inquiry by any reasonable means, including notifying
an adverse claimant by registered or certified mail at the
address furnished by him or, if there be no such address, at
his residence or regular place of business that the security
has been presented for registration of transfer by a named
person, and that the transfer will be registered unless
within thirty days from the date of mailing the
notification, either (a) an appropriate restraining order,
injunction or other process issues from a court of competent
jurisdiction; or (b) an indemnity bond, sufficient in the
corporation s judgment to protect the corporation and any
transfer agent, registrar or other agent of the corporation
involved from any loss which it or they may suffer by
complying with the adverse claim, is filed with the
corporation.
FIXING RECORD DATE
Section 6.6 (a) In order that the corporation
may determine the stockholders entitled to notice 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 fix a record date, which
record date shall not precede the date upon which the
resolution fixing the record is adopted by the board of
directors, and which record date shall not be more than
sixty nor less than ten days before the date of such
meeting, nor more than ten days after the date upon which
the resolution fixing the record date of action with a
meeting is adopted by the board of directors, nor more than
sixty days prior to any other action.
(b) If no record date is fixed:
(1) The record date for determining
stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next
preceding the day on which the meeting is held.
(2) The record date for determining
stockholders entitled to express consent to corporate action
in writing without a meeting, when no prior action by the
board of directors is necessary, shall be the first date on
<PAGE>
which a signed written consent is delivered to the
corporation.
(3) The record date for determining
stockholders for any other purpose shall be at the close of
business on the day on which the board of directors adopts
the resolution relating thereto.
(c) 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.
REGISTERED STOCKHOLDERS
Section 6.7 Prior to due presentment for transfer
of any share or shares, the corporation shall treat the
registered owner thereof as the person exclusively entitled
to vote, to receive notifications and to all other benefits
of ownership with respect to such share or shares, and shall
not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 7.1 Dividends upon the capital stock of
the corporation, subject to the provisions of the
certificate of incorporation, if any, may be declared by the
board of directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the
provisions of the certificate of incorporation.
Section 7.2 Before payment of any dividend, there
may be set aside out of any funds of the corporation
available for dividends such sum or sums as the directors
from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or
for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for such other purpose
as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created.
ANNUAL STATEMENT
Section 7.3 The board of directors shall present
at each annual meeting, and at any special meeting of the
stockholders when called for by vote of the stockholders, a
full and clear statement of the business and condition of
the corporation.
CHECKS
Section 7.4 All checks or demands for money and
notes of the corporation shall be signed by such officer or
officers or such other persons as the board of directors may
from time to time designate.
<PAGE>
FISCAL YEAR
Section 7.5 The fiscal year of the corporation
shall be as determined by the board of directors.
SEAL
Section 7.6 The corporate seal shall have
inscribed thereon the name of the corporation, the year of
its organization and the words Corporate Seal, Delaware .
The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or in any manner reproduced.
ARTICLE VIII
AMENDMENTS
Section 8.1 These by-laws may be altered or
repealed at any regular meeting of the stockholders or of
the board of directors or at any special meeting of the
stockholders or of the board of directors if notice of such
alteration or repeal be contained in the notice of such
special meeting.
ARTICLE IX
INDEMNIFICATION
Section 9.1 The corporation shall indemnify any
person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise,
against expenses (including attorneys fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 9.2 The corporation shall indemnify any
person who was or is a party, or is threatened to be made a
party to any threatened, pending or completed action or suit
by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
<PAGE>
against expenses (including attorneys fees) actually and
reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except
that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and
only to the extent that the Court of Chancery or the court
in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other
court shall deem proper.
Section 9.3 To the extent that a director,
officer, employee or agent of the corporation has been
successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in sections 9.1 or
9.2 of this Article, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses
(including attorneys fees) actually and reasonably incurred
by him in connection therewith.
Section 9.4 Any indemnification under sections
9.1 or 9.2 of this Article (unless ordered by a court) shall
be made by the corporation only as authorized in the
specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in such section. Such determination shall
be made:
l. By the board of directors by a majority
vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or
2. If such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion,
or
3. By the stockholders.
Section 9.5 Expenses (including attorneys fees)
incurred by an officer or director in defending any civil,
criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director
or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the
corporation as authorized in
this Section. Such expenses (including attorneys fees)
incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors
deems appropriate. Section 9.6 The indemnification
and advancement of expenses provided by, or granted pursuant
to the other sections of this Article shall not be deemed
<PAGE>
exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled
under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity
while holding such office.
Section 9.7 The corporation shall have power to
purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would
have the power to indemnify him against such liability under
the provisions of this Article.
Section 9.8 For purposes of this Article,
references to the corporation shall include, in addition
to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify
its directors, officers, and employees or agents, so that
any person who is or was a director, officer employee or
agent of such constituent corporation, or is or was serving
at the request of such constituent corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under this Article with respect
to the resulting or surviving corporation as he would have
with respect to such constituent corporation of its separate
existence had continued.
Section 9.9 For purposes of this Article,
references to other enterprises shall include employee
benefit plans; references to fines shall include any
excise taxes assessed on a person with respect to any
employee benefit plan; and references to serving at the
request of the corporation shall include any service as a
director, officer, employee or agent of the corporation
which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an
employee benefit plan, its participants or beneficiaries;
and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner not opposed to
the best interests of the corporation as referred to in
this Article.
Section 9.10 The indemnification and advancement
of expenses provided by, or granted pursuant to, this
Article shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the
<PAGE>
benefit of the heirs, executors and administrators of such a
person.
Section 9.11 No director or officer of the
corporation shall be personally liable to the corporation or
to any stockholder of the corporation for monetary damages
for breach of fiduciary duty as a director or officer,
provided that this provision shall not limit the liability
of a director or officer (i) for any breach of the
director's or the officer's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of Delaware, or (iv) for any
transaction from which the director or officer derived an
improper personal benefit.
<PAGE>
Exhibit - 3.1 Corrected Certificate of Designations of the
Relative Rights and Preferences of the Series
A 5% Cumulative Preferred Stock and the
Series B Convertible Preferred Stock
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:01 AM 11/04/1999
991469849 - 2890868
CORRECTED CERTIFICATE OF DESIGNATION
OF THE RELATIVE RIGHTS AND PREFERENCES OF THE
SERIES A 5% CUMULATIVE PREFERRED STOCK AND
SERIES B CONVERTIBLE PREFERRED STOCK
OF
INFORMATIX HOLDINGS, INC.
Under Section 103(f) of the
General Corporation Law
of the State of Delaware
* * * * * * * * * *
INFORMATIX HOLDINGS, INC., a Delaware corporation (the
"Company"), hereby certifies that:
FIRST: On October 29, 1999, the Company caused to be
filed with the Secretary of State of Delaware a certain
Certificate of Designation of the Relative Rights and
Preferences of the Series A 5% Cumulative Preferred Stock
and Series B Convertible Preferred Stock of the Company (the
"Certificate of Designation"). The Certificate of
Designation was defective due to the fact that the Board of
Directors (the "Board") did not have the authority as of the
date of filing to establish series of, and designate the
rights and preferences with respect to, the Company's
Preferred Stock, $.0001 par value per share (the "Preferred
Stock"), without first amending the Company's Certificate of
Incorporation. As of the date hereof, the Company has
caused to be duly filed with the Secretary of State of
Delaware a Certificate of Amendment to the Certificate of
Incorporation of the Company (i) authorizing the Board to
designate the rights and preferences of the authorized
Preferred Stock of the Company and (ii) increasing the
number of authorized shares of Preferred Stock. With
respect to (ii) above, this Corrected Certificate of
Designation also increases the number of each series of
Preferred Stock established hereby compared to the number of
such shares contained in the defective Certificate of
Designation. The Board has duly adopted resolutions
<PAGE>
establishing series of Preferred Stock effective as of the
date hereof and designating their respective rights and
preferences as follows:
RESOLVED, that pursuant to the authority expressly
granted to and vested in the Board by provisions of the
Certificate of Incorporation, as amended, of the
Company, there hereby is created out of the shares of
Preferred Stock authorized in Article 4 of the
Certificate of Incorporation (i) a series of Preferred
Stock of the Company, to be named "Series A 5%
Cumulative Preferred Stock," consisting of one million
six hundred twenty-five thousand (1,625,000) shares,
and (ii) a series of Preferred Stock of the Company, to
be named "Series B Convertible Preferred Stock,"
consisting of seven million five hundred thousand
(7,500,000) shares, each of which series shall have the
following designation, powers, preferences and relative
and other special rights and the following
qualifications, limitations and restrictions:
A. Series A 5% Cumulative Preferred Stock
1. Designation and Rank: The designation of such series of
the Preferred Stock shall be the Series A 5% Cumulative
Preferred Stock, par value $.0001 per share (the "Series A
Preferred Stock"). The maximum number of shares of Series A
Convertible Preferred Stock shall be one million six hundred
twenty-five thousand (1,625,000) shares. The Series A
Preferred Stock shall have a stated liquidation preference
of $1.00 per share (the "Liquidation Preference Amount").
The Series A Preferred Stock shall rank (i) prior to the
common stock, par value $.0001 per share (the "Common
Stock"), and to all other classes and series of equity
securities of the Company which by its terms does not rank
senior to the Series A Preferred Stock ("Junior Stock"),
(ii) on parity with the Series B Convertible Preferred Stock
and with any class and series of equity securities which by
its terms shall rank on parity with the Series A Preferred
Stock ("Pari Passu Stock") and (iii) junior to any class or
series of equity securities which by its terms shall rank
senior to the Series A Preferred Stock. The Series A
Preferred Stock shall be subordinate to and rank junior to
all indebtedness of the Company now or hereafter
outstanding.
2. Dividends
(a) Payment of Dividends: The holders of record of
shares of Series A Preferred Stock shall be entitled to
receive dividends at the rate of five percent (5%) (the
"Dividend Rate") of the stated Liquidation Preference Amount
per share per annum, payable on a quarterly basis; provided,
however, that such dividends are declared by the Board of
<PAGE>
Directors and consist of funds at the time legally available
for the payment of dividends. Such dividends on the Series
A Preferred Stock shall be cumulative and shall accrue and
be payable to holders of record as they appear on the stock
books on such record dates as are fixed by the Board of
Directors, but only when, as and if declared by the Board of
Directors out of funds at the time legally available for the
payment of dividends. Such dividends on the Series A
Preferred Stock are prior and in preference to any
declaration or payment of any distribution (as defined in
Section 2(d) below) on any outstanding shares of Common
Stock or any other equity securities of the Company ranking
junior to the Series A Preferred Stock as to the payment of
dividends. Such dividends shall accrue on each share of
Series A Preferred Stock from day to day from the date of
initial issuance thereof whether or not earned or declared.
(b) The Corporation may, in its sole discretion, but
is not obligated to, pay any or all dividends in Common
Stock rather than cash. The Corporation shall pay such
dividend by issuing to such holder shares of Common Stock
that have an aggregate Market Value (as defined below) equal
to the amount of the cash dividends otherwise payable to
such holder on the applicable dividend payment date. For
purposes of this paragraph, the aggregate "Market Value" of
the Common Stock with respect to any dividend payment date
shall mean the average of the Closing Prices (as defined
below) of the shares of Common Stock for the 20 consecutive
Trading Days preceding the date that is five Trading Days
prior to the dividend payment date, multiplied by the number
of shares to be issued to such holder. For purposes of this
paragraph, "Closing Price" shall mean the last reported sale
price on such day or, in case no such sale takes place on
such day, the average of the reported closing bid and asked
prices of the Common Stock in each case on a national
securities exchange, or, if the Common Stock is not listed
or admitted to trading on any such exchange, on the NASDAQ
National Market, Small Cap Market or other quotation system
on which the Common Stock is listed or admitted to trading
or quoted, or, if not listed or admitted to trading or
quoted on any national securities exchange or quotation
system, the average of the closing bid and asked prices of
the Common Stock in the over-the-counter market on the day
in question as reported by the National Quotation Bureau
Incorporated, or a similarly generally accepted reporting
service, or, if not so available in such manner, as
furnished by any NASD member firm selected from time to time
by the Board of Directors of the Corporation for that
purpose. In the event that the Closing Price as of any date
cannot be determined using any of the foregoing methods, it
shall be an amount equal to the fair market value of a share
of Common Stock as determined by a recognized investment
banking firm selected by the Corporation and reasonably
<PAGE>
satisfactory to the holder of the Series A Preferred Stock
being redeemed.
(c) So long as any shares of Series A Preferred Stock
are outstanding, the Company shall not declare, pay or set
apart for payment any dividend or make any distribution on,
any Junior Stock (other than dividends or distributions
payable in additional shares of Junior Stock), unless at the
time of such dividend or distribution the Company shall have
paid all accrued and unpaid dividends on the outstanding
shares of Series A Preferred Stock.
(d) In the event of a dissolution, liquidation or
winding up of the Company pursuant to Section 4, all accrued
and unpaid dividends on the Series A Preferred Stock shall
be payable on the day immediately preceding the date of
payment of the preferential amount to the holders of Series
A Preferred Stock. In the event of a mandatory redemption
pursuant to Section 6, all accrued and unpaid dividends on
the Series A Preferred Stock shall be payable on the day
immediately preceding the date of such redemption.
(e) For purposes hereof, unless the context otherwise
requires, "distribution" shall mean the transfer of cash or
property without consideration, whether by way of dividend
or otherwise, payable other than in shares of Common Stock
or other equity securities of the Company, or the purchases
or redemption of shares of the Company (other than
redemptions set forth in Section 6 below or repurchases of
Common Stock held by employees or consultants of the
Corporation upon termination of their employment or services
pursuant to agreements providing for such repurchase) for
cash or property.
3. Voting Rights. So long as the Series A Preferred
Stock is outstanding, each share of Series A Preferred Stock
shall entitle the holder thereof to vote on all matters
voted on by holders of the Common Stock of the Company
voting together as a single class with the other shares
entitled to vote, at all meetings of the stockholders of the
Company. With respect to any such vote, each share of
Series A Preferred Stock shall entitle the holder thereof to
cast the number of votes equal to the number of votes which
could be cast in such vote by a holder of one (1) share of
Common Stock of the Company.
4. Liquidation Preference.
(a) In the event of the liquidation, dissolution or
winding up of the affairs of the Company, whether voluntary
or involuntary, after payment of provision for payment of
the debts and other liabilities of the Company, the holders
of shares of the Series A Preferred Stock then outstanding
<PAGE>
shall be entitled to receive, out of the assets of the
Company whether such assets are capital or surplus of any
nature, an amount equal to the Liquidation Preference Amount
of the Series A Preferred Stock plus any accrued and unpaid
dividends before any payment shall be made or any assets
distributed to the holders of the Common Stock or any other
Junior Stock. If the assets of the Company are not
sufficient to pay in full the Liquidation Preference Amount
plus any accrued and unpaid dividends payable to the holders
of outstanding shares of the Series A Preferred Stock and
any series of preferred stock or any other class of stock on
a parity, as to rights on liquidation, dissolution or
winding up, with the Series A Preferred Stock, if any,
notably in accordance with the respective amounts that would
be payable on such shares if all amounts payable thereon
were paid in full. The liquidation payment with respect to
each outstanding fractional share of Series A Preferred
Stock shall be equal to a ratably proportionate amount of
the liquidation payment with respect to each outstanding
share of Series A Preferred Stock, in accordance with the
respective amounts that would be payable on such shares if
all amounts payable thereon were paid in full. All payments
for which this Section 4(a) provides shall be in cash,
property (valued at its fair market value as determined by
the Company's independent, outside accountant) or a
combination thereof, provided, however, that no cash shall
be paid to holders of Junior Stock unless each holder of the
outstanding hares of Series A Preferred Stock has been paid
in cash the full Liquidation Preference Amount plus any
accrued and unpaid dividends to which such holder is
entitled as provided herein. After payment of the full
Liquidation Preference Amount plus any accrued and unpaid
dividends to which each holder is entitled, such holders of
shares of Series A Preferred Stock will not be entitled to
any further participation as such in any distribution of the
assets of the Company.
(b) A consolidation of the Company with or into any
other corporation or corporations, or a sale of all or
substantially all of the assets of the Company, or the
effectuation by the Company of a transaction or series of
transactions in which more than 50% of the voting shares of
the Company is disposed of or conveyed, shall not be deemed
to be a liquidation, dissolution, or winding up within the
meaning of this section 4. In the event of the merger or
consolidation of the Company with or into another
corporation, the Series A Preferred Stock shall maintain its
relative powers, designations and preferences provided for
herein and no merger shall result inconsistent therewith.
(c) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Company, stating a payment date and the place where the
distributable amounts shall be payable, shall be given by
<PAGE>
mail, postage prepaid, no less than 45 days prior to the
payment date stated therein, to the holders of record of the
Series A Preferred Stock at their respective addresses as
the same shall appear on the books of the Company.
5. No Preemptive Rights. No holder of the Series A
Preferred Stock shall be entitled to rights to subscribe
for, purchase or receive any part of any new or additional
shares of any class, whether now or hereinafter authorized,
or of bonds or debentures, or other evidences of
indebtedness convertible into or exchangeable for shares of
any class, but all such new or additional shares of any
class, or any bond, debentures or other evidences of
indebtedness convertible into or exchangeable for shares,
may be issued and disposed of by the Board on such terms and
for such consideration (to the extent permitted by law), and
to such person or persons as the Board in their absolute
discretion may deem advisable.
6. Mandatory Redemption.
(a) Except as provided in this Section 6, the Series
A Preferred Stock is not subject to redemption.
(b) The Company shall redeem for cash at a price per
share equal to the Series A Liquidation Preference Amount
plus all accrued but unpaid dividends (the "Redemption
Price") all of the then outstanding shares of Series A
Preferred Stock on the earlier of (i) the seventh
anniversary of the date of issuance of the Series A
Preferred Stock (ii) forty-five (45) days following the end
of a fiscal quarter of the Company as of which the Company
has had aggregate gross revenues for a four (4) consecutive
fiscal quarter period of fifty million dollars ($50,000,000)
or more.
(c) If on a mandatory redemption date the Board
determines that funds of the Corporation legally available
for redemption of the Series A Preferred Stock shall be
insufficient to discharge such redemption requirements in
full, such funds as are so available for such purpose shall
be set aside and used for the redemption. Such redemption
requirements shall be cumulative, so that if such
requirements shall not be fully discharged as they accrue
because of the insufficiency of funds legally available, all
legally available funds shall be applied thereto until such
requirements are fully discharged. There shall be a
redemption within 10 days after such funds become available.
(d) In the event of the redemption of only a part of
the outstanding shares of Series A Preferred Stock, the
Corporation shall effect such redemption pro rata according
to the number of shares of Series A Preferred Stock held by
each holder of Series A Preferred Stock as of 10 days before
<PAGE>
the mandatory redemption date.
(e) Not less than 10 days nor more than 60 days prior
to a mandatory redemption date, written notice (the
"Mandatory Redemption Notice") shall be mailed, postage
prepaid, to each holder of record of the Series A Preferred
Stock to be redeemed at his post office address last shown
on the records of the Company. The Mandatory Redemption
Notice shall state:
(i) The total number of shares of Series A
Preferred Stock being redeemed;
(ii) The total number of shares of Series A
Preferred Stock held by the holder that the
Corporation shall redeem;
(iii) The mandatory redemption date and
the Redemption Price for the Series A Preferred
Stock; and
(iv) That the holder is to surrender to
the Corporation, in the manner and at the place
designated, his certificate or certificates
representing the shares of Series A Preferred
Stock to be redeemed.
(f) If the Mandatory Redemption Notice shall have
been duly given, and if on the mandatory redemption
date the Redemption Price is paid, then notwithstanding
that the certificates evidencing any of the shares of
Series A Preferred Stock so called for redemption shall
not have been surrendered, the Redemption Price with
respect to such shares shall cease to increase after
the mandatory redemption date and all rights with
respect to such shares shall forthwith after the
mandatory redemption date terminate, except only the
right of the holders to receive the Redemption Price
upon surrender of their certificate or certificates
therefor.
7. Vote to Change the Terms of or Issue Preferred
Stock. The affirmative vote at a meeting duly called
for such purpose or the written consent without a
meeting of the holders of not less than three-fourth
( ) of the then outstanding shares of Series A
Preferred Stock, shall be required for any change to
this Certificate of Designation or the Company's
Certificate of Incorporation which would amend, alter,
change or repeal may of the powers, designations,
preferences and rights of the Series A Preferred Stock.
8. Lost or Stolen Certificates. Upon receipt by the
Company of evidence satisfactory to the Company of the
<PAGE>
loss, theft, destruction or mutilation of any Preferred
Stock Certificates representing the shares of Series A
Preferred Stock, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the
holder to the Company and, in the case of mutilation,
upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver
new preferred stock certificate(s) of the like lienor
and date; provided, however, the Company shall not be
obligated to re-issue Preferred Stock Certificates if
the holder contemporaneously requests the Company to
convert such shares of Series A Preferred Stock into
Common Stock.
9. Remedies, Characterizations, Other Obligations,
Breaches and Injunctive Relief. The remedies provided
in this Certificate of Designation shall be cumulative
and in addition to all other remedies available under
this Certificate of Designation, at law or in equity
(including a decree of specific performance and/or
other injunctive relief), no remedy contained herein
shall be deemed a waiver of compliance with the
provisions giving rise to such remedy and nothing
herein shall limit a holder's right to pursue actual
damages for any failure by the Company to comply with
the terms of this Certificate Designation. Amounts set
forth or provided for herein with respect to payments,
conversion and the like (and this computation thereof)
shall be the amounts to be received by the holder
thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the
Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holders of
the Series A Preferred Stock and that the remedy at law
for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach
or threatened breach, the holders of the Series A
Preferred Stock shall be entitled, in addition to all
other available remedies, to an injunction restraining
any breach, without the necessity of showing economic
loss and without any bond or other security being
required.
10. Specific Shall Not Limit General; Construction.
No specific provision contained in this Certificate of
Designation shall limit or modify any more general
provision contained herein. This Certificate of
Designation shall be deemed to be jointly drafted by
the Company and all initial purchasers of the Series A
Preferred Stock and shall not be construed against any
person as the drafter hereof.
11. Failure or Indulgence Not Waiver. No failure or
<PAGE>
delay on the part of a holder of Series A Preferred
Stock in the exercise or any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right
or privilege preclude other or further exercise thereof
or of any other right, power or privilege.
B. Series B Convertible Preferred Stock
1. Designation and Rank: The designation of such
series of the Preferred Stock shall be the Series B
Convertible Preferred Stock, par value $.0001 per share
(the "Series B Preferred Stock"). The maximum number
of shares of Series B Preferred Stock shall be seven
million five hundred thousand (7,500,000) shares. The
Series B Preferred Stock shall have a stated
liquidation preference of $.0001 per share (the "Series
B Liquidation Preference Amount"). The Series B
Preferred Stock shall rank (i) prior to the Common
Stock, and to all other classes and series of equity
securities of the Company which by its terms does not
rank senior to the Series B Preferred Stock ("Junior
Stock"), (ii) on parity with the Series A Preferred
Stock and with any class and series of equity
securities which by its terms shall rank on parity with
the Series B Preferred Stock ("Pari Passu Stock") and
(iii) junior to any class or series of equity
securities which by its terms shall rank senior to the
Series B Preferred Stock. The Series B Preferred Stock
shall be subordinate to and rank junior to all
indebtedness of the Company now or hereafter
outstanding.
2. Dividends. Holders of record of shares of
Series B Preferred Stock shall not be entitled to
receive any dividends on shares of Series B Preferred
Stock
3. Voting Rights. So long as the Series B Preferred
Stock is outstanding, each share of Series B Preferred
Stock shall entitle the holder thereof to vote on all
matters voted on by holders of the Common Stock of the
Company voting together as a single class with the
other shares entitled to vote, at all meetings of the
stockholders of the Company. With respect to any such
vote, each share of Series B Preferred Stock shall
entitle the holder thereof to cast the number of votes
equal to the number of votes which could be cast in
such vote by a holder of one (1) share of Common Stock
of the Company.
4. Liquidation Preference.
(a) In the event of the liquidation, dissolution
<PAGE>
or winding up of the affairs of the Company, whether
voluntary or involuntary, after payment of provision
for payment of the debts and other liabilities of the
Company, the holders of shares of the Series B
Preferred Stock then outstanding shall be entitled to
receive, out of the assets of the Company whether such
assets are capital or surplus of any nature, an amount
equal to the Series B Liquidation Preference Amount of
the Series B Preferred Stock plus any accrued and
unpaid dividends before any payment shall be made or
any assets distributed to the holders of the Common
Stock or any other Junior Stock. If the assets of the
Company are not sufficient to pay in full the Series B
Liquidation Preference Amount plus any accrued and
unpaid dividends payable to the holders of outstanding
shares of the Series B Preferred Stock and any series
of preferred stock or any other class of stock on a
parity, as to rights on liquidation, dissolution or
winding up, with the Series B Preferred Stock, if any,
notably in accordance with the respective amounts that
would be payable on such shares if all amounts payable
thereon were paid in full. The liquidation payment
with respect to each outstanding fractional share of
Series B Preferred Stock shall be equal to a ratably
proportionate amount of the liquidation payment with
respect to each outstanding share of Series B Preferred
Stock, in accordance with the respective amounts that
would be payable on such shares if all amounts payable
thereon were paid in full. All payments for which this
Section 4(a) provides shall be in cash, property
(valued at its fair market value as determined by the
Company's independent, outside accountant) or a
combination thereof, provided, however, that no cash
shall be paid to holders of Junior Stock unless each
holder of the outstanding hares of Series B Preferred
Stock has been paid in cash the full Series B
Liquidation Preference Amount plus any accrued and
unpaid dividends to which such holder is entitled as
provided herein. After payment of the full Series B
Liquidation Preference Amount plus any accrued and
unpaid dividends to which each holder is entitled, such
holders of shares of Series B Preferred Stock will not
be entitled to any further participation as such in any
distribution of the assets of the Company.
(b) A consolidation of the Company with or into
any other corporation or corporations, or a sale of all
or substantially all of the assets of the Company, or
the effectuation by the Company of a transaction or
series of transactions in which more than 50% of the
voting shares of the Company is disposed of or
conveyed, shall not be deemed to be a liquidation,
dissolution, or winding up within the meaning of this
section 4. In the event of the merger or consolidation
<PAGE>
of the Company with or into another corporation, the
Series B Preferred Stock shall maintain its relative
powers, designations and preferences provided for
herein and no merger shall result inconsistent
therewith.
(c) Written notice of any voluntary or
involuntary liquidation, dissolution or winding up of
the affairs of the Company, stating a payment date and
the place where the distributable amounts shall be
payable, shall be given by mail, postage prepaid, no
less than 45 days prior to the payment date stated
therein, to the holders of record of the Series B
Preferred Stock at their respective addresses as the
same shall appear on the books of the Company.
5. No Preemptive Rights. No holder of the Series B
Preferred Stock shall be entitled to rights to
subscribe for, purchase or receive any part of any new
or additional shares of any class, whether now or
hereinafter authorized, or of bonds or debentures, or
other evidences of indebtedness convertible into or
exchangeable for shares of any class, but all such new
or additional shares of any class, or any bond,
debentures or other evidences of indebtedness
convertible into or exchangeable for shares, may be
issued and disposed of by the Board on such terms and
for such consideration (to the extent permitted by
law), and to such person or persons as the Board in
their absolute discretion may deem advisable.
6. Mandatory Conversion. Shares of Series B
Preferred Stock shall be subject to mandatory
conversion ("Mandatory Conversion") as follows:
(a) In the event that the Company, prior to the
first anniversary of the date of issuance of the Series
B Preferred Stock, issues additional shares of Common
Stock to investors in exchange for cash in one or more
offerings (the "Equity Financings") with aggregate
gross proceeds to the Company of up to $1,200,000,
then, for each one (1) share of Common Stock issued in
an Equity Financing, three (3) shares of Series B
Preferred Stock (up to an aggregate number equal to the
number of shares of Series B Preferred Stock then
outstanding) shall automatically and without any action
on the part of the holders thereof each convert into
one (1) fully paid and nonassessable share of Common
Stock.
(b) In the event that, as of the first
anniversary of the date of issuance of the Series B
Preferred Stock, the aggregate gross proceeds from
Equity Financings is less than $1,200,000, then for
<PAGE>
each One Dollar ($1.00) of such shortfall, seven and
one-half (7.5) shares of Series B Preferred Stock (up
to an aggregate number equal to the number of shares of
Series B Preferred Stock then outstanding) shall
automatically and without any action on the part of the
holders thereof each convert into one (1) fully paid
and nonassessable share of Common Stock.
(c) The Company shall effect any Mandatory
Conversion of less than all outstanding shares of
Series B Preferred Stock pro rata among the holders
thereof according to the number of shares of Series B
Preferred Stock held by each holder as of the Mandatory
Conversion Date.
(d) Within fifteen (15) days following the
closing on an Equity Financing and/or the first
anniversary of the date of issuance of the Series B
Preferred Stock (a "Mandatory Conversion Date"), the
Company shall provide to each holder of Series B
Preferred Stock a notice of Mandatory Conversion (a
"Conversion Notice"), including the nature of the event
triggering Mandatory Conversion, a calculation of the
aggregate number of shares of Series B Preferred Stock
to be converted and the number of shares held by each
such holder to be converted.
(e) On a Mandatory Conversion Date, the
outstanding shares of Series B Preferred Stock set
forth in a Conversion Notice shall be converted
automatically without any further action by the holders
of such shares and whether or not the certificates
representing such shares are surrendered to the Company
or its transfer agent; provided, however, that the
Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon
conversion of any shares of Series B Preferred Stock
unless certificates evidencing such shares of Series B
Preferred Stock are either delivered to the Company or
the holder notifies the Company that such certificates
have been lost, stolen, or destroyed, and executes an
agreement satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection
therewith. Upon the occurrence of the Mandatory
Conversion of the Series B Preferred Stock pursuant to
this Section 5(c), the holders of the Series B
Preferred Stock shall surrender the Preferred Stock
Certificates representing the Series B Preferred Stock
for which the Mandatory Conversion has occurred to the
Company and the Company shall deliver to each holder a
certificate evidencing the shares of Common Stock
issuable upon such conversion (and a certificate
evidencing any residual shares of Series B Preferred
Stock evidenced by the surrendered certificate and not
<PAGE>
subject to conversion within three (3) business days of
the holder's delivery of the applicable Series B
Preferred Stock certificates.
7. Mandatory Redemption.
(a) Except as provided in this Section 7, the
Series B Preferred Stock is not subject to redemption.
(b) In the event that any shares of Series B
Preferred Stock remain outstanding following all
Mandatory Conversions under Section 6 above, the
Company shall redeem for cash at a price per share
equal to the Series B Liquidation Preference Amount(the
"Redemption Price") all of the then outstanding shares
of Series B Preferred Stock fifteen (15) days following
the final Mandatory Conversion Date (the "Mandatory
Redemption Date").
(c) Not less than 10 days prior to the Mandatory
Redemption Date, written notice (the "Mandatory
Redemption Notice") shall be mailed, postage prepaid,
to each holder of record of the Series B Preferred
Stock to be redeemed at his post office address last
shown on the records of the Company. The Mandatory
Redemption Notice shall state that the holder is to
surrender to the Corporation, in the manner and at the
place designated, his certificate or certificates
representing the shares of Series B Preferred Stock to
be redeemed.
(d) If the Mandatory Redemption Notice shall
have been duly given, and if on the Mandatory
Redemption Date the Redemption Price is paid, then
notwithstanding that the certificates evidencing any of
the shares of Series B Preferred Stock so called for
redemption shall not have been surrendered, all rights
with respect to such shares shall forthwith after the
Mandatory Redemption Date terminate, except only the
right of the holders to receive the Redemption Price
upon surrender of their certificate or certificates
therefor.
8. Vote to Change the Terms of or Issue Preferred
Stock. The affirmative vote at a meeting duly called
for such purpose or the written consent without a
meeting of the holders of not less than three-fourth
( ) of the then outstanding shares of Series B
Preferred Stock, shall be required for any change to
this Certificate of Designation or the Company's
Certificate of Incorporation which would amend, alter,
change or repeal may of the powers, designations,
preferences and rights of the Series B Preferred Stock.
<PAGE>
9. Lost or Stolen Certificates. Upon receipt by the
Company of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of any Preferred
Stock Certificates representing the shares of Series B
Preferred Stock, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the
holder to the Company and, in the case of mutilation,
upon surrender and cancellation of the Preferred Stock
Certificate(s), the Company shall execute and deliver
new preferred stock certificate(s) of the like lienor
and date; provided, however, the Company shall not be
obligated to re-issue Preferred Stock Certificates if
the holder contemporaneously requests the Company to
convert such shares of Series B Preferred Stock into
Common Stock.
10. Remedies, Characterizations, Other Obligations,
Breaches and Injunctive Relief. The remedies provided
in this Certificate of Designation shall be cumulative
and in addition to all other remedies available under
this Certificate of Designation, at law or in equity
(including a decree of specific performance and/or
other injunctive relief), no remedy contained herein
shall be deemed a waiver of compliance with the
provisions giving rise to such remedy and nothing
herein shall limit a holder's right to pursue actual
damages for any failure by the Company to comply with
the terms of this Certificate Designation. Amounts set
forth or provided for herein with respect to payments,
conversion and the like (and this computation thereof)
shall be the amounts to be received by the holder
thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the
Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holders of
the Series B Preferred Stock and that the remedy at law
for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach
or threatened breach, the holders of the Series B
Preferred Stock shall be entitled, in addition to all
other available remedies, to an injunction restraining
any breach, without the necessity of showing economic
loss and without any bond or other security being
required.
11. Specific Shall Not Limit General; Construction.
No specific provision contained in this Certificate of
Designation shall limit or modify any more general
provision contained herein. This Certificate of
Designation shall be deemed to be jointly drafted by
the Company and all initial purchasers of the Series B
Preferred Stock and shall not be construed against any
person as the drafter hereof.
<PAGE>
12. Failure or Indulgence Not Waiver. No failure or
delay on the part of a holder of Series B Preferred
Stock in the exercise or any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right
or privilege preclude other or further exercise thereof
or of any other right, power or privilege.
SECOND: This Corrected Certificate of
Designation shall be effective as of the date of filing
with the Secretary of State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed
and subscribed this Certificate and does affirm the
foregoing as true this 4th day of November, 1999.
INFORMATIX HOLDINGS, INC.
By: /s/ Lena Donoflio
Secretary
<PAGE>
Exhibit 5.1 - Voting Agreement
VOTING AGREEMENT
This VOTING AGREEMENT entered into this 4th day of
November, 1998, by and among the undersigned
stockholders (each a "Stockholder" and collectively the
"Stockholders") of AuTologous Wound Therapy, Inc.,
formerly known as Informatix Holdings, Inc., a Delaware
corporation (the "Company") and Jim D. Swink, Jr.
("Swink")
WHEREAS, the Company entered into a Plan and
Agreement of Merger with AuTologous Wound Therapy,
Inc., an Arkansas corporation ("AWT"), dated
October 22, 1999 (the "Merger Agreement"), and the
Merger Agreement provides for the former AWT
stockholders to acquires shares of voting common stock
in the Company (the "Stock"):
WHEREAS, the stockholders have agreed to vote the
Stock in any election for the members of the Board of
Directors and on other items requiring shareholder
consent in accordance with the terms of this Agreement;
and
WHEREAS, each Stockholder has agreed to close in
consideration of the other undersigned Stockholders
execution and delivery of this Voting Agreement and the
performance of their obligations hereunder and the
undersigned Stockholders have agreed to vote their
shares in accordance with the terms of this Agreement
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual
covenants and premises contained herein, and other good
and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree
as follows:
1. Voting Agreement. Pursuant to the Delaware
General Corporation Law (the "Act"), specifically 8
Del. C 101 et. seq, the undersigned Stockholders
hereby create this voting agreement for the purposes
set forth herein in accordance with Section 218 of the
Act. Each Stockholder acknowledges that in
consideration of the agreements of the other
Stockholders set forth herein, the Stockholder approved
the Merger and is expressly relying on the voting
covenants set forth herein.
2. Purpose. The purpose of this Agreement shall
be to provide for the election of director
representatives of the Company and voting on certain
<PAGE>
corporate actions requiring shareholder approval.
3. Term. This Agreement shall remain in full
force and effect until the earlier of (i) (a) the
Company filing a registration statement pursuant to the
Securities Act of 1933, as amended registering the
Stock covered by this Agreement; (b) there is a change
of control in the Company's voting stock (as
hereinafter defined); or (c) the written consent of Jim
D. Swink, Jr., terminating the Agreement. For purposes
of this Agreement, a "change of control" shall be
defined as a change in the ownership of the voting
stock of the Company either by virtue of the issuance
of additional shares or transfers by existing
shareholders to persons not shareholders as of the date
hereof, or any combination of the foregoing, such that
the shareholders of the Company as of the date of this
Agreement (determined after giving effect to the
Merger), hold less than forty percent (40%) of the
issued and outstanding voting stock of the Company.
4. Voting Obligations. During the term hereof,
the Stockholders agree to vote the shares of common
stock in the Company owned or voted by such
Stockholders as follows:
(a) Nomination of Directors. The
Stockholders shall vote their shares in the Company so
as to cause the designee(s) of Quasar Investments, LLC
("Quasar") to be nominated as candidates for positions
on the Board of Directors (the Quasar Nominees ) which
are to be elected by virtue of the Stockholders stock
ownership position in the Company, so long as such
designee is eligible and legally competent to serve as
such. In the event of the removal, resignation or
legal incapacity of such designee hereunder, Quasar
shall have the right to designate the nominee to fill
such vacancy and the Stockholders shall vote in favor
of such nominee in accordance with the terms of this
Agreement.
(b) Election of Directors. The Stockholders
shall vote their shares in favor of the election of the
Quasar Nominees as members of the Board of Directors.
The parties acknowledge that the Company has cumulative
voting in the election of directors and the obligations
hereunder shall be limited to each Stockholders
obligation to vote at least one vote per share of stock
owned for each of the Quasar Nominees during each
election. For example, if seven directors are to be
elected, each Stockholder would be entitled to cast
seven votes for each share of stock owned in the
election of directors under the cumulative voting right
and, pursuant to this Agreement, each Stockholder
<PAGE>
agrees to cast one vote for share of stock owned for
each of the Quasar Nominees and shall be free to
cumulate and vote the remaining five votes per share
among one or more other candidates for the Board of
Directors.
(c) During the term of this Agreement, any
action requiring shareholder approval pursuant to
Section 251 et seq., 271 and 275 of the Act,
specifically dealing with the merger of the Company,
sale of substantially all of its assets or liquidation,
the stockholders agree to vote their shares of stock in
either approving or voting against such proposed
actions in the same manner as the Stock owned by Quasar
Investments, LLC is going to vote with respect to such
matter. At the request of Quasar Investments, LLC,
each stockholder shall deliver an irrevocable proxy in
favor of Quasar Investments, LLC with respect to the
foregoing actions if a stockholder vote is requested at
any special or regular meeting of the stockholders of
the company or if such action is requested to be taken
by consent to corporate action without a meeting.
(d) After Acquired Shares. The voting
obligations set forth herein shall apply to any
additional shares of the Company's stock issued to a
Stockholder from and after the date hereof.
(e) Board of Directors. Any Stockholder
elected to serve as a director shall use his best
efforts in discharging his duties as a director of the
Company and seeing that the Board functions as a
cohesive, unified governing board.
5. Decrease in Board Representation. In the
event the number of Directors designated by the
Stockholders and the holders of the Stock under the
voting rights granted hereunder is reduced during the
term of this Agreement, then the rights hereunder shall
be adjusted to take into account the reduction in the
number of seats on the Board of Directors available to
the Stockholders.
6. Breach of Voting Obligations. In the event a
Stockholder breaches his obligations hereunder, upon
the demand by Quasar Investments, LLC, such breaching
Stockholder shall execute an irrevocable proxy in favor
of the designee of Quasar, for the shares covered by
this Agreement owned or voted by such Stockholder for
all matters covered by this Agreement which are to be
voted upon by the Stockholders. Such irrevocable proxy
shall be in a form approved by counsel to Quasar and in
a form where such proxy constitutes an irrevocable
proxy coupled with an interest under the Act.
<PAGE>
7. Miscellaneous.
(a) Validity. Each Stockholder warrants
and represents that this agreement has been duly
executed and delivered, constitutes the legal, valid
and binding obligation of the Stockholder, enforceable
against the Stockholder in accordance with its terms,
except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws
affecting the enforcement of creditors' rights, or by
general principles of equity.
(b) Assignment. Neither this agreement, nor
any of the rights, obligations and duties hereunder,
may be assigned or otherwise transferred by either
party without the prior written consent of the other
party.
(c) Survival. The covenants, agreements,
representations, warranties and obligations of the
parties hereto shall survive the termination of this
Agreement.
(d) Fees of Legal Counsel. In the event
either party to this agreement shall employ legal
counsel with respect to any claim concerning the
interpretation or any breach of this agreement, or
otherwise to protect its rights hereunder or to enforce
any term or provision hereof, the prevailing party
shall have the right to recover from the other party
all of its reasonable attorneys' fees and out of pocket
costs and expenses incurred in connection therewith.
(e) Further Assurances. The parties agree
that from time to time hereafter, upon request, each of
them will execute, acknowledge and deliver such other
documents and instruments, and take such further
action, as may be reasonably necessary to carry out the
intent of this agreement.
(f) Modification. No provision contained
herein may be modified, amended or waived except by
written agreement or consent signed by the party to be
bound thereby.
(g) Binding Effect and Benefit. This
agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective
heirs, executors, administrators, personal
representatives, successors and permitted assigns.
(h) Specific Performance. The parties
recognize and agree that the obligations to be
<PAGE>
performed hereunder are unique and in the event either
party fails or refuses to perform its obligations
hereunder in breach of this agreement, the other party
would be irreparably harmed and would not have an
adequate remedy at law for money damages. Therefore,
each party agrees that in such circumstances the other
party shall be entitled to a temporary and/or permanent
injunction to prevent the breach of this agreement and
to specific performance of the covenants contained
herein, in addition to any other remedy to which it may
be entitled hereunder, or otherwise, at law or in
equity.
(i) Time for Performance. Time is of the
essence in this agreement.
(j) Waiver. No waiver of a breach or
violation of any provision of this agreement shall
operate or be construed as a waiver of any subsequent
breach or limit or restrict any right or remedy
otherwise available. Any waiver must be in writing.
(k) Rights and Remedies Cumulative. The
rights and remedies expressed herein are cumulative and
not exclusive of any rights and remedies otherwise
available.
(l) Entire Agreement. This agreement,
together with the exhibits hereto, constitutes the
entire agreement of the parties and supersedes any and
all other prior agreements, oral or written, with
respect to the subject matter contained herein. There
are no representations, warranties, covenants or other
agreements, oral or written, between the parties in
connection with this transaction, other than those
expressly set forth herein.
(m) Governing Law. This agreement shall be
subject to and governed by the laws of the State of
Delaware.
IN WITNESS WHEREOF, the parties hereto have
executed this agreement effective as of the day and
year aforesaid.
<PAGE>
Number of Shares STOCKHOLDER:
2,655,000 QUASAR INVESTMENTS, LLC
By: BDR, Inc., Managing Member
By: /s/ Jim D. Swink, Jr., President
125,000 BDR, INC.
By: /s/ Jim D. Swink, Jr., President
20,000 F & G INVESTMENT PARTNERSHIP
By: /s/ Alec Farmer, Partner
360,000 KAB INVESTMENTS
By: /s/ Earnest Bartlett, President
390,000 GWR TRUST
By: /s/ Greg Stephens, Trustee
270,000 SPH INVESTMENTS
By: /s/ Stephen Harrington, President
180,000 SPH EQUITIES
By: /s/ Stephen Harrington, President
300,000 CRANBOURNE INVESTMENTS
By: /s/ Harold E. Chaffe, President
441,000 DISCRETIONARY INVESTMENT TRUST
By: /s/ Richard Zona, Trustee
<PAGE>
309,000 GATKIN INVESTMENTS
By: /s/ S. E. Edwards, President
_________
TOTAL: 5,050,000
<PAGE>
Exhibit 6.1 - Royalty Agreement with Charles Worden
ROYALTY AGREEMENT
This Agreement is made and entered into this 27th
day of April, 1999, by and between Charles E. Worden
("Worden"), an individual, and Autologous Wound
Therapy, Inc. ("AWT"), an Arkansas Corporation.
WHEREAS, Worden has previously assigned,
transferred and conveyed certain intellectual property
rights to AWT, as more fully described herein;
WHEREAS, Worden represents and warrants that prior
to assignment to AWT, he was the owner of the entire
right, title and interest in certain intellectual
property (the "Intellectual Property"), as defined
herein, and as set forth in Exhibit A attached hereto;
WHEREAS, Worden represents and warrants that he
had the sole right to grant to AWT the rights to the
Intellectual Property, of the scope hereinafter
granted;
WHEREAS, as partial consideration for the
assignment of the Intellectual Property to AWT, the
parties intend that Worden should receive a royalty, as
herein defined;
WHEREAS, the parties desire to reduce their
agreement and understanding to writing and upon the
terms hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing
and of the mutual covenants, terms and conditions
hereinafter expressed, the parties hereto agree as
follows:
1. Intellectual Property. The Intellectual
Property subject to this Agreement shall include, but
is not limited to, any and all of the following: all
trade names, trademarks, logos, service marks,
copyrights, patents, writings, licenses, trade secrets,
patented ideas, formulas, processes, inventions,
procedures, know-how, and other intellectual property
used in the operation of AWT s business as presently
conducted and the marketing, sale, use and application
of the services and products sold by AWT.
2. Grant. Worden hereby ratifies, readopts and
reaffirms the assignment of all of his right, title,
and interest in and to the Intellectual Property, as
set forth in Exhibit A attached hereto.
3. Royalty. AWT hereby agrees to pay Worden a
royalty of five percent (5%) of the Gross Profit
derived by AWT from the sale, licensing, or other
exploitation of the Intellectual Property (the
"Royalty"). For the purpose of this Agreement, Gross
Profit shall be defined as the excess of the total
amount of money received by AWT from revenues from the
sale, licensing, or other exploitation of the
<PAGE>
Intellectual Property over the cost of such goods and
services sold. The cost of such goods and services
shall include those which are direct costs of sales
properly charged to cost of sales pursuant to generally
accepted accounting principles, consistently applied.
4. Payment Records. For the purpose of
computing the Royalty referred to in paragraph 3 of
this Agreement, the year shall be divided into
quarters, beginning January 1, April 1, July 1, and
October 1 of each year. Within thirty (30) days after
the end of each quarter, reports shall be made by AWT
to Worden setting forth an accounting of the Royalty
for such quarter ended. AWT s remittance for the full
amount of Royalty due for such quarter shall accompany
such accounting. AWT agrees to keep complete and
correct books and records necessary to account to
Worden, and Worden or his representatives shall have
the right to examine AWT s books and records at all
reasonable times to the extent and insofar as is
necessary to verify the accuracy of the above-mentioned
reports.
5. Effect of Invalidity of Patent on Royalty
Payments. If in any suit for infringement of any
Letters Patent which may be subject to this Agreement,
any of the claims of said Letters Patent shall be held
to be invalid or not infringed by a Court of last
resort, or by a lower Court of competent jurisdiction
from whose decree no appeal is taken or certiorari
granted, within the period allowed therefor, the
construction placed upon the patent by the Courts shall
be followed from and after the date of entry of the
decree of such Court, and Royalty shall thereafter be
payable by AWT only in accordance with such
construction until the same shall be modified or
reversed by a subsequent Court decree, and with respect
to claims which are by any such decree held to be
invalid, AWT shall be relieved of its obligation to
make reports and to pay Royalty on products sold under
and covered only by said claims, until the decision
with respect to such claims shall be modified or
reversed by a subsequent Court decree.
6. Future Improvements. Worden agrees that in
the event he should make any improvements upon the
intellectual property set forth in Exhibit A which is
subject to this Agreement, he shall communicate the
same to AWT and AWT shall have the right to such
improvements, provided that in the event Worden should
secure the grant of Letters Patent on any such
improvements he will notify AWT, who shall have the
right at its option to include the same within the
terms of the present Agreement. Only one Royalty shall
be due, regardless of the number of patents involved in
the products. AWT shall be entitled to take out
patents on its own inventions, and such patents shall
<PAGE>
be the property of AWT exclusively.
7. Warranties. Worden warrants and represents
that at the time of assignment to AWT, he was the sole
and lawful owner of the entire right, title and
interest in and to the Intellectual Property, and that
the same were unencumbered and not subject to any other
agreement or restriction, and that Worden had good and
full right and lawful authority to assign, transfer and
convey those rights to AWT. Worden also represents
that none of the ownership, access to, or use of the
Intellectual Property infringes on the rights of any
other party and the rights to the Intellectual Property
are valid and enforceable. No person has any claim to,
interfered with, infringed upon, misappropriated or
otherwise come into conflict with the Intellectual
Property rights of Worden. Worden has not interfered
with, infringed upon, misappropriated or otherwise come
into conflict with any intellectual property rights of
others, and Worden has not received any charge,
complaint, demand or notice alleging any such
interference, infringement, misappropriation or
conflict.
8. Enforcement of Patent. AWT is hereby given
the first right during the term of this Agreement to
sue infringers of any Letters Patent which may be
subject to this Agreement, and Worden will permit the
use of his name in all such suits and sign all
necessary papers. The expenses of such suit or suits
shall be paid by AWT, and any and all recoveries from
said suit or settlements thereof shall go to AWT.
Should AWT fail to take the necessary steps by
litigation or otherwise to stop infringement of said
Letters Patent, then Worden may conduct at his own
expense, and with the right to all recoveries, such
litigation as he may deem necessary, provided that
Worden has first given a written sixty (60) day notice
to AWT of his intention to initiate such litigation,
and provided further, that AWT fails during said sixty
(60) days period to indicate its willingness to
initiate said suggested litigation or fails to initiate
said suggested litigation within four (4) months after
said notice.
9. Duration. This Agreement shall become
effective on the _____ day of __________, 1999 and,
unless sooner terminated as otherwise herein provided,
shall remain in effect for so long as AWT derives any
revenue from any source from the sale, license, or
exploitation of the Intellectual Property.
10. Cancellation. If one party shall at any time
commit any breach of any covenant, warranty or
agreement herein contained, and shall fail to remedy
any such breach within thirty (30) days after written
notice thereof by the other party, such other party may
at its option, and in addition to any other remedies
<PAGE>
that it may be entitled to, cancel this Agreement by
notice in writing to such effect.
11. Entire Agreement. This Agreement sets forth
the entire agreement and understanding of the parties
relating to the subject matter contained herein and
merges all prior discussions between them, and neither
party shall be bound by any definition, condition,
warranty, or representation other than as expressly
stated in this Agreement or as subsequently set forth
in a writing signed by the party to be bound thereby.
12. Governing Law. This Agreement shall be
interpreted and construed, and the legal relations
created herein shall be determined, in accordance with
the laws of the State of Arkansas.
13. Notices. Any notice to be given under this
Agreement shall be in writing and shall for all
purposes be deemed to be fully given by a party if sent
by registered or certified mail, with proper postage
prepaid, to the other party at its address as set forth
below. The date of mailing shall be deemed to be the
date on which such notice was given. Either party may
change its address for the purposes of this Agreement
by giving the other party written notice of its new
address.
14. Further Assurances. Worden hereby covenants
and agrees to and with AWT, its successors, legal
representatives, and assigns, that Worden will, upon
reasonable request, sign all papers and documents, take
all lawful oaths, and do all acts necessary or required
to be done for the procurement, maintenance,
enforcement and defense of the Intellectual Property.
15. Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the
successors, assigns, and personal representatives or
heirs of the respective parties.
IN WITNESS WHEREOF, the parties have caused this
agreement to be executed effective the date first
written above.
Charles E. Worden Autologous Wound Therapy, Inc.
________________________ 1527 Bowman Road, Suite G
Little Rock, AR 72211
Little Rock, AR ________
/s/ Charles E. Worden By: /s/ Dennis G. Hendren
President and CEO
<PAGE>
Exhibit 6.2 - First Amendment to Royalty Agreement with
Charles Worden
FIRST AMENDMENT TO ROYALTY AGREEMENT
THIS FIRST AMENDMENT TO ROYALTY AGREEMENT entered
into this 29th day of October, 1999 by and between
Autologous Wound Therapy, Inc. (the Company") and
Charles E. Worden ( Worden ).
W I T N E S S E T H :
WHEREAS, The Company and Worden entered into a
Royalty Agreement dated April 27, 1999 (the Royalty
Agreement ), wherein Worden is to receive a Royalty
from the Company as partial consideration for the
transfer of certain Intellectual Property to the
Company; and
WHEREAS, in anticipation of the merger of The
Company and Informatix Holdings, Inc.( Informatix ),
The Company is required to restructure certain
compensation relationships with Worden payable on
certain future revenues of The Company and Worden has
agreed to such restructuring on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein and other
good and valuable consideration, including, but not
limited to, the benefits of the merger with Informatix
to Worden as a stockholder of the Company, the receipt
and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:
1. Limitation on Royalty. Worden and the
Company agree that the Royalty paid to Worden under
Paragraph 3 of the Royalty Agreement shall not exceed
$1,000,000 in the aggregate during any four (4)
consecutive calendar quarters. The Company shall
compute the aggregate rolling four (4) consecutive
calendar quarters Royalty with each calculation of the
Royalty payment due under Paragraph 4 of the Royalty
Agreement. To the extent that the Royalty payment due
for such quarter would cause the aggregate to exceed
$1,000,000, then the amount of such payment shall be
reduced, but not below zero, to an amount necessary to
bring the aggregate total Royalty to $1,000,000 for
said rolling twelve (12) consecutive month period.
2. Consulting Fees. Worden agrees to provide
consulting services on behalf of the Company as
reasonably may be requested by the Company from time to
time. Until such time as the royalty fees described in
<PAGE>
Paragraph 3 of the agreement, as amended, exceed
$150,000 per annum, the Company shall pay Worden the
sum of $50,000 per annum as compensation for his
services. At such time as the royalties exceed
$150,000 during any four (4) consecutive calendar
quarters, no separate compensation shall be due and
payable for his services as a consultant. The
consulting fees shall be paid in equal monthly
installments of $4,250 per month, payable in advance on
the first day of each month. The relationship of the
parties hereto shall be that of independent
contractors, and nothing contained herein shall be
construed to make Worden an employee of the Company.
Additionally, Worden shall not be accorded any rights,
privileges, or fringe benefits generally established
for the Company's employees.
3. Confidentiality and Nondisclosure. Worden, as
a condition to the payment of the royalties and
consulting fees due under the Agreement, as amended,
agrees that the terms of this Agreement, the
Intellectual Property and any other information
regarding the Company, the results of its operations,
price lists, costs of goods, vendor and customer lists,
reimbursement strategies, marketing and licensing plans
or other matters shall remain confidential and Worden
shall not disclose any such information without the
prior written consent of the Company. Worden further
acknowledges that the Company deems all information
regarding the Intellectual Property and the Company's
marketing plans and financial results of operations to
be confidential and proprietary information. Any
violation of the confidentiality provisions of this
Agreement may result in the termination of this
Agreement and forfeiture of any future royalty or
consulting payment due hereunder or such additional or
alternative action as the Company's board of directors
deems, in its sole and absolute discretion, appropriate
as a remedy to such breach.
4. Effect on Royalty Agreement. Except as
otherwise expressly modified and amended by this First
Amendment, the terms and conditions of the Royalty
Agreement, expressly including the duties and
obligations of the parties thereunder, shall remain in
full force and effect and shall not be modified,
amended or otherwise changed of affected by this First
Amendment. Capitalized terms used in this First
Amendment not otherwise defined herein shall have the
definition and meaning ascribed to the same under the
Royalty Agreement.
WHEREFORE, the parties hereto have executed this
First Amendment as of the date first above written.
<PAGE>
AUTOLOGOUS WOUND THERAPY, INC.
By: /s/ Dennis G. Hendren, President & CEO
WORDEN:
/s/ Charles E. Worden
<PAGE>
Exhibit - 6.2 Consulting Agreement with BDR, Inc.
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (this "Agreement") is
executed effective as of October 29, 1999, by and
between Autologous Wound Therapy, Inc., an Arkansas
corporation (the "Company"), and BDR Consulting, Inc.,
an Arkansas corporation ( BDR ).
W I T N E S S E T H:
WHEREAS, the Company and BDR have previously
entered into a consulting arrangement under a letter
agreement dated February 23, 1999, wherein BDR is to
provide certain consulting services on behalf of the
Company; and
WHEREAS, BDR and the Company have agreed to
restructure the arrangement by converting the
consulting fees due on the gross monetary value of
contracts procured by BDR into stock of the Company
under the terms of a separate conversion agreement
between the Company and BDR Investment Partnership (as
assignee of BDR's rights thereunder) and the execution
of separate consulting agreement on the terms and
conditions set forth herein.
NOW, THEREFORE, in exchange for the mutual
promises and covenants contained herein, and other good
and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. ENGAGEMENT. The Company hereby engages BDR
as a consultant and independent contractor, and BDR
hereby accepts such engagement, upon the terms and
conditions contained herein.
2. TERM. The term of this Agreement shall be
for a period of five (5) years beginning on the date
hereof and ending October 31, 2004.
3. CONSULTING SERVICES. During the term hereof,
BDR agrees to provide consulting and management
advisory services to the Company, upon reasonable
request, relating to its business, sources of debt and
equity financing, marketing, product procurement and
agrees, upon reasonable request, to serve as a liaison
between the Company and the suppliers, customers,
lenders, investors and others with whom the Company
transacts business. It is agreed by the parties that
the consulting and advisory services hereunder shall
not require any specific number of hours of time per
<PAGE>
month and that BDR will make Jim Swink reasonably
available as needed by the Company. Notwithstanding
anything herein to the contrary, the Company shall have
no specific control over the particular methods and
procedures used by BDR in performing BDR's services
hereunder.
4. INDEPENDENT CONTRACTOR. In performing BDR s
services described herein, BDR shall be an independent
contractor and shall have no power or authority to bind
Access or to create any obligation or responsibility,
express or implied, in the name or on behalf of the
Company. BDR shall be solely responsible for payment
of federal, state and local income taxes on all
payments to BDR hereunder, and the Company shall have
no responsibility whatsoever therefor.
5. CONSULTING FEES. In consideration for the
consulting and advisory services to be provided
hereunder by BDR, the Company agrees to pay BDR a
monthly fee based on the then current annualized gross
revenues of the Company computed in accordance with
Exhibit A attached hereto and made a part hereof, but
in no event less than $6,000 per month. Fees shall be
payable in arrears on the last day of each calendar
month during the term of this Agreement.
6. EXPENSES. BDR shall be responsible for
paying its own expenses incurred in performing the
consulting and advisory services hereunder. The
foregoing notwithstanding, the Company will pay on
behalf of BDR (or reimburse BDR for) all reasonable
expenses incurred by BDR at the request of The Company
in connection with the performance of BDR's duties
pursuant to this Agreement, and in accordance with The
Company's expense reimbursement policies.
7. DISCLOSURE OF INFORMATION. BDR agrees that
he will not, during or after the term of this
Agreement, disclose, make public or otherwise utilize
any proprietary or other confidential information
relating to the Company or its business, except as
required by applicable law. BDR shall deliver to the
Company no later than thirty (30) days after the date
of termination of this Agreement all tangible forms of
such information in BDR's possession or control.
<PAGE>
8. TERMINATION.
(a) Notwithstanding the term herein stated,
this Agreement shall terminate upon the death of Jim
Swink or upon BDR's becoming disabled to the extent
that he is unable to perform, in all material respects,
the consulting and advisory services on behalf of BDR
hereunder.
(b) BDR may, at its option, terminate this
Agreement at any time upon ten (10) days prior written
notice to the Company if:
(1) The Company fails to make any
payment hereunder to BDR and such failure continues for
a period of more than thirty (30) days following
receipt of written notice of such default; or
(2) Substantially all of the assets or
a controlling interest in the stock of the Company is
sold to a person or entity not controlled by or under
common control with the Company or its current
stockholders.
(c) The Company may terminate this Agreement
upon forty (40) days prior written notice to BDR if BDR
fails to perform BDR's services hereunder in any
material respect and such failure continues for a
period of thirty (30) days following receipt of such
written notice from the Company.
(d) Upon termination of this Agreement, the
Company shall not be obligated to make any further
payments to BDR except amounts accrued, due and payable
as of the date of termination.
9. MISCELLANEOUS.
(a) Assignment. This Agreement and the
rights, obligations and duties of the parties hereunder
shall not be assignable or otherwise transferable
without the prior written consent of each party.
(b) Modification. No provision contained
herein may be modified, amended or waived except by
written agreement signed by the party to be bound
thereby.
(c) Binding Effect and Benefit. This
Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto, and their respective
heirs, executors, administrators, personal
representatives, successors and permitted assigns.
<PAGE>
(d) Headings and Captions. Subject headings
and captions are included for convenience purposes only
and shall not affect the interpretation of this
Agreement.
(e) Notice. All notices, requests, demands
and other communications permitted or required
hereunder shall be in writing, and shall be deemed to
have been duly given upon delivery if delivered in
person, or on the date postmarked if mailed, registered
or certified United States mail, postage prepaid as
follows:
If to BDR, addressed or delivered in person
to:
BDR Consulting, Inc.
5000 Garrison Road
Little Rock, Arkansas 72211
If to the Company, addressed or delivered in
person to:
Autologous Wound Therapy, Inc.
1527 Bowman Road, Suite G
Little Rock, Arkansas 72211
or to such other address as either party
may designate by notice.
(f) Severability. If any portion of this
Agreement is held invalid, illegal or unenforceable,
such determination shall not impair the enforceability
of the remaining terms and provisions herein.
(g) Waiver. No waiver of a breach or
violation of any provision of this Agreement shall
operate or be construed as a waiver of any subsequent
breach or limit or restrict any right or remedy
otherwise available.
(h) Rights and Remedies Cumulative. The
rights and remedies expressed herein are cumulative and
not exclusive of any rights and remedies otherwise
available.
(i) Gender and Pronouns. Throughout this
Agreement, the masculine shall include the feminine and
neuter and the singular shall include the plural and
vice versa as the context requires.
(j) Entire Agreement. This document
constitutes the entire agreement of the parties and
supersedes any and all other prior agreements, oral or
<PAGE>
written, with respect to the subject matter contained
herein, including but not limited to the letter
agreement dated February 23, 1999.
(k) Governing Law. This Agreement shall be
subject to and governed by the laws of the State of
Arkansas.
(l) No Joint Venture or Partnership. This
Agreement shall not be considered to create any type of
joint venture, partnership, or any other legal
relationship between the parties in which either party
shall share or be responsible for the debts or
liabilities of the other party.
IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of the day and year aforesaid.
COMPANY:
Autologous Wound Therapy, Inc.
By: /s/ Dennis Hendren,
President and CEO
CONSULTANT:
BDR Consulting, Inc.
By: /s/ Jim D. Swink, Jr.
President and CEO
<PAGE>
EXHIBIT A
CONSULTING FEE SCHEDULE
For purposes of this Agreement the consulting fees
shall be based on the rolling twelve month aggregate
gross revenues of the Company measured as of the close
of the month immediately prior to the month for which
the payment is due is being calculated. For example,
the payment due December 31, 2000, would be based on
the aggregate gross revenues for the rolling twelve
month period ending November 30, 2000. The fee due and
payable shall be computed as follows:
Rolling Annual Gross Revenues Monthly Fee
__________________________________________
$0 to 7.5 Million $ 6,000
Over $7.5 Million to $14 Million $10,000
Over $14 Million to $25 Million $15,000
$25 Million and above $20,000
<PAGE>
Exhibit - 6.4 Plan and Agreement of Merger and
Reorganization
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
_______________________________________________
Agreement and Plan of Merger and Reorganization,
dated as of October 22, 1999 (this "Agreement"), by and
between Informatix Holdings, Inc., a Delaware
corporation ("Informatix"), and Autologous Wound
Therapy, Inc., an Arkansas corporation ("AWT").
BACKGROUND
A. The Boards of Directors of Informatix and AWT
have each determined that it is advisable and in the
best interests of their respective corporations and
stockholders for AWT to be acquired by Informatix
pursuant to a merger (the "Merger") of AWT with and
into Informatix upon the terms and subject to the
conditions set forth herein.
B. In furtherance thereof, the Boards of
Directors and shareholders of Informatix and AWT have
each approved the Merger in accordance with the
applicable provisions of the Delaware General
Corporation Law (the "DGCL") and the Arkansas Business
Corporation Act of 1987 ("ABCA") and upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants and agreements herein
contained, and intending to be legally bound hereby,
Informatix and AWT hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time
(as defined herein), and subject to and upon the terms
and conditions of this Agreement, the DGCL and the
ABCA, AWT shall be merged with and into Informatix, the
separate corporate existence of AWT shall cease, and
Informatix shall continue as the surviving corporation.
Informatix, as the surviving corporation after the
Merger, is hereinafter sometimes referred to as the
"Surviving Corporation."
Section 1.2 Effective Time. As of the Closing
(as defined below), the parties hereto shall cause the
Merger to be consummated by filing certificates of
merger (the "Certificates of Merger") with the
<PAGE>
Secretary of State of the State of Arkansas and the
Secretary of State of the State of Delaware, in such
form as is required by, and executed in accordance
with, the relevant provisions of the DGCL and the ABCA,
respectively (the time of such filings being the
"Effective Time").
Section 1.3 Effect of the Merger. At the
Effective Time, the effect of the Merger shall be as
provided in this Agreement, the Certificates of Merger
and the applicable provisions of the DGCL and the ABCA.
Section 1.4 Articles of Incorporation; By-Laws.
(a) Articles of Incorporation. At the
Effective Time, the articles of incorporation of
Informatix, as in effect immediately prior to the
Effective Time, shall be the articles of incorporation
of Surviving Corporation until thereafter amended as
provided by the DGCL and such articles of incorporation
provided, that the name of the Surviving Corporation
shall be changed to Autologous Wound Therapy, Inc.
(b) By-Laws. At the Effective Time,
the by-laws of Informatix, as in effect immediately
prior to the Effective Time, shall be the by-laws of
Surviving Corporation until thereafter amended as
provided by the DGCL, the articles of incorporation of
the Surviving Corporation and such by-laws.
Section 1.5 Directors and Officers. Following
the Effective Time, the officers and directors of the
Surviving Corporation shall be those individuals set
forth on Schedule 1.5 hereto, in each case until their
respective successors are duly elected or appointed and
qualified or until their earlier resignation or
removal.
Section 1.6 Effect on Capital Stock. Subject
to the terms and conditions contained herein, at the
Effective Time, by virtue of the Merger and without any
action on the part of Informatix or AWT:
(a) Outstanding Stock of AWT. All of
the shares of capital stock of AWT issued and
outstanding as of the Effective Time (collectively, the
"AWT Shares") shall be converted into the right to
receive, in the aggregate, (i) seven million five
hundred thousand (7,500,000) newly issued shares of
common stock, par value $.001 per share, of Informatix
("Informatix Common Stock") and (ii) seven million five
hundred thousand (7,500,000) newly issued shares of
Series B Preferred Stock, par value $.001 per share, of
Informatix (the "Series B Preferred Stock"). The
<PAGE>
Informatix Common Stock and the Series B Preferred
Stock issuable under this Section 1.6(a) is sometimes
referred to herein as the "Merger Consideration."
(b) Delivery of Certificates. At the
Closing (as defined below), Informatix will cause to
be delivered a certificate or certificates representing
the shares of Informatix Common Stock issuable as
Merger Consideration hereunder to the shareholders of
AWT as of the Closing Date (the "AWT Shareholders") in
such amounts and registered in such names as set forth
on Schedule 1.6.
Section 1.7 Tax-Free Reorganization. It is
intended by the parties hereto that the Merger
constitute a tax-free reorganization within the meaning
of Section 368 of the Internal Revenue Code of 1986
(the "Code"). The parties hereto agree to utilize
commercially reasonable efforts and to cooperate with
each other, to cause the Merger to be a tax-free
reorganization within the meaning of Section 368 of the
Code.
ARTICLE II
THE CLOSING
Section 2.1 Closing. The closing of the
transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Klehr,
Harrison, Harvey, Branzburg & Ellers, LLP, 260 S. Broad
Street, Philadelphia, Pennsylvania, on November 1,
1999, or at such other time and place as the parties
shall agree. The date on which the Closing actually
occurs is referred to herein as the "Closing Date."
Section 2.2 Deliveries by AWT.
(a) At the Closing, AWT shall deliver
to Informatix (unless delivered previously), the
following:
(i) stock certificates endorsed in
blank representing the AWT Shares;
(ii) the certificates referred to
in Sections 5.4 and 5.5;
(iii) the opinion of counsel
referred to in
Section 5.6;
(iv) executed counterparts of any
<PAGE>
consents referred to in Section 5.8; and
(v) all other previously
undelivered documents and instruments required to
be delivered by AWT to Informatix at or prior to
the Closing pursuant to this Agreement or
otherwise required in connection herewith.
Section 2.3 Deliveries by Informatix.
(a) At the Closing, Informatix shall
deliver to AWT (unless delivered previously) the
following:
(i) a certificate or certificates
representing the Informatix Common Stock and
Series B Preferred Stock;
(ii) the certificates referred to
in Sections 6.6 and 6.7;
(iii) the opinion of counsel
referred to in Section 6.8; and
(iv) all other previously
undelivered documents and instruments required to
be delivered by Informatix to AWT at or prior to
the Closing pursuant to this Agreement or
otherwise required in connection herewith.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AWT
AWT represents and warrants to Informatix as of
the date hereof and as of the Closing Date (except for
representations and warranties that expressly relate to
a different date) as follows:
Section 3.1 Organization, Etc. AWT is a
corporation duly organized, validly existing and in
good standing under the laws of the State of Arkansas.
AWT has the corporate power and authority to conduct
its business as it is currently being conducted and to
own and lease the property and assets that it now owns
and leases. Except as set forth on Schedule 3.1, AWT
does not do business as a foreign corporation in any
jurisdiction where the failure to be qualified as a
foreign corporation would have a material adverse
effect on the operations, condition (financial or
other), assets, liabilities, earnings or prospects of
AWT (a "Material Adverse Effect"). The copies of the
articles of incorporation and by-laws of AWT as amended
<PAGE>
and restated, delivered to Informatix by AWT, are
complete and correct copies of such instruments as
currently in effect. Except as set forth on
Schedule 3.1, AWT does not directly or indirectly own
any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any
equity or similar interest, in any corporation,
partnership, joint venture or other business
association, entity or person.
Section 3.2 Authorization. AWT has all the
power and authority to execute, deliver and consummate
the transactions contemplated by this Agreement. This
Agreement is a valid and binding obligation of AWT,
enforceable against AWT in accordance with its terms.
AWT has taken all action required by the ABCA, its
articles of incorporation, by-laws or otherwise to
authorize the execution and delivery of this Agreement
and the consummation of the transactions contemplated
hereby. No other act or proceeding on the part of AWT
is necessary to authorize this Agreement or the
transactions contemplated hereby.
Section 3.3 Capitalization. The capitalization
of AWT as of the date hereof, including the authorized
capital stock and the number of shares issued and
outstanding of each class of capital stock is set forth
on Schedule 3.3. All of the shares of capital stock of
AWT have been duly authorized and validly issued and
are fully paid and non-assessable. Except as set forth
on Schedule 3.3, there are no outstanding
subscriptions, stock options, warrants or other
agreements or commitments obligating AWT to issue
additional shares of its capital stock or options,
warrants or other securities convertible into or
exchangeable for shares of its capital stock.
Section 3.4 No Violation. Neither the
execution or delivery by AWT of this Agreement or any
agreement contemplated hereby, nor the performance by
AWT of the transactions contemplated hereby or thereby
(i) conflicts with, or constitutes a breach or default
under (A) the articles of incorporation or by-laws of
AWT, (B) any applicable judgment, order, writ,
injunction or decree of any court or (C) any applicable
law or any applicable rule or regulation of any
administrative agency or governmental or regulatory
authority or (ii) except for the consents required
prior to the consummation of the transactions
contemplated by this Agreement as set forth on
Schedule 3.13, violates, conflicts with, or constitutes
a default (or an event or condition that, with notice
or lapse of time or both, would constitute a default)
under, or results in the termination of, or accelerates
<PAGE>
the performance required by, or causes the acceleration
of the maturity of any liability or obligation pursuant
to, or results in the creation or imposition of any
security interest, lien, charge or other encumbrance
upon any of the property or assets of AWT under any
note, bond, mortgage, indenture, deed of trust,
license, lease, contract, commitment, understanding,
arrangement, agreement or restriction of any kind or
character to which AWT is a party or by which AWT may
be bound or affected or to which any of the property or
assets of AWT may be subject.
Section 3.5 Financial Statements. T h e
balance sheets of AWT at December 31, 1998 and
June 30, 1999 (the balance sheet as of June 30, 1999,
the "Balance Sheet") and the statements of income,
changes in stockholders equity and cash flows for the
period from inception through December 31, 1998 and the
six month period ended June 30, 1999 heretofore
provided to Informatix are true, complete and accurate
and, with respect to such balance sheets and the notes
thereto, fairly present the assets, liabilities and
financial condition of AWT as of the respective dates
thereof and, to the best of AWT s knowledge, with
respect to such statements of income, changes in
stockholders equity and cash flows and the notes
thereto, fairly present the results of operations of
AWT for the periods referred to therein, all (to the
best of AWT s knowledge) in accordance with generally
accepted accounting principles consistently applied
throughout the periods involved, except as otherwise
specifically disclosed therein.
Section 3.6 No Undisclosed or Contingent
Liabilities. Except as set forth on Schedule 3.6, AWT
has no liabilities or obligations of any nature
(whether absolute, accrued, contingent or otherwise and
whether due or to become due) that are not fully
reflected on the Balance Sheet, except for liabilities
and obligations incurred in the ordinary course of
business since the date thereof, and there is no basis
for the assertion against AWT of any liability or
obligation of any nature whatsoever not fully reflected
on the Balance Sheet.
Section 3.7 Absence of Certain Changes. Except
as set forth on Schedule 3.7, since the date of the
Balance Sheet, AWT has conducted its business only in
the ordinary course and consistent with past practice,
and has not:
(a) Suffered any material adverse
change in its operations, condition (financial or
otherwise), assets, liabilities, earnings, working
<PAGE>
capital or prospects;
(b) Incurred any liabilities or
obligations (absolute, accrued, contingent or
otherwise) except immaterial items incurred in the
ordinary course of business and consistent with past
practice (including obligations or liabilities arising
from one transaction or a series of related or similar
transactions, and all periodic installments or payments
under any lease or other agreement providing for
periodic installments or payments, as a single
obligation or liability), or increased, or experienced
any change in any assumptions underlying or methods of
calculating, any bad debt, contingency or other
reserves;
(c) Paid, discharged or satisfied any
claims, liabilities or obligations (absolute, accrued,
contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of
business and consistent with past practice of
liabilities and obligations reflected or reserved
against in the Balance Sheet or incurred in the
ordinary course of business and consistent with past
practice since the date of the Balance Sheet;
(d) Permitted or allowed any of its
assets to be subjected to any mortgage, pledge, lien,
security interest encumbrance, restriction or charge of
any kind;
(e) Written down the value of any
inventory or written off as uncollectible any notes or
accounts receivable;
(f) Canceled any debts or waived any
claims or rights of substantial value;
(g) Sold, transferred or otherwise
disposed of any of its properties or assets, except in
the ordinary course of business and consistent with
past practice;
(h) Disposed of or permitted to lapse
any rights to the use of any patent, trademark, trade
name, service mark or copyright, or disposed of or
disclosed to any person any trade secret, formula,
process or know-how not theretofore a matter of public
knowledge;
(i) Granted any general increase in the
compensation of employees (including any such increase
pursuant to any bonus, pension, profit sharing or other
plan or commitment) or any increase in the compensation
<PAGE>
payable or to become payable to any employee, and no
such increase is customary on a periodic basis or
required by agreement or understanding;
(j) Made any capital expenditure or
commitment for additions to its property, equipment or
intangible capital assets in excess of $25,000;
(k) Made any change in any method of
accounting or accounting practice or failed to maintain
its books, accounts and records in the ordinary course
of business and consistent with past practice;
(l) Failed to maintain any properties
or equipment in good operating condition and repair;
(m) Failed to maintain in full force
and effect all existing policies of insurance at least
at such levels as were in effect prior to such date or
canceled any such insurance or taken or failed to take
any action that would enable the insurers under such
policies to avoid liability for claims arising out of
occurrences prior to the Closing;
(n) Entered into any transaction or
made or entered into any material contract or
commitment, or terminated or amended any material
contract or commitment, except in the ordinary course
of business and consistent with past practice, and not
in excess of current requirements;
(o) Taken any action that could have a
material adverse effect on its business organization or
its current relationships with its employees,
suppliers, distributors, advertisers, subscribers or
others having business relationships with it;
(p) Declared, paid or set aside for
payment any dividend or other distribution in respect
of its capital stock or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares
of its capital stock or other securities; or
(q) Agreed in writing or otherwise to
take any action with respect to any of the matters
described in this Section 3.7.
Section 3.8 Litigation, Orders. There are no
claims, actions, suits, proceedings, investigations or
inquiries pending before any court, arbitrator or
governmental or regulatory official or office, or
threatened against or affecting AWT or questioning the
validity of this Agreement, the transactions
contemplated hereby or any action taken or to be taken
<PAGE>
by AWT pursuant to this Agreement or pursuant to any
other agreement contemplated hereby, at law or in
equity, before or by any federal, state, local or
foreign governmental authority; nor to AWT s knowledge
is there any valid basis for any such claim, action,
suit, proceeding, inquiry or investigation. AWT is not
subject to any judgment, order or decree entered in any
lawsuit or proceeding that has had or may have a
material adverse effect on AWT s ability to acquire any
property for the use or benefit of AWT or to conduct
its business in any area.
Section 3.9 Title to Properties; Encumbrances.
Except as set forth on Schedule 3.9, AWT does not own
or lease any real property. AWT has good, marketable
and defensible title to all of its properties and
assets, including any vehicles, free and clear of all
liens, charges and encumbrances, except liens for taxes
not yet due and payable and such liens or other
imperfections of title, if any, that do not materially
detract from the value of or interfere with the present
use of the property affected thereby or that would not
and are not reasonably likely to have a Material
Adverse Effect; and all leases pursuant to which AWT
leases other real or personal property, including any
vehicles, are in good standing, valid and effective in
accordance with their respective terms, and there is
not under any such lease any existing default or event
of default (or to AWT s knowledge any event which with
notice or lapse of time, or both, would constitute a
default).
Section 3.10 Equipment. The equipment of AWT
has no known material defects and is in good operating
condition and repair (ordinary wear and tear excepted)
and is adequate for its current uses. None of such
equipment is in need of known maintenance or repairs
except for ordinary routine maintenance and repairs
that are not material in nature or cost.
Section 3.11 Compliance with Law. Except as set
forth on Schedule 3.11, AWT is currently in compliance
in all material respects with all applicable laws
(whether statutory or otherwise), rules, regulations,
orders, ordinances, judgments, decrees, writs and
injunctions of all federal, state, local or foreign
governmental authorities (collectively, "Laws"),
including all Laws relating to the safe conduct of
AWT s business, environmental protection and
conservation, antitrust, taxes, consumer protection,
currency exchange, equal opportunity, health,
sanitation, fire, zoning, building, occupational
safety, pension, securities and trademark and
copyright; and AWT has not received notification in the
<PAGE>
last three years of any asserted present or past
failure to so comply. AWT is not required to obtain
any permits, licenses or other authorizations under the
Laws for AWT to conduct its business.
Section 3.12 Taxes.
(a) AWT has timely filed (including any
applicable extension periods) all tax reports, returns
and forms required to be filed by applicable federal,
state, local or foreign tax laws, and all such reports,
returns and forms are correct and complete; copies of
all tax returns for AWT in respect of all years not
barred by the statute of limitations have been
delivered by AWT to Informatix. None of AWT s tax
returns have been examined or audited by the Internal
Revenue Service or any other state or local taxing
authority.
(b) AWT has timely paid all federal,
state, local and foreign income, payroll, withholding,
excise, sales, use, real and personal property, use and
occupancy, business and occupancy, business and
occupation, mercantile, real estate, capital stock and
franchise or other tax due or claimed to be due from
AWT by the Internal Revenue Service or any Authority.
No tax liens have been filed on any property or assets
of AWT and no claims are being asserted with respect to
any taxes.
(c) AWT has complied with all
applicable laws, rules and regulations relating to the
payment and withholding of taxes and has withheld all
amounts required by law to be withheld from the wages
or salaries of its employees, and is not liable for any
taxes or other charges for failure to comply with such
laws, rules and regulations.
Section 3.13 Consents and Approvals. Except as
set forth on Schedule 3.13, AWT is not required to
obtain, transfer or cause to be transferred any
consent, approval, license, permit or authorization of,
or make any declaration, filing or registration with,
any third party or any governmental or regulatory
authority in connection with (a) the execution and
delivery of this Agreement, (b) the execution and
delivery of any agreement contemplated hereby, (c) the
consummation of the transactions contemplated hereby or
thereby or (d) the ownership and operation by
Informatix of AWT.
<PAGE>
Section 3.14 Contracts, Commitments and Returns.
(a) All other parties to material
contracts, commitments, instruments and agreements of
AWT have complied with the provisions thereof in all
material respects, no party is in material default
thereunder, and to AWT s knowledge, no event has
occurred which, but for the passage of time or the
giving of notice or both, would constitute a material
default thereunder.
(b) (i) Except as set forth on
Schedule 3.14, AWT is not a party to or bound by
any contracts or commitments that require payments
in excess of $25,000 by any party thereto and are
not cancelable by AWT on notice of not longer than
30 days;
(ii) No purchase contracts or
commitments of AWT exceed the ordinary
requirements of its business or were entered into
at an excessive price;
(iii) Subject to obtaining any
requisite consents of third parties, the
enforceability of AWT s material contracts and
commitments will not be affected in any manner by
the execution and delivery of this Agreement or
the consummation of the transactions contemplated
hereby or by the other agreements referred to
herein;
(iv) Except as set forth on
Schedule 3.14, AWT is not a party to or bound by
any contracts or commitments with officers,
employees, agents, consultants, advisors,
salesmen, sales representatives, distributors or
dealers that are not cancelable by it on notice of
not longer than 30 days and without liability,
penalty or premium or any agreement or arrangement
providing for the payment of any bonus or
commission based on sales or earnings; and
(v) AWT is not a party to or bound
by any employment agreement or any other agreement
relating to its business that contains any
severance or termination pay liabilities or
obligations.
Section 3.15 Insurance. All policies of fire,
medical, life, liability, product liability, workmen s
compensation, health and other forms of insurance
currently in effect with respect to AWT s business are
<PAGE>
in full force and effect, all premiums with respect
thereto covering all periods up to and including the
Closing Date have been paid, and no notice of
cancellation, termination or non-renewal has been
received with respect to any such policy. Such
policies are sufficient for compliance with all
requirements of law and of all agreements to which AWT
is a party; are valid, outstanding and enforceable
policies; provide adequate insurance coverage for AWT s
business; and the coverage provided thereby, with
respect to any act or event occurring on or prior to
the Closing Date, will not in any way be affected by or
terminate or lapse by reason of the transactions
contemplated by this Agreement. No risks with respect
to the AWT s business are or have been designated by
AWT as being self-insured.
Section 3.16 Customers and Suppliers. No
material adverse change has occurred in the business
relationship of AWT with any of its significant
customers or suppliers and, to AWT s knowledge, no
facts exist and no events have occurred that could
reasonably be expected to result in a material adverse
change to any such relationship.
Section 3.17 Accounts Receivable. All accounts
receivable of AWT, whether reflected on the Balance
Sheet or subsequently created through the Closing Date,
represent sales actually made or services actually
performed in the ordinary course of business and are
current and either have been collected in full or to
AWT s knowledge will be collectable in full, without
any setoff or counterclaim.
Section 3.18 Certain Interests. Neither AWT nor
any officer, director or shareholder thereof, nor any
of their respective affiliates, has (a) any direct or
indirect interest (other than the ownership of less
than one percent of the outstanding securities of a
publicly held company) in any corporation or business
that competes with AWT or (b) any direct or indirect
interest in any property or assets used by, or relating
to, AWT or its business, except through the ownership
of AWT s capital stock.
Section 3.19 Intellectual Property.
(a) AWT owns, free and clear of all
liens, mortgages, security interests, charges and
encumbrances and has good and marketable title to, or
holds adequate licenses or otherwise possesses all
rights necessary to use, all patents, trademarks,
service marks, trade names, copyrights (including any
applications for any of the foregoing), inventions,
<PAGE>
discoveries, processes, know-how, trade secrets,
scientific, technical, engineering and marketing data,
object and source codes, and techniques used or
proposed to be used in, or necessary for, the conduct
of AWT s business as now conducted or proposed to be
conducted (collectively, the "Intellectual Property").
(b) All applications for the
registration of patents, trademarks and copyrights
constituting a part of the Intellectual Property are
valid and subsisting, and are duly recorded and being
prosecuted in the name of AWT.
(c) AWT to its knowledge has the sole
and exclusive right to use all of the Intellectual
Property in all jurisdictions in which AWT conducts or
proposes to be conducting its business, and the
consummation of the transactions contemplated hereby
will not alter or impair any such rights.
(d) No claims have been asserted by any
person challenging or questioning the ownership,
validity, enforceability or use by AWT of any of the
Intellectual Property and, to the knowledge of AWT,
there is no valid basis for any such claim, and to the
knowledge of AWT, the use or other exploitation of the
Intellectual Property by AWT does not infringe on or
dilute the rights of any person; and, to the knowledge
of AWT, no other person is infringing on the rights of
AWT with respect to any of the Intellectual Property.
(e) AWT has taken reasonable security
measures to protect the secrecy, confidentiality and
value of its trade secrets and other confidential
information.
(f) AWT has delivered to Informatix all
documents with respect to any invention, process,
design, computer program or other know-how or trade
secret included in the Intellectual Property, which
documents are accurate in all material respects and
reasonably sufficient in detail and content to identify
and explain such invention, process, design, computer
program or other know-how or trade secret and to
facilitate its full and proper use without reliance on
the special knowledge or memory of any person.
Section 3.20 Employee Benefit Plans.
(a) Except as set forth on
Schedule 3.20, other than a plan pursuant to
Section 401(k) of the Code and health and life
insurance policies (the "Employee Plans"), AWT
maintains no bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental
<PAGE>
retirement, severance or termination pay, medical or
life insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plans, agreements
or arrangements and other similar fringe or employee
benefit plans, programs or arrangements, written or
otherwise, for the benefit of, or relating to, any
current or former employee of AWT. AWT is not required
to make any contributions under such 401(k) plan, a
true and correct copy of which has been delivered to
Informatix.
(b) None of the Employee Plans promises
or provides retiree medical or other retiree welfare
benefits to any person, (i) there has been no
transaction or failure to act with respect to any
Employee Plan that could result in any material
liability of AWT; and (ii) all Employee Plans are in
compliance in all material respects with the
requirements prescribed by all statutes, orders or
governmental rules and regulations currently in effect
with respect thereto, and AWT has performed all
material obligations required to be performed by it
under, is not in any material respect in default under
or in violation of, and has no knowledge of any default
or violation by any other party to, any of the Employee
Plans except as to which such non-compliance, non-
performance or default would not result and is not
reasonably likely to result in a Material Adverse
Effect.
(c) Except as set forth on
Schedule 3.20, there are no actions, suits or claims
pending or threatened by former or present employees of
AWT (or their beneficiaries) with respect to Employee
Plans or the assets or fiduciaries thereof (other than
routine claims for benefits).
(d) AWT granted and adopted the plan
providing for the grant of options to purchase shares
of capital stock of AWT set forth on Schedule 3.20.
Section 3.21 Labor Matters.
(a) AWT has and is currently complying
in all material respects with all applicable laws
relating to employment and employment practices, terms
and conditions of employment, and wages and hours, and
is not engaged in any unfair labor practice or unlawful
employment practice;
(b) There is no unfair labor practice
charge or complaint against AWT pending or threatened
before the National Labor Relations Board nor, to the
knowledge of AWT, is there any basis for any such
<PAGE>
charge or complaint;
(c) There is no labor strike, slowdown
or work stoppage pending or threatened against AWT;
(d) AWT has not experienced any
significant work stoppages or been a party to any
proceedings before the National Labor Relations Board
involving any significant issues or been a party to any
arbitration proceeding arising out of or under
collective bargaining agreements; and
(e) There is no charge or complaint
pending or threatened against AWT before the Equal
Employment Opportunity Commission or the Department of
Labor or any state or local agency of similar
jurisdiction. No employees of AWT are represented by
any labor union and there is no collective bargaining
agreement in effect with respect to such employees. To
the knowledge of AWT, no labor union has engaged in any
organizing activities with respect to AWT s employees.
Section 3.22 Personnel. Schedule 3.22 contains
an accurate and complete list of (a) the names, titles
and current salaries of all officers of AWT and (b) the
wage rates for non-salaried and non-executive salaried
employees of AWT by classification. AWT is not in
default with respect to any obligation to any of its
employees.
Section 3.23 Bank Accounts. Schedule 3.23 sets
forth the names and locations of all banks, trust
companies, savings and loan associations and other
financial institutions at which AWT has accounts or
safe deposit boxes and the names of all persons
authorized to draw thereon or to have access thereto.
Section 3.24 Environmental.
(a) AWT, to the knowledge of AWT, is
not required to obtain any permits, licenses or other
authorizations under federal, state and local laws,
rules and regulations relating to pollution or
protection of the environment (collectively, the
"Environmental Laws").
(b) AWT has not received any notice
alleging non-compliance with any Environmental Laws.
There is no civil, criminal or administrative action,
suit, demand, claim, investigation, proceeding, notice
or demand letter pending or threatened against AWT
relating in any way to any Environmental Laws.
<PAGE>
(c) There are no past or present events
or conditions relating to AWT and caused by AWT that
may interfere with or prevent compliance with any
Environmental Laws or that may give rise to any common
law or other legal liability thereunder.
Section 3.25 Disclosure. No representation or
warranty by AWT contained in this Agreement, and no
statement contained in any document, list, certificate
or other writing furnished or to be furnished by or on
behalf of AWT to Informatix or any of its
representatives in connection with the transactions
contemplated hereby, contains or will contain any
untrue statement of a material fact, or omits or will
omit to state any material fact necessary, in light of
the circumstances under which it was or will be made,
in order to make the statements herein or therein not
misleading. For purposes of this Agreement, disclosure
on one or more schedules shall be deemed disclosure on
any other schedule which may require said disclosure.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INFORMATIX
Informatix represents and warrants to AWT as of
the date hereof and as of the Closing Date (except for
representations and warranties that expressly relate to
a different date) as follows:
Section 4.1 Organization, Etc. Informatix is a
corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
A copy of the articles of incorporation of Informatix
has been delivered to AWT, and such copy is complete
and correct and in full force and effect on the date of
this Agreement.
Section 4.2 Authorization. Informatix has all
requisite power and authority to execute and deliver
this Agreement and to consummate the transactions
contemplated by this Agreement. Informatix has taken
all action required by law and its articles of
incorporation or otherwise to authorize the execution
and delivery of this Agreement and the consummation of
the transactions contemplated hereby. No other act or
proceeding on the part of Informatix is necessary to
authorize this Agreement or the transactions
contemplated hereby. This Agreement is a valid and
binding obligation of Informatix, enforceable against
Informatix in accordance with its terms.
Section 4.3 No Violation. Neither the
<PAGE>
execution or delivery of this Agreement by Informatix,
nor the performance by Informatix of the transactions
contemplated hereby (i) conflicts with, or constitutes
a breach or default under (A) the articles of
incorporation of Informatix, (B) any applicable law, or
any applicable rule, judgment, order, writ, injunction
or decree of any court or (C) any applicable rule or
regulation of any administrative agency or other
governmental or regulatory authority or (ii) violates,
conflicts with, or constitutes a default (or an event
or condition that, with notice or lapse of time or
both, would constitute a default) under, or results in
the termination of, or accelerates the performance
required by, or causes the acceleration of the maturity
of any liability or obligation pursuant to, or results
in the creation or imposition of any security interest,
lien, charge or other encumbrance upon any of the
property or assets of Informatix under any note, bond,
mortgage, indenture, deed of trust, license, lease,
contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to
which Informatix is a party or by which Informatix may
be bound or affected or to which any of the property or
assets of Informatix may be subject.
Section 4.3 Capitalization. The capitalization
of Informatix as of the date hereof, including the
authorized capital stock and the number of shares
issued and outstanding of each class of capital stock
is set forth on Schedule 4.3. All of the shares of
capital stock of Informatix have been duly authorized
and validly issued and are fully paid and non-
assessable. There are no outstanding subscriptions,
stock options, warrants or other agreements or
commitments obligating Informatix to issue additional
shares of its capital stock or options, warrants or
other securities convertible into or exchangeable for
shares of its capital stock. A complete listing of the
shareholders of Informatix and the number and class of
shares held is shown on Schedule 4.3.
Section 4.4 Recapitalization. Informatix has
taken, or shall have taken prior to the Effective Time,
the actions necessary to convert all shareholder loans
to Informatix into the number of shares and classes of
capital stock shown on Schedule 4.4. Informatix shall
have also raised additional capital, if necessary, to
cause the value of cash and cash equivalents of
Informatix as of the Effective time to exceed the
amount of all liabilities of Informatix by not less
than $300,000.
Section 4.5 Validity of Stock. The shares of
Informatix Common Stock to be issued as the Merger
<PAGE>
Consideration pursuant to this Agreement shall be duly
authorized and, when issued and delivered in accordance
with this Agreement, will be validly issued, fully paid
and non-assessable with no personal liability attaching
to the ownership thereof, and will not be subject to
preemptive rights.
Section 4.6 No Violation. Neither the
execution or delivery by Informatix of this Agreement
or any agreement contemplated hereby, nor the
performance by Informatix of the transactions
contemplated hereby or thereby (i) conflicts with, or
constitutes a breach or default under (A) the articles
of incorporation or by-laws of Informatix, (B) any
applicable judgment, order, writ, injunction or decree
of any court or (C) any applicable law or any
applicable rule or regulation of any administrative
agency or governmental or regulatory authority or (ii)
except for the consents required prior to the
consummation of the transactions contemplated by this
Agreement as set forth on Schedule 4.13, violates,
conflicts with, or constitutes a default (or an event
or condition that, with notice or lapse of time or
both, would constitute a default) under, or results in
the termination of, or accelerates the performance
required by, or causes the acceleration of the maturity
of any liability or obligation pursuant to, or results
in the creation or imposition of any security interest,
lien, charge or other encumbrance upon any of the
property or assets of Informatix under any note, bond,
mortgage, indenture, deed of trust, license, lease,
contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to
which Informatix is a party or by which Informatix may
be bound or affected or to which any of the property or
assets of Informatix may be subject.
Section 4.7. Financial Statements. T h e
balance sheets of Informatix at December 31, 1998 and
June 30, 1999 (the balance sheet as of June 30, 1999,
the "Balance Sheet") and the statements of income,
changes in stockholders' equity and cash flows for the
period from inception through December 31, 1998 and the
six month period ended June 30, 1999 heretofore
provided to AWT are true, complete and accurate and,
with respect to such balance sheets and the notes
thereto, fairly present the assets, liabilities and
financial condition of Informatix as of the respective
dates thereof and, with respect to such statements of
income, changes in stockholders' equity and cash flows
and the notes thereto, fairly present the results of
operations of Informatix for the periods referred to
therein, all in accordance with generally accepted
accounting principles consistently applied throughout
<PAGE>
the periods involved, except as otherwise specifically
disclosed therein.
Section 4.8 No Undisclosed or Contingent
Liabilities. Informatix has no liabilities or
obligations of any nature (whether absolute, accrued,
contingent or otherwise and whether due or to become
due) that are not fully reflected on the Balance Sheet,
except for liabilities and obligations incurred in the
ordinary course of business since the date thereof, and
there is no basis for the assertion against Informatix
of any liability or obligation of any nature whatsoever
not fully reflected on the Balance Sheet.
Section 4.9 Absence of Certain Changes. Except
as set forth on Schedule 4.9, since the date of the
Balance Sheet, Informatix has conducted its business
only in the ordinary course and consistent with past
practice.
Section 4.10 Litigation, Orders. There are no
claims, actions, suits, proceedings, investigations or
inquiries pending before any court, arbitrator or
governmental or regulatory official or office, or
threatened against or affecting Informatix or
questioning the validity of this Agreement, the
transactions contemplated hereby or any action taken or
to be taken by Informatix pursuant to this Agreement or
pursuant to any other agreement contemplated hereby, at
law or in equity, before or by any federal, state,
local or foreign governmental authority; nor is there
any valid basis for any such claim, action, suit,
proceeding, inquiry or investigation. Informatix is not
subject to any judgment, order or decree entered in any
lawsuit or proceeding that has had or may have a
material adverse effect on Informatix's ability to
acquire any property for the use or benefit of
Informatix or to conduct its business in any area.
Section 4.11 Title to Properties; Encumbrances.
Except as set forth on Schedule 4.11, Informatix does
not own or lease any real property. Informatix has
good, marketable and defensible title to all of its
properties and assets, including any vehicles, free and
clear of all liens, charges and encumbrances, except
liens for taxes not yet due and payable and such liens
or other imperfections of title, if any, that do not
materially detract from the value of or interfere with
the present use of the property affected thereby or
that would not and are not reasonably likely to have a
Material Adverse Effect; and all leases pursuant to
which Informatix leases other real or personal
property, including any vehicles, are in good standing,
valid and effective in accordance with their respective
<PAGE>
terms, and there is not under any such lease any
existing default or event of default (or event which
with notice or lapse of time, or both, would constitute
a default).
Section 4.11 Equipment. The equipment of
Informatix has no known material defects and is in good
operating condition and repair (ordinary wear and tear
excepted) and is adequate for its current uses. None
of such equipment is in need of maintenance or repairs
except for ordinary routine maintenance and repairs
that are not material in nature or cost.
Section 4.12 Compliance with Law. Informatix is
currently in compliance in all material respects with
all applicable laws (whether statutory or otherwise),
rules, regulations, orders, ordinances, judgments,
decrees, writs and injunctions of all federal, state,
local or foreign governmental authorities
(collectively, "Laws"), including all Laws relating to
the safe conduct of Informatix's business,
environmental protection and conservation, antitrust,
taxes, consumer protection, currency exchange, equal
opportunity, health, sanitation, fire, zoning,
building, occupational safety, pension, securities and
trademark and copyright; and Informatix has not
received notification in the last three years of any
asserted present or past failure to so comply.
Informatix is not required to obtain any permits,
licenses or other authorizations under the Laws for
Informatix to conduct its business.
Section 4.13 Taxes.
(a) Informatix has timely filed
(including any applicable extension periods) all tax
reports, returns and forms required to be filed by
applicable federal, state, local or foreign tax laws,
and all such reports, returns and forms are correct and
complete; copies of all tax returns for Informatix in
respect of all years not barred by the statute of
limitations have been delivered by Informatix to AWT.
None of Informatix's tax returns have been examined or
audited by the Internal Revenue Service or any other
state or local taxing authority.
(b) Informatix has timely paid all
federal, state, local and foreign income, payroll,
withholding, excise, sales, use, real and personal
property, use and occupancy, business and occupancy,
business and occupation, mercantile, real estate,
capital stock and franchise or other tax due or claimed
to be due from Informatix by the Internal Revenue
Service or any Authority. No tax liens have been filed
<PAGE>
on any property or assets of Informatix and no claims
are being asserted with respect to any taxes.
(c) Informatix has complied with all
applicable laws, rules and regulations relating to the
payment and withholding of taxes and has withheld all
amounts required by law to be withheld from the wages
or salaries of its employees, and is not liable for any
taxes or other charges for failure to comply with such
laws, rules and regulations.
Section 4.14 Consents and Approvals. Except as
set forth on Schedule 4.14, Informatix is not required
to obtain, transfer or cause to be transferred any
consent, approval, license, permit or authorization of,
or make any declaration, filing or registration with,
any third party or any governmental or regulatory
authority in connection with (a) the execution and
delivery of this Agreement, (b) the execution and
delivery of any agreement contemplated hereby, (c) the
consummation of the transactions contemplated hereby or
thereby or (d) the ownership and operation by AWT of
Informatix.
Section 4.15 Contracts, Commitments and Returns.
(a) All other parties to material
contracts, commitments, instruments and agreements of
Informatix have complied with the provisions thereof in
all material respects, no party is in material default
thereunder, and no event has occurred which, but for
the passage of time or the giving of notice or both,
would constitute a material default thereunder.
(b) Informatix is not a party to or
bound by any contracts or commitments that require
payments in excess of $25,000 by any party thereto and
are not cancelable by Informatix on notice of not
longer than 30 days.
Section 4.16 Insurance. All policies of fire,
medical, life, liability, product liability, workmen's
compensation, health and other forms of insurance
currently in effect with respect to Informatix's
business are in full force and effect, all premiums
with respect thereto covering all periods up to and
including the Closing Date have been paid, and no
notice of cancellation, termination or non-renewal has
been received with respect to any such policy. Such
policies are sufficient for compliance with all
requirements of law and of all agreements to which
Informatix is a party; are valid, outstanding and
enforceable policies; provide adequate insurance
<PAGE>
coverage for Informatix's business; and the coverage
provided thereby, with respect to any act or event
occurring on or prior to the Closing Date, will not in
any way be affected by or terminate or lapse by reason
of the transactions contemplated by this Agreement. No
risks with respect to the Informatix s business are or
have been designated by Informatix as being self-
insured. Informatix has not been refused any insurance
nor has its coverage been limited by any insurance
carrier to which it has applied for such insurance or
with which it has carried such insurance in the last
three years.
Section 4.17 Accounts Receivable. All accounts
receivable of Informatix, whether reflected on the
Balance Sheet or subsequently created through the
Closing Date, represent sales actually made or services
actually performed in the ordinary course of business
and are current and either have been collected in full
or will be collectable in full, without any setoff.
Section 4.18 Certain Interests. Neither
Informatix nor any officer, director or shareholder
thereof, nor any of their respective affiliates, has
(a) any direct or indirect interest (other than the
ownership of less than one percent of the outstanding
securities of a publicly held company) in any
corporation or business that is involved in or competes
with Informatix or (b) any direct or indirect interest
in any property or assets used by, or relating to,
Informatix or its business, except through the
ownership of Informatix's capital stock.
Section 4.19 Employee Benefit Plans.
(a) Except as set forth on
Schedule 4.19, other than a plan pursuant to Section
401(k) of the Code and health and life insurance
policies (the "Employee Plans"), Informatix maintains
no bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement,
severance or termination pay, medical or life
insurance, supplemental unemployment benefits, profit-
sharing, pension or retirement plans, agreements or
arrangements and other similar fringe or employee
benefit plans, programs or arrangements, written or
otherwise, for the benefit of, or relating to, any
current or former employee of Informatix. Informatix is
not required to make any contributions under such
401(k) plan, a true and correct copy of which has been
delivered to AWT.
(b) None of the Employee Plans promises
or provides retiree medical or other retiree welfare
<PAGE>
benefits to any person, (i) there has been no
transaction or failure to act with respect to any
Employee Plan that could result in any material
liability of Informatix; and (ii) all Employee Plans
are in compliance in all material respects with the
requirements prescribed by all statutes, orders or
governmental rules and regulations currently in effect
with respect thereto, and Informatix has performed all
material obligations required to be performed by it
under, is not in any material respect in default under
or in violation of, and has no knowledge of any default
or violation by any other party to, any of the Employee
Plans except as to which such non-compliance, non-
performance or default would not result and is not
reasonably likely to result in a Material Adverse
Effect.
(c) Except as set forth on
Schedule 4.19, there are no actions, suits or claims
pending or threatened by former or present employees of
Informatix (or their beneficiaries) with respect to
Employee Plans or the assets or fiduciaries thereof
(other than routine claims for benefits).
(d) Informatix has not granted, or
adopted any plans providing for the grant of, any
option to purchase any capital stock of Informatix.
Section 4.20 Labor Matters.
(a) Informatix has and is currently
complying in all material respects with all applicable
laws relating to employment and employment practices,
terms and conditions of employment, and wages and
hours, and is not engaged in any unfair labor practice
or unlawful employment practice;
(b) There is no unfair labor practice
charge or complaint against Informatix pending or
threatened before the National Labor Relations Board
nor, to the knowledge of Informatix, is there any basis
for any such charge or complaint;
(c) There is no charge or complaint
pending or threatened against Informatix before the
Equal Employment Opportunity Commission or the
Department of Labor or any state or local agency of
similar jurisdiction. No employees of Informatix are
represented by any labor union and there is no
collective bargaining agreement in effect with respect
to such employees. To the knowledge of Informatix, no
labor union has engaged in any organizing activities
with respect to Informatix's employees.
<PAGE>
Section 4.21 Personnel. Schedule 4.21 contains
an accurate and complete list of (a) the names, titles
and current salaries of all officers of Informatix and
(b) the wage rates for non-salaried and non-executive
salaried employees of Informatix by classification.
Informatix is not in default with respect to any
obligation to any of its employees.
Section 4.22 Environmental.
(a) Informatix is not required to
obtain any permits, licenses or other authorizations
under federal, state and local laws, rules and
regulations relating to pollution or protection of the
environment (collectively, the "Environmental Laws").
(b) There are no past or present events
or conditions relating to Informatix that may interfere
with or prevent compliance with any Environmental Laws
or that may give rise to any common law or other legal
liability thereunder.
Section 4.23 Securities Laws.
(a) Informatix has not registered an
offering of securities under the Securities Act of 1933
(the Securities Act ), and is not a reporting company
under the Securities Exchange Act of 1934 (the
Exchange Act ). Shares of Informatix common stock
are traded on the OTC Bulletin Board pursuant to Rule
15c2-11 under the Exchange Act.
(b) There is no known fact or
circumstance that materially and adversely has affected
or is affecting or, in the reasonable opinion of
Informatix s executive officers, may reasonably be
expected in the future to materially and adversely
affect, Informatix s financial condition or results of
operations.
Section 4.24 Disclosure. No representation or
warranty by Informatix contained in this Agreement, and
no statement contained in any document, list,
certificate or other writing furnished or to be
furnished by or on behalf of Informatix to AWT or any
of its representatives in connection with the
transactions contemplated hereby, contains or will
contain any untrue statement of a material fact, or
omits or will omit to state any material fact
necessary, in light of the circumstances under which it
was or will be made, in order to make the statements
herein or therein not misleading.
<PAGE>
ARTICLE V
CONDITIONS TO OBLIGATIONS OF INFORMATIX
The obligations of Informatix under this
Agreement are subject to the satisfaction, at or before
the Closing, of each of the following conditions
(provided that such conditions are solely for the
benefit of and may be waived by, Informatix):
Section 5.1 Representations and
Warranties. The representations and warranties of AWT
contained herein, and the statements contained in any
schedule, instrument, list, certificate or writing
delivered by AWT pursuant to this Agreement, shall be
true, complete and accurate as of the date when made
and as of the Closing Date as though such
representations and warranties were made at and as of
such dates, unless otherwise expressly provided in this
Agreement.
Section 5.2 Performance. AWT shall
have performed and complied in all material respects
with all agreements, obligations and conditions
required by this Agreement to be performed or complied
with by AWT at or prior to the Closing.
Section 5.3 No Proceeding or
Litigation. There shall not be threatened, instituted
or pending any suit, action, investigation, inquiry or
other proceeding by or before any court or governmental
or other regulatory or administrative agency or
commission requesting or looking toward an order,
judgment, decree or injunction that restrains or
prohibits the consummation of any of the transactions
contemplated hereby or could have a Material Adverse
Effect.
Section 5.4 Officer's Certificate
AWT shall have delivered to Informatix a certificate
executed by a duly authorized officer of AWT, dated as
of the Closing Date, certifying the fulfillment of the
conditions specified in this Article V.
Section 5.5 Secretary's Certificate.
AWT shall have delivered to Informatix a certificate,
dated as of the Closing Date, executed by the Secretary
of AWT certifying AWT s articles of incorporation, by-
laws and resolutions of AWT s board of directors
attached thereto.
Section 5.6 Opinion of Counsel to
AWT. Informatix shall have received an opinion of
Friday, Eldredge & Clark, counsel to AWT, dated as of
<PAGE>
the Closing Date, in substantially the form attached
hereto as Exhibit "A".
Section 5.7 Documents. All other
documents to be delivered by AWT to Informatix at the
Closing shall be satisfactory in form and substance to
Informatix.
Section 5.8 Consents and Approvals.
All licenses, permits, consents, approvals and
authorizations of all third parties and governmental
bodies and agencies shall have been obtained that are
necessary, in the opinion of counsel to Informatix, in
connection with (a) the execution and delivery by AWT
of this Agreement, (b) the consummation by AWT of the
transactions contemplated hereby or (c) the ownership
and operation by Informatix of AWT, and copies of all
such licenses, permits, consents, approvals and
authorizations shall have been delivered to Informatix.
Section 5.9 AWT Shareholders. Each
of the AWT Shareholders shall have executed a
securities law representation letter in the form of
that attached hereto as Exhibit "B".
Section 5.10 Shareholder Approval.
Informatix shall have obtained any shareholder approval
required by law.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF AWT
The obligations of AWT under this
Agreement are subject to the satisfaction, at or before
the Closing, of each of the following conditions
(provided that such conditions are solely for the
benefit of, and may be waived by, AWT):
Section 6.1 Representations and
Warranties. The representations and warranties of
Informatix contained herein shall be true, complete and
accurate as of the date when made and at and as of the
Closing Date as though such representations and
warranties were made at and as of such date, except as
otherwise expressly provided in this Agreement.
Section 6.2 Performance. Informatix
shall have performed and complied in all material
respects with all agreements, obligations and
conditions required by this Agreement to be so
performed or complied with by it at or prior to the
Closing.
<PAGE>
Section 6.3 Indebtedness. Informatix
shall not have outstanding liabilities exceeding an
aggregate of $200,000 and shall have cash and cash
equivalents of not less than $300,000 in excess of said
liabilities.
Section 6.4 Creation of Series B
Preferred Stock.
(a) Informatix shall have
authorized the issuance of seven hundred fifty thousand
(750,000) shares of Series B Preferred Stock. The
Series B Preferred Stock shall vote on an as-converted
basis, shall be entitled to no dividends, and shall
automatically convert to shares of Informatix Common
Stock as follows:
(i) Upon the issuance of
shares of Informatix Common Stock
pursuant to the equity financing
described in Section 8.4 below, three
(3) shares of Series B Preferred Stock
(up to the total number of shares
outstanding) shall automatically convert
to shares of Informatix Common Stock (on
the basis of ten (10) shares of
Informatix Common Stock for each share
of Series B Preferred Stock) for each
newly issued share of Informatix Common
Stock.
(ii) In the event that
Informatix fails to raise $1,200,000
under Section 8.4 within one (1) year
following the Closing Date, 7.5 shares
of Series B Preferred Stock (up to the
total number of unconverted shares
outstanding) shall automatically convert
to shares of Informatix Common Stock (on
the basis of ten (10) shares of
Informatix Common Stock for each share
of Series B Preferred Stock) for each
One Dollar ($1.00) by which the
aggregate amount raised is less than
$1,200,000.
(iii) All conversion
shall be pro rata among the holders of
Series B Preferred Stock based on the
number of shares of Series B Preferred
Stock held by each holder thereof.
(b) All shares of Series B
<PAGE>
Preferred Stock which remain outstanding as of the
first to occur of (i) completion by Informatix of the
sale of additional shares of Informatix Common Stock
under Section 8.4 or (ii) conversion under clause (ii)
above shall be subject to mandatory redemption by
Informatix at par.
Section 6.5 Officer's Certificate.
Informatix shall have delivered to AWT a certificate,
dated as of the Closing Date, executed by an authorized
officer of Informatix, certifying to the fulfillment of
the conditions specified in this Article VI.
Section 6.6 Secretary's Certificate.
Informatix shall deliver to AWT a certificate, dated as
of the Closing Date, executed by the secretary of
Informatix certifying as to Informatix s articles of
incorporation, by-laws and resolutions adopted by
Informatix s board of directors attached thereto.
Section 6.7 No Injunction. On the
Closing Date, there shall be no effective injunction,
writ, preliminary restraining order or other order
issued by a court of competent jurisdiction restraining
or prohibiting the consummation of the transactions
contemplated hereby.
Section 6.8 Opinion of Counsel to
Informatix. AWT shall have received an opinion of
Klehr, Harrison, counsel to Informatix, dated as of the
Closing Date, in substantially the form attached hereto
as Exhibit "C".
Section 6.9 AWT shall have obtained
any shareholder approval required by law.
ARTICLE VII
CONDUCT OF AWT BUSINESS
Section 7.1 Conduct of Businesses
Prior to the Effective Time. During the period from
the date of this Agreement to the Effective Time,
except as expressly contemplated or permitted by this
Agreement (including the Schedules), AWT shall
(a) conduct its business in the ordinary course,
(b) use best efforts to maintain and preserve intact
its business organization, employees and advantageous
business relationships and retain the services of its
key officers and key employees and (c) take no action
which would adversely affect or delay the ability of
either AWT or Informatix to obtain any necessary
approvals of any third party required for the
<PAGE>
transactions contemplated hereby or to perform its
covenants and agreements under this Agreement or to
consummate the transactions contemplated hereby or
thereby.
Section 7.2 Forbearances. During the
period from the date of this Agreement to the Effective
Time, except as expressly contemplated or permitted by
this Agreement, AWT shall not, without the prior
written consent of Informatix:
(a) other than in the
ordinary course of business, incur any indebtedness for
borrowed money or any indebtedness that constitutes the
deferred purchase price of any property or assets,
assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of
any other individual, corporation or other entity, or
make any loan or advance;
(b) adjust, split, combine or
reclassify any capital stock;
(c) make, declare or pay any
dividend (whether in cash or property), or make any
other distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of
its capital stock or any securities or obligations
convertible (whether currently convertible or
convertible only after the passage of time or the
occurrence of certain events) into or exchangeable for
any shares of its capital stock;
(d) sell, transfer, mortgage,
encumber or otherwise dispose of any of its material
properties or assets (including, without limitation,
cash) to any individual, corporation or other entity,
or cancel, release or assign any indebtedness to any
such person or any claims held by any such person,
except in the ordinary course of business or pursuant
to contracts or agreements in force at the date of this
Agreement;
(e) except pursuant to
contracts or agreements in force at the date of or
permitted by this Agreement, make any investment in,
either by purchase of stock or securities,
contributions to capital, property transfers, or
purchase of any property or assets, any other
individual, corporation or other entity;
(f) except for transactions
in the ordinary course of business, terminate, or waive
any material provision of, any contract, or make any
<PAGE>
change in any instrument or agreement governing the
terms of any of its securities, or material lease or
contract, other than normal renewals of contracts and
leases without material adverse changes of terms;
(g) increase in any manner
the compensation or fringe benefits of any of its
employees or pay any pension or retirement allowance
not required by any existing plan or agreement to any
such employees or become a party to, amend or commit
itself to any pension, retirement, profit-sharing or
welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee other
than in the ordinary course of business, or accelerate
the vesting of, or the lapsing of restrictions with
respect to, any stock options or other stock-based
compensation;
(h) solicit or encourage from
any third party or enter into any negotiations,
discussions or agreement in respect of, or authorize
any individual, corporation or other entity to solicit
or encourage from any third party or enter into any
negotiations, discussions or agreement in respect of,
or provide or cause to be provided any confidential
information in connection with, any inquiries or
proposals relating to the conveyance, sale, lease,
transfer or other disposition of all or a substantial
portion of its business, property or assets, or the
acquisition of its capital stock or securities
convertible into capital stock, or the merger or
consolidation, whether in one transaction or a series
of transactions, of it with any corporation or other
entity, other than as provided by this Agreement (and
each party shall promptly notify the other of all of
the relevant details relating to all inquiries and
proposals which it may receive relating to any of these
matters);
(i) settle any material
claim, action or proceeding involving money damages,
except in the ordinary course of business;
(j) make any material capital
expenditures, make any material changes in its current
method of conducting business, or liquidate, dissolve
or suffer any liquidation or dissolution;
(k) make any material payment
of principal of any debt, with a maturity of more than
one year, for borrowed money or for the deferred
purchase price of property or services except at the
stated maturity of the debt or as required by mandatory
prepayment provisions relating thereto (subject to any
<PAGE>
subordination provisions applicable thereto);
(l) enter into any material
agreement or become liable under any material agreement
for the lease, hire or use of any real or personal
property, or enter into any material sale/leaseback
arrangement with respect to any real or personal
property which now owned or hereafter acquired;
(m) incur or make any
optional prepayment of, or purchase, redeem or
otherwise acquire, or amend any provision pertaining to
the subordination, or the terms of payment of, any
subordinated debt;
(n) create, incur, assume or
suffer to exist any lien or encumbrance of any kind
upon any of its properties, assets, income or profits,
whether borrowed or hereafter acquired;
(o) knowingly take any action
that would prevent or impede the Merger from qualifying
as a reorganization within the meaning of Section 368
of the Code;
(p) amend its articles of
incorporation or its by-laws;
(q) take any action that is
intended or expected to result in any of its
representations and warranties set forth in this
Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, or in
any of the conditions to the Merger not being satisfied
or in a violation of any provision of this Agreement,
except, in every case, as may be required by applicable
law;
(r) implement or adopt any
change in its accounting principles, practices or
methods, other than as may be required by general
accepted accounting principles or regulatory
guidelines; or
(s) agree to take, make any
commitment to take, or adopt any resolutions of its
board of directors in support of, any of the actions
prohibited by this Section 7.2.
<PAGE>
ARTICLE VIII
ADDITIONAL COVENANTS
Section 8.1 Investment Banking Fee.
On the Closing Date, Informatix shall issue 400,000
fully paid, nonassessable shares of Common Stock to SPH
Equities or their designee in payment for investment
banking services rendered in connection with the
Merger.
Section 8.2 Further Action. Upon the
terms and subject to the conditions hereof, each of the
parties hereto shall in good faith use commercially
reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all other
things necessary, proper or advisable to consummate and
make effective as promptly as practicable the
transactions contemplated by this Agreement, to make in
a timely manner all necessary filings, and to otherwise
satisfy or cause to be satisfied all conditions
precedent to the obligations under this Agreement.
Section 8.3 Public Announcements.
Neither Informatix nor AWT shall, without the prior
consent of the other party hereto, issue any press
release or otherwise make any public statements with
respect to the Merger or this Agreement except to the
extent advisable under state and federal securities
laws (which determination shall be made in consultation
with such party's counsel).
Section 8.4 Equity Financing. Within
one (1) year following the Closing Date, Informatix
shall use its best efforts to raise not less than
$1,200,000 in gross proceeds through the sale of
Informatix Common Stock in one or more private
placements. Informatix shall use its best efforts to
raise not less than $300,000 of such total amount
within 90, 180 and 270 days, respectively, following
the Closing Date.
Section 8.5 Delivery of Schedules.
No later than five (5) business days following the date
hereof, each party shall deliver to the other party any
Schedules to this Agreement not attached hereto prior
to execution. No representation or warranty set forth
herein shall be deemed modified by the information set
forth in such Schedules unless the non-delivering party
accepts such Schedules in writing; provided that
completion of Closing by a party shall be deemed
acceptance of Schedules delivered pursuant to this
Section.
<PAGE>
ARTICLE IX
TERMINATION
Section 9.1 Termination. This
Agreement may be terminated at any time prior to the
Effective Time, notwithstanding any stockholder
approvals thereof:
(a) by mutual written consent
duly authorized by the Boards of Directors of
Informatix and AWT; or
(b) by either Informatix or
AWT if the Merger shall not have been consummated by
December 31, 1999 (provided that the right to terminate
this Agreement under this Section 9.1(b) shall not be
available to any party whose failure to fulfill any
obligation under this Agreement has been, in full or in
part, the cause of or resulted in, in full or in part,
the failure of the Merger to occur on or before such
date).
Section 9.2 Effect of Termination.
In the event of the termination of this Agreement
pursuant to Section 9.1, this Agreement shall become
null and void and there shall be no liability on the
part of any party hereto or any of their affiliates,
directors, officers or stockholders except (i) as set
forth in Section 10.1, and (ii) nothing herein shall
relieve any party from liability for any willful breach
hereof.
<PAGE>
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival. All statements
________
contained in any certificate or other instrument
delivered by or on behalf of AWT or Informatix
pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement shall be
considered representations and warranties by AWT or
Informatix, as the case may be, with the same force
and effect as if contained in this Agreement. All
representations, warranties, covenants and agreements
by AWT or Informatix shall survive the Effective Time
for a period of one (1) year after the Effective Time
notwithstanding any investigation at any time by or on
behalf of any party to which such representation or
warranty was given, and shall not be considered waived
by the consummation of the Merger contemplated by this
Agreement with knowledge of any breach or
<PAGE>
misrepresentation by any of the parties hereto.
Section 10.2 Notices. All notices and
other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been
duly given or made as of the date delivered if
delivered personally, three days after being sent by
registered or certified mail (postage prepaid, return
receipt requested), one day after dispatch by
recognized overnight courier (provided delivery is
confirmed by the carrier) and upon transmission by
telecopy, confirmed received, to the parties at the
following addresses (or at such other address for a
party as shall be specified by like changes of
address):
If to Informatix:
Informatix Holdings, Inc.
12760 High Bluff Drive, Suite #210
Sand Diego, CA 92130
Telecopier No.: (610) 660-5905
Attention: Chief Executive Officer
With a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
260 S. Broad Street
Philadelphia, PA 19102
Telecopier No.: (215) 568-6603
Attention: Lawrence D. Rovin, Esq.
If to AWT:
Autologous Wound Therapy, Inc.
1527 Bowman Road, Suite G
Little Rock, Arkansas 72211
Telecopier No.: 501-225-8428
Attention: Chief Executive Officer
With a copy to:
Friday, Eldredge & Clark
400 W. Capitol Avenue, Suite 2000
Little Rock, AR 72201
Telecopier No.: 501-244-5302
Attention: Price C. Gardner, Esq.
Section 10.3 Amendment. This
Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
Section 10.4 Waiver. Any party hereto
<PAGE>
may with respect to any other party hereto (a) extend
the time for the performance of any of the obligations
or other acts, (b) waive any inaccuracies in the
representations and warranties contained herein or in
any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall
be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
Section 10.5 Headings. The headings
contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 10.6 Severability. If any
term or other provision of this Agreement is held to be
invalid, illegal or incapable of being enforced under
any rule of law or public policy by a court of
competent jurisdiction, all other conditions and
provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any
party.
Section 10.7 Entire Agreement. This
Agreement constitutes the entire agreement among the
parties and supersedes all prior agreements and
undertakings both written and oral, among the parties,
or any of them, with respect to the subject matter
hereof.
Section 10.8 Assignment. This
Agreement shall not be assigned by operation of law or
otherwise, except by the mutual written consent of the
parties hereto.
Section 10.9 Parties In Interest.
This Agreement shall be binding upon and inure solely
to the benefit of each party hereto, and nothing in
this Agreement, express or implied, is intended to or
shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason
of this Agreement.
Section 10.10 Failure or Indulgence Not
Waiver; Remedies Cumulative. No failure or delay on
the part of any party hereto in the exercise of any
right hereunder shall impair such right or be construed
to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor
shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any
<PAGE>
other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
Section 10.11 Governing Law. This
Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware,
without regard to conflict of law principles.
Section 10.12 Jurisdiction. The
parties hereto irrevocably consent to the jurisdiction
of the United States federal courts and the state
courts located in the State of Delaware in any suit or
proceeding based on or arising under this Agreement and
irrevocably agree that any and all claims arising out
of this Agreement or related to the transactions
contemplated by this Agreement shall be determined
exclusively in such courts. The parties hereto
irrevocably waive the defense of an inconvenient forum
to the maintenance of such suit or proceeding.
Section 10.13 Fees and Expenses. Each
party to this Agreement shall bear its own costs and
expenses in connection with the transactions
contemplated by this Agreement, including without
limitation, attorney's fees, accounting fees and fees
of any investment bankers or other financial advisors.
Section 10.14 Counterparts. This
Agreement may be executed in one or more counterparts
and by facsimile, each of which when executed shall be
deemed an original and all of which taken together
shall constitute one and the same Agreement.
Section 10.15 Joint Participation.
Informatix and AWT have participated in the drafting of
this Agreement and hereby expressly acknowledge such
joint participation. No provision of this Agreement
shall be construed against any party because such party
drafted such provision.
Section 10.16 Exhibits and Schedules.
All Exhibits and Schedules attached hereto or delivered
pursuant to this Agreement are incorporated by
reference into, and made a part of, this Agreement.
<PAGE>
IN WITNESS WHEREOF, Informatix and AWT
have caused this Agreement to be executed as of the
date first written above.
Informatix Holdings, Inc.
By: /s/ Robert deRosa, President
Autologous Wound Therapy, Inc.
By: /s/ Dennis Hendren, President
<PAGE>
December 9, 1999 (9:35am)
AUTOLOGOUS WOUND THERAPY, INC.
(A Development Stage Entity)
Financial Statements and
Independent Auditors Report
For the Period December 11, 1998 (Date of
Incorporation) through December 31, 1998
and for the Nine Months Ended
September 30, 1999 (Unaudited)
<PAGE>
AuTologous Wound Therapy Inc
(A Development Stage Entity)
INDEX TO THE FINANCIAL STATEMENTS
_________________________________
Page
______
Independent Auditors' Report F2
Balance Sheets as of December31, 1998 (auditied) and
September 30, 1999 (unaudited) F3
Statement of Operations for the period December 11,
1998 (date of inception) through December 31, 1998
(audited), for the nine months ended September 30,
1999 (unaudited) and the period December 11, 1998
(date of inception) through December 31, 1998
(unauditied) F4
Statement of Changes in Stockholders Deficit for the
period December 11, 1998 (date of inception) through
December 31, 1998 (audited), for the nine months
ended September 30, 1999 (unaudited) and the period
December 11, 1998 (date of inception) through
December 31, 1998 (unauditied) F5
<PAGE>
Statements of Cash Flows for the period December
11, 1998 (date of inception) through December 31,
1998 (audited), for the nine months ended September
30, 1999 (unaudited) and the period December 11,
1998 (date of inception) through December 31, 1998
(unauditied) F6
Notes to Financial Statements F7
Unaudited Pro Forma Condensed Consolidated Combined
Balance Sheet (unaudited) P2
Notes to Unaudited Pro Forma Condensed Consolidated
Combinded Balance Sheet (unaudited) P3
F-1
<PAGE>
INDEPENDENT AUDITORS REPORT
To the Stockholders and Board of Directors
AuTologous Wound Therapy, Inc.
Little Rock, Arkansas
We have audited the accompanying balance sheet of AuTologous
Wound Therapy, Inc. (a development stage entity) as of
December 31, 1998, and the related statements of operations,
changes in stockholders deficit and cash flows for the
period December 11, 1998 (date of inception) through
December 31, 1998. These financial statements are the
responsibility of the Company s management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of AuTologous Wound Therapy, Inc. as of December
31, 1998, and the results of its operations, changes in
stockholders deficit and cash flows for the period December
11, 1998 (date of inception) through December 31, 1998 in
conformity with generally accepted accounting principles.
L J SOLDINGER ASSOCIATES
Arlington Heights, Illinois
December 6, 1999
F-2
<PAGE>
AuTologous Wound Therapy, Inc.
(A Development Stage Entity)
Balance Sheets
ASSETS
______
December 31, September 30
1998 1999
--------- -----------
(Unaudited)
Current Assets
Cash $ 92 $ 128,063
Accounts receivable - 90,000
Employee receivable - 970
Note receivable - stockholder and related - 5,500
Prepaid expenses 4,448 8,658
------- -------
Total Current Assets 4,540 233,191
------- -------
Property and Equipment, Net - 57,677
Other Assets - 17,342
------- -------
$ 4,540 $ 308,210
========= ==========
LIABILITIES AND STOCKHOLDERS DEFICIT
_____________________________________
Current Liabilities
Notes payable - stockholders and related $ - $ 190,375
parties
Advances - stockholder and related party 20,728 -
Current portion of long-term debt - 15,558
Accounts payable 3,074 68,798
Accrued expenses - 26,000
Deferred revenue - 30,000
------- ---------
Total Current Liabilities 23,802 330,731
------- ---------
Long-Term Liabilities
Long-term debt, net of current portion - 28,945
Deferred revenue - 60,000
-------- --------
Total Long-Term Liabilities - 88,945
-------- --------
Total Liabilities 23,802 419,676
-------- --------
<PAGE>
Stockholders Deficit
Common stock; $.10 par value; At December
31, 1998 authorized - 1,000,000 shares;
issued and outstanding - 100,000
shares; At September 30, 1999
authorized 1,000,000 shares;
issued, issuable and outstanding
- 68,875 shares 10,000 6,887
Additional paid-in capital (9,900) 2,805,775
Stock subscription note receivable - (5,000)
Deferred compensation - (928,125)
Deficit accumulated in the development (19,362) (1,991,003)
stage --------- -----------
Total Stockholders Deficit (19,262) (111,466)
--------- ----------
$4,540 $308,210
========= ==========
The accompanying notes are an integral part
of the financial statements.
F-3
<PAGE>
AuTologous Wound Therapy, Inc.
(A Development Stage Entity)
Statements of Operations
December 11, December 11,
1998 1998
(Date of (Date of
Inception) Inception)
through through
December 31, September 30, December 31,
1998 1999 1998
------------ ------------ -----------
(Unaudited) (Unaudited)
Revenues $ - $1,100 $1,100
Operating Expenses
Salaries and Wages - 746,952 746,952
Consulting Expense 3,000 1,050,681 1,053,681
Legal 14,180 54,882 69,062
General and Administrative 2,182 118,387 120,569
Expenses ------------ ----------- ----------
Total Operating Expenses 19,362 1,970,902 1,990,264
------------ ----------- ----------
Loss from Operations (19,362) (1,969,802) (1,989,164)
------------- ----------- -----------
Other (Income) Expense
Interest expense - 2,641 2,641
Interest income - (802) (802)
------------- ------------ ----------
Total Other Expense, Net - 1,839 1,839
Net Loss $(19,362) $(1,971,641) $(1,991,003)
============= ============ ============
Basic Loss Per Common Share $ (.19) $ (23.72)
============= ============
Weighted Average Shares 100,000 83,125
============= ============
The accompanying notes are an integral part
of the financial statements.
F-4
<PAGE>
AuTologous Wound Therapy Inc
(A Development Stage Entity)
Statement of Changes in Stockholders Deficit
Deficit
Accumulated
Additional During the
Common Stock Paid-In Subscription Deferred Development
Shares Amount Capital Receivable Compensation Stage
------ ----- ------- ----------- ---------- ---------
Balances,
December 11,
1998 (Date
of Inception) - $ - $ - $ - $ - $ -
Common stock
issued for
Cash 100,000 10,000 (9,900) - - -
Net loss - - - - - (19,362)
------- ------- -------- --------- -------- --------
Balances,
December 31,
1998 100,000 10,000 (9,900) - - (19,362)
Share
retirement
for employee
stock option
plan (20,000) (2,000) 2,000 - - -
Share
retirement
for marketing
option (5,000) (500) 500 - - -
Share
retirement
for private
placement
raise (10,000) (1,000) 1,000 - - -
Common stock
issued with
private
placement
offering, net
of offering
costs 3,875 387 332,225 (5,000) - -
<PAGE>
Warrant and
Options issued
under services
agreement - - 994,950 - - -
Options issued
under the Stock
Option Plan - - 1,485,000 - (928,125) -
Net loss - - - - - (1,971,641)
------ ----- ---------- ------------ ----------- ----------
Balances,
September 30,
1999
(Unaudited) 68,875 $6,887 $2,805,775 $(5,000) $(928,125) $(1,991,003)
======= ====== ========== ========== ========== ==========
The accompanying notes are an integral part
of the financial statements.
F-5
<PAGE>
AuTologous Wound Therapy, Inc.
(A Development Stage Entity)
Statements of Cash Flows
December 11, 1998 December 11, 1998
(Inception) through September 30, (Inception) through
December 11, 1998 1999 September 30, 1999
--------------- -- ------------- ----------------
(Unaudited) (Unaudited)
Cash Flows from
Operating Activities
Net loss $(19,362) $(1,971,641) $(1,991,003)
Adjustments to
reconcile net loss
to net cash
provided by (used in)
operating activities
Depreciation and
amortization - 3,978 3,978
Consulting expense
recorded for
issuance of warrants
and options under
service agreement - 994,950 994,950
Compensation expense
recorded for issuance
of stock under stock
option plan - employees
and officer - 556,875 556,875
Compensation expense
recorded for the
assumption of debt of
of an officer - related
party - 67,000 67,000
Increases in assets and
liabilites
Accounts receivable - (90,000) (90,000)
Prepaid expenses (4,448) (21,552) (26,000)
Accounts payable 23,802 7,861 31,663
Accrued expenses 26,000 26,000
Deferred revenue 90,000 90,000
------- -------- ---------
Total Adjustments 19,354 1,635,112 1,654,466
------- --------- ---------
<PAGE>
Net Cash Used in
Operations (8) (336,529) (336,537)
------- ---------- ----------
Cash Flows from Investing
Activities;
Advances to stockholders - (5,500) (5,500)
Advances to employees - (970) (970)
------- ---------- ----------
Net Cash Used in
Investing
Activities - (6,470) (6,470)
-------- ---------- ----------
Cash Flows from Financing
Activities Repayments on
long-term debt - (7,092) (7,092)
Proceeds from notes payable -
stockholders, net of
repayments - 123,375 123,375
Proceeds from sale of common
stock, net of offering costs
paid 100 354,687 354,787
------- --------- ---------
Net Cash Provided
by Financing
Activities 100 470,970 471,070
------- --------- ---------
Net Increase in Cash 92 127,971 128,063
Cash, Beginning of Period - 92 -
-------- -------- --------
Cash, End of Period $ 92 $128,063 $128,063
======== ======== ========
Cash Paid for Interest $ - $ 2,641 $ 2,641
======== ======== ========
Cash Paid for Income
Taxes $ - $ - $ -
======== ======== =========
The accompanying notes are an integral part
of the financial statements.
F-6
<PAGE>
AuTologous Wound Therapy, Inc.
(A Development Stage Entity)
Notes to Financial Statements
Information for September 30, 1999 and the Nine
Months ended September 30, 1999 is Unaudited
NOTE 1 - DESCRIPTION OF THE BUSINESS
AuTologous Wound Therapy, Inc. (the Company ) was
incorporated under the laws of the state of Arkansas on
December 11, 1998. The Company, a development stage
entity, is in the business of providing proprietary,
turnkey solutions to the chronic wound care field through
its AuTolo-Cure system developed by the founder of the
Company.
In November 1999, the Company merged with and into
Informatix Holdings, Inc. ( Informatix ), a company
incorporated under the laws of the state of Delaware,
with Informatix as the surviving legal entity.
Informatix was a public shell company, defined as an
inactive, publicly-quoted company with nominal assets and
liabilities. In connection with the merger, Informatix
exchanged 50 shares of Informatix common stock and 50
shares of Informatix series B convertible preferred stock
in exchange for each issued and outstanding share of
common stock of the Company after adjusting for a one-
for-two reverse common stock split on November 8, 1999.
As a result of the exchanges, the stockholders of the
Company gained a controlling interest in Informatix (see
Note 14).
The financial statements of Informatix Holdings, Inc. are
not included in this presentation.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
_______________________
The Company s financial statements are prepared on the accrual
basis of accounting in accordance with generally accepted
accounting principles, and have been presented on a going
concern basis which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of
business.
<PAGE>
Interim Information
___________________
The interim financial data as of September 30, 1999 and for the
nine months then ended is unaudited. The information reflects
all adjustments, consisting only of normal recurring
adjustments that, in the opinion of management, are necessary
to fairly present the financial position and results of
operations of the Company for the periods indicated. Results
<PAGE>
of operations for the interim periods are not necessarily
indicative of the results of operations for a full fiscal year.
Development Stage Enterprise
____________________________
The Company is a Development Stage Enterprise, as defined in
Statement of Financial Accounting Standards No. 7 ( SFAS No.
7") Accounting and Reporting for Development Stage
Enterprises. Under SFAS No. 7, certain additional financial
information is required to be included in the financial
statements for the period from inception of the Company to the
current balance sheet date. Since the inception of the
Company, management has been in the process of raising capital
through stock offerings and its merger with Informatix
Holdings, Inc., hiring personnel, obtaining customers and
developing and marketing the Company s product line.
Use of Estimates
________________
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and the accompanying notes. Actual
results could differ from those estimates.
F-7
<PAGE>
AuTologous Wound Therapy, Inc.
(A Development Stage Entity)
Notes to Financial Statements
Information for September 30, 1999 and the Nine
Months ended September 30, 1999 is Unaudited
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loss Per Share
______________
Loss per share is calculated in accordance with Statement of
Financial Accounting Standard No. 128 Earnings Per Share.
Basic loss per share is computed based upon the weighted
average number of shares of common stock outstanding for the
period and excludes any potential dilution. Diluted earnings
per share reflect potential dilution from the exercise of
conversion of securities into common stock. Options and
warrants to purchase common stock are not included in the
computation of diluted loss per share because the effect of
these instruments would be anti-dilutive for the loss periods
presented.
Segment Information
___________________
The Company operates as a provider of health delivery systems
in the chronic wound field.
Fair Value of Financial Instruments
___________________________________
The carrying value of accounts receivable, accounts payable and
accrued expenses approximates the fair market value due to the
relatively short maturity of these instruments.
Cash Equivalents
________________
For purposes of the statements of cash flows, the Company
considers all highly-liquid instruments purchased with a maturity
of three months or less to be cash equivalents.
Concentration of Credit Risk
____________________________
The Company provides credit in the normal course of business and
performs ongoing credit evaluations of its customers.
During the periods presented in these financial statements, the
Company maintained cash balances in a money market fund at a
financial brokerage firm. These funds are not covered under the
Federal Deposit Insurance Corporation ( FDIC ). At September 30,
1999, the amount of funds in accounts not covered under FDIC
insurance was $116,650. Management does not believe that a
significant risk existed by maintaining balances in the money
market account.
Revenue Recognition
___________________
<PAGE>
Revenue from the sale of disposable supplies are recognized when
these supplies are shipped to the customer. Revenue from
licensing agreements entered into with hospitals, clinics and
wound care facilities for the licensing of technology are
recognized over the life of the agreement. The Company also
recognizes revenue for training, certification and for billing
services at the time such services are performed.
Property and Equipment
______________________
Property and equipment are recorded at cost. Property and
equipment are depreciated using the straight-line method over
their estimated useful lives of five years.
Income Taxes
____________
The Company accounts for its income taxes under Statement of
Financial Accounting Standard No. 109, Accounting for Income
Taxes. Income taxes are recorded in the period in which the
related transactions have been recognized in the financial
statements, net of the valuation allowances which have been
recorded against deferred tax assets. Deferred tax assets
and/or liabilities are recorded for the expected future tax
consequences of temporary differences between the tax basis and
financial reporting basis of assets and liabilities.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
F-8
<PAGE>
AuTologous Wound Therapy, Inc.
(A Development Stage Entity)
Notes to Financial Statements
Information for September 30, 1999 and the Nine
Months ended September 30, 1999 is Unaudited
Compensatory Stock-Based Arrangements
_____________________________________
Management has elected to utilize the guidelines of Accounting
Principles Board Opinion No. 25 to account for the value of
stock-based compensation arrangements that have been entered
into by the Company in exchange for services performed by
employees and independent contractors.
Stock Splits
____________
On June 8, 1999 , the Company s Board of Directors approved a
one thousand-for-one common stock split. Stockholders of
record on June 8, 1999 received one thousand shares of common
stock for each share held on that date. All share numbers in
these financial statements and notes presented herein have been
adjusted to reflect the one thousand-for-one common stock
split. While not changing stockholders deficit in the
aggregate, the common stock split did change the allocation of
capital between par value and additional paid-in capital.
<PAGE>
NOTE 3 - NOTE RECEIVABLE - STOCKHOLDER AND RELATED PARTY
In July 1999, the Company loaned $5,500 to BDR Consulting, Inc.
The loan is due and payable on July 1, 2000 and bears interest
at the rate of 7.5 percent per annum.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
December 31, September 30,
1998 1999
(Unaudited)
Medical equipment $ - $10,060
Medical equipment under capital lease - 51,595
------- --------
- 61,655
Accumulated depreciation - (3,978)
------- --------
Total $ - $57,677
======== =======
NOTE 5 - NOTES PAYABLE - STOCKHOLDERS AND RELATED PARTIES
During 1999, the Company was advanced funds by stockholders of
the Company to meet working capital requirements. The
advances are payable on demand with interest at rates,
originally, ranging from .05% to 1% per annum. Certain of the
advances were guaranteed by the founder of the Company pledging
his stock in the Company to secure repayment. In July 1999,
the Company and stockholders agreed to waive the interest
payable. Management has not discounted the below market rate
loans due to their immateriality.
F-9
<PAGE>
AuTologous Wound Therapy, Inc.
(A Development Stage Entity)
Notes to Financial Statements
Information for September 30, 1999 and the Nine
Months ended September 30, 1999 is Unaudited
NOTE 6 - LONG-TERM DEBT
During 1999, the Company entered into agreements to lease
medical equipment in the amount of $51,595. As of September
30, 1999 the Company was obligated on these leases in the
amount of $44,503. These borrowings bear interest at rates
ranging from approximately 14% to 16% per annum and are payable
in equal monthly installments of $1,765, consisting of
principal and interest payments, and mature between February
and May 2002. The equipment has been pledged as collateral for
the lease.
The following is a schedule by year of future minimum lease
payments required under the capital leases together with the
present value of the net minimum lease payments as of September
30, 1999:
(Unaudited)
-----------
2000 21,176
2001 21,176
2001 11,443
------------
Total minimum lease payments 53,795
Less amount representing
interest (9,292)
------------
Present value of net minimum
lease payments 44,503
Less amount due within one year (15,558)
------------
Noncurrent portion $28,945
============
<PAGE>
NOTE 7 - DEFERRED REVENUE
The Company entered into an agreement on September 23, 1999 to
license two AuTolo-Cure systems, each for a period of 36
months with total payments due of $45,000 per system. The
Company will amortize the revenue from these licenses on a
straight line basis beginning in October, 1999 over the lives
of the agreements.
NOTE 8 - INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
timing differences between the carrying amounts of assets and
F-10
<PAGE>
AuTologous Wound Therapy, Inc.
(A Development Stage Entity)
Notes to Financial Statements
Information for September 30, 1999 and the Nine
Months ended September 30, 1999 is Unaudited
liabilities reflected on the financial statements and the
amounts used for income tax purposes. The tax effects of
temporary differences and net operating loss carryforwards that
give rise to significant portions of the deferred tax assets
recognized at December 31, 1998 are presented below:
Deferred tax assets :
Federal and state deferred tax
benefit arising from net
operating loss carryforwards $ 3,600
-------
3,600
Less valuation allowance (3,600)
-------
Total deferred tax assets $ -
=======
NOTE 8 - INCOME TAXES (Continued)
Income tax benefit consists of the following at December 31,
1998:
Current
Federal $ -
State -
Deferred
Federal -
State -
Tax benefit of net operating
loss carryforward 3,600
-------
3,600
Less valuation allowance (3,600)
-------
Total $ -
-------
The Company has a loss carryforward of approximately $19,362 as
of December 31, 1998 that may be offset against future taxable
income. The carryforward will expire in 2018.
The following table presents the principal reasons for the
difference between the Company's effective tax rates and the
United States federal statutory income tax rate of 15% at
December 31, 1998:
U.S. federal statutory income tax 15%
Federal income tax benefit at
statutory rate $2,904
State and local income tax benefits,
net of effect of federal benefit 696
Valuation allowance for deferred
tax benefit (3,600)
--------
<PAGE>
NOTE 8 - INCOME TAXES (Continued)
Income Tax Expense $ -
========
Effective Income Tax Rate 0%
========
NOTE 9 - CAPITAL STOCK ACTIVITY
On December 11, 1998, the Company issued 100,000 shares of
common stock, with a par value $1.00, for a purchase price of
$100.
On March 8, 1999, the sole shareholder of the Company returned
5,000 shares of common stock to the Company to be reserved for
issuance under a consulting and marketing agreement with Sigma
Health Care Consulting (see Note 13).
On April 29, 1999, the Company and its sole shareholder entered
into an agreement with Quasar Investments, LLC where the sole
shareholder returned 10,000 shares of common stock to the
Company to be held for a private placement offering through the
efforts of Quasar Investments, LLC.
On June 8, 1999, the Company amended its Articles of
Incorporation changing the par value of its common stock to
$.01 per share and authorizing the issuance of up to 1,000,000
shares of common stock.
F-11
<PAGE>
AuTologous Wound Therapy, Inc.
(A Development Stage Entity)
Notes to Financial Statements
Information for September 30, 1999 and the Nine
Months ended September 30, 1999 is Unaudited
NOTE 9 - CAPITAL STOCK ACTIVITY (Continued)
On June 8 , 1999, a shareholder of the Company returned 20,000
shares of common stock to the Company to be reserved for
issuance under the Non-Qualified Stock Option Plan.
In September 1999, the Company was in the process of completing
a private placement offering of 5,000 shares of common stock
for an aggregate purchase price of $500,000, under exemptions
of the Securities and Exchange Act of 1933. At September 30,
1999, the Company had issued 3,875 shares, raised $382,500 and
had a subscription receivable in the amount of $5,000. Costs
related to offering amounted to $54,887.
NOTE 10 - NON-QUALIFIED STOCK OPTION PLAN
On June 8, 1999, the Company adopted a Non-Qualified Stock
Option Plan (the NSO Plan ) which provides for the granting of
options to employees, officers, directors and consultants of
the Company. The number of shares which can be purchased under
this plan is limited to 20,000 shares, adjustable for changes
in the capital structure of the Company. The exercise prices
of the options granted under the NSO Plan are to be determined
by the Board of Directors or other NSO Plan administrators on
the date the option is granted. The expiration date for an
option granted shall be determined at the discretion of the
board of directors and shall not expire later than ten years
after date of grant. Any options which have not been exercised
prior to termination of services will be deemed canceled
immediately as a result of resignation or dismissal and after
180 days subsequent to death or disability. The Company will
incur compensation expense to the extent that the market value
of the stock at the date of grant to employees exceeds the
amount the grantee is required to pay for the options (see
Notes 11 and 12). As of September 30, 1999, the Company had
issued 15,000 options under the plan.
NOTE 11 - SUPPLEMENTAL CASH FLOW DISCLOSURES - NON CASH
TRANSACTIONS
Accounts payable at September 30, 1999 included $10,060 related
to the purchase of property and equipment.
In 1999 the Company entered into capital leases to acquire
property and equipment in the amount of $51,595.
At September 30, 1999, offering costs of $27,074 were unpaid
<PAGE>
and included in accounts payable.
Proceeds from stock sales are reflected net of a stock
subscription receivable amounting to $5,000.
The Company incurred $1,485,000 of compensation expense in
connection with the issuance of options to employees under the
Company s stock option plan. The exercise prices were 1% of
the fair market value of the underlying common stock and
therefore the Company has recorded the issuances of these
options in the same manner as if common stock had been granted.
As of September 30, 1999, $556,875 of the $1,485,000 had been
expensed as compensation for services rendered, and the
remaining $928,125 had been recorded as deferred compensation
and will be ratably expensed over the period ending December
31, 2000 as services are rendered by the employees (see Note
12).
NOTE 12 - RELATED PARTY TRANSACTIONS - NOT DESCRIBED ELSEWHERE
BDR Consulting, Inc. is the managing member of, and significant
investor in, Quasar Investments, LLC which owns a controlling
interest in the Company. BDR Consulting, Inc., through a
voting trust agreement, is entitled to vote on matters relating
to election of Directors, merger, sale and liquidation of the
Company on behalf of Quasar Investments, LLC. As of September
30, 1999, Quasar Investments, LLC owned 74% of the outstanding
stock of the Company.
BDR Consulting, Inc. is also affiliated with BDR Investment
Partnership through common ownership. The principal in both
entities is an employee of the Company.
F-12
<PAGE>
AuTologous Wound Therapy, Inc.
(A Development Stage Entity)
Notes to Financial Statements
Information for September 30, 1999 and the Nine
Months ended September 30, 1999 is Unaudited
NOTE 12 - RELATED PARTY TRANSACTIONS - NOT DISCLOSED ELSEWHERE
(Continued)
On February 23, 1999, the Company and BDR Consulting, Inc.
( BDR ) entered into a consulting agreement. The agreement
called for BDR to provide contacts, potential investors,
expertise in marketing, general business and certain legal
services required by the Company. Initially, the Company was
to pay a consulting fee of ten percent of the gross value of
any contracts entered into with a party introduced by BDR. On
October 28, 1999, BDR assigned its rights to the consulting
fees to BDR Investment Partnership (see Note 14).
On October 29, 1999, the Company and BDR entered into a
subsequent consulting agreement, providing that BDR would
receive compensation based on the annualized gross revenue of
<PAGE>
the Company. The amended agreement specified a graduated
monthly fee as follows: $6,000 per month on annual revenues of
$0 to $7.5 million; $10,000 per month if annualized revenues
are $7.5 million to $14 million; $15,000 per month if
annualized revenues are $14 million to $25 million; and $20,000
per month if annualized gross revenues are in excess of $25
million. The consulting fees is to be based on the rolling
twelve month aggregate gross revenues of the Company measured
as of the close of the month immediately prior to the month for
which payment due is being calculated. The amended agreement
has a term of five years from the date of amendment.
On April 27, 1999, the founder and sole stockholder of the
Company, the Company and Quasar Investments, LLC entered into
an agreement, effective May 1, 1999, which amended an earlier
option agreement between the founder and Quasar Investments,
LLC. Under the amended agreement, the Company is to pay the
founder a royalty of five percent of the gross profit derived
from the sale, license or other exploitation of the
intellectual property of the Company, payable thirty days after
the end of each quarter, in exchange for the founder delivering
fifty-one percent of the issued and outstanding common stock of
the Company, held by the founder to Quasar Investments, LLC.
On October 29, 1999, the Company and the stockholder amended
the royalty agreement, whereby the royalty would be limited to
$1,000,000 in the aggregate during any four consecutive
quarters. The agreement also calls for the stockholder to be
paid a consulting fee of $50,000 per year should royalty fees
exceed $150,000 per year.
On June 8, 1999, the principal stockholders and the Company
entered into an agreement whereby those stockholders would be
required to give the Company the right of first refusal to
purchase the stock if any of those stockholders desired to sell
their stock to anyone but the stockholders involved (see Note
14).
On September 1, 1999 the Company granted options to purchase
5,000 shares of the Company s common stock to the President
and Director of the Company, 7,000 shares of the Company s
common stock to the Chief Operating Officer and Director of the
Company and 3,000 shares to the VP of Marketing and a Director
of the Company. The exercise price for each issuance was $1.00
per share which represented 1% of the fair market value of the
stock at that date (see Note 10).
NOTE 13 - COMMITMENTS AND CONTINGENCIES
<PAGE>
On February 13, 1999, the Company filed a patent application
with the United States Patent and Trademark Office for an
Improved Enriched Platelet Wound Healant, which encompasses the
AuTolo-Cure system.
On March 8, 1999, the Company and Sigma Health Care Consulting,
Inc. ( Sigma ) entered into a consulting and marketing
agreement whereby Sigma would use its contacts to place the
AuTolo-Cure system into high profile hospitals. The
agreement calls for Sigma to receive shares of common stock, in
an amount up to 2.5% of the issued and outstanding common
stock shares, upon closing of sales or licensing agreements
with two high profile hospitals. The agreement also limits
the maximum issuance amount to 5% of the issued and
outstanding common stock for placement of systems in five
high profile hospitals. The Company is in the final stages of
renegotiating the agreement, and has agreed in principal
with Sigma to rescind the prior agreement and pay Sigma
a one time fee of $3,000 for consulting services performed
and issue an option to purchase 1,000 shares of common stock
at an exercise price of $200 per share with a term of five
years.
F-13
<PAGE>
AuTologous Wound Therapy, Inc.
(A Development Stage Entity)
Notes to Financial Statements
Information for September 30, 1999 and the Nine
Months ended September 30, 1999 is Unaudited
NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued)
On September 22, 1999 the Company, Keith Bennett, M.D.
( Bennett ) and Bennett Medical, LLC ( BMI ) entered into a
service agreement whereby Bennett and BMI agreed to test the
AuTolo-Cure system on 75 cases on behalf of the Company. The
Company is obligated to provide operational and technical
support in connection with the technology. As compensation for
the trials, Bennett and BMI are to retain all professional fees
associated with the trials and to receive a warrant to purchase
up to 5,000 shares of the Company s common stock, upon
completion of the trials. The warrant may be exercised at any
time after January 1, 2000 and is exercisable through September
22, 2004. The exercise price of the warrant is $.01 per share
of underlying common stock. Upon exercise of the warrant, BMI
will be entitled to participate in the Non-Qualified Stock
Option Plan (see Note 10) on a one-for-one basis with the
number of shares exercised under the warrant. BMI will also
act as a sales agent for the lease of equipment, licensing
fees, sale of disposable supplies and training services for the
Company. The agreement calls for BMI to receive a commission
of twenty five percent of the gross profit from these sales and
licenses to customers designated in their sales territory and
to receive a commission of five percent of the gross profit for
sales and licenses to certain designated customers. On October
29, 1999, the Company and BMI amended the commission agreement
whereby BMI waived the five percent commission on the gross
profit of sales and licenses to certain designated customers in
exchange for an option to purchase 135,000 shares of Informatix
Holdings, Inc. (see Note 14) at an exercise price of $1.00 per
share. As of September 30, 1999 BMI had completed the 75
trials under the agreement. The Company recorded consulting
expense in the amount of $994,950 for the difference in price
between the exercise price of the warrant and option versus the
fair market value of the common stock.
On September 23, 1999, the Company and Little Rock Foot Clinic
( LRFC ) entered into an agreement whereby the Company would
pay a commission equal to five percent of the gross profit
earned on any sales, licenses or training that LRFC is directly
responsible for providing to the Company. The Company licensed
one machine to LRFC for an unlimited period, at no charge, in
return for being the first commercial operation to utilize the
process. The Company intends on rescinding the commission
agreement in return for providing stock options to LRFC.
NOTE 14 - SUBSEQUENT EVENTS
<PAGE>
On October 29, 1999, the Company and BDR Investment Partnership
amended the February 23, 1999 consulting agreement whereby the
Company issued 50,000 shares of common stock to BDR Investment
Partnership in exchange for cancellation of the agreement.
This resulted in the Company recording deferred consulting fees
of $5,000,000, which will be amortized over the five year term
of the agreement. The deferred fees are not recorded in these
financial statements.
On November 4, 1999, the Company consummated a plan of merger
and reorganization with Informatix Holdings, Inc.
( Informatix ), a Delaware corporation, with Informatix as the
surviving legal entity. The merger will be accounted for as a
recapitalization and the financial statements of the Company
will become those of the surviving entity as adjusted for the
merger. After the merger, Informatix changed its name to
AuTologous Wound Therapy, Inc. The merger calls for the
exchange of each share of the Company s common stock for 50
shares of Informatix common stock, par value $.0001 and 50
shares of Informatix series B convertible preferred stock, par
value $.0001 after adjusting for a one-for-two reverse common
stock split on November 8, 1999. Each warrant and option share
of the Company was exchanged for a similar option or warrant to
acquire 50 shares of Informatix common stock and 50 shares of
Informatix series B convertible preferred stock. In conjunction
with the merger, the Company rescinded the right of first
refusal agreement of sale of shares of the Company s common
stock between certain stockholders. These financial statements
do not reflect the recapitalization.
In October 1999, a director of the Company forgave loans to the
Company totaling $25,000 in exchange for receiving three
percent of the outstanding stock of the Company from the
founder of the Company.
The Company executed a new 60 month lease for office space in
Little Rock, Arkansas, commencing December 1, 1999. Monthly
payments under the lease are $3,000.
F-14
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED BALANCE SHEET
The following unaudited pro forma condensed consolidated
combined balance sheet is based on the historical balance
sheets of AuTologous Wound Therapy, Inc. as of September 30,
1999 and of Informatix Holdings, Inc. as of November 4,
1999. The two entities merged on November 4, 1999 with
Informatix Holdings, Inc. being the legal survivor. This
merger has been treated as a recapitalization of AuTologous
Wound Therapy, Inc. Therefore at the date of the merger the
financial statements of AuTologous Wound Therapy, Inc.
become those of Informatix Holdings, Inc.
Specifically, the following unaudited pro forma condensed
consolidated combined balance sheet presents the
recapitalization of AuTologous Wound Therapy, Inc. as if the
merger had been consummated as of September 30, 1999 but
uses the historical numbers of Informatix Holdings, Inc. as
of November 4, 1999, the actual date of the merger. The
information presented is derived from, should be read in
conjunction with, and is qualified in its entirety by
reference to, the separate historical financial statements
and the notes thereto appearing elsewhere in this Form10SB
or incorporated elsewhere in this Form10SB by reference. The
unaudited pro forma condensed combined financial data has
been included for comparative purposes only and does not
purport to be indicative of the financial position which
actually would have been obtained if the merger had been
effected at September 30, 1999.
P-1
<PAGE>
AUTOLOGOUS WOUND THERAPY, INC
Pro Forma Condensed Consolidated Combined Balance Sheet
AuTologous Informatix
Wound Holdings Recapital-
Therapy, Inc. ization Pro Forma
September 30, November 30,
1999 1999
---------- --------- --------- ---------
ASSETS
______
Current Assets
Cash $128,063 $288,935 - $416,998
Accounts receivable 90,000 - - 90,000
Employee receivable 970 - - 970
Interest receivable - 13,263 - 13,263
Note receivable - 110,000 - 110,000
Note receivable -
stockholder and
related party 5,500 - - 5,500
Prepaid expenses 8,658 - - 8,658
------- -------- ------- --------
Total Current Assets 233,191 412,198 - 645,389
Property and Equipment,
Net 57,677 - - 57,677
Other Assets 17,342 - - 17,342
------- ------- -------- --------
$308,210 $412,198 - $720,408
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
______________________________________________
Current Liabilities
Notes payable -
stockholders and
related parties $190,375 $ - $ - $190,375
Notes payable -
stockholders - 77,500 - 77,500
Current portion of
long-term debt 15,558 - - 15,558
Accounts payable 68,798 - - 68,798
Accrued expenses 26,000 42,617 - 68,617
Deferred revenue 30,000 - - 30,000
------- ------- ------ ------
Total Current
Liabilites 330,731 120,117 - 450,848
------- ------- ------- -------
Long-Term Liabilities
Long-term debt, net of
current portion 28,945 - - 28,945
Deferred revenue 60,000 - - 60,000
-------- ------- ------- -------
Total Long-Term
Liabilites 88,945 - - 88,945
-------- ------- ------- -------
<PAGE>
Stockholders Equity (Deficit)
Common stock: AuTologous 6,887 - (6,887) 0
Common stock: Informatix - 534 344 878
Preferred stock series A
5% cumulative - 163 - 163
Preferred stock series B - - 600 600
Additional paid-in
capital 2,805,775 3,257,903 (2,905,076) 3,158,602
Subscription receivable (5,000) (55,500) - (60,500)
Deferred compensation (928,125) - - (928,125)
Deficit accumulated in the
development stage (1,991,003) (2,911,019) 2,911,019 (1,991,003)
----------- ---------- --------- ---------
Total Stockholders
Equity (Deficit) (111,466) 292,081 - 180,615
----------- ---------- --------- ---------
$308,210 $412,198 $ - $720,408
=========== ========== ========== ========
The accompanying notes are an integral part of this unaudited
pro forma condensed consolidated combined balance sheet.
P-2
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
COMBINED BALANCE SHEET (UNAUDITED)
(1) The unaudited pro forma information presents the
recapitalization of AuTologous Wound Therapy, Inc. as
if the merger with Informatix Holdings, Inc. had been
consummated as of September 30, 1999, but uses the
historical numbers of Informatix Holdings, Inc. as of
November 4, 1999, the actual date of the merger.
(2) The recapitalization is reflected with the issuance of
stock by AuTologous Wound Therapy, Inc., represented by
the outstanding shares of Informatix Holdings, Inc., in
exchange for the assets and liabilities of Informatix
Holdings, Inc.
(3) This presentation assumes the issuance of approximately
3,443,750 shares of Informatix Holdings, Inc. common
stock and an equal number of Informatix Series B
convertible preferred stock to the stockholders of
AuTologous Wound Therapy, Inc. in return for all of the
outstanding shares of AuTologous Wound Therapy, Inc.
In connection with the recapitalizaton, the par value
of the common stock has been changed to that of
Informatix Holdings, Inc. ; $.0001.
(4) There were no intercompany balances during the periods
presented. All intercompany transactions have been
eliminated.
P-3
