U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB/A
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
MIRACOM INDUSTRIES, INC.
---------------------------------------------
(Name of Small Business Issuer in its Charter)
Nevada, U.S.A. 91-1982205
(State or other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
14747 Artesia Boulevard, Suite 1F, La Mirada, California 90638
(Address of Principal Executive Offices)
(714) 522-2800
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered: Each Class is to be Registered:
Securities to be registered under Section 12(g) of the Act:
Common Stock
------------------------------
(Title of Class)
<PAGE>
FORWARD LOOKING STATEMENTS
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
Miracom Industries, Inc., a new communications and
technology company ("Miracom", the "Company" or the "Registrant")
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 Document or that are otherwise made by
or on behalf of the Company. For this purpose, any statements
contained in the Document that are not statements of historical
fact may be deemed to be forward-looking statements. This
Registration contains statements that constitute "forward-looking
statements." These forward-looking statements can be identified
by the use of predictive, future-tense or forward-looking
terminology, such as "believes," "anticipates," "expects,"
"estimates," "plans," "may," "will," or similar terms. These
statements appear in a number of places in this Registration and
include statements regarding the intent, belief or current
expectations of the Company, its directors or its officers with
respect to, among other things: (i) trends affecting the
Company's financial condition or results of operations for its
limited history; (ii) the Company's business and growth
strategies; (iii) technology advancements as they relate to the
communications and consumer electronics industries; and, (iv) the
Company's financing plans. Investors are cautioned that any such
forward-looking statements are not guarantees of future
performance and involve significant risks and uncertainties, and
that actual results may differ materially from those projected in
the forward-looking statements as a result of various factors.
Factors that could adversely affect actual results and
performance include, among others, the Company's limited
operating history, dependence on new product development,
competition and low barriers to entry, technological change and
government regulation.
The accompanying information contained in this Registration,
including, without limitation, the information set forth under
the headings "Risk Factors," "Description of Business" and
"Management's Discussion and Analysis or Plan of Operation"
identify important additional factors that could materially
adversely affect actual results and performance. All of these
factors should be carefully considered and evaluated. All
forward-looking statements attributable to the Company are
expressly qualified in their entirety by the foregoing cautionary
statement. Any forward-looking statements in this report should
be evaluated in light of these important risk factors. The
Company is also subject to other risks detailed herein or set
forth from time to time in the Company's filings with the
Securities and Exchange Commission.
<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Part I
------
Item 1. Description of Business
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 3. Description of Property
Item 4. Security Ownership of Certain Beneficial Owners and
Management
Item 5. Directors, Executive Officers, Promoters and Control
Persons
Item 6. Executive Compensation
Item 7. Certain Relationships and Related Transactions
Item 8. Description of Securities
Part II
-------
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters
Item 2. Legal Proceedings
Item 3. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Item 4. Recent Sales of Unregistered Securities
Item 5. Indemnification of Directors and Officers
Part F/S
--------
Item 1. Financial Statements
Part III
--------
Index to Exhibits
Signatures
Exhibits
Except where the context otherwise requires, all references in
this Registration to (a) the "Registrant" or the "Company" or
"Miracom" refer to Miracom Industries, Inc., a Nevada
corporation, (b) the "Web" refer to the World Wide Web and (c)
the "site" refer to the Company's website at www.miracomind.com.
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) Business Development. Miracom Industries, Inc.
("Miracom" or the "Company"), formerly known as Bigway, Inc., was
incorporated in the State of Nevada on March 12, 1996. On or
about April 25, 1999, the Company approved a Resolution of the
Board of Directors whereby it authorized the consummation of a
Corporate Combination Agreement (the "Agreement") executed with
Miracom Industries, a California sole proprietorship (the
"Acquired Entity"), and concurrently resolved to change the name
of the Company to Miracom Industries, Inc. Pursuant to the terms
of the Agreement, which was consummated on April 26, 1999, the
Company acquired all of the existing distribution contracts,
marketing rights, inventory and accounts receivable from the
Acquired Entity. There were no outstanding liabilities at the
time of the acquisition, however, the Company has agreed to
assume any obligations that may arise as a result of previous
product sales. As consideration for its acquisition, the Company
issued 3,269,230 Shares of its Common Stock to the prior owners
of Miracom's newly-acquired business interests. As part of the
Agreement, the Company secured a capital contribution commitment
from one of the Miracom principals in the amount of $125,000 in
exchange for 641,026 shares of the Company's Common Stock,
$80,000 (410,257 shares) of which has already been contributed,
and $45,000 (230,769 shares) of which is in the form of a Common
Stock subscription receivable.
Upon execution of the Agreement, the Company appointed Jimmy
K. Sung and Paul Kim as President and Secretary, respectively,
and appointed both to the Company's Board of Directors, effective
as of the merger date. The Acquired Entity was established in
cooperation with an associate manufacturer in Korea to develop
new and innovative consumer electronics products to be
distributed and marketed worldwide. Neither the Company nor its
predecessors have been involved in any bankruptcy, receivership
or similar proceeding.
(b) Business of Issuer.
Industry Background:
Consumer electronics is an $86 billion industry worldwide,
and in the United States, and is one the fastest growing sectors
of the economy, with consumer electronics manufacturers employing
over 180,000 people. The industry as a whole covers a broad
spectrum of categories, including home office equipment,
communications equipment, digital satellite systems, home
theater, audio and video equipment, and mobile electronics and
accessories. Miracom focuses on the communications and media
segments of the industry.
Miracom Industries, Inc.
The Company's business is in developing and distributing
high-technology telephone hardware and mass consumer electronics
products. Miracom strategically invests in research and
development of those products that have definitive advantages in
the consumer electronics marketplace over their competition. The
primary focus and goal of the Company is to develop an assortment
of high-tech consumer telephony products and accessories
implementing better functional usage, unique design features and
utilizing new technology.
The objective of the Company is to penetrate the top 100
mass consumer electronics retail outlets and to simultaneously
develop wholesale distribution outlets for independent retail
establishment outreach. The Company will strive to keep the
profit margin and overhead at a minimum during this initial two-
year period, while offering various marketing incentives to
penetrate notable key accounts. Once vendor relationships are
established with retail accounts, the Company will expand its
product line with other consumer electronic goods in order to
maximize sales potential and increase the Company's overall gross
sales margin. The Company is targeting annual sales revenues of
twenty million dollars within three years.
The Company's primary product, initially, will be the Mini
Wireless 900 MHz Telephone. There are at least one dozen
competitors already in the market that make 900 MHz wireless
telephones, and as a result of advancing technology, 900 MHz
phone prices have fallen drastically in recent months. Newer,
more advanced wireless phones are now utilizing digital and/or
2.4 GHz frequency technology. Consequently, consumer products
within the wireless industry as a whole have become extremely
price-sensitive.
Miracom's products separate themselves from the competition
by implementing better functional usage, unique designs and new
technology, while maintaining economic feasability. Miracom's
Mini Wireless Telephone is small, lightweight and has a
contemporary design. It comes with a unique headphone/microphone
accessory, thus making it completely handsfree, unlike its bulky,
cumbersome and lesser-accessorized competitors.
Products:
Mini Phone (SG1400M)
Miracom's Mini Phone is one of the smallest and lightest
telephones in the world, measuring just 2.12" x 1.97" x .63", and
weighing a mere 1.06 ounces. Unlike its competitors, the SG1400M
is the only full-featured mini phone on the market today, with
such features as a 10-number memory, last number redial, mute,
volume control and three different ringer tones. The SG1400M
comes in several attractive colors and is packaged in a peggable,
see-through clamshell. The SG1400M is great for computer users,
for people working around the house and for anybody on the phone
for extended periods of time.
Multi-Line Phone Amplifier
This product is a true hands-free unit that can be used in
conjunction with any phone, including home and office
applications. A multi-line phone amplifier is a simple device
that amplifies the output sound for maximum hearing. The device
is internally set to adapt to handle various multi-line settings,
including manual as well as automatic settings. The amplifier
comes with the microphone/earphone headset, thus giving the
versatility of hands-free operation or regular handheld
operation, while providing sound quality comparable to much more
expensive professional units. The amplifier offers convenience,
versatility and reduces stress from awkward phone posture.
This technology has been around for some time, but the
advantage of Miracom's product is the price. Miracom's unit will
be priced fifty percent below its nearest competitor, thus
allowing for every station within an office to be able to afford
the luxury of answering the phone with a headset. Multi-line
phone amplifiers are retailing in the range of $69 to $150. This
can be verified in such distributions as Hello Direct, a direct
sales company. Miracom's product will have a suggested retail
price of $40.
FM Hands-Free Kit for Cellular Phone
By using the FM frequency on a car's radio, Miracom's first-
of-its kind product will provide exceptional clarity when using a
cellular phone inside an automobile. With this product, drivers
will be able to focus their full attention on the road because
both of their hands will be free. The unique aspect of this
product is that it works with the FM radio. By setting the radio
to any FM station while using a cellular phone, a caller can hear
their remote party on the car's audio speakers. There is also an
option for private conversation. As a bonus, Miracom's kit also
doubles as a battery recharger. Many states are considering
legislation that would ban the use of handheld wireless phones
while operating an automobile. Europe and some Asian countries
have already implemented laws mandating hands-free operation of
cellular phones in automobiles. There is currently legislation
pending in several states to improve driving safety, and it is
possible that cellular phone users will eventually be required to
have a hands-free unit in their vehicles.
900 MHz Digital Spread Spectrum PBX Phone Receiver
Private Branch Exchange ("PBX"), is a telephone system used
generally in an office or call center environment, that controls
and switches information between local station equipment, such as
telephones or data terminals, and provides access to the public
switched network. Organizations that have more than a few phones
usually have an internal switching mechanism that connects the
internal phones to each other and to the outside world. As such,
a PBX is like a miniature Central Office switching system
designed for a private institution.
Although there are presently 900MHz cordless phones for PBX
systems, the existing products are cost-prohibitive and do not
support all different types of PBX processors. Miracom's unit,
available for the price of a standard cordless phone, will work
with all types of PBX processors, and will be able to support
over 40 different stations. This unit will have clear sound
quality with DSS (Digital Spread Spectrum) technology for
complete conversation privacy, with a range of over 300 feet from
the base in a typical closed environment. The telephone can be
answered and disconnected from a remote location, freeing its
user from the confines of his or her desk, and increasing
efficiency by allowing multitasking.
Miracom's PBX digital receiver and amplifier comes in three
parts; the receiving base, the receiver and the headset. The
base unit is connected to a telephone handset outlet; the
receiver is carried by the user; and the headset/microphone is
plugged into the mobile receiver. A user can answer or hang up
the phone from a remote location simply by pressing the "On/Off"
hook button, making Miracom's 900 MHz DSS PBX Phone Receiver the
first product of its kind on the market. Phone station identity
is not required since the base is unique only to its receiver,
and the units are compatible with virtually any phone in the
market today. The headset can be used as an option if hands-free
operation is preferred, otherwise, the built-in speaker and
microphone is used as in normal operation. Based upon test
marketing done by the Company at the 1999 Consumer Electronics
Show, the new product will be received with great excitement.
MP3 Player
Miracom's "MP3 Player" is a new type of audio player, much
like a Compact Disc player. Music can be stored and played
digitally on an MP3 player with no audio tape or removable disc.
The user downloads music directly from the Internet or other
source into the MP3 unit. Although MP3 is still a new format,
its popularity is growing rapidly and new MP3 sites are appearing
on a regular basis. Larger music distributors and clearing
houses are also creating their own MP3 websites to capture the
vast new music market created by the MP3 format. Because of the
Internet's economical way to showcase music to the masses, the
MP3 format is being used by more and more new artists, otherwise
unable to secure contracts with the larger and more well-known
record companies, to market their music. There are currently
about twelve manufacturers of MP3 players. Miracom's product
will be one of the most compact units amongst the competition and
will come to market with 64MB of memory, as opposed to the
typical MP3 player which offers only 16MB or 32MB of memory. The
MP3 player is 2.75" in width, 3.5" in length and 0.7" in height,
and weighs only 70 grams(2.4 oz) without its battery.
Die-Cut Compact Disc
Miracom Industries has a proprietary technology for die-
cutting a compact disc and then formatting the disc to play audio
format files. Standard compact discs measure 4 11/16 inches in
diameter, and when their size or shape is disturbed, data can no
longer be stored or played. Miracom's product, however, breaks
this rule. Miracom's Compact Discs can be cut into the shape of
a flower basket, sports figure, heart, animation character or
just about anything else. For example, the Company is currently
studying the market in the greeting card industry, particularly,
the idea of having a Miracom CD be delivered with a greeting
card, thus adding the value of sentiment without raising the
purchase price of the greeting card. Miracom Cards will be the
first of their kind on the market to actually play music.
The Die-cut compact disc has been released. It is packaged
with greeting cards and marketed through various gift
distributors. For example, one of the designs is in the shape of
a sun flower, where the song "My Heart Will Go On" is recorded in
the shaped CD. To create a better sentimental product, the shaped
CD and the greeting card compliment each other as components of
this package. Miracom is currently studying other applications
of this innovative idea.
Distribution Methods and Inventory:
The Company's corporate offices and main warehouse are
located in La Mirada, California, about 15 miles south of Los
Angeles. The warehouse is easily accessible from both Interstate
5 and Interstate 91. The warehouse is also close to the Long
Beach Port and Los Angeles International Airport, which is
important as most of the Company's products will be brought in
from Korea. The Company will contract with fulfillment houses
for distribution in other areas of the United States for
efficient delivery and warehousing capacity. Miracom intends to
maintain 95 percent order fill levels at all times. All orders
will be processed centrally at the La Mirada headquarters office,
and will then be disbursed to the appropriate warehouse for
delivery. Orders will be processed within three days of
receiving purchase orders.
The total projected sales for the first year of operation is
$7 million, of which $5 million will be derived from the domestic
market. This estimate is derived from our current sales network
and contract resources rather than from taking a percentage of an
existing market. We are closely working with approximately fifty
reputable marketing personnel who have many years of experience
working with chain retail outlets. These people are successful
independent brokers, through which we project to penetrate a
total of 5,000 retail outlets in the first year. The average
sales ticket on a mini wireless phone is $100, and we project
that a minimum of 10 units will be distributed to each retail
outlet rendering a total of $5 million in sales. The remaining
$2 million in sales will be accomplished through export sales.
The majority of these export sales will occur in Korea where
Miracom already has a presence in electronic distribution. We
feel that the $2 million figure is nominal given the price
comparison to what is already in the market and the novelty of
our product.
All export shipments will come directly from the factory
warehouse. We project annual sales for the first year of
operation at $2 million, with an initial inventory of $200,000.
With an average gross margin of 30%, our effective selling cost
will be at 130%; therefore, the initial inventory will generate
$260,000 in gross sales. $2 million divided by $260,000 is our
minimum inventory turnover of 7.7. As a result, our annual
inventory turn-over will be approximately eight times or once
every 45 days.
Marketing Strategy:
The Company's website, located at www.MiracomInd.com, will
be utilized to showcase and market the Company and its products
on the Internet. The website is presently online and accessible,
however, it is not yet complete. An independent website
developer is working to implement design changes, updates and e-
commerce functionality to the website to better reflect the
Company's online aspirations which include exposure of the
Company's products to a larger number of potential customers and
possible future sales of Miracom products through its website.
In conjunction with its website, the Company will employ a
separate and unique marketing strategy for each of its five
current products.
Multi-Line Phone Amplifier
The standout feature of this product is that it will be the
most economical product of its kind on the market. The
manufacturer's suggested retail price is $34.95, with its closest
competitor priced at $69.00. Miracom's product will be packaged
similar to its competition, using a four-color retail box, making
the consumer aware that the Company's product is comparable to
other products on the market. The unit will carry a one-year
factory warranty.
Miracom will first and primarily target mass retail outlets
carrying multi-line phones for its initial sales campaign, as
these retailers typically cater to businesses and office
environments, where most multi-system phones are used. As a
secondary line of distribution, the Company intends to market its
products to local telephone installers and service companies,
which, in turn, will distribute them for the Company. These
individuals and companies not only install multi-line phone
systems and telephony products, but often also recommend products
for their clients, which recommendations are often followed based
upon close customer relationships. Additionally, direct sales
organizations, and specifically door-to-door sales companies,
will be contacted to send people out on the street to call on and
solicit businesses. Because of their relatively-low overhead,
these companies will be able to sell the Amplifiers at a lower
price than the suggested retail price. Finally, although the
Company's Amplifier is best-suited for offices with multi-system
phones, the product is also compatible with residential phones,
potentially opening up an additional market for distribution.
FM Hands-Free Kit for Cellular Phone
Hands-free cellular accessories are becoming more and more
widely used. One reason is their convenience, but the primary
factor is driving safety. Many states are proposing mandatory
hands-free operation for cellular phones while driving. These
units typically retail between $24 and $39. Miracom's FM Hands-
free Kit will be priced within this market range, but will offer
additional unique features.
Most cellular accessories, including leather cases, battery
chargers, hands-free kits and extra batteries, are bundled or
offered as a total package when the main phones are purchased.
The key to the success of Miracom's product will be to keep the
distribution and company margin low for its wholesalers, thus
making it economical enough for distributors to give away to
their customers. Bundling the hands-free kit with a cellular
unit from a service provider, or at the manufacturer level, is
preferred to other methods of sales and marketing.
900 MHz Digital Spread Spectrum PBX Phone Receiver
Miracom's 900 MHz PBX Phone Receiver will be the first
cordless multi-line PBX receiver on the market. The product's
stand-alone usage will make it an economical hands-free wireless
product. Similar products on the market require an expensive
base station, in addition to the purchase of separate wireless
phones. These competitor phones only support a maximum of seven
to ten lines, whereas Miracom's Receiver will support over 40
different lines.
Miracom Industries' Receiver and other products will be
showcased at the 2000 Consumer Electronics Show in Las Vegas,
Nevada, after pre-launch in December of 1999, and in a Company
press release. The PBX unit will be presented to the direct
sales companies covering catalog and television shopping. The
strategy is to develop smaller distributors specializing in
installation of multi-line system phones. Smaller distributors
typically need higher mark up than the mass retailers. Small
distributors will also be set up through a mail advertisement
campaign and through telemarketing. Installation companies have
the built-in advantage of promoting new product, and educating
consumers about Miracom Industries' products. As such, it is
more cost-effective, initially, to set up telephone service
contractors as distributors rather then spending money on mass-
market advertising. After the communication specialists advise
and recommend products to their clients, the sales approach will
usually be on a one-on-one basis, providing the distributor with
the opportunity to fully explain the features and benefits of
owning Miracom's 900 MHz Digital Spread Spectrum PBX Phone
Receiver.
MP3 Player
MP3 is a relatively new form of media, developed to be a
more efficient method of data compression over the Internet.
Typically, data, such as, music files or voice transmission,
takes a long time to download because of its large size. MP3
technology compresses this data into a more manageable download,
allowing music file that previously took thirty minutes to
download to be downloaded in under five minutes as MP3 media.
MP3 files are encrypted and require special MP3 players, which
can be either software-based or hardware, for playback. Miracom
only deals with hardware MP3 players.
Hardware MP3 players, however, are not yet a mass-consumed
product. Software-based MP3 players are becoming popular on
Internet sites because of the general availability of freely-
downloadable MP3 from the Internet. Though consumer awareness is
growing, Miracom projects that its MP3 Player product will not
reach the general population for another two years due to the
relatively high price of the unit as compared to Compact Disc
players or portable cassette players. However, the advantages of
MP3 are clear: the sound quality is exceptional; the unit is
versatile in that a user can format any song; and up to 100
titles can be downloaded into a single memory chip. As a result,
more and more companies are investing in MP3 technology and MP3
players. The Company's opinion is that within two years, MP3
players will come down in price, as did CD, and now DVD players,
to a level for mass consumer appeal. Miracom's position is to
observe the trend in demand for MP3 players and be ready for
marketing at a point when the technology becomes widely popular.
This means having all the technology, designing, and production
ready for eventual marketing.
Because the MP3 Player is a specialty player associated with
Internet users, the product will also be marketed through an
Internet sales company like MP3.com or other similar website
offering MP3 format music titles. A special promotion will be in
place as an introductory offer, and the Company's website will be
linked to other sites and banners will be placed on high traffic
Internet sites.
Die-Cut CD
The greeting card industry is the primary target for this
product, but the Die-Cut CD is not limited to this area. The CD
can be marketed in the premium industries emphasizing customized
company logos as well as music duplication services for single
CDs and as a blank CD for retail in stores.
Governmental Regulation.
All consumer electronics must be certified by and registered
with the Underwriters Laboratories ("U/L"). U/L certification of
individual products is not mandated by law, but is generally
indicative of consumer confidence in a company's products. It
is, therefore, as important as the product itself. U/L
certification is granted by category and the process takes about
three to six months. CE certification, similar to that of U/L,
is necessary to export to the European countries.
Consumer electronics product manufacturers are also faced
with other distinct registrations such as with the Federal
Communications Commission ("FCC") and its equivalent in Europe.
Miracom currently has two FCC approvals, one for its Mini Phone
and the other for its Caller ID unit. The Company obtained these
FCC approvals for marketing reasons and not as a result of any
government regulations. Similar to U/L certification, whereas
all communication devices must meet FCC standards, not all
communication devices must be registered. Miracom's mini phone
is already registered with the FCC. In addition, Miracom expects
that all of its products will comply with FCC standards and will
continue to seek FCC approvals, as well as U/L and CE listings,
to further its U.S. and European marketing efforts. The Company
will consult agencies specializing in getting approvals for
standard marks.
At the present time, the Company does not anticipate the
need for any mandatory governmental approval for its products or
services. However, if government regulation becomes a factor and
approval of the Company's products and/or services becomes
necessary at some point in the future, the Company will seek such
approval at the appropriate time.
Employees.
As of the date of this filing, the Company has three
full-time employees Jimmy Sung, Paul Kim and Jerry Sung, and two
employees working on commission. The Company is also presently
in discussions with potential employees for additional sales
positions, with marketing companies to assist with the design and
production of Company brochures and sales material and with
Internet providers and individuals to facilitate web technology
and design. As contracts are undertaken, the Company intends to
hire temporary help sufficient to staff such contract projects,
as and if necessary.
(i) The Company's performance is substantially dependent on
the performance of its President, Jimmy K. Sung, and its
corporate Secretary, Paul Kim. In particular, the Company's
success depends on their ability to develop, design and market
the Company's products.
(ii) The Company does not carry key person life insurance on
any of its personnel. The loss of the services of any of its
executive officers or other key employees could have a material
adverse effect on the business, results of operations and
financial condition of the Company. The Company's future success
also depends on its ability to retain and attract highly
qualified technical and managerial personnel, if and when the
need for such personnel arises.
(iii) There can be no assurance that the Company will be
able to retain its key managerial and technical personnel or that
it will be able to attract and retain additional highly qualified
technical and managerial personnel in the future. The inability
to attract and retain the technical and managerial personnel
necessary to support the growth of the Company's business, due
to, among other things, a large increase in the wages demanded by
such personnel, could have a material adverse effect upon the
Company's business, results of operations and financial
condition.
(c) Risk Factors.
In any business venture, there are substantial risks
specific to the particular enterprise which cannot be ascertained
in total until the business is underway. However, at a minimum,
the Company's present and proposed business operations will be
highly speculative and be subject to the same types of risks
inherent in any new or unproven venture, and will include those
types of risk factors outlined below.
No "Established Trading Market" for Common Stock.
Although the Company's common stock is quoted on the
National Quotation Bureau's "Pink Sheets", there is currently no
"established trading market" for its common stock; and there can
be no assurance that any such market will ever develop or be
maintained. Any market price for shares of common stock of the
Company is likely to be very volatile, and numerous factors
beyond the control of the Company may have a significant adverse
effect. In addition, the stock markets generally have
experienced, and continue to experience, extreme price and volume
fluctuations which have affected the market price of many small
capital companies and which have often been unrelated to the
operating performance of these companies. These broad market
fluctuations, as well as general economic and political
conditions, may adversely affect the market price of the
Company's common stock in any market that may develop. Sales of
"restricted securities" under Rule 144 may also have an adverse
effect on any market that may develop in the Company's common
stock.
Further, effective January 4, 1999, the National Association
of Securities Dealers ("NASD") adopted rules and regulations
requiring that prior to any issuer having its securities quoted
on the OTC Bulletin Board of the NASD that such issuer must be a
"reporting issuer" which is required to file reports under
Section 13 or 15(d) of the Securities and Exchange Act of the
1934, as amended (the "1934 Act"). This Registration Statement
will bring the Company into compliance with the listing provision
of the OTC Bulletin Board and should prevent the NASD from
delisting quotations of the Company's common stock.
Applicability of Low-Priced Stock Risk Disclosure
Requirements.
The securities of the Company will be considered low-priced
or "designated" securities under rules promulgated under the
Exchange Act. Penny Stock Regulation Broker-dealer practices in
connection with transactions in "Penny Stocks" are regulated by
certain rules adopted by the Securities and Exchange Commission.
Penny stocks generally are equity securities with a price of less
than $5.00 (other than securities registered on certain national
securities exchanges or quoted on the NASDAQ system). The penny
stock rules require a broker-dealer, prior to a transaction in a
penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document that provides information
about penny stocks and the risk associated with the penny stock
market. The broker-dealer must also provide the customer with
current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market
value of each penny stock held in the customer's account. In
addition, the penny stock rules generally require that prior to a
transaction in a penny stock, the broker-dealer must make a
written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may
have the effect of reducing the level of trading activity in the
secondary market for a stock that becomes subject to the penny
stock rules. When the Registration Statement becomes effective
and the Company's securities become registered, the stock will
likely have a trading price of less than $5.00 per share and will
not be traded on any national exchanges. Therefore, the
Company's stock will become subject to the penny stock rules and
investors may find it more difficult to sell their securities,
should they desire to do so.
Anticipated Losses for the Foreseeable Future.
The Company has not achieved profitability to date, and the
Company anticipates that it will continue to incur net losses for
the foreseeable future. The extent of these losses will depend,
in part, on the amount of growth in the Company's revenues from
sales of its products. The Company expects that its operating
expenses will increase significantly during the next several
years, especially in the areas of sales and marketing, and brand
promotion. Thus, the Company will need to generate increased
revenues to achieve profitability. To the extent that increases
in its operating expenses precede or are not subsequently
followed by commensurate increases in revenues, or that the
Company is unable to adjust operating expense levels accordingly,
the Company's business, results of operations and financial
condition would be materially and adversely affected. There can
be no assurances that the Company can achieve or sustain
profitability or that the Company's operating losses will not
increase in the future.
Future Capital Needs; Uncertainty of Additional Financing.
The Company currently does not have the available cash
resources and credit facilities sufficient to meet its presently
anticipated working capital and capital expenditure requirements
for this year. Therefore, the Company will need to raise
additional funds in order to conduct its intended operations or
to take advantage of unanticipated opportunities. The Company's
future liquidity and capital requirements will depend upon
numerous factors, including the success of its new product
offerings and competing technological and market developments.
The Company will be required to raise additional funds through
public or private financing, strategic relationships or other
arrangements. There can be no assurance that such additional
funding, if needed, will be available on terms acceptable to the
Company, or at all. Furthermore, any additional equity financing
may be dilutive to stockholders, and debt financing, if
available, may involve restrictive covenants, which may limit the
Company's operating flexibility with respect to certain business
matters. Strategic arrangements, if necessary to raise
additional funds, may require the Company to relinquish its
rights to certain of its intellectual property or selected
business opportunities. If additional funds are raised through
the issuance of equity securities, the percentage ownership of
the stockholders of the Company will be reduced, stockholders may
experience additional dilution in net book value per share and
such equity securities may have rights, preferences or privileges
senior to those of the holder of the Company's common stock. If
adequate funds are not available on acceptable terms, the Company
may be unable to develop or enhance its products, take advantage
of future opportunities or respond to competitive pressures, any
of which could have a material adverse effect on its business,
financial condition, results of operations and prospects.
Competition; Low Barriers to Entry.
The market for communications hardware and consumer
electronics is intensely competitive, rapidly evolving and
subject to rapid technological change. The Company currently
faces significant competition in its markets and expects the
level of price and product competition to persist, intensify and
increase in the future. In addition, as a result of both the
trend toward global expansion by foreign and domestic competitors
and technological and public policy changes, the Company
anticipates that new and different competitors will enter its
markets. These competitors may include entrants from the
telecommunications, software and data networking industries.
Almost all of the Company's current and potential competitors
have longer operating histories, larger installed customer bases,
longer relationships with clients and significantly greater
financial, technical, marketing and public relation resources
than the Company and could decide at any time to increase their
resource commitments to the Company's target market. Depending
upon the continuing pace of global expansion by domestic and
foreign competitors, the nature of their product offerings and
prices, and the extent to which they benefit from foreign market
subsidies, as well as the new types of product offerings from
companies in other industries and the timing and circumstances of
the entry of these competitors into the Company's markets, the
Company's future revenues and net income could be materially
adversely affected.
Dependence on New Product Development.
The markets for the Company's principal products are
characterized by rapidly changing technology, evolving industry
standards, frequent new product introductions and evolving
methods of building and operating telecommunications systems for
business and personal customers. The Company's operating results
will depend to a significant extent on its ability to continue to
introduce new products successfully and on a timely basis and to
reduce costs of existing products. The success of these and
other new offerings is dependent on several factors, including
proper identification of customer needs, cost, timely completion
and introduction, differentiation from offerings of the Company's
competitors and market acceptance. There can be no assurance
that the Company will successfully identify new product
opportunities and develop and bring them to market in a timely
manner, or that products or technologies developed by others will
not render the Company's offerings obsolete or noncompetitive.
Any such development could have a material adverse effect on the
Company's future competitive position and results of operations.
In addition, new technological innovations generally require a
substantial investment before any assurance is available as to
their commercial viability, including, in some cases,
certification by international and domestic standards-setting
bodies. There can be no assurance that any of the technologies
in which the Company is focusing its research and development
investments will achieve broad acceptance in the marketplace, and
the lack of such market acceptance could have a material adverse
effect on the Company's future competitive position and results
of operations.
In addition, there can be no assurance that the Company will
be able to attract and retain the highly skilled technical
personnel necessary to enable the Company to develop new
products, systems and software successfully.
Potential Liability to Clients.
Many of the Company's intended operations involve the
development, implementation and maintenance of hardware and
applications that are critical to the operations of their
clients' businesses. Its failure or inability to meet a client's
expectations in the performance of its products could injure the
Company's business reputation or result in a claim for
substantial damages, regardless of its responsibility for such
failure. In addition, the Company possesses technologies and
content that may include confidential or proprietary client
information. Although the Company will implement policies to
prevent such client information from being disclosed to
unauthorized parties or used inappropriately, any such
unauthorized disclosure or use could result in a claim for
substantial damages. The Company will attempt to limit
contractually its damages arising from negligent acts, errors,
mistakes or omissions in rendering professional services;
however, there can be no assurance that any contractual
protections will be enforceable in all instances or would
otherwise protect the Company from liability for damages. The
successful assertion of one or more large claims against the
Company that are uninsured, exceed available insurance coverage,
if any, or result in changes to any insurance policies the
Company may obtain, including premium increases or the imposition
of a large deductible or co-insurance requirements, could
adversely affect the Company's business, results of operations
and financial condition.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
All statements, trend analysis and other information
contained in this Registration relative to markets for the
Company's products and trends in revenues, gross margin and
anticipated expense levels, as well as other statements including
words such as "believe," "anticipate," "expect," "estimate,"
"plan" and "intend" and other similar expressions, constitute
forward-looking statements. Those forward-looking statements are
subject to business and economic risks, and the Company's actual
results of operations may differ from those contained in the
forward-looking statements. The following discussion of the
financial condition and results of operations of the Company
should also be read in conjunction with the Financial Statements
and Notes related thereto included elsewhere in this
Registration.
(a) Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Miracom Industries is an importer/exporter and wholesaler of
consumer electronics products. Many of the Company's products
are either proprietary, developed internally, or are exclusive to
the Company under licensing agreements. At present, and for the
foreseeable future, manufacturing of the Company's products is
accomplished through the use of contract manufacturers, none of
which are under contract with Miracom, allowing the Company the
freedom to negotiate and contract with whomever it chooses.
Miracom will continue to develop its product line in two ways.
The first is Original Equipment Manufacturing, meaning that a
product is purchased from its original manufacturer and
distributed under the Miracom brand name. At this time Miracom
is evaluating the Wireless Intercom and FRS Two-Way Radio for OEM
Manufacturing relationships. The second method for developing
its product line is through the Company's own in-house
development. For those products developed exclusively for
Miracom, all research and development and molding will be
provided by Miracom, while only the product parts will be sourced
and purchased directly from parts manufacturers, at which point
the parts will be delivered to a contract assembly company for
final assembly. By utilizing this latter method, Miracom will be
able to save 25% to 30% on final manufacturing costs as a result
of bypassing assembly company mark-up on parts and outside
research and development. Subcontract work will be assigned from
time to time, as necessary, and without any long term
manufacturing commitment, so as to avoid the overhead of
maintaining the Company's own manufacturing facility. This use
of contract manufacturers mitigates the need for high capital
investment and will enable the Company to grow with a smaller
initial funding requirement.
The Company's near-term financial strategy is to keep costs
at a minimum by, among other things, reviewing production plant
operations in slow growth months, keeping the overhead of the
Company low and maximizing profits. In addition, the Company
will continue to focus on targeted marketing for specific market
segments. Sales representatives, working on commission, will be
used rather than having a large internal sales department. Based
upon its past and present operations, Miracom expects an average
of 30% to 35% gross (7% to 12% net) profit margin on sales of its
products. In order to stay ahead of the competition and to
acquire name recognition in the industry, Miracom Industries will
continue to focus on the development of new and innovative high
technology products by dedicating a portion of the Company's
sales revenue to continued research and development endeavors.
Miracom is presently working with two different sources for
the development of future products. Mr. Chae Ryong Lim, who
resides in Korea and is very knowledgeable in communications
product engineering, is currently developing amplifier products
for the Company. In the U.S., B.S. Electronic Engineering
Company is working on handsfree products for cellular/PCS
telephones. The compensation arrangement with these two
developers is based solely upon royalties on sales of future
products. Miracom is currently awaiting funding for tooling,
molding and assembly of these new products.
In addition to the products mentioned herein, the Company is
also considering the production and distribution of a children's
learning device; an Internet telephone; Caller ID systems for
computers, for home entertainment systems and for televisions; a
900 MHz DSS cordless phone for the home; a wireless keyboard; a
wireless mouse; and a mouse phone. The Company intends to
develop and maintain strategic alliances for the successful
development and expansion of its consumer electronics and
telephone hardware business. The Company will also continue to
evaluate relationships with other companies or business partners
that may provide collaborative benefits and/or complement the
Company's objectives.
During the year ended December 31, 1999, Miracom achieved
revenues of $246,497 from sales of its Mini Phone (SG1400M),
released in late 1998. A significant portion of the Company's
1999 revenue, $161,447, or approximately 65%, was derived from a
single customer, Softech Media Company. However, as of the date
of this filing, Miracom no longer sells to Softech due to
Softech's recurring payment delinquencies.
During the years ended December 31, 1999 and 1998, the
Company spent approximately $52,230 and $6,800, respectively, on
research and development activities. These activities included
art design, mock-ups and engineering development for the
Company's Mini-Phone, Wireless PBX Receiver, Cellular/PCS Hands-
Free Kit and its Single/Multi-Line Telephone Hands-Free
Amplifier. For the year 2000, the Company expects to
significantly increase its Research and Development activities.
The Company intends to invest approximately $400,000 in Research
and Development to complete and bring to market its Wireless PBX
Digital Receiver and Amplifier, its FM Hands-Free Cellular/PCS
Kits and its Single/Multi-Line Telephone Amplifier.
The Company presently anticipates that a total funding of
$1,000,000, including the $400,000 needed for research and
development, will be required to finalize the pre-production and
development of its complete product line. Although development
for the above products is finished or nearly finished, more
funding is required for final tooling, packaging, inventory,
certification, and marketing. If less than the full $1,000,000
is raised and/or the Company's revenues cannot support a full
launch of the Company's product line, the Company will allocate
funds so as to incrementally launch each product, thereby
internally creating cash flow and revenues for subsequent
products. Funding is also needed to strengthen the Company's
facilities infrastructure and to acquire additional qualified
personnel as the volume of its business increases.
The Company's projected $1,000,000 expenditure over the next
twelve months will be allocated amongst the Company's initial
product line in order to bring the products to market. These
expenditures include the costs of research and development. The
Company's initial product line The Company's initial product line
includes: 1. The Multi-Line Phone Amplifier; 2. The FM Hands-Free
Kit for cellular/PCS phones; 3. The 900 MHz Digital Spread
Spectrum PBX Phone Receiver; and 4. The MP3 Player. The Multi-
Line Phone Amplifier, engineering for which is complete, will
require an additional $130,000 in order to bring the product to
market. The FM Hands-Free Kit for cellular/PCS phones,
engineering for which is complete, will require an additional
$160,000 in order to bring the product to market. The 900 MHz
Digital Spread Spectrum PBX Phone Receiver(Wireless PBX Digital
Receiver and Amplifier), which is in the final stages of research
and development, will require an additional $540,000 in order to
bring the product to market. The MP3 Player, Intercom and FRS
Two-Way Radio, all OEM purchases, will require a total of
$170,000 in order to bring the products to market. These
remaining expenditures prior to initial product launch are
comprised of research and development, tooling, molding,
production, inventory and marketing expenses. The timetable for
the release of these products will be adjusted in accordance with
the amount and timing of funding.
The Company anticipates that $1,000,000 would be sufficient
to launch all of Miracom's initial product line. Additional cash
requirements for the operation of the business will be generated
by sales proceeds. Miracom already has several distributors in
Europe ready to commit to distribution for several of the
Company's products. These European distributors are not bound by
any agreement to distribute our products, as we could not hold
the distributors in anticipation of a new product when delivery
time was uncertain. Miracom intends to contact these
distributors when the final products have a certain date for
their release. We believe that these distributors will
distribute our products when we are ready to deliver.
Primary to management's plans for solvency in the coming
year is the sale of additional equity in the Company, continuing
the Company's strategy of funding development through additional
equity financing. These funds will be used to manage working
capital requirements and to fund ongoing development costs. The
Company also intends to enter into distribution agreements for
its products in the United States and Europe, shifting marketing
costs to the distributors, and thereby increasing its delivery of
product through existing channels without commensurate increases
in overhead. Subsequent to the December 31, 1999 year-end, the
Company has raised $100,000 from the issuance of an additional
175,000 shares of Common Stock and 50,000 warrants. Management
believes that this strategy will enable the Company to finance
its start-up and development and move it to commercial launch of
its initial product line. The initial funding of $1,000,000 will
flow into the Company by selling equity, which we anticipate will
be facilitated by the listing of our common stock on the Over-
The-Counter Bulletin Board. We anticipate becoming operationally
profitable within twelve months of launching our initial product
line, thereby eliminating any existing "going concern" issues,
and should only experience further losses if we opt to increase
advertising and promotion in an attempt to rapidly increase
market penetration.
Capital commitments for the year ended December 31, 2000,
are minimal, and these additional funds raised through private
placements will be sufficient to meet the Company's obligations
for the next six months and until the various sales initiations
described herein are able to create significant cash flow. We
expect to generate significant cash flow in the second year of
operation. Revenues during the first year will be reserved for
producing and marketing products and will be reinvested in
production (to increase our inventory) and used for costs of
doing business with chain outlets.
The Company has received an audit opinion which includes a
"going concern" risk. The Company is aware of this risk and
plans to raise any necessary capital shortfall through either the
sale of additional equity or increased borrowings. If additional
capital is not readily available, the Company will be forced to
scale back its research and development such that its income will
exceed its expenses. Although this will greatly slow the
Company's penetration into new markets, it will allow for the
Company's survival. Notwithstanding the foregoing, there is
substantial doubt regarding the Company's ability to continue as
a going concern, and as such, the Company is substantially
dependent upon its ability to generate sufficient revenues to
cover its operating costs.
Year 2000 Disclosure.
The Year 2000 issue is the potential for system and
processing failures of date-related data and the result of
computer-controlled systems using two digits rather than four to
define the applicable year. For example, computer programs that
have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in
system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability
to process transactions. The Company has not in any way been
affected by Year 2000 issues related to non-compliant information
technology ("IT") systems or non-IT systems operated by the
Company or by third parties.
As of the date of this filing, this risk has been a non-
issue and neither the Company nor any of its hardware or software
suppliers has experienced any system failures or disruptions
caused by the Year 2000 issue. To date, the Company has not
incurred, and does not in the future expect to incur, any
material costs in remediating any potential Year 2000 problems.
Most of the Company's equipment is not date-sensitive and thus
not susceptible to Year 2000 issues. Any equipment that may be
date-sensitive is new, and the architecture and design of its
software was taken into account in all equipment purchases.
Purchases have been and will continue to be limited to equipment
from well-known and reputable hardware manufacturers.
Forward Looking Information.
This report contains certain forward-looking statements and
information. The cautionary statements made in this report
should be read as being applicable to all related forward-looking
statements wherever they appear. Forward-looking statements, by
their very nature, include risks and uncertainties. Accordingly,
the Company actual results could differ materially from those
discussed herein. A wide variety of factors could cause or
contribute to such differences and could adversely impact
revenues, profitability, cash flows and capital needs. Such
factors, many of which are beyond our control, include the
following: its success in obtaining new contracts; the volume and
type of orders that are received under such contracts; levels
of, and ability to, collect accounts receivable; availability of
trained personnel and utilization of its capacity to complete
work; competition and competitive pressures on pricing;
availability, cost and terms of debt or equity financing; and
economic conditions in the United States and in the regions
served.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company presently maintains its principal place of
business at 14747 Artesia Boulevard, Suite 1F, La Mirada,
California 90638, consisting of minimal office space and
warehousing capacity. The rent for this space is $964.80 per
month, with a one-year lease expiring in February, 2001.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
(a) Security ownership of certain beneficial owners. The
table below identifies any individuals (including any "group")
who is known to the company to be the beneficial owner of more
than five percent of any class of the small business issuer's
voting securities:
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
Owner ownership
Common Jimmy K. Sung 3,128,205 (1) 49.2%
14747 Artesia Boulevard, 1F
La Mirada, CA 90638
Common Paul Kim 782,051 12.3%
14747 Artesia Boulevard, 1F
La Mirada, CA 90638
(1) This number includes 230,769 shares of common stock
subscription, to be issued upon a capital contribution of
$45,000, in accordance with the Corporate Combination
Agreement of April, 1999. As of the date of this filing,
the subscription rights have not been exercised.
</TABLE>
(b) Security ownership of management. The table below sets for
the ownership by all directors and nominees, and each of the named
executive officers of the Company, and directors and executive
officers of the registrant as a group.
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
Owner ownership
Common Jimmy K. Sung 3,128,205 (1) 49.2%
14747 Artesia Boulevard, 1F
La Mirada, CA 90638
Common Paul Kim 782,051 12.3%
14747 Artesia Boulevard, 1F
La Mirada, CA 90638
Common All Officers and 3,910,256 61.5%
Directors as a Group
(two persons)
(1) This number includes 230,769 shares of common stock
subscription, to be issued upon a capital contribution of
$45,000, in accordance with the Corporate Combination
Agreement of April, 1999. As of the date of this filing,
the subscription rights have not been exercised.
</TABLE>
There are no agreements between or among any of the
shareholders which would restrict the issuance of shares in a
manner that would cause any change of control of the Company.
There are no voting trusts, pooling arrangements or similar
agreements in place between or among any of the shareholders, nor
do the shareholders anticipate the implementation of such an
agreement in the near term.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS.
(a) Directors and Executive Officers:
Jimmy K. Sung [President / Director], age 37, serves as the
Company's President and Director, as well as being one of the
original principals in Miracom Industries, prior to its
acquisition. From 1995 to 1998, Mr. Sung served as a director of
the Korean-based Woong Jin Media Corporation, as well as manager
of its U.S. office. Woong Jin is involved in a variety of
multimedia projects, including movie and music production,
interactive software development, publication and international
trading of semiconductors and consumer electronics. Prior to
Woong Jin, from 1993 to 1995, Mr. Sung served as Project Division
Manager at Kolon California Corporation, a U.S. subsidiary of
Korean-based Kolon International Corporation, an international
trading conglomerate. At Kolon, Mr. Sung was involved in
international trading and new project development, including
primary responsibility for joint venture projects with Sears,
Roebuck & Co. and Starbucks Coffee Company.
Paul Kim [Vice President, Sales and Marketing / Secretary /
Director], age 35, has served as the Company's Secretary and a
Director since February, 1999, and had been involved with Miracom
Industries, prior to its acquisition. From 1998 to 1999, Mr. Kim
was President of Wetkins Distribution in Fullerton, California, a
company involved in the import and distribution of restaurant-
grade towel dispensing machines. From 1995 to 1998, Mr. Kim was
Director of Sales and Marketing for P & C Synergy, Inc. Mr. Kim
specializes in business development, financing, marketing and
consulting. He has helped numerous individuals and companies
with the organization, development, marketing and financing of
businesses in various fields, including restaurant supply
distribution, medical technology transfer, import/export,
specialty and novelty product manufacturing and distribution,
stainless steel cookware manufacturing, retail merchandising and
hot towel dispenser distribution.
Jerry Sung [General Manager], age 30, has served as the
Company's General Manager since June, 1999. From 1996 until
1999, Mr. Sung served as an Operations Manager at Binex Line
Corporation, an international logistics company. Prior to that,
from 1993 to 1996, he was a Teller Supervisor at First Interstate
Bank. Mr. Sung received his B.S. in Business Administration from
the California State University at Long Beach. Mr. Sung's
experience will help the Company in distribution logistics,
export documentation, accounting and office administration.
(b) There are no significant employees who are not
described as executives above, and there are no family
relationships among directors, executive officers or any nominees
to these positions; however, Jimmy Sung and Jerry Sung, persons
who may be deemed to be "affiliates," are brothers.
During the past five years, no present or former director,
executive officer or person nominated to become a director or an
executive officer of the Company:
(1) was a general partner or executive officer of any
business against which any bankruptcy petition was filed, either
at the time of the bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named
subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) was subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any
type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in
a civil action), the Securities and Exchange Commission or the
Commodity Futures Trading Commission to have violated a federal
or state securities or commodities law, and the judgment has not
been reversed, suspended or vacated.
ITEM 6. EXECUTIVE COMPENSATION.
<TABLE>
SUMMARY COMPENSATION TABLE
Annual compensation Long term compensation
Awards Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Name and Year Salary($) Bonus($) Other Restricted Securities LTIP All
Principal annual stock awards underlying payouts other
position compensation options/SARs ($) compen-
(Medical) (#) sation
($)
----------------------------------------------------------------------------------------------------
Jimmy K. Sung 2000 30000(1) 0 0 0 0 0 0
(President & 1999 6000 0 0 0 0 0 0
Director) 1998 0 0 0 0 0 0 0
Paul Kim 2000 36000 0 0 0 0 0 0
(Secretary & 1999 14028 0 0 0 0 0 0
Director) 1998 0 0 0 0 0 0 0
Jerry Sung 2000 36000 0 0 0 0 0 0
(General 1999 15450 0 0 0 0 0 0
Manager) 1998 0 0 0 0 0 0 0
(1) As of July 1, 2000
</TABLE>
No cash compensation, deferred compensation or long-term
incentive plan awards were issued or granted to the Company's
management during the period ended December 31, 1999, except as
set forth in the Summary Compensation Table. Further, no member
of the Company's management has been granted any option or stock
appreciation rights; accordingly, no tables relating to such
items have been included within this Item.
There are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company,
with respect to any director or executive officer of the Company
which would in any way result in payments to any such person
because of his or her resignation, retirement or other
termination of employment with the Company or its subsidiaries,
any change in control of the Company, or a change in the person's
responsibilities following a change in control of the Company.
The existing directors of the Company currently serve on a
non-compensated basis, and there are no standard arrangements
pursuant to which the Company's directors are compensated for any
services provided as a director. No additional amounts are
payable to the Company's directors for committee participation or
special assignments.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
ITEM 8. DESCRIPTION OF SECURITIES.
There is only one class of stock, common, each share having
equal and identical rights to every other share for purposes of
dividends, liquidation preferences, voting rights and any other
attributes of a company's common stock. No voting trusts or any
other arrangement for preferential voting exist among any of the
shareholders, and there are no restrictions in the Bylaws or
Articles of Incorporation precluding issuance of further Common
Stock or requiring any liquidation preferences, voting rights or
dividend priorities with respect to this class of stock. As of
the date of this filing, there were 6,354,487 shares issued and
outstanding, as well as 230,769 shares of Common Stock
subscribed.
Each share of Common Stock entitles the holder thereof to
one vote, either in person or by proxy, at a meeting of
shareholders. The holders are not entitled to vote their shares
cumulatively. Accordingly, the holders of more than 50% of the
issued and outstanding shares of Common Stock can elect all of
the directors of the Company.
All shares of Common Stock are entitled to participate
ratably in dividends when and as declared by the Company's Board
of Directors out of the funds legally available therefor. Any
such dividends may be paid in cash, property or additional shares
of Common Stock. The Company has not paid any dividends since
its inception and presently anticipates that no dividends will be
declared in the foreseeable future. Any future dividends will be
subject to the discretion of the Company's Board of Directors and
will depend upon, among other things, future earnings, the
operating and financial condition of the Company, its capital
requirements, general business conditions and other pertinent
facts. Therefore, there can be no assurance that any dividends
on the Common Stock will be paid in the future.
Holders of Common Stock have no preemptive rights or other
subscription rights, conversion rights, redemption or sinking
fund provisions. In the event of the dissolution, whether
voluntary or involuntary, of the Company, each share of Common
Stock is entitled to share ratably in any assets available for
distribution to holders of the equity securities of the Company
after satisfaction of all liabilities.
There is no provision in the Company's Articles of
Incorporation or Bylaws that would delay, defer, or prevent a
change in control of the Company.
There are existing notes convertible into Common Stock of
the Company at a price of $1.00 per share, in a total amount of
$20,000 for services rendered by legal counsel ($10,000) and
bankers ($10,000). These notes are included in this Registration
Statement as Exhibits 10.2 and 10.3, respectively. In addition,
on June 14, 1999, July 13, 1999, August 28, 1999 and October 18
and 29, 1999, the Company issued to accredited investors 10%
notes payable of $20,000, $20,000, $12,000, $50,000 and $35,000,
respectively, for an aggregate of $137,000, maturing May 15, 2000
and convertible at $1.00 per share. The principal sums of the
notes are payable at the maturity date, and the interest is
payable on the principal sums outstanding on the maturity date,
at the rate of ten (10) percent per annum accruing from the date
of initial issuance. Any or all of the principal of the notes,
including accrued interest, is convertible into the Common Stock
of the Company at $1.00 per share, at the note holder's option,
at any time commencing one year after the closing date until
maturity. As of the date of this filing, none of the notes have
been converted, and the note holders have extended the maturity
dates to November 1, 2000.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.
A. Market Information
There has never been any "established trading market" for
shares of common stock of the Company. Quotation of its common
stock on the National Quotation Bureau's "Pink Sheets" only
commenced during the third quarter, 1999, as "unpriced", with
trades ranging between $0.125 to $1.625 per share. Consequently,
no assurance can be given that any current market for the
Company's common stock will develop or be maintained. For any
market that develops for the Company's common stock, the sale of
"restricted securities" (common stock) pursuant to Rule 144 of
the Securities and Exchange Commission by members of management,
or any other person to whom any such securities may be issued in
the future may have a substantial adverse impact on any such
public market. A minimum holding period of one year is required
for resales under Rule 144, along with other pertinent
provisions, including publicly available information concerning
the Company (this requirement will be satisfied by the filing and
effectiveness of this Registration Statement, the passage of 90
days and the continued timely filing by the Company of all
reports required to be filed by it with the Securities and
Exchange Commission; limitations on the volume of "restricted
securities" which can be sold in any 90 day period; the
requirement of unsolicited broker's transactions; and the filing
of a Notice of Sale of Form 144. As of the date of this filing,
there are approximately 127,090 restricted shares of the Company
eligible for trading under Rule 144.
The following quotations were provided by the National
Quotation Bureau, LLC, and do not represent actual transactions;
these quotations do not reflect dealer markups, markdowns or
commissions.
STOCK QUOTATIONS
CLOSING BID
Quarter ended: High Low
-------------- ---- ---
September 30, 2000 $0.125 $0.125
June 30, 2000 $0.125 $0.125
March 31, 2000 $0.125 $0.125
December 31, 1999 $1.625 $0.25
September 30, 1999 $1.375 $1.00
(i) There are currently 280,769 shares of Common Stock which
are subject to outstanding options or warrants to purchase and/or
subscription agreements. In addition, there are note payable
securities convertible into the Company's Common Stock at a price
of $1.00 per share, in a total amount of $157,000 for costs
advanced during the merger and loans to the Company.
(ii) There are currently 127,090 shares of Common Stock of
the Company which could be sold under Rule 144 under the
Securities Act of 1933 as amended or that the registrant has
agreed to register for sale by security holders.
(iii) There is currently no common equity that is being or
is proposed to be publicly offered by the registrant, the
offering of which could have a material effect on the market
price of the issuer's common equity.
B. Holders
As of the date of this filing, the Company has approximately
45 shareholders of record.
C. Dividend Policy
The payment of dividends is within the discretion of the
Board of Directors of the Company. The Company currently intends
to retain all earnings, if any, in the foreseeable future for use
in the development of the Company's business. The Company has
not paid dividends since inception. It is not anticipated that
any dividends will be paid in the foreseeable future and there
can be no assurance that dividends can or will ever be paid. The
payment of dividends is contingent upon future earnings, if any,
the Company's financial condition and capital requirements,
general business conditions and other factors. The Board of
Directors of the Company will review its dividend policy from
time to time to determine the desirability and feasibility of
paying dividends after giving consideration to the Company's
earnings, financial condition, capital requirements and such
other factors as the Board may deem relevant.
D. Reports to Shareholders
The Company intends to furnish its shareholders with annual
reports containing audited financial statements and such other
periodic reports as the Company may determine to be appropriate
or as may be required by law. Upon the effectiveness of this
Registration Statement, the Company will be required to comply
with periodic reporting, proxy solicitation and certain other
requirements by the Securities Exchange Act of 1934.
E. Transfer Agent and Registrar
The Transfer Agent for the shares of common voting stock of
the Company is Transfer Online, Inc., 227 Pine Street, Suite 300,
Portland, Oregon 97204.
ITEM 2. LEGAL PROCEEDINGS.
In the normal course of business, the Company is subject to
proceedings, lawsuits and other claims. Such matters are subject
to many uncertainties and outcomes are not predictable with
assurance. Consequently, the Company is unable to ascertain the
ultimate aggregate amount of monetary liability or financial
impact with respect to such matters at the date of this filing.
To the best knowledge of the officers and directors of the
Company, neither the Company nor any of its officers or directors
is presently a party to any material legal proceeding or
litigation and such persons know of no other material legal
proceeding or litigation contemplated or threatened. There are
no judgments against the Company or its officers or directors.
None of the officers or directors has been convicted of a felony
or misdemeanor relating to securities or performance in corporate
office.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During April 1999, and closing on April 26, 1999, the
Company consummated a reverse merger transaction whereby it
acquired all of the existing distribution contracts, marketing
rights, inventory and accounts receivable of Miracom Industries,
a California sole proprietorship, for total consideration of
3,910,256 shares of the Company's Common Stock. This transaction
was completed pursuant to an exemption from registration provided
by Section 4(2) of the Securities Act of 1933, as amended, and
Internal Revenue Code section 368. As a result of the
transaction, the former principals of Miracom Industries
effectively control the Company through their share ownership.
On June 14, 1999, July 13, 1999, August 31, 1999 and October
18 and 29, 1999, the Company issued to accredited investors 10%
notes payable of $20,000, $20,000, $12,000, $50,000 and $35,000,
respectively, for an aggregate of $137,000, maturing May 15, 2000
and convertible at $1.00 per share. The principal sums of the
notes are payable at the maturity date, and the interest is
payable on the principal sums outstanding on the maturity date,
at the rate of ten (10) percent per annum accruing from the date
of initial issuance. Any or all of the principal of the notes,
including accrued interest, is convertible into the Common Stock
of the Company at $1.00 per share, at the note holder's option,
at any time commencing one year after the closing date until
maturity. The conversion rate in each instance was arrived at
and set based upon arms-length negotiations. As of the date of
this filing, none of the notes have been converted, and the note
holders have extended the maturity dates to November 1, 2000.
On March 14, 2000, 50,000 shares and 50,000 Warrants
(exercisable at $1.00 per share for three years from date of
issuance) were sold to one accredited investor, under Rule 506,
at $1.00 per share, for a total raise of $50,000. On March 17,
2000, 125,000 shares of the Company's Common Stock were sold to
two accredited investors, under Rule 506, at $0.40 per share, for
a total raise of $50,000. The share price in each instance was
determined by the approximate market price at the time of the
sale.
No compensation or commissions were paid to any person in
connection with the issuance of the shares and/or notes, and no
underwriter, broker or dealer participated in such a sale. Each
issuee in the transactions described above made a written
representation to the Company that he was acquiring the Company's
securities for investment purposes and not with a view to the
resale or redistribution thereof. Each stock certificate issued
contains a restrictive legend. Each of the above transactions
was deemed by the Company to be exempt from registration under
Section 4(2) of the Securities Act of 1933, and Rule 145 (17 CFR
Section 230.145) as a transaction not involving any public
offering.
As of the date of this report, 127,090 of the issued and
outstanding shares of the Company's Common Stock could
potentially be eligible for sale under Rule 144 promulgated under
the Securities Act of 1933, as amended, subject to certain
limitations included in the Rule:
In summary, Rule 144 applies to affiliates (that is, control
persons) and nonaffiliates when they resell restricted securities
(those purchased from the issuer or an affiliate of the issuer in
non-public transactions). Nonaffiliates reselling restricted
securities, as well as affiliates selling restricted or
non-restricted securities, are not considered to be engaged in a
distribution and, therefore, are not deemed to be underwriters as
defined in Section 2(a)(11), if six conditions are met:
(1) Current public information must be available about the
issuer unless sales are limited to those made by non-affiliates
after two years.
(2) When restricted securities are sold, generally there
must be a one-year holding period.
(3) When either restricted or non restricted securities are
sold by an affiliate after one year, there are limitations on the
amount of securities that may be sold (144(e)); when restricted
securities are sold by non-affiliates between the first and
second years, there are identical limitations; after two years,
there are no volume limitations for resales by non-affiliates
(144(k)).
(4) Except for sales of restricted securities made by
non-affiliates after two years, all sales must be made in
brokers' transactions as defined in Section 4(4) of the
Securities Act of 1933, as amended, or a transaction directly
with a "market maker" as that term is defined in Section 3(a)(38)
of the 1934 Act.
(5) Except for sales of restricted securities made by
non-affiliates after two years, a notice of proposed sale must be
filed for all sales in excess of 500 shares or with an aggregate
sales price in excess of $10,000.
(6) There must be a bona fide intention to sell within a
reasonable time after the filing of the notice referred to in (5)
above.
Furthermore, Rule 145, which applies when a merger, share
exchange or similar reorganization of a company takes place,
would limit the ability of holders of restricted securities to
sell their shares through the public market. All securities
received as a result of a transaction subject to Rule 145 would
be restricted for a minimum of one year from the date on which
the consideration for these shares was exchanged, which would be
April 26, 1999. Once the one-year period has elapsed, the
holders are subject to the normal restrictions and exemptions set
forth in Rule 144. Rule 144(e), in particular, allows for the
sale by an affiliate, every ninety days, of the greater of either
i) 1% of an issuer's outstanding shares of such security; or ii)
the average weekly reported trading volume in such security
during the four calendar weeks preceding the filing of notice.
Based upon the foregoing and the Company's knowledge of the
dates of acquisition of the various securities of the Company,
there are currently approximately 127,090 shares of the 3,679,487
potentially tradeable restricted shares which could be sold
during the next ninety days under Rule 144 of the Securities Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Twelfth of the Articles of Incorporation provides
that no director of the Company shall have personal liability to
the corporation or to its shareholders for damages for any breach
of duty in such capacity, provided, however, that the provisions
shall not eliminate or limit:
(a) acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law, or
(b) the payment of dividends in violation of Section 78.300
of the Nevada Revised Statutes.
Section 78.751(1) of the Nevada Revised Statutes ("NRS")
authorizes a Nevada corporation to indemnify any director,
officer, employee, or corporate agent "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, except an action by or in the
right of the corporation" due to his or her corporate role.
Section 78.751(1) extends this protection "against expenses,
including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in
connection with the action, suit or proceeding if he or she acted
in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification
of the reasonable defense or settlement expenses of a corporate
director, officer, employee or agent who is sued, or is
threatened with a suit, by or in the right of the corporation.
The party must have been acting in good faith and with the
reasonable belief that his or her actions were not opposed to the
corporation's best interests. Unless the court rules that the
party is reasonably entitled to indemnification, the party
seeking indemnification must not have been found liable to the
corporation.
To the extent that a corporate director, officer, employee,
or agent is successful on the merits or otherwise in defending
any action or proceeding referred to in Section 78.751(1) or
78.751(2), Section 78.751(3) of the NRS requires that he be
indemnified "against expenses, including attorneys' fees,
actually and reasonably incurred by him or her in connection with
the defense."
Section 78.751(4) of the NRS limits indemnification under
Sections 78.751(1) and 78.751(2) to situations in which either
(1) the stockholders, (2)the majority of a disinterested quorum
of directors, or (3) independent legal counsel determine that
indemnification is proper under the circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation
may advance an officer's or director's expenses incurred in
defending any action or proceeding upon receipt of an
undertaking. Section 78.751(6)(a) provides that the rights to
indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any bylaw, agreement,
stockholder vote or vote of disinterested directors. Section
78.751(6)(b) extends the rights to indemnification and
advancement of expenses to former directors, officers, employees
and agents, as well as their heirs, executors, and
administrators.
Regardless of whether a director, officer, employee or agent
has the right to indemnity, Section 78.752 allows the corporation
to purchase and maintain insurance on his behalf against
liability resulting from his or her corporate role.
PART F/S FINANCIAL
MIRACOM INDUSTRIES, INC.
Consolidated Financial Statements
June 30, 2000
(Unaudited)
<PAGE>
KWANG-HO LEE
Certified Public Accountant
3600 Wilshire Blvd., Suite 1416
Los Angeles, CA 90010
The Board of Directors
Miracom Industries, Inc.
La Mirada, California
We have reviewed the accompanying consolidated balance sheet of
Miracom Industries, Inc. as of June 30, 2000 and the related
consolidated statements of operations, stockholders' equity and
cash flows for the six-month period (January 1, 2000 through June
30, 2000) then ended, in accordance with standards established by
the American Institute of Certified Public Accountants. All
information included in these financial statements is the
representation of the management of Miracom Industries, Inc.
A review consists principally of inquiries of Company personnel
and analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements in order for them to be in conformity with generally
accepted accounting principles.
/s/
Kwang-Ho Lee
Certified Public Accountant
August 15, 2000
<PAGE>
<TABLE>
MIRACOM INDUSTRIES, INC.
Consolidated Balance Sheet
June 30, 2000 and 1999
(Unaudited)
<S> <C>
June 30,
2000
---------
Assets
Current assets:
Cash $ 48
Accounts receivable - trade, less allowance
for doubtful accounts of $0 141,407
Other receivable 67,958
Inventories 48,018
---------
Total current assets 257,431
Property and equipment, at cost:
Furniture, fixtures and equipment 15,082
---------
15,082
Less: accumulated depreciation 2,404
---------
Net property and equipment 12,678
Other assets: 965
---------
Total assets $ 271,074
=========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
MIRACOM INDUSTRIES, INC.
Consolidated Balance Sheet
June 30, 2000 and 1999
(Unaudited)
<S> <C>
June 30,
2000
---------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 193,118
Note payable, convertible (note 4) 137,000
Current portion of long-term debt (note 5) 158
Accrued expenses and other liabilities 36,734
---------
Total current liabilities 367,010
Long-term liabilities:
Long-term debt, less current portion (note 5) -
---------
Total long-term liabilities -
Stockholders' equity:
Common stock, par value $0.0001 per share.
Authorized 50,000,000 shares; issued
and outstanding 6,354,487 and
6,179,487 shares(note 3) 636
Additional paid-in capital (note 3) 182,191
Retained earnings (deficits) ($278,763)
---------
Total stockholders' equity (95,936)
---------
Total liabilities
and stockholders' equity $ 271,074
=========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
MIRACOM INDUSTRIES, INC.
Consolidated Statement of Operations
Six months ended June 30, 2000 and 1999
(Unaudited)
<S> <C> <C>
Six months Six months
June 30, June 30,
2000 1999
--------- ---------
(Audited)
Net sales $ 996,517 $ 123,073
Cost of sales 971,516 74,373
--------- ---------
Gross profit 25,001 48,700
Selling, general and administrative expenses 129,875 93,201
--------- ---------
Operating income (loss) ($ 104,874) ($ 44,501)
Other income (expense):
Interest expense ($ 8,449) ($ 111)
--------- ---------
Income (loss) before income taxes ($ 113,323) ($ 44,612)
Income taxes 800 800
--------- ---------
Net income (loss) ($ 114,123) ($ 45,412)
========= =========
Earnings per common share ($ 0.02) ($0.01)
========= =========
Weighted average number of common shares 6,284,678 6,179,487
========= =========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
MIRACOM INDUSTRIES, INC.
Consolidated Statement of Cash Flows
Six months ended June 30, 2000 and 1999
(Unaudited)
<S> <C> <C>
Six months Six months
June 30, June 30,
2000 1999
--------- ---------
(Audited)
Cash flows from operating activities:
Net income (loss) ($ 114,123) ($ 45,412)
--------- ---------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,125 321
Increase in accounts receivable ($99,321) ($ 37,018)
Increase in other receivable ($22,029) ($ 18,614)
Decrease in inventories ($30,884) ($ 62,174)
Decrease in other assets 1,843 ($ 2,808)
Increase in accounts payable 165,949 64,858
Decrease (increase) in accrued expenses
and other liabilities ($3,357) 24,512
--------- ---------
Total adjustments 13,326 ($ 30,923)
--------- ---------
Net cash provided by (used in)
operating activities ($ 100,797) ($ 76,335)
--------- ---------
Cash flows from investing activities:
Acquisition of property and equipment ($ 2,000) ($ 13,082)
--------- ---------
Net cash provided by (used in)
investing activities ($ 2,000) ($ 13,082)
--------- ---------
Cash flows from financing activities:
Issuance of Common Stock 18 80,327
Increase in additional paid-in capital 99,982 -
Proceeds from note payable, convertible - 20,000
Proceeds from long-term debt - 800
Repayment of long-term debt ($319) ($98)
--------- ---------
Net cash provided by (used in)
financing activities 99,681 101,029
--------- ---------
Net decrease (increase) in cash ($3,116) 11,612
Cash at beginning of period 3,164 -
--------- ---------
Cash at end of period $ 48 $ 11,612
========= =========
Supplemental disclosure of cash flow information:
Cash payments during the year for interest $ 73 $ 22
========= =========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<PAGE>
<TABLE>
MIRACOM INDUSTRIES, INC.
Consolidated Statement of Stockholders' Equity
Six months ended June 30, 2000
(Unaudited)
<S> <C> <C> <C> <C>
Retained
Common Additional earnings
Stock Paid-in (accumulated
Capital deficits) Total
------- ---------- --------- ---------
Balance at December 31,
1999 $618 82,209 ($164,640) ($81,813)
Issuance of Common Stock
(note 3) 18 99,982 - 100,000
Net income (loss) - - ($114,123) ($114,123)
------- ----------- ---------- ---------
Balance at June 30,
2000 $636 182,191 ($278,763) ($95,936)
======= =========== ========== =========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
MIRACOM INDUSTRIES, INC.
Notes to consolidated Financial Statements
June 30, 2000
(Unaudited)
(1) Summary of Significant Accounting Policies
Affirmative Statement
---------------------
The accompanying consolidated financial statements have been
adjusted to include all adjustments which in the opinion of the
management of the Company are necessary in order to make the
consolidated financial statements not misleading.
Basis of Presentation
---------------------
The accompanying consolidated financial statements have been
prepared on the accrual basis of accounting.
Organization
------------
Miracom Industries, Inc. (the Company), formerly named Bigway,
Inc. was incorporated in Nevada on March 12, 1996. Bigway, Inc.
was a shell corporation with no assets or liabilities and had no
other material operations until the acquisition since its
incorporation.
On April 25, 1999, Bigway, Inc. approved a Resolution of the
Board of Directors whereby it authorized a "Corporate Combination
Agreement", executed and accepted as effective April 26, 1999.
In accordance with the "Agreement", the Company acquired Miracom
Industries, a California sole proprietorship, engaged in
developing and manufacturing new and innovative consumer
electronic products. Simultaneous with the consummation of the
acquisition, Bigway, Inc. changed its name to Miracom Industries,
Inc., whose main office is located in California, focusing its
business direction on the manufacture of electronic products and
distributing them to major department stores and wholesalers
throughout the United States.
For both financial and income taxes reporting purposes, the
Company utilizes a calendar year-end accounting period. The
Company's fiscal year subsequent to the acquisition ends December
31.
Revenue Recognition
-------------------
The Company recognizes revenue from product sales upon shipment.
The Company does not provide a specific return policy. When the
products are returned, the Company normally exchanges the
products or provides credits to the customers. The returned
products are directly shipped out to the supplier and receives
new products or credits from the supplier. The Company does not
provide sales discounts to the customers.
Inventories
-----------
Inventories, which consist of finished goods, are stated at the
lower of cost or market, with cost determined on the first-in,
first-out (FIFO) basis. At June 30, 2000, the Company had
inventories of $48,018 recorded at cost.
Property and Equipment
----------------------
Property and equipment are recorded at cost. Maintenance and
repairs are expensed as paid, and expenditures that increase the
useful life of the asset are capitalized.
For financial reporting purposes, depreciation is provided using
the straight-line method over the following estimated useful
lives of the respective assets.
Furniture, fixtures and equipment 5 to 7 years
Research and Development
------------------------
The Company charges all research and development costs to expense
when incurred.
Earnings Per Share
------------------
Earnings per share of common stock are computed by dividing net
income by the weighted average number of shares outstanding
during the period.
Income Taxes
------------
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standard (SFAS) No. 109,
"Accounting for Income Taxes", which was adopted in 1999. The
assets and liability approach used in SFAS No. 109 requires the
recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of the assets and
liabilities.
Income taxes consist of the minimum state franchise tax of $800.
For the six-month period ended June 30, 2000, no provision for
federal income tax was made, because the Company is expected to
be at a loss for the current year for federal income tax
purposes. The ultimate establishment of provision for federal
income tax is dependent upon the Company attaining future taxable
earnings.
(2) Going Concern
------------------
The Company has incurred net losses of $114,123 and $162,140 in
2000 and 1999, respectively.
Management believes that the net loss of $114,123 for the
six-month period ended June 30, 2000 results mainly from $52,000
for research and development, which is an integral portion (40%)
of the total selling, general and administrative expenses and
mainly from an increase in sales competition in the mini-phone
market. This matter raises substantial doubt about the
Company's ability to continue as a going concern. If this
expense was not incurred, management believes that total selling,
general and administrative expenses might be $77,875, resulting
in net losses of $62,123 for the six-month period ended June 30,
2000. In order to survive in an increasingly competitive mini-
phone market, management decided to focus on and develop
additional new innovative consumer electronic products. The
Company's continued existence is dependent upon the Company's
ability to secure adequate investment for the successful
completion of the development of its new products.
Through the acquisition of additional capital contributions, the
Company has already implemented a plan for new consumer
electronic product development, which should significantly
improve operating results. Although no patent or copyright has
been obtained yet, the Company plans to obtain patent and
copyright protection for the new products in order to prevent
competitors from copying the products.
Management plans to seek additional capital through equity
placements now in progress, and it believes that, if successfully
funded and implemented, the development of the new products will
improve operating results of the Company and net earnings will be
recorded in the near future.
(3) Common Stock Sale and Stock Warrants
-----------------------------------------
At March 14, 2000, the Company sold 50,000 shares of common stock
and issued 50,000 stock warrants (exercisable at $1.00 per share
with an exercise period of three (3) years from the date of
issuance) for $50,000 ($1.00 per share). At March 17, 2000,
125,000 shares of the Company's common stock were sold at $0.40
per share for $50,000. The share price in each instance was
determined by the by the approximate market price at the time of
the sale. As of June 30, 2000, neither subscription rights nor
stock warrants were exercised.
As of June 30, 2000, common stock status consists of the following:
No. of Additional
shares Par Common Capital paid-in
issued Percent value stock contribution capital
--------- -------- ------- ------ -------- --------
2,500,000 39.34% $0.0001 $ 250 $ 2,500 $ 2,250
3,269,230 51.45% $0.0001 $ 327 $ 327 -
410,257 6.64% $0.0001 $ 41 $ 80,000 $ 79,959
175,000 2.75% $0.0001 $ 18 $100,000 $ 99,982
--------- -------- ------- ------ -------- --------
6,354,487 100.00% $0.0001 $ 636 $182,827 $182,191
--------- -------- ------- ------ -------- --------
(4) Notes Payable, Convertible
-------------------------------
At June 14, 1999, July 13, 1999, August 31, 1999 and October 18
and 29, 1999, the Company has 10% notes payable of $20,000,
$20,000, $12,000, $50,000 and $35,000, respectively, maturing May
15, 2000 and convertible at $1.00 per share. The principal sums
of the notes are payable at maturity date, and the interest is
payable on the principal sums outstanding from time to time in
arrears on the maturity date, at the rate of ten (10) percent per
annum accruing from the date of initial issuance.
Any or all of the principal of the notes, including accrued
interest, is convertible into the Company's common stock shares
at $1.00 per share, at the notes holders' option, at any time
commencing one year after the closing date until maturity.
At June 30, 2000, outstanding borrowing under the notes was
$137,000, none of the notes were converted and the maturity dates
of the notes were extended to November 1, 2000.
(5) Current Portion of Long-Term Debt
--------------------------------------
In May, 1999, the Company had a long-term debt of $800, maturing
December, 2000. The debt, payable in monthly installments of
$56, bears interest at 36.30% and is secured by certain office
equipment. At June 30, 2000, outstanding borrowing, all current
portion, was $158.
(6) Concentration of Credit Risk and Significant Supplier
----------------------------------------------------------
Substantially all of the Company's revenues are derived from
customers throughout the United States. For the six-month period
ended June 30, 2000, the Company sold approximately fifty six
(56) percent of its products to one customer. At June 30, 2000,
the amount due from such customer was $666, which was included in
accounts receivable.
For the six-month period ended June 30, 2000, the Company
purchased approximately eighty nine (89) percent of its products
from one supplier. At June 30, 2000, the amount due to such
supplier was $176,479, which was included in accounts payable.
(7) Fair Value of Financial Instruments
----------------------------------------
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of
Statement of Financial Accounting Standards No. 107, "Disclosures
About Fair Value of Financial Instruments". The carrying values
of cash, receivables, accounts payable and accrued liabilities
approximate fair value due to the short-term maturities of these
instruments. The carrying amount of note payable, convertible
approximates fair value. The estimated fair value of the note is
based upon the current rate at which the Company could borrow
fund with a similar maturity.
(8) Commitments and Contingencies
----------------------------------
At January 31, 2000, the Company entered into a noncancelable
operating lease expiring February, 2001 for office space.
Future minimum lease payments under the operating lease as of
June 30, 2000 are as follows:
Year ending December 31:
2000 $ 5,789
----------
$ 5,789
----------
Rent expense charged to operations for the six-month period ended
June 30, 2000 was $10,131.
Based upon advice from legal counsel, there are neither existing
claims nor pending or threatened litigation, either asserted or
unasserted, which would be material to the Company.
<PAGE>
MIRACOM INDUSTRIES, INC.
Consolidated Financial Statements
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
<PAGE>
KWANG-HO LEE
Certified Public Accountant
3600 Wilshire Blvd., Suite 1416
Los Angeles, CA 90010
The Board of Directors
Miracom Industries, Inc.
La Mirada, California
We have audited the accompanying consolidated balance sheets of
Miracom Industries, Inc. as of December 31, 1999 and 1998 and the
related consolidated statements of operations, stockholders'
equity and cash flows for the year and the nine-month period then
ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial
statements based on our 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 the 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Miracom Industries, Inc. as of December 31, 1999 and
the results of its operations and its cash flows for the year and
the nine-month period then ended in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 2 to the financial statements, the
Company has suffered losses from operations that raise
substantial doubt about the ability to continue as a going
concern. Management's plans in regards to this matter are also
described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
/s/
Kwang-Ho Lee
Certified Public Accountant
May 12, 2000
<PAGE>
<TABLE>
MIRACOM INDUSTRIES, INC.
Consolidated Balance Sheet
December 31, 1999 and 1998
<S> <C> <C>
Dec. 31, Dec. 31,
1999 1998
--------- ---------
Assets
Current assets:
Cash $ 3,164 $ 966
Accounts receivable - trade, less allowance
for doubtful accounts of $0 42,086 -
Other receivable 45,929 -
Inventories 17,134 39,123
--------- ---------
Total current assets 108,313 40,089
Property and equipment, at cost:
Furniture, fixtures and equipment 13,082 -
--------- ---------
13,082 -
Less: accumulated depreciation 1,279 -
--------- ---------
Net property and equipment 11,803 -
Other assets: 2,808 -
--------- ---------
Total assets $ 122,924 $ 40,089
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 27,169 $ 24,816
Note payable, convertible (note 4) 137,000 -
Current portion of long-term debt (note 5) 477 -
Accrued expenses and other liabilities (note 3) 40,091 35
--------- ---------
Total current liabilities 204,737 24,851
Long-term liabilities: - -
--------- ---------
Total long-term liabilities - -
Owners' and Stockholders' equity:
Common stock, par value $0.0001 per share.
Authorized 50,000,000 shares; issued
and outstanding 6,179,487 shares (note 3) 618 -
Capital investment - 15,000
Additional paid-in capital (note 3) 82,209 -
Retained earnings (deficits) ($164,640) 238
--------- ---------
Total stockholders' and
owners' equity ($81,813) 15,238
--------- ---------
Total liabilities and stockholders'
and owners' equity $ 122,924 $ 40,089
========= =========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
MIRACOM INDUSTRIES, INC.
Consolidated Statement of Operations
Year ended December 31, 1999 and
Nine months ended December 31, 1998
<S> <C> <C>
12 months 9 months
ended ended
Dec. 31, Dec. 31
1999 1998
--------- ---------
Net sales $ 246,497 $ 95,244
Cost of sales 189,294 76,557
--------- ---------
Gross profit 57,203 18,687
Selling, general and administrative expenses 212,560 18,449
--------- ---------
Operating income (loss) ($ 155,357) 238
Other income (expense):
Interest expense ($ 5,983) -
--------- ---------
Income (loss) before income taxes ($ 161,340) 238
Income taxes 800 -
--------- ---------
Net income (loss) ($ 162,140) 238
========= =========
Earnings per common share ($ 0.03) -
========= =========
Weighted average number of common shares 6,179,487 -
========= =========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
MIRACOM INDUSTRIES, INC.
Consolidated Statement of Cash Flows
Year ended December 31, 1999 and
Nine months ended December 31, 1998
<S> <C> <C>
12 months 9 months
ended ended
Dec. 31, Dec. 31
1999 1998
--------- ---------
Cash flows from operating activities:
Net income (loss) ($ 162,140) $ 238
--------- ---------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,279 -
Increase in accounts receivable ($ 42,086) -
Increase in other receivable ($ 45,929) -
Increase in inventories ($ 17,134) (39,123)
Increase in other assets ($ 2,808) -
Increase in accounts payable 27,169 24,816
Increase in accrued expenses and
other liabilities 40,091 35
--------- ---------
Total adjustments ($ 39,418) ($ 14,272)
--------- ---------
Net cash provided by (used in)
operating activities ($ 201,558) ($ 14,034)
--------- ---------
Cash flows from investing activities:
Acquisition of property and equipment ($ 13,082) -
--------- ---------
Net cash provided by (used in)
investing activities ($ 13,082) -
--------- ---------
Cash flows from financing activities:
Issuance of common stock 80,327 -
Increase in capital investment - 15,000
Proceeds from note payable, convertible 137,000 -
Proceeds from long-term debt 800 -
Repayment of long-term debt ($ 323) -
--------- ---------
Net cash provided by (used in)
financing activities 217,804 15,000
--------- ---------
Net increase in cash 3,164 966
Cash at beginning of year - -
--------- ---------
Cash at end of year $ 3,164 $ 966
========= =========
Supplemental disclosure of cash flow information:
Cash payments during the year for interest $ 133 -
========= =========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<PAGE>
<TABLE>
MIRACOM INDUSTRIES, INC.
Consolidated Statement of Stockholders' Equity
Year ended December 31, 1999
<S> <C> <C> <C> <C>
Retained
Common Additional earnings
Stock Paid-in (accumulated
Capital deficits) Total
------- ---------- --------- ---------
Balance at December 31,
1998 $250 2,250 ($2,500) -
Issuance of common stock
(note 3) $368 79,959 - 80,327
Net income (loss) - - ($162,140) ($162,140)
------- ---------- --------- ---------
Balance at December 31,
1999 $618 82,209 ($164,640) ($81,813)
======= =========== ========== =========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<PAGE>
MIRACOM INDUSTRIES, INC.
Notes to consolidated Financial Statements
December 31, 1999
(1) Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been
prepared on the accrual basis of accounting.
Organization
Miracom Industries, Inc. (the Company), formerly named Bigway,
Inc. was incorporated in Nevada on March 12, 1996. Bigway, Inc.
was a shell corporation with no assets or liabilities and had no
other material operations until the acquisition since its
incorporation.
On April 25, 1999, Bigway, Inc. approved a Resolution of the
Board of Directors whereby it authorized a "Corporate Combination
Agreement", executed and accepted as effective April 26, 1999.
In accordance with the "Agreement", the Company acquired a
Miracom Industries, a California sole proprietorship engaged in
developing new and innovative consumer electronic products.
Simultaneous with the consummation of the acquisition, Bigway,
Inc. changed its name to Miracom Industries, Inc., whose main
office is located in California, focusing its business direction
on the development of the electronic products and distributing
them to major department stores and wholesalers throughout the
United States.
For both financial and income taxes reporting purposes, the
Company utilizes calendar year-end accounting period. The
Company's fiscal year subsequent to the acquisition ends December
31.
Revenue Recognition
The Company recognizes revenue from product sales upon shipment.
The Company does not provide a specific return policy. When the
products are returned, the Company normally exchanges the
products or provides credits to the customers. The returned
products are directly shipped out to the supplier and receives
new products or credits from the supplier. The Company does not
provide sales discounts to the customers.
Inventories
Inventories, which consist of finished goods, are stated at the
lower of cost or market, with cost determined on the first-in,
first-out (FIFO) basis. At December 31, 1999, the Company had
inventories of $17,134 recorded at cost.
Property and Equipment
Property and equipment are recorded at cost. Maintenance and
repairs are expensed as paid, and expenditures that increase the
useful life of the asset are capitalized.
For financial reporting purposes, depreciation is provided using
the straight-line method over the following estimated useful
lives of the respective assets.
Furniture, fixtures and equipment 5 to 7 years
Research and Development
The Company charges all research and development costs to expense
when incurred.
Earnings Per Share
Earnings per share of common stock are computed by dividing net
income by the weighted average number of shares outstanding
during the period.
Income Taxes
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standard (SFAS) No. 109,
"Accounting for Income Taxes", which was adopted in 1999. The
assets and liability approach used in SFAS No. 109 requires the
recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of the assets and
liabilities.
Income taxes consist of the minimum state franchise tax of $800.
For the year ended December 31, 1999, no provision for federal
income tax was made, because the Company is expected to be at a
loss for the current year for federal income tax purposes. The
ultimate establishment of provision for federal income tax is
dependent upon the Company attaining future taxable earnings.
(2) Going Concern
The Company has incurred net losses of $162,140 and $2,500 in
1999 and 1998, respectively.
Management believes that the net loss of $162,140 for the year
ended December 31, 1999 results mainly from $52,230 for research
and development and $20,000 of out-of-pocket costs for the
acquisition of Miracom Industries in 1999, which are the integral
portion (34%) of the total selling, general and administrative
expenses and mainly from increase in sales competition in mini
phone market. These matters raise substantial doubt about the
Company's ability to continue as a going concern. If these
expenses were not incurred, management believes that total
selling, general and administrative expenses might be $140,330,
resulting in net losses of $89,910 for the year ended December
31, 1999. In order to survive in an increasingly competitive
mini phone market, the management decided to develop new
innovative consumer electronic products. The Company's continued
existence is dependent upon the Company's ability to secure
adequate investment for the successful completion of the
development of the new products.
Through the acquisition of additional capital contributions, the
Company has already implemented a plan for new consumer
electronic product development, which should significantly
improve operating results. Although no patent or copyright has
been obtained yet, the Company plans to obtain patent and
copyright protection for the new products in order to prevent
competitors from copying the products.
Management plans to seek additional capital through equity
placements now in progress, and it believes that, if successfully
funded and implemented, the development of the new product will
improve operating results of the Company and net earnings will be
recorded in the near future.
(3) Acquisitions
On April 26, 1999, in accordance with the "Agreement", the
Company completed the acquisition. The acquisition qualified as
a tax-free exchange and was accounted for as a pooling of
interests. Bigway, Inc. acquired all of the assets (net assets:
$104,912 as of acquisition date) of Miracom Industries in
exchange for the issuance of 3,269,230 shares ($0.0001 per share)
of the Company's common stock and secured a capital contribution
from one of the shareholders in the amount of $125,000 (641,026
shares) for the issuance of 410,257 shares ($0.0001 per share and
$80,000 contributed) of common stock and 230,769 shares ($0.0001
per share, $45,000 of common stock subscription receivable to be
collected) of common stock subscription. Jimmy K. Sung owns
230,769 shares of common stock subscription. As of December 31,
1999, the subscription rights were not exercised.
As of December 31, 1999, common stock status consists of the
following:
No. of Additional
shares Par Common Capital paid-in
issued Percent value stock contribution capital
--------- -------- ------- ------ -------- --------
2,500,000 40.46% $0.0001 $ 250 $ 2,500 $ 2,250
3,269,230 52.90% $0.0001 $ 327 $ 327 -
410,257 6.64% $0.0001 $ 41 $ 80,000 $ 79,959
--------- -------- ------- ------ -------- --------
6,179,487 100.00% $0.0001 $ 618 $ 82,827 $ 82,209
--------- -------- ------- ------ -------- --------
In accordance with the acquisition, the Company's financial
statements have been restated for all periods prior to the
acquisition to include the combined financial results of Bigway,
Inc. and Miracom Industries. In connection with the acquisition,
the Company incurred $20,000 of acquisition-related out-of-pocket
costs which were charged to operations for the year ended
December 31, 1999 and were accrued as liabilities under the
"Current Liabilities" of the Consolidated Balance Sheet as of
December 31, 1999.
Net sales and net income (loss) reported prior to the acquisition
were as follows:
Four months ended Year ended
April 25, 1999 December 31, 1998
(Unaudited)
--------------- ---------------
Net sales:
Bigway, Inc. $ 0 $ 0
Miracom Industries $ 143,697 $ 95,244
--------- ---------
Combined $ 143,697 $ 95,244
--------- ---------
Net Income:
Bigway, Inc. $ 0 $ 0
Miracom Industries $ (20,939) $ 238
--------- ---------
Combined $ (20,939) $ 238
--------- ---------
(4) Note Payable, Convertible
At June 14, 1999, July 13, 1999, August 31, 1999 and October 18
and 29, 1999, the Company has 10% notes payable of $20,000,
$20,000, $12,000, $50,000 and $35,000, respectively, maturing May
15, 2000 and convertible at $1.00 per share. The principal sums
of the notes are payable at maturity date, and the interest is
payable on the principal sums outstanding from time to time in
arrears on the maturity date, at the rate of ten (10) percent per
annum accruing from the date of initial issuance.
Any or all of the principal or any portion of the principal of
the notes, including accrued interest, is convertible into the
Company's common stock shares at $1.00 per share, at the notes
holders' option, at any time commencing one year after the
closing date until maturity.
At December 31, 1999, outstanding borrowing under the notes was
$137,000.
(5) Current Portion of Long-Term Debt
In May, 1999, the Company has a long-term debt of $800, maturing
December, 2000. The debt, payable in monthly installments of
$56, bears interest at 36.30% and is secured by certain office
equipment. At December 31, 1999, an outstanding borrowing, all
current portion, was $477.
(6) Concentration of Credit Risk and Significant Supplier
Substantially all of the Company's revenues are derived from
customers throughout the United States. For the year ended
December 31, 1999, the Company sold approximately thirty (30)
percent of its products to one customer. At December 31, 1999,
the amount due from such customer was $1,522, which was included
in accounts receivable.
For the year ended December 31, 1999, the Company purchased
approximately eighty one (81) percent of its products from one
supplier, who was an associated manufacturer of the Company. At
December 31, 1999, the amount due to such supplier was $27,169,
which was included in accounts payable.
(7) Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of
Statement of Financial Accounting Standards No. 107, "Disclosures
About Fair Value of Financial Instruments". The carrying values
of cash, receivables, accounts payable and accrued liabilities
approximate fair value due to the short-term maturities of these
instruments. The carrying amount of note payable, convertible
approximates fair value. The estimated fair value of the note is
based upon the current rate at which the Company could borrow
fund with a similar maturity.
(8) Commitments and Contingencies
At February 2, 1999, the Company entered into a noncancelable
operating lease expiring through February, 2000 for office space.
Future minimum lease payments under the operating lease as of
December 31, 1999 are as follows:
Year ending December 31:
2000 $ 1,872
----------
$ 1,872
----------
Rent expense charged to operations for the year ended December
31, 1999 was $6,552.
Based upon advice from legal counsel, there are neither existing
claims nor pending or threatened litigation, either asserted or
unasserted, which would be material to the Company.
<PAGE>
MIRACOM INDUSTRIES
(A California Sole Proprietorship)
Financial Statements
December 31, 1998
(With Independent Auditors' Report Thereon)
<PAGE>
KWANG-HO LEE
Certified Public Accountant
3600 Wilshire Blvd., Suite 1416
Los Angeles, CA 90010
Miracom Industries
La Mirada, California
We have audited the accompanying balance sheet of Miracom
Industries as of December 31, 1998 and the related statements of
operations, owner's equity and cash flows for the nine-month
period (April 17, 1998 to December 31, 1998) then ended. These
financial statements are the responsibility of the Entity'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 the 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 Miracom Industries as of December 31, 1998 and the results of
its operations and its cash flows for the nine-month period then
ended in conformity with generally accepted accounting
principles.
/s/
Kwang-Ho Lee
Certified Public Accountant
January 27, 2000
<PAGE>
<TABLE>
MIRACOM INDUSTRIES
Balance Sheet
December 31, 1998
Assets
<S> <C>
Current assets:
Cash $ 966
Accounts receivable - trade, less
allowance for doubtful accounts of $0 -
Inventories 39,123
---------
Total current assets 40,089
Property and equipment, at cost -
---------
Total assets 40,089
=========
Liabilities and Owner's Equity
Current liabilities:
Accounts payable $ 24,816
Accrued expenses and other liabilities 35
---------
Total current liabilities 24,851
Long term liabilities:
Total long-term liabilities -
---------
Owner's equity:
Capital investment 15,000
Retained earnings (deficits) 238
---------
Total owner's equity 15,238
---------
Total liabilities and owner's equity 40,089
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
MIRACOM INDUSTRIES
Statement of Operations
Nine months ended December 31, 1998
<S> <C>
Net Sales $ 95,244
Cost of sales 76,557
---------
Gross profit 18,687
Selling, general and administrative expenses 18,449
---------
Operating income (loss) 238
Other income (expense) -
---------
Income (loss) before income taxes 238
Income taxes -
---------
Net income (loss) $ 238
=========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
MIRACOM INDUSTRIES
Statement of Owner's Equity
Nine months ended December 31, 1998
<S> <C> <C> <C>
Retained
Capital Earnings
Investment (Deficits) Total
---------- ---------- ----------
Balance at April 17, 1998 $ 15,000 $ - $ 15,000
Less: withdrawal - - -
Net income (loss) - 238 238
---------- ---------- ----------
Balance at December 31, 1998 $ 15,000 238 15,238
========== ========== ==========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
MIRACOM INDUSTRIES
Statement of Cash Flows
Nine months ended December 31, 1998
<S> <C>
Cash flows from operating activities:
Net income (loss) $ 238
---------
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Increase in inventories $ (39,123)
Increase in accounts payable 24,816
Increase in accrued expenses and
other liabilities 35
---------
Total adjustments $ (14,272)
---------
Net cash provided by (used in)
operating activities $ (14,034)
---------
Cash flows from investing activities: -
---------
Net cash provided by (used in)
investing activities -
---------
Cash flows from financing activities:
Increase in capital investment 15,000
---------
Net cash provided by (used in)
financing activities 15,000
---------
Net increase in cash 966
Cash at beginning of year -
---------
Cash at end of year $ 966
=========
Supplemental disclosure of
cash flow information: -
See accompanying notes to financial statements
</TABLE>
<PAGE>
MIRACOM INDUSTRIES
Notes to Financial Statements
December 31, 1998
(1) Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared on
the accrual basis of accounting.
Organization
Miracom Industries (the Entity), a California sole
proprietorship, started its operation in California on April
17, 1998.
The Entity is primarily engaged in developing and
distributing new and innovative consumer electronic products
and distributing them to major department stores and
wholesalers throughout the United States.
For both financial and income taxes reporting purposes, the
Entity utilizes calendar year-end accounting period. The
Entity's calendar year ends December 31.
Revenue Recognition
The Entity recognizes revenue from product sales upon
shipment.
Inventories
Inventories, which consist of finished goods, are stated at
the lower of cost or market, with cost determined on the
first-in, first-out (FIFO) basis. At December 31, 1998, the
Entity had inventories of $39,123 recorded at cost.
Property and Equipment
Property and equipment are recorded at cost. Maintenance
and repairs are expensed as paid, and expenditures that
increase the useful life of the asset are capitalized.
For financial reporting purposes, depreciation is provided
using the straight-line method over the estimated useful
lives of the assets.
Research and Development
The Company charges all research and development costs to
expense when incurred.
(2) Concentration of Credit Risk and Significant Supplier
Substantially all of the Entity's revenues are derived from
customers throughout the United States. For the nine-month
period ended December 31, 1998, the Entity sold
approximately forty percent (40) percent of its products to
one customer.
For the nine-months ended December 31, 1998, the Entity
purchased approximately one hundred (100) percent of its
products from one supplier, who was an associated
manufacturer of the Entity. At December 31, 1998, the
amount due to such supplier was $24,816, which was included
in accounts payable.
(3) Fair Value of Financial Instruments
The following disclosure of the estimated fair value of
financial instruments is made in accordance with the
requirements of Statement of Financial Accounting Standards
No. 107, "Disclosures About Fair Value of Financial
Instruments". The carrying values of cash, receivables,
accounts payable and accrued liabilities approximate fair
value due to the short term maturities of these instruments.
(4) Commitments and Contingencies
Based upon advice from legal counsel, there are neither
existing claims nor pending or threatened litigations,
either asserted or unasserted, which would be material to
the Entity.
(5) Subsequent Event - Acquisition
On April 26, 1999, the Entity entered into an acquisition
agreement (the "Agreement") with Bigway, Inc., a Nevada
corporation. In accordance with the Agreement, the Entity
was acquired into Bigway Inc., which changed its name to
Miracom Industries, Inc. simultaneous with the consummation
of the acquisition.
<PAGE>
PART III
FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS
1. Unaudited Consolidated Financial Statements for
June 30, 2000
2. Audited Consolidated Financial Statements for
December 31, 1999 and 1998
3. Audited Financial Statements of Miracom Industries
(a California sole proprietorship) for
December 31, 1998
(b) EXHIBITS
3.1 Articles of Incorporation, as amended, dated
March 12, 1996
3.2 Bylaws, adopted on March 14, 1996 and amended on
July 1, 1999
10.1 Merger Agreement between Miracom Industries and
Bigway, Inc.
10.2 $10,000 Convertible Note for Legal Services
10.3 $10,000 Convertible Note for Investment Banking
Services
27 Financial Data Schedule
SIGNATURES
In accordance with 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.
MIRACOM INDUSTRIES, INC.
Date: November 13, 2000 By: /s/ Jimmy K. Sung
Jimmy K. Sung
President, Chairman
Date: November 13, 2000 By: /s/ Paul Kim
Paul Kim
Secretary, Director
<PAGE>
Exhibit 3.1 Articles of Incorporation
ARTICLES OF INCORPORATION
OF
MIRACOM INDUSTRIES, INC.
FIRST. The name of the corporation shall be:
MIRACOM INDUSTRIES, INC.
SECOND. Its registered office in the State of Nevada
is located at 2533 Carson Street, Carson City, Nevada 89706 that
this Corporation may maintain an office, or offices, in such
other place within or without the State of Nevada as may be from
time to time designated by the Board of Directors, or by the By-
Laws of said Corporation, and that this Corporation may conduct
all Corporation business of every kind and nature, including the
holding of all meetings of Directors and Stockholders, outside
the State of Nevada as well as within the State of Nevada.
THIRD. The objects for which this Corporation is
formed are: To engage in any lawful activity, including, but not
limited to the following:
(A) Shall have such rights, privileges and powers as may be
conferred upon corporations by any existing law.
(B) May at any time exercise such rights, privileges and
powers, when not inconsistent with the purposes and objects for
which this corporation is organized.
(C) Shall have power to have succession by its corporate
name for the period limited in its certificate or articles of
incorporation, and when no period is limited, perpetually, or
until dissolved and its affairs wound up according to law.
(D) Shall have power to sue and be sued in any court of law
or equity.
(E) Shall have power to make contracts.
(F) Shall have power to hold, purchase and convey real and
personal estate and to mortgage or lease any such real and
personal estate with its franchises. The power to hold real and
personal estate shall include the power to take the same by
devise or bequest in the State of Nevada, or in any other state,
territory or country.
(G) Shall have power to appoint such officers and agents as
the affairs of the corporation shall require, and to allow them
suitable compensation.
(H) Shall have power to make By-Laws not inconsistent with
the constitution or laws of the United States, or the State of
Nevada, for the management, regulation and government of its
affairs and property, the transfer of its stock, the transaction
of its business, and the calling and holding of meetings of its
stockholders.
(I) Shall have power to wind up and dissolve itself, or be
wound up or dissolved.
(J) Shall have power to adopt and use a common seal or
stamp, and alter the same at pleasure. The use of a seal or
stamp by the corporation on any corporate documents is not
necessary. The corporation may use a seal or stamp, if it
desires, but such use or nonuse shall not in any way affect the
legality of the document.
(K) Shall have the power to borrow money and contract
debts when necessary for the transaction of its business, or for
the exercise of its corporate rights, privileges or franchises,
or for any other lawful purpose of its incorporation; to issue
bonds, promissory notes, bills of exchange, debentures, and other
obligations and evidences of indebtedness, payable at a specified
time or times, or payable upon the happening of a specified event
or events, whether secured by mortgage, pledge or otherwise, or
unsecured, for money borrowed, or in payment for property
purchased, or acquired, or for any other lawful object.
(L) Shall have power to guarantee, purchase, hold, sell,
assign, transfer, mortgage, pledge or otherwise dispose of the
shares of the capital stock of, or any bonds, securities or
evidences of the indebtedness created by, any other corporation
or corporations of the State of Nevada, or any other state or
government, and, while owners of such stock, bonds, securities or
evidence of indebtedness, to exercise all the rights, powers and
privileges of ownership, including the right to vote, if any.
(M) Shall have power to purchase, hold, sell and transfer
shares of its own capital stock, and use therefor its capital,
capital surplus, surplus, or other property or fund.
(N) Shall have power to conduct business, have one or more
offices, and hold, purchase, mortgage and convey real and
personal property in the State of Nevada, and in any of the
several states, territories, possessions and dependencies of the
United States, the District of Columbia, and any foreign
countries.
(O) Shall have power to do all and everything necessary and
proper for the accomplishment of the objects enumerated in its
certificate or articles of incorporation, or any amendment
thereof, or necessary or incidental to the protection and benefit
of the corporation, and, in general, to carry on any lawful
business necessary or incidental to the attainment of the objects
of the corporation, whether or not such business is similar in
nature to the objects set forth in the certificate or articles of
incorporation of the corporation, or any amendment thereof.
(P) Shall have power to make donations for the public
welfare or for charitable, scientific or educational purposes.
(Q) Shall have power to enter into partnerships, general or
limited, or joint ventures, in connection with any lawful
activities, as may be allowed by law.
FOURTH. The total number of authorized capital stock
is increased to Fifty Million (50,000,000) shares at $.0001 par
value per share shall be authorized. Said shares at $.0001 par
value may be issued by the corporation from time to time for such
consideration as may be fixed from time to time by the Board of
Directors.
FIFTH. The governing board of this corporation shall
be known as directors, and the number of directors may from time
to time be increased or decreased in such manner as shall be
provided by the By-Laws of this Corporation, providing that the
number of directors shall not be reduced to fewer than one (1).
The name and post office address of the first board of
Directors shall be one (1) in number and listed as follows:
NAME POST OFFICE ADDRESS
Patrick McMullen 2533 North Carson Street
Carson City, Nevada 89706
SIXTH. The capital stock, after the amount of the
subscription price, or par value, has been paid in, shall not be
subject to assessment to pay the debts of the corporation.
SEVENTH. The name and post office address of the
Incorporator signing the Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
Patrick McMullen 2533 North Carson Street
Carson City, Nevada 89706
EIGHTH. The resident agent for this corporation shall
be:
LAUGHLIN ASSOCIATES, INC.
The address of said agent, and, the registered or statutory
address of this corporation in the state of Nevada, shall be:
2533 North Carson Street
Carson City, Nevada 89706
NINTH. The corporation is to have perpetual existence.
TENTH. In furtherance and not in limitation of the
powers conferred by statute, the Board of Directors is expressly
authorized:
Subject to the By-Laws, if any, adopted by the
Stockholders, to make, alter or amend the By-Laws of the
Corporation.
To fix the amount to be reserved as working capital
over and above its capital stock paid in; to authorize and cause
to be executed, mortgages and liens upon the real and personal
property of this Corporation.
By resolution passed by a majority of the whole Board,
to designate one (1) or more committees, each committee to
consist of one or more of the Directors of the Corporation,
which, to the extent provided in the resolution, or in the By-
Laws of the Corporation, shall have and may exercise the powers
of the Board of Directors in the management of the business and
affairs of the Corporation. Such committee, or committees, shall
have such name, or names, as may be stated in the By-Laws of the
Corporation, or as may be determined from time to time by
resolution adopted by the Board of Directors.
When and as authorized by the affirmative vote of the
Stockholders holding stock entitling them to exercise at least a
majority of the voting power given at a Stockholders meeting
called for that purpose, or when authorized by the written
consent of the holders of at least a majority of the voting stock
issued and outstanding, the Board of Directors shall have power
and authority at any meeting to sell, lease or exchange all of
the property and assets of the Corporation, including its good
will and its corporate franchises, upon such terms and conditions
as its Board of Directors deems expedient and for the best
interests of the Corporation.
ELEVENTH. No shareholder shall be entitled as a matter
of right to subscribe for or receive additional shares of any
class of stock of the Corporation, whether now or hereafter
authorized, or any bonds, debentures or securities convertible
into stock, but such additional shares of stock or other
securities convertible into stock may be issued or disposed of by
the Board of Directors to such persons and on such terms as in
its discretion it shall deem advisable.
TWELFTH. No director or officer of the Corporation
shall be personally liable to the Corporation or any of its
stockholders for damages for breach of fiduciary duty as a
director or officer involving any act or omission of any such
director or officer; provided, however, that the foregoing
provision shall not eliminate or limit the liability of a
director or officer (i) for acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or
(ii) the payment of dividends in violation of Section 78.300 of
the Nevada Revised Statutes. Any repeal or modification of this
Article by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation
on the personal liability of a director or officer of the
Corporation for acts or omissions prior to such repeal or
modification.
THIRTEENTH. This Corporation reserves the right to
amend, alter, change or repeal any provision contained in the
Articles of Incorporation, in the manner now or hereafter
prescribed by statute, or by the Articles of Incorporation, and
all rights conferred upon Stockholders herein are granted subject
to this reservation.
<PAGE>
Exhibit 3.2 Bylaws of the Company
BYLAWS
OF
"MIRACOM INDUSTRIES, INC."
A Nevada Corporation
ARTICLE I
Stockholders
Section 1. Annual Meeting. Annual meetings of the
stockholders, commencing with the year 1996, shall be held on the
1st day of October each year if not a legal holiday and, if a
legal holiday, then on the next secular day following, or at such
other time as may be set by the Board of Directors from time to
time, at which the stockholders shall elect by vote a Board of
Directors and transact such other business as may properly be
brought before the meeting.
Section 2. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise
prescribed by statute or by the Articles of Incorporation, may be
called by the President or the Secretary by resolution of the
Board of Directors or 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 of the proposed meeting.
Section 3. Place of Meetings. All annual meetings of the
stockholders shall be held at the registered office of the
corporation or at such other place within or without the State of
Nevada as the directors shall determine. Special meetings of the
stockholders may be held at such time and place within or without
the State of Nevada as shall be stated in the notice of the
meeting, or in a duly executed waiver of notice thereof. Business
transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
Section 4. Quorum; Adjourned Meetings. 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 Articles 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 the 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 5. Voting. Each stockholder of record of the
corporation holding stock which is entitled to vote at this
meeting shall be entitled at each meeting of stockholders to one
vote for each share of stock standing in his name on the books of
the corporation. Upon the demand of any stockholder, the vote for
directors and the vote upon any question before the meeting shall
be by ballot.
When a quorum is present or represented 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 be
sufficient to elect directors or to decide any question brought
before such meeting, unless the question is one upon which by
express provision of the statutes or of the Articles of
Incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such
question.
Section 6. Proxies. At any meeting of the stockholders any
stockholder may be represented and vote by a proxy or proxies
appointed by an instrument in writing. In the event that any such
instrument in writing shall designate two or more persons to act
as proxies, a majority of such persons present at the meeting,
or, if only one shall be present, then that one shall have and
may exercise all of the powers conferred by such written
instrument upon all of the persons so designated unless the
instrument shall otherwise provide. No proxy or power of attorney
to vote shall be used to vote at a meeting of the stockholders
unless it shall have been filed with the secretary of the
meeting. All questions regarding the qualification of voters, the
validity of proxies and the acceptance or rejection of votes
shall be decided by the inspectors of election who shall be
appointed by the Board of Directors, or if not so appointed, then
by the presiding officer of the meeting.
Section 7. Action Without Meeting. Any action which may be
taken by the vote of the stockholders at a meeting may be taken
without a meeting if authorized by the written consent of
stockholders holding at least a majority of the voting power,
unless the provisions of the statutes or of the Articles of
Incorporation require a greater proportion of voting power to
authorize such action in which case such greater proportion of
written consents shall be required.
ARTICLE II
Directors
Section 1. Management of Corporation. The business of the
corporation shall be managed by 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 Articles
of Incorporation or by these Bylaws directed or required to be
exercised or done by the stockholders.
Section 2. Number, Tenure, and Qualifications. The number of
directors which shall constitute the whole board shall be at
least one. The number of directors may from time to time be
increased or decreased to not less than one nor more than
fifteen. The directors shall be elected at the annual meeting of
the stockholders and except as provided in Section 2 of this
Article, each director elected shall hold office until his
successor is elected and qualified. Directors need not be
stockholders.
Section 3. Vacancies. Vacancies in the Board of Directors
including those caused by an increase in the number of directors,
may be filled by a majority of the renaming directors, though
less than a quorum, or by a sole remaining director, and each
director so elected shall hold office until his successor is
elected at an annual or a special meeting of the stockholders.
The holders of two-thirds of the outstanding shares of stock
entitled to vote may at any time peremptorily terminate the term
of office of all or any of the directors by vote at a meeting
called for such purpose or by a written statement filed with the
secretary or, in his absence, with any other officer. Such
removal shall be effective immediately, even if successors are
not elected simultaneously.
A vacancy or vacancies in the Board of Directors shall be
deemed to exist in case of the death, resignation or removal of
any directors, or if the authorized number of directors be
increased, or if the stockholders fall at any annual or special
meeting of stockholders at which any director or directors are
elected to elect the full authorized number of directors to be
voted for at that meeting.
If the Board of Directors accepts the resignation of a
director tendered to take effect at a future time, the Board or
the stockholders shall have power to elect a successor to take
office when the resignation is to become effective.
No reduction of the authorized number of directors shall
have the effect of removing any director prior to the expiration
of his term of office.
Section 4. Annual and Regular Meetings. Regular meetings of
the Board of Directors shall be held at any place within or
without the State which has been designated from time to time by
resolution of the Board or by written consent of all members of
the Board. In the absence of such designation regular meetings
shall be held at the registered office of the corporation.
Special meetings of the Board may be held either at a place so
designated or at the registered office.
Regular meetings of the Board of Directors may be held
without call or notice at such time and at such place as shall
from time to time be fixed and determined by the Board of
Directors.
Section 5. First Meeting. The first meeting of each newly
elected Board of Directors shall be held immediately following
the adjournment of the meeting of stockholders and at the place
thereof. No notice of such meeting shall be necessary to the
directors in order legally to constitute the meeting, provided a
quorum be present. In the event such meeting is not so held, the
meeting may be held at such time and place as shall be specified
in a notice given as hereinafter provided for special meetings of
the Board of Directors.
Section 6. Special Meetings. Special meetings of the Board
of Directors may be called by the Chairman or the President or by
any Vice-President or by any two directors.
Written notice of the time and place of special meetings
shall be delivered personally to each director, or sent to each
director by mail or by other form of written communication,
charges prepaid, addressed to him at his address as it is shown
upon the records or if such address is not readily ascertainable,
at the place in which the meetings of the directors are regularly
held. In case such notice is mailed or telegraphed, it shall be
deposited in the United States mail or delivered to the telegraph
company at least three (3) days prior to the time of the holding
of the meeting. In case such notice is hand delivered as above
provided, it shall be so delivered at least twenty-four (24)
hours prior to the time of the holding of the meeting. Such
mailing, telegraphing or delivery as above provided shall be due,
legal and personal notice to such director.
Section 7. Business of Meetings. The transactions of any
meeting of the Board of Directors, however called and noticed or
wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present, and
if, either before or after the meeting, each of the directors not
present signs a written waiver of notice, or a consent to holding
such meeting, or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate
records or made a part of the minutes of the meeting.
Section 8. Quorum, Adjourned Meetings. A majority of the
authorized number of directors shall be necessary to constitute a
quorum for the transaction of business, except to adjourn as
hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which
a quorum is present shall be regarded as the act of the Board of
Directors, unless a greater number be required by law or by the
Articles of Incorporation. Any action of a majority, although not
at a regularly called meeting, and the record thereof, if
assented to in writing by all of the other members of the Board
shall be as valid and effective in all respects as if passed by
the Board in regular meeting.
A quorum of the directors may adjourn any directors meeting
to meet again at a stated day and hour; provided, however, that
in the absence of a quorum, a majority of the directors present
at any directors meeting, either regular or special, may adjourn
from time to time until the time fixed for the next regular
meeting of the Board.
Notice of the time and place of holding an adjourned meeting
need not be given to the absent directors if the time and place
be fixed at the meeting adjourned.
Section 9. Committees. The Board of Directors may, by
resolution adopted by a majority of the whole Board, designate
one or more committees of the Board of Directors, each committee
to consist of at least one or more of the directors of the
corporation which, to the extent provided in the resolution,
shall have and may exercise the power of the Board of Directors
in the management of the business and affairs of the corporation
and may have power to authorize the seal of the corporation to be
affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined
from time to time by the Board of Directors. The members of any
such committee present at any meeting and not disqualified from
voting may, whether or not they constitute a quorum, unanimously
appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. At
meetings of such committees, a majority of the members or
alternate members shall constitute a quorum for the transaction
of business, and the act of a majority of the members or
alternate members at any meeting at which there is a quorum shall
be the act of the committee.
The committees shall keep regular minutes of their
proceedings and report the same to the Board of Directors.
Section 10. Action Without Meeting. 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 a
written consent thereto is signed by all members of the Board of
Directors or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the
Board or committee.
Section 11. Special Compensation. The directors may be paid
their expenses of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director.
No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be
allowed like reimbursement and compensation for attending
committee meetings.
ARTICLE III
Notices
Section 1. Notice of Meetings. Notices of meetings shall be
in writing and signed by the President or a Vice-President or the
Secretary or an Assistant Secretary or by such other person or
persons as the directors shall designate. Such notice shall state
the purpose or purposes for which the meeting is called and the
time and the place, which may be within or without this State,
where it is to be held. A copy of such notice shall be either
delivered personally to or shall be mailed, postage prepaid, to
each stockholder of record entitled to vote at such meeting not
less than ten (10) nor more than sixty (60) days before such
meeting. If mailed, it shall be directed to a stockholder at his
address as it appears upon the records of the corporation and
upon such mailing of any such notice, the service thereof shall
be complete and the time of the notice shall begin to run from
the date upon which such notice is deposited in the mail for
transmission to such stockholder. Personal delivery of any such
notice to any officer of a corporation or association, or to any
member of a partnership shall constitute delivery of such notice
to such corporation, association or partnership. In the event of
the transfer of stock after delivery of such notice of and prior
to the holding of the meeting it shall not be necessary to
deliver or mail notice of the meeting to the transferee.
Section 2. Effect of Irregularly Called Meetings. Whenever
all parties entitled to vote at any meeting, whether of directors
or stockholders, consent, either by a writing on the records of
the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking
part 'in the deliberations at such meeting without objection, the
doings of such meeting shall be as valid as if had at a meeting
regularly called and noticed, and at such meeting any business
may be transacted which is not excepted from the written consent
or to the consideration of which no objection for want of notice
is made at the time, and if any meeting be irregular for want of
notice or of such consent, provided a quorum was present at such
meeting, the proceedings of said meeting may be ratified and
approved and rendered likewise valid and the irregularity or
defect therein waived by a writing signed by all parties having
the right to vote at such meeting; and such consent or approval
of stockholders may be by proxy or attorney, but all such proxies
and powers of attorney must be in writing.
Section 3. Waiver of Notice. Whenever any notice whatever is
required to be given under the provisions of the statutes, of the
Articles of Incorporation or of these Bylaws, a waiver thereof in
writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE IV
Officers
Section 1. Section. The officers of the corporation shall be
chosen by the Board of Directors and shall be a President, a
Secretary and a Treasurer, none of whom need be directors. Any
person may hold two or more offices. The Board of Directors may
appoint a Chairman of the Board, Vice-Chairman of the Board, one
or more vice presidents, assistant treasurers and assistant
secretaries.
Section 2. Chairman of the Board. The Chairman of the Board
shall preside at meetings of the stockholders and the Board of
Directors, and shall see that all orders and resolutions of the
Board of Directors are carried into effect.
Section 3. Vice-Chairman of the Board. The Vice-Chairman
shall, in the absence or disability of the Chairman of the Board,
perform the duties and exercise the powers of the Chairman of the
Board and shall perform such other duties as the Board of
Directors may from time to time prescribe.
Section 4. President. The President shall be the chief
executive officer of the corporation and shall have active
management of the business of the corporation. He shall execute
on behalf of the corporation all Instruments requiring such
execution except to the extent the signing and execution thereof
shall be expressly designated by the Board of Directors to some
other officer or agent of the corporation. In the absence of the
President the Vice President will assume all of the President's
responsibilities.
Section 5. Vice-President. The Vice-President shall act
under the direction of the' President and in the absence or
disability of the President shall perform the duties and exercise
the powers of the President. They shall perform such other duties
and have such other powers as the President or the Board of
Directors may from time to time prescribe. The Board of Directors
may designate one or more Executive Vice-Presidents or may
otherwise specify the order of seniority of the Vice-Presidents.
The duties and powers of the President shall descend to the Vice-
Presidents in such specified order of seniority.
Section 6. Secretary. The Secretary shall act under the
direction of the President. Subject to the direction of the
President he shall attend all meetings of the Board of Directors
and all meetings of the stockholders and record the proceedings.
He 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 President or the Board of Directors. In the
absence of the Secretary the Vice President will assume all of
the Secretary's responsibilities
Section 7. Assistant Secretaries. The Assistant Secretaries
shall act under the direction of the President. In order of their
seniority, unless otherwise determined by the President or the
Board of Directors, they shall, in the absence or disability of
the Secretary, perform the duties and exercise the powers of the
Secretary. They shall perform such other duties and have such
other powers as the President or the Board of Directors may from
time to time prescribe.
Section 8. Treasurer. The Treasurer shall act under the
direction of the President. Subject to the direction of the
President he shall have 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 monies 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. He shall disburse the funds
of the corporation as may be ordered by the President or 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. In
the absence of the Treasurer the Vice President will assume all
of the Treasurer's responsibilities.
If required by the Board of Directors, he shall give the
corporation a bond 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 9. Assistant Treasurers. The Assistant Treasurers
in the order of their seniority, unless otherwise determined by
the President or the Board of Directors, shall, in the absence or
disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer. They shall perform such other duties and
have such other powers as the President or the Board of Directors
may from time to time prescribe.
Section 10. Compensation. The salaries and compensation of
all officers of the corporation shall be fixed by the Board of
Directors.
Section 11. Removal, Resignation . The officers of the
corporation shall hold office at the pleasure of the Board of
Directors. Any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors.
Any vacancy occurring in any office of the corporation by death,
resignation, removal or otherwise shall be filled by the Board of
Directors.
ARTICLE V
Capital Stock
Section 1. Certificates. Every stockholder shall be entitled
to have a certificate signed by the 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. If the corporation
shall be authorized to issue more than one class of stock or more
than one series of any class, the designations, preferences and
relative, participating, optional or other special rights of the
various classes of stock or series thereof and the
qualifications, limitations or restrictions of such rights, shall
be set forth in full or summarized on the face or back of the
certificate, which the corporation shall issue to represent such
stock.
If a certificate is signed (1) by a transfer agent other
than the corporation or its employees or (2) by a registrar other
than the corporation or its employees, the signatures of the
officers of the corporation may be facsimiles. In case any
officer who has signed or whose facsimile signature has been
placed upon a certificate shall cease to be such officer before
such certificate is issued, such certificate may be issued with
the same effect as though the person had not ceased to be such
officer. The seal of the corporation, or a facsimile thereof,
may, but need not be, affixed to certificates of stock.
Section 2. Surrendered; Lost or Destroyed Certificates. 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
or destroyed upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost 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
or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall
require and/or 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 or destroyed.
Section 3. Replacement Certificates. 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, if it is satisfied that all
provisions of the laws and regulations applicable to the
corporation regarding transfer and ownership of shares have been
complied with, to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction
upon its books.
Section 4. Record Date. The Board of Directors may fix in
advance a date not exceeding sixty (60) days nor less than ten
(10) days preceding the date of any meeting of stockholders, or
the date for the payment of any distribution, or the date for the
allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in
connection with obtaining the consent of stockholders for any
purpose, as a record date for the determination of the
stockholders entitled to notice of and to vote at any such
meeting, and any adjournment thereof, or entitled to receive
payment of any such distribution, or to give such consent, and in
such case, such stockholders, and only such stockholders as shall
be stockholders of record on the date so fixed, shall be entitled
to notice of and to vote at such meeting, or any adjournment
thereof, or to receive payment of such distribution, or to
receive such allotment of rights, or to exercise such rights, or
to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the corporation after any
such record date fixed as aforesaid.
Section 5. Registered Owner. The corporation shall be
entitled to recognize the person registered on its books as the
owner of shares to be the exclusive owner for all purposes
including voting and distribution, and the corporation 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 Nevada.
ARTICLE VI
General Provisions
Section 1. Registered Office. The registered office of this
corporation shall be in the State of Nevada.
The corporation may also have offices at such other places
both within and without the State of Nevada as the Board of
Directors may from time to time determine or the business of the
corporation may require.
Section 2. Distributions. Distributions upon the capital
stock of the corporation, subject to the provisions of the
Articles of Incorporation, if any, may be declared by the Board
of Directors at any regular or special meeting, pursuant to law.
Distributions may be paid in cash, in property or in shares of
the capital stock, subject to the provisions of the Articles of
Incorporation.
Section 3. Reserves. Before payment of any distribution,
there may be set aside out of any funds of the corporation
available for distributions 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
distributions 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.
Section 4. Checks; Notes. All checks or demands for money
and notes of the corporation shall be signed by such officer or
officers or such other person or persons as the Board of
Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the corporation
shall be fixed by resolution of the Board of Directors.
Section 6. Corporate Seal. The corporation may or may not
have a corporate seal, as may from time to time be determined by
resolution of the Board of Directors. If a corporate seal is
adopted, it shall have inscribed thereon the name of the
corporation and the words "Corporate Seal" and "Nevada". The seal
may be used by causing it or a facsimile thereof to be impressed
or affixed or in any manner reproduced.
ARTICLE VII
Indemnification
Section 1. Indemnification of Officers and Directors,
Employees and Other Persons. Every person 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 the fact that he or
a person of whom he is the legal representative is or was a
director or officer of the corporation or is or was serving at
the request of the corporation or for its benefit as a director
or officer of another corporation, or as its representative in a
partnership, Joint venture, trust or other enterprise, shall be
indemnified and held harmless to the fullest extent legally
permissible under the general corporation law of the State of
Nevada from time to time 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 corporation as they are incurred
and in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not
entitled to be indemnified by the corporation. Such night of
indemnification shall be a contract right which may be enforced
in any manner desired by such person. Such right of
indemnification shall not be exclusive of any other right which
such directors, officers or representatives may have or hereafter
acquire and, without limiting the generality of such statement,
they shall be entitled to their respective rights of
indemnification under any bylaw, agreement, vote of stockholders,
provision of law or otherwise, as well as their rights under this
Article.
Section 2. Insurance. The Board of Directors may cause the
corporation to purchase and maintain' 'insurance on behalf of any
person who is or was a director or officer of the corporation, or
is or was serving at the request of the corporation as a director
or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred in any such
capacity or arising out of such status, whether or not the
corporation would have the power to indemnify such person.
Section 3. Further Bylaws. The Board of Directors may from
time to time adopt further Bylaws with respect to indemnification
and may amend these and such Bylaws to provide at all times the
fullest indemnification permitted by the General Corporation Law
of the State of Nevada.
ARTICLE VIII
Amendments
Section 1. Amendments by Stockholders. The Bylaws may be
amended by a majority vote of all the stock issued and
outstanding and entitled to vote for the election of directors of
the stockholders, provided notice of intention to amend shall
have been contained in the notice of the meeting.
Section 2. Amendments by Board of Directors. The Board of
Directors by a majority vote of the whole Board at any meeting
may amend these Bylaws, including Bylaws adopted by the
stockholders, but the stockholders may from time to time specify
particular provisions of the Bylaws which shall not be amended by
the Board of Directors.
APPROVED AND ADOPTED March 14, 1996 (originally) and amended
July 1, 1999.
SECRETARY
______________________
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of MIRACOM
INDUSTRIES, INC. and that the foregoing Bylaws, consisting of 13
pages, constitute the code of Bylaws of the Company as duly
adopted at a regular meeting of the Board of Directors of the
corporation held March 14, 1996 and Amended July 1, 1999.
In witness whereof, I have hereunto subscribed my name
July 1, 1999.
Secretary
___________________________
<PAGE>
Exhibit 10.1 Merger Agreement between Miracom Industries and
Bigway, Inc.
CORPORATE COMBINATION AGREEMENT
This agreement and plan of Merger (the "Agreement") dated
April 2, 1999 is by and between Bigway, Inc., a Nevada
corporation ("BIGWAY"), having its principal offices at 1475
Terminal Way, Suite E, Reno, Nevada and the interest holders of
Miracom Industries, a California sole proprietorship (Jimmy K.
Sung and Paul Kim as a de facto partner) ("Miracom"), all of whom
are listed on Exhibit A (the "Partners") to this Agreement, and
having its principal offices at 14747 Artesia Boulevard, Suite
1F, La Mirada, California.
RECITALS:
A. BIGWAY desires to acquire all of the assets of Miracom
and the Partners of MIRACOM desire to exchange all of their
assets for shares of BIGWAY's authorized but unissued Common
stock as hereinafter provided.
B. It is the intention of the parties hereto that: (i)
BIGWAY shall acquire all of the assets of MIRACOM in exchange
solely for the number of shares of BIGWAY's authorized but
unissued shares of Common Stock, par value $0.001 ("Common
Stock"), set forth below (the "Exchange"); (ii) the Exchange
shall qualify as a tax free reorganization under Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended,
and related sections thereunder; and (iii) the Exchange shall
qualify as a transaction in securities exempt from registration
or qualification under the Securities Act of 1933, as amended,
and under the applicable securities laws of each state or
jurisdiction where the Shareholders and/or Partners reside.
C. The board of directors of BIGWAY deems it to be in the
best interest of BIGWAY and its shareholders to acquire all of
the assets of MIRACOM.
D. The Partners of MIRACOM deem it to be in the best
interest of MIRACOM to exchange all of the assets of MIRACOM for
shares of BIGWAY, as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained in this
Agreement, the parties hereto agree as follows:
SECTION 1. EXCHANGE OF SHARES
1.1 Exchange of Shares. BIGWAY and the Partners of MIRACOM
hereby agree that the Partners shall, on the Closing Date (as
hereinafter defined), exchange all of the assets of MIRACOM for
3,910,256 shares of BIGWAY, which will be restricted against
resale for a period in compliance with Rules 144 and 145. The
MIRACOM assets being tendered will represent all of the assets of
MIRACOM (the "Assets"). The Assets of MIRACOM owned by each
Partner and the number of shares of BIGWAY Common Stock which
each will receive in the Exchange are set forth in Exhibit A
hereto.
1.2 Delivery of Shares. On the Closing Date, the Partners
will deliver to BIGWAY the documents representing the Assets or
control of the Assets, duly endorsed so as to make BIGWAY the
sole owner thereof. Simultaneously, BIGWAY will deliver
certificates representing the BIGWAY Shares to the Partners
subject to certain conditions as set forth in Section 8 of this
Agreement. The Exchange shall not be effected unless a minimum
of ninety (90%) percent of MIRACOM Assets are delivered to BIGWAY
on the Closing Date (as is more fully set forth in Section 8 of
this Agreement).
1.3 Investment Intent. The BIGWAY Shares have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be resold unless the BIGWAY Shares are
registered under the Act or an exemption from such registration
is available. The Partners represent and warrant that each of
them is acquiring the BIGWAY Shares for his own account, for
investment, and not with a view to the sale or distribution of
the BIGWAY shares. Each certificate representing the BIGWAY
Shares will have a legend thereon incorporating language or
substantially similar language, as follows:
"The Shares represented by the certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"). The shares have been acquired for investment and
may not be sold or transferred in the absence of an
effective Registration Statement for the shares under the
Act unless in the opinion of counsel satisfactory to the
Company, registration is not required under the Act."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF MIRACOM
MIRACOM hereby represents and warrants as follows:
2.1 Organization and Good Standing: Ownership of Assets.
MIRACOM is a general partnership duly organized, validly existing
and in good standing under the laws of the State of California.
There are no outstanding rights, options or other agreements
obligating MIRACOM to issue, sell or transfer any interests,
rights or other assets of MIRACOM except as listed on Schedule
2.1 attached hereto and made a part hereof.
2.2 Partnership Authority. MIRACOM has the power to enter
into this Agreement and to perform its respective obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby have been
duly authorized by the Partners of MIRACOM. The execution and
performance of this Agreement will not constitute a material
breach of any agreement, indenture, mortgage, license or other
instrument or document to which MIRACOM is a party and will not
violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to MIRACOM or its properties. The
execution and performance of this Agreement will not violate or
conflict with any provision of the Partnership Agreement of
MIRACOM.
2.3 Ownership of Partnership Interests and Assets. Except
as set forth on Schedule 2.3, the Partners are the owners of
record and beneficially of all of the Assets of MIRACOM, which
Assets are free and clear of all rights, claims, liens and
encumbrances, and have not been sold, pledged, assigned or
otherwise transferred except pursuant to this Agreement. The
Assets represent all of the Assets of MIRACOM.
2.4 Financial Statements, Books and Records. Schedule 2.4
consists of the unaudited financial statements (balance sheet,
income statement, notes) of MIRACOM as of March 31, 1999 and for
the previous fiscal year, starting April 17, 1998 (the "Financial
Statements"). The Financial Statements fairly represent the
financial position of MIRACOM as at such dates and the results of
MIRACOM's operations for the periods then ended. The Financial
Statements were prepared in accordance with generally accepted
accounting principles applied on a consistent basis with prior
periods except as otherwise stated therein. The books of account
and other financial records of MIRACOM are in all respects
complete and correct in all material respects and are maintained
in accordance with good business and accounting practices.
2.5 Access to Records. The partnership financial records,
books and other documents and records of MIRACOM have been made
available to BIGWAY prior to the Closing hereof.
2.6 No Material Adverse Changes. Since March 31, 1999
there has not been:
(i) any material adverse change in the financial
position of MIRACOM except changes arising in the
ordinary course of business, which changes will in no
event materially or adversely affect the financial
position of MIRACOM;
(ii) any damage, destruction or loss materially
affecting the assets, prospective business, operations
or condition (financial or otherwise) of MIRACOM
whether or not covered by insurance;
(iii) any sale of an asset (other than in the
ordinary course of business) or any mortgage or pledge
by MIRACOM of any properties or assets, other than as
set forth in Section 2.13 below; or
(iv) adoption of any pension, profit sharing,
retirement or similar plan or arrangement.
2.7 Taxes. MIRACOM as of December 31, 1998, has filed all
material tax, governmental and/or related forms and reports (or
extensions thereof) due or required to be filed and has (or will
have) paid or made adequate provisions for all taxes or
assessments which had become due as of December 31, 1998, and
there are no deficiency notices outstanding, which will attach to
or encumber the Assets. The partners will be responsible for
their own tax returns, which are of no consequence to this
Agreement.
2.8 Compliance with Laws. MIRACOM has complied with all
federal, state, county and local laws, ordinances, regulations,
inspections, orders, judgments, injunctions, awards or decrees
applicable to it or its business which, if not complied with,
would materially and adversely affect the business of MIRACOM.
2.9 No Breach. The execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby will not:
(i) violate any provision of the Partnership
Agreement of MIRACOM;
(ii) violate, conflict with or result in the
breach of any of the terms of, result in a material
modification of, otherwise give any other contracting
party the right to terminate, or constitute (or with
notice or lapse of time, or both constitute) a default
under any contract or other agreement to which MIRACOM
is a party or by or to which it or any of its assets or
properties may be bound or subject;
(iii) violate any order, judgment, injunction,
award or decree of any court, arbitrator or
governmental or regulatory body against, or binding
upon, MIRACOM or upon the properties or business of
MIRACOM; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions
contemplated herein which could have a materially
adverse effect on the business or operations of
MIRACOM.
2.10 Actions and Proceedings. MIRACOM is not a party to any
material pending litigation or, to its knowledge, any
governmental investigation or proceeding not reflected in the
MIRACOM Financial Statements, and to its best knowledge, no
material litigation, claims, assessments or Non-governmental
proceedings are threatened against MIRACOM except as set forth on
Schedule 2.10 attached hereto and made a part hereof.
2.11 Agreements. Schedule 2.11 sets forth any material
contract or arrangement to which MIRACOM is a party or by or to
which it or its assets, properties or business are bound or
subject, whether written or oral.
2.12 Brokers or Finders. No broker's or finder's fee will
be payable by MIRACOM in connection with the transactions
contemplated by this Agreement, nor will any such fee be incurred
as a result of any actions by MIRACOM or any of its Partners.
2.13 Real Estate. Except as set forth on Schedule 2.13,
MIRACOM owns no real property nor is a party to any leasehold
agreement.
2.14 Tangible Assets. MIRACOM has full title and interest
in all machinery, equipment, furniture, leasehold improvements,
fixtures, projects, owned or leased by MIRACOM, any related
capitalized items or other tangible property material to the
business of MIRACOM (the "Tangible Assets"), other than as set
forth in Section 2.13. MIRACOM holds all rights, title and
interest in all the Tangible Assets owned by it on the Balance
Sheet or acquired by it after the date on the Balance Sheet free
and clear of all liens, pledges, mortgages, security interests,
conditional sales contracts or any other encumbrances. All of
the Tangible Assets are in good operating condition and repair
and are usable in the ordinary course of business of MIRACOM and
conform to all applicable laws, ordinances and government orders,
rules and regulations relating to their construction and
operation, except as set forth on Schedule 2.14 hereto.
2.15 Liabilities. MIRACOM did not have any direct or
indirect indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, known or unknown, fixed
or unfixed, liquidated or unliquidated, secured or unsecured,
accrued or absolute, contingent or otherwise, including, without
limitation, any liability on account of taxes, any governmental
charge or lawsuit (all of the foregoing collectively defined to
as "Liabilities"), which are not fully, fairly and adequately
reflected on the Financial Statement except for a specific
Liabilities set forth on Schedule 2.15 attached hereto and made a
part hereof. As of the date of Closing, MIRACOM will not have
any Liabilities, other than Liabilities fully and adequately
reflected on the Financial Statements except for Liabilities
incurred in the ordinary course of business and as set forth in
Schedule 2.15. To the best knowledge of the Partners, there is
no circumstance, condition, event or arrangement which may
hereafter give rise to any Liabilities not in the ordinary course
of business.
2.16 Operations of MIRACOM. From the date of the Financial
Statements through date of Closing, hereto MIRACOM has not and
will not have:
(i) incurred any indebtedness or borrowed money;
(ii) declared or made any distribution of any kind
to any Partner, or made any direct or indirect
redemption, retirement, purchase or other acquisition
of any of its Assets;
(iii) made any loan or advance to any Partner,
employee, consultant, agent or other representative or
made any other loan or advance otherwise than in the
ordinary course of business;
(iv) except in the ordinary course of business,
incurred or assumed any indebtedness or liability
(whether or not currently due and payable);
(v) disposed of any Assets of MIRACOM except in
the ordinary course of business, except as described in
Schedule 2.13;
(vi) materially increased the annual level of
compensation of any executive employee of MIRACOM;
(vii) increased, terminated, amended or otherwise
modified any plan for the benefit of employees of
MIRACOM.
(viii) except in the ordinary course of business,
entered into or modified any contract, agreement or
transaction, except as described in Schedule 2.13.
2.17 Capitalization. MIRACOM has not granted, issued or
agreed to grant, issue or make any commitments of any character
relating to the Assets of MIRACOM except as set forth on Schedule
2.1 attached hereto and made a part hereof. MIRACOM has no
subsidiaries or other entities except as listed on Schedule 2.17
attached hereto, setting forth the shares or percentage interest
owned by MIRACOM.
2.18 Full Disclosure. No representation or warranty by
MIRACOM in this Agreement or in any document or schedule to be
delivered by them pursuant hereto, and no written statement,
certificate or instrument furnished or to be furnished by MIRACOM
pursuant hereto or in connection with the negotiation, execution
or performance of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to
state any fact necessary to make any statement herein or therein
not materially misleading or necessary to a complete and correct
presentation of all material aspects of the business of MIRACOM.
2.19 Minimum Gross Sales and/or Net Worth. The gross sales
of MIRACOM are no less than those of MIRACOM on March 31, 1999,
as represented in the financial statements provided.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BIGWAY
BIGWAY hereby represents and warrants as follows:
3.1 Organization and Good Standing. BIGWAY is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada. It has the corporate
power to own its own property and to carry on its business as now
being conducted and is duly qualified to do business in any
jurisdiction where so required except where the failure to so
qualify would have no material negative impact.
3.2 Corporate Authority. BIGWAY has the corporate power to
enter into this Agreement and to perform their respective
obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of
BIGWAY and the shareholders as required by Nevada law. The
execution and performance of this Agreement will not constitute a
material breach of any agreement, indenture, mortgage, license or
other instrument or document to which BIGWAY is a party and will
not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to BIGWAY or its properties. The execution
and performance of this Agreement will not violate or conflict
with any provision of the respective Articles of Incorporation or
by-laws of BIGWAY.
3.3 The BIGWAY Shares. As of the Closing Date, there are
approximately 27 shareholders of record that are the owners of
2,500,000 shares of BIGWAY Common Stock (and zero (0) shares of
Preferred Stock), none of whom owns in excess of 5% of the issued
and outstanding shares, except as may be set forth on Schedule
3.3. There are no outstanding warrants, issued stock options,
stock rights or other commitments of any character relating to
the issued or unissued shares of either Common Stock or Preferred
Stock of BIGWAY, other than those which are set forth on Schedule
3.3 attached hereto. The BIGWAY shares on schedule 3.3 represent
all of the outstanding capital stock of BIGWAY.
At the Closing, the BIGWAY Shares to be issued and delivered
to the MIRACOM Partners will, when so issued and delivered,
constitute valid and legally issued shares of BIGWAY Common
Stock, fully paid and nonassessable.
3.4 Financial Statement: Books and Records. Schedule 3.4
consists of the financial statements (balance sheet, income
statement and Notes) of BIGWAY for the fiscal year ended December
31, 1998, and for the preceding 2-year period (collectively the
"Financial Statements"). The Financial Statements fairly
represent the financial position of BIGWAY as at such date and
the results of their operations for the periods then ended. The
Financial Statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis with
prior periods except as otherwise stated therein. The books of
account and other financial records of BIGWAY are in all respects
complete and correct in all material respects and are maintained
in accordance with good business and accounting practices.
3.5 No Material Adverse Changes.
Since March 31, 1999, there has not been:
(i) any materially adverse change in the financial
position of BIGWAY except changes arising in the
ordinary course of business, which changes will in no
event materially and adversely affect the financial
position of BIGWAY, and the past audit for the fiscal
year ended December 31, 1998 will be consistent with
the representations made by BIGWAY to MIRACOM.
(ii) any damage, destruction or loss materially
affecting the assets, prospective business, operations
or condition (financial or otherwise) of BIGWAY whether
or not covered by insurance;
(iii) any declaration setting aside or payment of
any dividend or distribution with respect to any
redemption or repurchase of BIGWAY capital stock;
(iv) any sale of an asset (other than in the
ordinary course of business) or any mortgage pledge by
BIGWAY of any properties or assets; or
(v) adoption or modification of any pension,
profit sharing, retirement, stock bonus, stock option
or similar plan or arrangement.
(vi) except in the ordinary course of business,
incurred or assumed any indebtedness or liability,
whether or not currently due and payable;
(vii) any loan or advance to any shareholder,
officer, director, employee, consultant, agent or other
representative or made any other loan or advance
otherwise than in the ordinary course of business;
(viii) any material increased in the annual level
of compensation of any executive employee of BIGWAY;
(ix) except in the ordinary course of business,
entered into or modified any contract, agreement or
transaction, except as described in Schedule 3.5;
(x) issued any equity securities or rights to
acquire equity securities other than as set forth in
Schedule 3.5.
3.6 Taxes. BIGWAY has timely filed all material tax,
governmental and/or related forms and reports (or extensions
thereof) due or required to be filed and has paid or made
adequate provisions for all taxes or assessments which have
become due as of the Closing Date, and there are no deficiencies
outstanding.
3.7 Compliance with Laws. BIGWAY has complied with all
federal, state, county and local laws, ordinances, regulations,
inspections, orders, judgments, injunctions, awards or decrees
applicable to it or its business, which, if not complied with,
would materially and adversely affect the business of BIGWAY or
the trading market for the BIGWAY Shares and specifically, and to
the best of its knowledge, BIGWAY complied with provisions for
registration under the Securities Act of 1933 and all applicable
blue sky laws in connection with its public stock offering and
there are no outstanding, pending or threatened stop orders or
other actions or investigations relating thereto.
3.8 Actions and Proceedings. BIGWAY is not a party to any
material pending litigation or, to its knowledge, any
governmental proceedings are threatened against BIGWAY, except as
set forth on Schedule 3.8 attached hereto and made a part hereof.
3.9 Periodic Reports. BIGWAY is not a reporting company
(under Section 12(g)) and has no current obligation to file
reports with the SEC, however, BIGWAY has delivered to MIRACOM
true and complete copies of all forms filed pursuant to SEC Rules
and Regulations under the Securities Exchange Act of 1934, as
amended. As of their respective dates, such reports and
statements did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstance under which they were made, not misleading.
Schedule 3.9 sets forth all of the documentation of such reports
BIGWAY has delivered to MIRACOM.
3.10 Disclosure. BIGWAY has (and at the Closing it will
have) disclosed in writing all events, conditions and facts
materially affecting the business, financial conditions or
results of operation of BIGWAY all of which have been set forth
herein. BIGWAY has not now and will not have, at the Closing,
withheld disclosure of any such events, conditions, and facts
which they have knowledge of or have reasonable grounds to know
may exist. BIGWAY has identified all oral and written agreements
between Bigway and third parties affecting the business credit
and/or stock pledges of BIGWAY which have been fully disclosed to
MIRACOM in writing on Schedule 3.10.
3.11 Capitalization. The authorized Capital Stock of BIGWAY
consists of 50,000,000 shares of Common Stock of which 2,500,000
shares of Common Stock are issued and outstanding and has
authorized 0 shares of Preferred Stock, par value $0.00l per
share, of which zero (0) shares are issued and outstanding.
3.12 Access to Records. The corporate financial records,
minute books, and other documents and records of BIGWAY have been
made available to MIRACOM prior to the Closing hereof.
3.13 No Breach. The execution, delivery and performance of
this of this Agreement and the consummation of the transactions
contemplated hereby will not:
(i) violate any provision of the Articles of
Incorporation or By-Laws of BIGWAY;
(ii) violate, conflict with or result in the
breach of any of the terms of, result in a material
modification of, otherwise give any other contracting
party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default
under, any contract or other agreement to which BIGWAY
is a party or by or to which it or any of its assets or
properties may be bound or subject;
(iii) violate any order, judgment, injunction,
award or decree of any court, arbitrator or
governmental or regulatory body against, or binding
upon, BIGWAY or upon the securities, properties or
business to BIGWAY; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions
contemplated herein.
3.14 Brokers or Finders. No broker's or finder's fee will
be payable by BIGWAY in connection with the transactions
contemplated by this Agreement, nor will any such fee be incurred
as a result of any actions of BIGWAY.
3.15 OTC Bulletin Board. BIGWAY shares are able to be
listed on the OTC Bulletin Board under a symbol to be chosen. No
representation is being made by BIGWAY of any value as to the
trading of the shares of BIGWAY, At the Closing Date, and
thereafter until such time as BIGWAY becomes a reporting company,
BIGWAY Rule 15(c)2-11 documentation and reports required to be
filed with the SEC as discussed above shall have been updated and
shall be current in all material respects, except as may appear
on Schedule 3.15.
3.16 Authority to Execute and Perform Agreements. BIGWAY
has the full legal right and power and all authority and approval
required to enter into, execute and deliver this Agreement and to
perform fully its obligations hereunder. This Agreement has been
duly executed and delivered and is the valid and binding
obligation of BIGWAY enforceable in accordance with its terms,
except as may be limited by bankruptcy, moratorium, insolvency or
other similar laws generally affecting the enforcement of
creditors' rights. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and
the performance by BIGWAY of this Agreement, in accordance with
its respective terms and conditions will not:
(i) require the approval or consent of any
governmental or regulatory body or the approval or
consent of any other person;
(ii) conflict with or result in any breach or
violation of any of the terms and conditions of, or
constitute (or with any notice or lapse of time or both
would constitute) a default under, any order, judgment
or decree applicable to BIGWAY, or any instrument,
contract or other agreement to which BIGWAY is a party
or by or to which BIGWAY is bound or subject; or
(iii) result in the creation of any lien or other
encumbrance on the assets or properties of BIGWAY.
3.17 Full Disclosure. No representation or warranty by
BIGWAY in this Agreement or in any document or schedule to be
delivered by them pursuant hereto, and no written statement,
certificate or instrument furnished or to be furnished by BIGWAY
pursuant hereto or in connection with the negotiation, execution
or performance of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to
state any fact necessary to make any statement herein or therein
not materially misleading or necessary to complete and correct
presentation of all material aspects of the business of BIGWAY.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to the Obligation of MIRACOM and
its Partners. All obligations of MIRACOM and its Partners under
this Agreement are subject to the fulfillment, prior to or as of
the Closing Date, as indicated below, of each of the following
conditions:
(a) The representations and warranties by or on
behalf of BIGWAY contained in this Agreement or in any
certificate or document delivered pursuant to the
provisions hereof shall be true in all material
respects at and as of Closing Date as though such
representations and warranties were made at and as of
such time.
(b) BIGWAY shall have performed and complied in
all material respects, with all covenants, agreements,
and conditions set forth in, and shall have executed
and delivered all documents required by this Agreement
to be performed or complied with or executed and
delivered by them prior to or at the Closing.
(c) On or before the Closing, the Board of
Directors and the shareholders of BIGWAY shall have
approved, in accordance with Nevada law, the execution,
delivery and performance of this Agreement and the
consummation of the transaction contemplated herein and
authorized all of the necessary and proper action to
enable BIGWAY to comply with the terms of the
Agreement.
(d) The Exchange shall be permitted by Nevada law
and BIGWAY shall have sufficient shares of BIGWAY
Common Stock authorized to complete the Exchange.
(e) At the Closing, all instruments and documents
delivered to MIRACOM and the Partners pursuant to
provisions hereof shall be reasonably satisfactory to
legal counsel for MIRACOM.
(f) At the Closing, BIGWAY shall have delivered to
MIRACOM an opinion of counsel dated as of the Closing
to the effect that:
(i) BIGWAY is a corporation duly organized,
validly existing and in good standing under the
laws of the State of Nevada;
(ii) This Agreement has been duly authorized
executed and delivered by BIGWAY and is a valid
and binding obligation of BIGWAY enforceable in
accordance with its terms;
(iii) BIGWAY, through its Board of Directors
and its shareholders, has taken all corporate
action necessary for performance under this
Agreement;
(iv) The documents executed and delivered to
MIRACOM and the MIRACOM Partners hereunder are
valid and binding in accordance with their terms
to the shares of BIGWAY Shares to be issued
pursuant to Section 1.1 hereof, and such Shares
will be duly and validly issued, fully paid and
non-assessable; and
(v) BIGWAY has the corporate power to
execute, deliver the Shares and perform under this
Agreement.
(g) The shares of restricted BIGWAY Common Stock
to be issued to the Partners of MIRACOM at Closing will
be validly issued, nonassessable and fully paid under
Nevada corporation law and will be issued in a non-
public offering and isolated transaction in compliance
with all federal and state securities laws, bearing a
restrictive legend, as is more fully set forth above.
(h) This transaction must have been approved by
MIRACOM.
(i) BIGWAY shall have performed the following
financial commitments to MIRACOM:
(1) Secured a capital contribution from Sung
and Kim in the amount of $125,000.00,
for which the issuance of 61% (rather
than 51% of the Company has occurred);
(2) Secured a loan from Morse Financial,
Inc. in the amount of $125,000.00,
convertible after 1 year at $1.00 per
share;
(3) Converted existing debt to James Morse
of $100,000 into a loan or convertible
debenture as an obligation of Bigway,
also convertible after 1 year at $1.00
per share, at James Morse's discretion
or option;
4.2 Conditions Precedent to the Obligations of BIGWAY and
BIGWAY Shareholders. All obligations of BIGWAY under this
Agreement are subject to the fulfillment, prior to or at Closing,
of each of the following conditions:
(a) The representations and warranties by MIRACOM
and its Partners, contained in this Agreement or in any
certificate or document delivered pursuant to the
provisions hereof shall be true in all material
respects at and as of the Closing as though such
representations and warranties were made at and as of
such time;
(b) MIRACOM and its Partners shall have performed
and complied with, in all material respects, with all
covenants, agreements, and conditions set forth in, and
shall have executed and delivered all documents
required by this Agreement to be performed or complied
or executed and delivered by them prior to or at the
Closing;
(c) MIRACOM shall deliver on behalf of its
Partners to BIGWAY a letter commonly known as an
"Investment Letter," or investment representations
acknowledging that the shares of BIGWAY Common Stock
are being acquired for investment purposes.
(d) MIRACOM and its Partners shall deliver an
opinion of its legal counsel to BIGWAY to the effect
that:
(i) MIRACOM is a general partnership duly
organized validly existing and in good standing
under the laws of the State of California and is
duly qualified to do business in any jurisdiction
where so required except where the failure to so
qualify would have no material adverse impact on
the company;
(ii) MIRACOM has the partnership authority to
carry on its business as now being conducted; and
(iii) This Agreement has been duly
authorized, executed and delivered by MIRACOM.
SECTION 5. COVENANTS
5.1 Corporate Examinations and Investigations. Prior to
the Closing Date, the parties acknowledge that they have been
entitled, through their employees and representatives, to make
such investigation of the assets, properties, business and
operations, books, records and financial condition of the other
as they each may reasonably require. No investigations, by a
party hereto shall, however, diminish or waive any of the
representations, warranties, covenants or agreements of the party
under this Agreement.
5.2 Expenses. Each party hereto agrees to pay its own
costs and expenses incurred in negotiating this Agreement and
consummating the transactions described herein, other than as set
forth in Section 4.1(i) above.
5.3 Further Assurances. The parties shall execute such
documents and other papers and take such further actions as may
be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby. Each such party
shall use its best efforts to fulfill or obtain the fulfillment
of the conditions to the Closing, including, without limitation,
the execution and delivery of any documents or other papers, the
execution and delivery of which are necessary or appropriate to
the Closing.
5.4 Confidentiality. In the event the transactions
contemplated by this Agreement are not consummated, BIGWAY,
MIRACOM and the Partners agree to keep confidential any
information disclosed to each other in connection therewith for a
period of three (3) years from the date hereof; provided,
however, such obligation shall not apply to information which:
(i) at the time of the disclosure was public
knowledge;
(ii) after the time of disclosure becomes public
knowledge (except due to the action of the receiving
party); or
(iii) the receiving party had within its
possession at the time of disclosure.
(iv) is ordered disclosed by a Court of proper
jurisdiction.
5.5 Asset Documents. At the Closing, the Partners shall
have delivered the documents representing the Assets duly
endorsed so as to make BIGWAY the sole owner thereof. At such
Closing, BIGWAY shall issue to the Partners the BIGWAY Shares.
5.6 Investment Letters. The Partners shall have delivered
to BIGWAY an "Investment Letter" agreeing that the shares are
being acquired for investment purposes only and not with the view
to public resale or distribution.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF MIRACOM
AND BIGWAY
Notwithstanding any right of either party to investigate the
affairs of the other party, its Shareholders and/or Partners,
each party has the right to rely fully upon representations,
warranties, covenants and agreements of the other party and its
Shareholders and/or Partners contained in this Agreement or in
any document delivered to one by the other or any of their
representatives, in connection with the transactions contemplated
by this Agreement. All such representations, warranties,
covenants and agreements shall survive the execution and delivery
hereof and the closing hereunder for 3 years following the
Closing.
SECTION 7. INDEMNIFICATION
For a period of three (3) years from the Closing, MIRACOM
and its Partners agree to indemnify and hold harmless BIGWAY and
BIGWAY agrees to indemnify and hold harmless MIRACOM, and its
Partners, at all times after the date of this Agreement against
and in respect of any liability, damage, or deficiency, all
actions, suits, proceedings, demands, assessments, judgments,
costs and expenses, including attorneys' fees, incident to any of
the foregoing, resulting from any material misrepresentation made
by any indemnifying party to an indemnified party, an
indemnifying party's breach of covenant or warranty or an
indemnifying party's nonfulfillment of any agreement hereunder,
or from any material misrepresentation or omission from any
certificate furnished or to be furnished hereunder.
SECTION 8. DOCUMENTS AT CLOSING AND THE CLOSING
8.1 Documents at Closing. At the Closing, the following
transactions shall occur, all of such transactions being deemed
to occur simultaneously:
(a) MIRACOM will deliver, or will cause to be
delivered, to BIGWAY the following:
(i) a certificate executed by the Partners of
MIRACOM to the effect that all representations and
warranties made by MIRACOM under this Agreement are
true and correct as of the Closing, the same as though
originally given to BIGWAY on said date;
(ii) a certificate from the State of California
dated at or about the Closing to the effect that
MIRACOM is in good standing under the laws of said
State;
(iii) Investment Letters or investment
representations in the form executed by each MIRACOM
Partner;
(iv) Documents representing those Assets of
MIRACOM to be exchanged for BIGWAY Shares will be
delivered.
(v) all other items, the delivery of which is a
condition precedent to the obligations of MIRACOM, as
set forth in Section 4 hereof.
(b) BIGWAY will deliver or cause to be delivered to
MIRACOM and the MIRACOM Partners:
(i) stock certificates representing those shares
of BIGWAY Shares to be issued as a part of the Exchange
as described in Section I hereof;
(ii) a certificate from BIGWAY executed by the
President or Secretary of BIGWAY, to the effect that
all representations and warranties of BIGWAY made under
this Agreement are true and correct as of the Closing,
the same as though originally given to MIRACOM on said
date;
(iii) certified copies of resolutions by BIGWAY
Board of Directors authorizing this transaction; and an
opinion of BIGWAY counsel as described in Section 4
above;
(iv) certificates from the Nevada Secretary of
State dated at or about the Closing Date that BIGWAY is
in good standing under the laws of said State;
(v) all other items, the delivery of which is a
condition precedent to the obligations of BIGWAY, as
set forth in Section 4 hereof.
8.2 The Closing. The Closing shall take place at the
conclusion of the Escrow or at such other later time or place as
may be agreed upon by the parties hereto. At the Closing, the
parties shall provide each other with such documents as may be
necessary.
SECTION 9. MISCELLANEOUS
9. 1 Waivers. The waiver of a breach of this Agreement or
the failure of any party hereto to exercise any right under this
Agreement shall in no way constitute waiver as to future breach
whether similar or dissimilar in nature or as to the exercise of
any further right under this Agreement.
9.2 Amendment. This Agreement may be amended or modified
only by an instrument of equal formality signed by the parties or
the duly authorized representatives of the respective parties.
9.3 Assignment. This Agreement is not assignable except by
operation of law.
9.4 Notice. Until otherwise specified in writing, the
mailing addresses and fax numbers of the parties of this
Agreement shall be as follows:
To: BIGWAY:
Vivienne Furlong, President
Bigway Corporation
1110 Via Altamira
Palm Springs, California 92262
Fax (760) 416-1631
cc: Christopher Dieterich
11300 West Olympic Boulevard, Suite 800
Los Angeles, California 90064
Fax (310) 312-6680
To: Miracom Industries:
Jimmy K. Sung, General Partner
Miracom Industries
14747 Artesia Boulevard, Suite 1F
La Mirada, California 90638
Fax: (714) 522-2816
To: The Partners:
Jimmy K. Sung, General Partner
Paul Kim, General Partner
14747 Artesia Boulevard, Suite 1F
La Mirada, California 90638
Fax: (714) 522-2816
Any notice or statement given under this Agreement shall be
deemed to have been given if sent by registered mail addressed to
the other party at the address indicated above or at such other
address which shall have been furnished in writing to the
addressor.
9.5 Governing Law. This Agreement shall be construed, and
the legal relations be the parties determined, in accordance with
the laws of the State of Nevada, thereby precluding any choice of
law rules which may direct the application of the laws of any
other jurisdiction.
9.6 Arbitration.
(a) All disputes and differences arising in connection
with or relating to the provisions of this Agreement,
including what constitutes a dispute or difference, shall be
settled and finally determined by arbitration unless
agreement in writing has been reached between the parties
within ninety (90) days after either party shall have given
written notice to the other party of the existence of a
dispute or difference which it desires to have arbitrated.
Such notice shall state the point or points in dispute.
(b) Arbitration shall be conducted in Los Angeles,
California, in accordance with the rules of the American
Arbitration Association augmented by the rights of Civil
Discovery included in the Federal Rules of Civil Procedure
by three (3) arbitrators, one of whom shall be selected by
BIGWAY, one by MIRACOM, and a Chairman of the Arbitration
Court selected by the two arbitrators so selected. The
applicable law shall be as provided above. Each party shall
notify the other party of the arbitrator selected by it
within sixty (60) days of the giving of written notice
referred to above. In the event that the two arbitrators
selected by the parties are unable to reach agreement as to
the third arbitrator, the third arbitrator shall be selected
by the American Arbitration Association. Arbitration shall
be held in the jurisdiction of the party against which or
whom the arbitration is instituted. Each party shall be
given the opportunity to present to the arbitrators its
evidence, witnesses and arguments, and the right to be
represented by counsel of its selection when the other party
be represented by counsel, of its selection when the other
party presents its evidence, witnesses and arguments. In
the event one of the parties shall fail, after reasonable
notice, to appear and participate in the arbitration
proceedings as normally interpreted by the above-mentioned
rules, the arbitrators shall be entitled to make their
decision and award on the basis of evidence, witnesses and
arguments presented by the party appearing.
(c) The decision and the award of the arbitrators
shall be in writing and shall be final and binding upon the
parties hereto. Judgment upon the award rendered my be
entered in any court having jurisdiction thereof, or
application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the
case may be. The expenses of arbitration shall be borne n
accordance with the determination of the arbitrators with
respect thereto. Pending decision by the arbitrators with
respect to the dispute or difference undergoing arbitration,
all other obligations of the parties hereto shall continue
as stipulated herein, and all monies not directly involved
in such dispute or difference shall be paid when due. All
parties will have the right to appeal as if the award had
been rendered in Federal District Court.
9.7 Publicity. No publicity release or announcement
concerning this Agreement or the transactions contemplated hereby
shall be issued by either party hereto at any time from the
signing hereof without advance approval in writing of the form
and substance by the other party.
9.8 Entire Agreement. This Agreement (including the
Exhibits and Schedules hereto) and the collateral agreements
executed in connection with the consummation of the transactions
contemplated herein contain the entire agreement among the
parties with respect to the purchase and issuance of the Shares
and the BIGWAY Shares and related transactions, and supersede all
prior agreements, written or oral, with respect thereto.
9.9 Headings. The headings in this Agreement are for
reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
9.10 Severability of Provisions. The invalidity or
unenforceability of any term, phrase, clause, paragraph,
restriction, covenant, agreement or provision of this Agreement
shall in no way affect the validity or enforcement of any other
provision or any part thereof.
9.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed, shall
constitute an original copy hereof, but all of which together
shall consider but one and the same document.
9.12 Binding Effect. This Agreement shall be binding upon
the parties hereto and inure to the benefit of the parties, their
respective heirs, administrators, executors,
successors and assigns.
9.13 Press Releases. The parties will mutually agree as to
the wording and timing of any informational releases concerning
this transaction prior to and through Closing.
SECTION 11 ESCROW PENDING CLOSING
The parties anticipate the utilization of an Escrow Agent,
agreed to be the law firm of Dieterich & Associates, as
represented by Christopher H. Dieterich, to effect the
transaction contemplated by this Agreement, with the Escrow to
close on or before April 30, 1999. The Notes, Shares, Financial
Statements and all supporting Schedules to this Agreement and the
Financial Statements, Cash Payments and Financial Commitments and
similar documentation necessary or incident to Closing, will be
delivered to the Escrow Agent. Following receipt in escrow of
these items, both parties are then committed to this Agreement,
and may suffer damages if there is a breach. Either party may
demand arbitration under Section 9.6 for actual damages or
specific performance at that time. Upon receipt of the items,
the Escrow Agent will transfer relevant documents, funds, and
financial instruments to the appropriate party. If, during the
escrow period, either party determines that a material
misrepresentation has occurred, or that a condition precedent has
not been met, the transaction may be canceled with no further
obligation of either party to the other. The parties will
execute this Agreement prior to completion of all Schedules,
however the Schedules must be provided to Escrow prior to
Closing. Any party may cancel this Agreement upon review of the
relevant Schedules, with no liability assessed against either
party for cancellation. There will be no remedies for breach of
this agreement other than as set forth in Section 9.6.
SIGNATURES BEGIN ON NEXT PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
Bigway Corporation
a Nevada corporation
By: __________________________
Vivienne Furlong,
President
ATTEST:
_____________________________
, Secretary
Miracom Industries
a California general partnership
By: __________________________
Jimmy K. Sung
General Partner
ATTEST:
_____________________________
Paul Kim
General Partner
<PAGE>
EXHIBIT "A"
LIST OF MIRACOM PARTNERS
Name of Shareholder Approximate Holdings of Number of
of MIRACOM Percentage of MIRACOM Shares of
Holding Partnership BIGWAY
Common Stock
Jimmy K. Sung* 80 100 3,128,204
Paul Kim 20 0 782,051
TOTAL: 100 3,910,256
* Sung/Kim capital contribution of $125,000 assumed for
additional 10% of company (See Paragraph 4(i)1). If debt
not paid by Sung/Kim to James Lee and Lee claims interest in
Company, then 10% of stock reverts to Company for purposes
of settling with Lee.
<PAGE>
SCHEDULES
MIRACOM Schedules
2.1 MIRACOM Equity Commitments currently in existence
2.4 MIRACOM Financial Statements
2.10 MIRACOM Claims, Litigation, Government actions pending
2.11 MIRACOM Significant contracts
2.12 MIRACOM Brokers Agreements due by MIRACOM contract
2.13 MIRACOM List of Real Estate Owned and List of Leases
2.14 MIRACOM List of exceptions to the Tangible Assets on balance
sheets
2.15 MIRACOM List of undisclosed Liabilities
2.17 MIRACOM List of Subsidiaries
BIGWAY Schedules
3.3 BIGWAY list of 5% or greater shareholders, and outstanding
warrants and options
3.4 BIGWAY Financial Statements
3.5 List of transactions of BIGWAY for contracts and in which
stock has been issued or committed
3.8 BIGWAY List of Pending Actions not disclosed in financial
statements
3.9 BIGWAY list of periodic reports filed with SEC or
Broker/Dealers
3.14 BIGWAY list of brokers due pursuant to BIGWAY contracts
3.15 BIGWAY list of exceptions to any current SEC filings
4.2 Employment (or Consulting) Agreements: (Subject to
restrictions in the Corporate Combination Agreement:
<PAGE>
Exhibit 10.2 $10,000 Convertible Note for Legal Services
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED.
10% CONVERTIBLE NOTE DUE NOVEMBER 1, 2000
THIS NOTE is one of a duly authorized issue of Notes of Miracom,
Inc., a Nevada corporation (the "Company") designated as its 10%
Convertible Note Due November 1, 2000, in an aggregate principal
amount not exceeding $20,000.
FOR VALUE RECEIVED, the Company promises to pay to purchaser or
the registered holder hereof (the "Holder"), the principal sum of
Ten Thousand Dollars ($10,000), on November 1, 2000 (the
"Maturity Date"), and to pay interest on the principal sum
outstanding from time to time in arrears on the Maturity Date, at
the rate of 10% per annum accruing from the date of initial
issuance. Accrual of interest shall commence on the first
business day to occur after the date hereof until payment in full
of the principal sum has been made or duly provided for. All
accrued and unpaid interest shall bear interest at the same rate
as the principal and be due on the date for the principal.
Interest may be paid in the form of Common Stock, issued at the
conversion rates described below in the amounts necessary to
satisfy the outstanding interest amounts then due. The interest
so payable will be paid on the Maturity Date to the person in
whose name this Note (or one or more predecessor Notes) is
registered on the records of the Company regarding registration
and transfers of the Notes (the "Note Register") on the tenth day
prior to the Maturity Date; provided, however, that the Company's
obligation to a transferee of this Note arises only if such
transfer, sale or other disposition is made in accordance with
the terms and conditions of the Regulation 506 Securities
Subscription Agreement executed by the original Holder. The
principal of, and interest on, this Note are payable in such coin
or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts,
at the address last appearing on the Note Register of the Company
as designated in writing by the Holder from time to time. The
Company will pay the principal of and interest upon this Note on
the Maturity Date, less any amounts required by law to be
deducted, to the registered Holder of this Note as of the tenth
day prior to the Maturity Date and addressed to such Holder as
the last address appearing on the Note Register. The forwarding
of such check shall constitute a payment of principal and
interest hereunder and shall satisfy and discharge the liability
for principal and interest on this Note to the extent of the sum
represented by such check less any amounts so deducted.
This Note is subject to the following additional provisions:
1. The Notes are issuable in denominations of Five Thousand
Dollars ($5,000) and integral multiples thereof up to the
aggregate total of $20,000. The Notes are exchangeable for
an equal aggregate principal amount of Notes of different
authorized denominations, as requested by the Holders
surrendering the same. No service charge will be made for
such registration or transfer or exchange.
2. The Company shall be entitled to withhold from all payments
of principal of, and interest on, this Note any amounts
required to be withheld under the applicable provisions of
the Untied States income tax laws or other applicable laws
at the time of such payments.
3. This Note has been issued subject to investment
representations of the original purchaser hereof and may be
transferred or exchanged only in compliance with the
Securities Act of 1933, as amended (the "Act"). Prior to
due presentment for or transfer of this Note, the Company
and any agent of the Company may treat the person in whose
name this Note is duly registered on the Company's Note
Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes,
whether or not this Note be overdue, and neither the Company
nor any such agent shall be affected by notice to the
contrary.
4. The Holder of this Note is entitled, at its option, at any
time commencing One Year after the Closing Date until
maturity hereof to convert any or all of the principal
amounts of these Notes or any portion of the principal
amount (to include accrued interest) hereof into shares of
Common Stock of the Company ("Shares") with the number of
shares issuable upon such conversion being equal to the
dollar amount converted at a price of $1.00 per share,
subject to adjustment in the event of any stock split,
dividend, combination or similar event). Such conversion
shall be effectuated by surrendering the Notes to be
converted to the Company, with the form of conversion notice
attached to the Note as Exhibit A, executed by the Holder of
the Note evidencing such Holder's intention to convert this
Note, and accompanied, if required by the Company, by proper
assignment hereof in blank. No amount of accrued but unpaid
interest shall be subject to conversion, but interest
accrued or accruing from the date of issuance to the date of
conversion shall be waived by the Holder. No fraction of
Shares or script representing fractions of Shares will be
issued on conversion, but the number of Shares issuable
shall be rounded to the nearest whole Share. The date on
which notice of conversion is given shall be deemed to be
the date on which the Holder has delivered this Note, with
the conversion notice duly executed, to the Company, or if
earlier, the date set forth in such notice of conversion if
the Note is received by the Company within five business
days thereafter.
5. No provision of this Note shall alter or impair the
obligation of the Company, which is absolute and
unconditional, to pay the principal of, and interest on,
this Note at the time, place, and rate, and in the coin or
currency herein prescribed. This Note and all other Notes
now or hereafter issued on similar terms are direct
obligations of the Company. This Note ranks equally with
all other Notes now or hereafter issued under the terms set
forth herein.
6. The Company hereby expressly waives demand and presentment
for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, notice of acceleration or
intent to accelerate, bringing of suit and diligence in
taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment
of all sums owing and to be owing hereon, regardless of and
without any notice, diligence, act or omission as or with
respect to the collection of any amount called for
hereunder.
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by Holder
in colection any amount due under this Note.
8. If one or more of the following described "Events of
Default" shall occur:
(a) The Company shall default in the payment of principal
or interest on this Note; or
(b) Any of the representations or warranties made by the
Company herein, in the documents delivered to the
Holder dated as of June 1, 1999 (the "Subscription
Agreement"), or in any certificate or financial or
other statements heretofore or hereafter furnished by
or on behalf of the Company in connection with the
execution and delivery of this Note or the Subscription
Agreement shall be false or misleading in any material
respect at the time made; or
(c) The Company shall fail to perform or observe any other
covenant, term, provision, condition, agreement or
obligation of the Company under this Note and such
failure shall continue uncured for a period of seven
(7) days after notice from the Holder of such failure;
or
(d) The Company shall (1) become insolvent; (2) admit in
writing its inability to pay its debts as they mature;
(3) make an assignment for the benefit of creditors or
commence proceedings for its dissolution; or (4) apply
for or consent to the appointment of a trustee,
liquidator or receiver for it or for a substantial part
of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed
for the Company or for a substantial part of its
property or business without its consent and shall not
be discharged within thirty (30) days after such
appointment; or
(f) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency
shall assume custody or control of the whole or any
substantial portion of the properties or assets of the
Company and shall not be dismissed within thirty (30)
days thereafter, or
(g) Any money judgment, writ or warrant of attachment, or
similar process in excess of Two Hundred Thousand
Dollars ($200,000) in aggregate shall be entered or
filed against the Company or any of its properties or
other assets and shall remain unvacated, unbonded or
unstayed for a period of fifteen (15) days or in any
event later than five (5) days prior to the date of any
proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors
shall be instituted by or against the Company and, if
instituted against the Company, shall not be dismissed
within thirty (30) days after such institution or the
Company shall by any action or answer approve of,
consent, or acquiesce in any such proceedings or admit
the material allegations of, or default in answering a
petition filed in any such proceeding; or
(i) The Company shall have its Common Stock delisted from
an exchange or over-the-counter market, without being
relisted on a public exchange shortly thereafter.
Then, or at any time thereafter, and in each and every such
case, unless such Event of Default shall have been waived in
writing by the Holder (which waiver shall not be deemed to
be a waiver of any subsequent default) at the option of the
Holder and in the Holder's sole discretion, the Holder may
consider this Note immediately due and payable, without
presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, anything herein or in any
note or other instruments contained to the contrary
notwithstanding, and the Holder may immediately and without
expiration of any period of grace, enforce any and all of
the Holder's rights and remedies provided herein or any
other rights or remedies afforded by law.
9. For so long as any amount payable under this Note remains
unpaid, the Company shall furnish to the Holder the
following information:
(a) On or before the commencement of each fiscal year,
commencing with the fiscal year beginning January 1,
2000, a business plan and budget for the Company for
such fiscal year.
(b) No later than one hundred twenty (120) days following
the end of each fiscal year, beginning with the fiscal
year ending December 31, 1999, consolidated balance
sheets, statements of income and statements of cash
flow and shareholders' equity of the Company and its
subsidiaries, if any, prepared in accordance with
generally accepted accounting principles ("GAAP"), and
audited by a firm of independent public accountants.
(c) Within forty-five (45) days after the end of each
quarter (except the fourth quarter) of each fiscal
year, consolidated balance sheets, statements of income
and statements of cash flow and shareholders' equity of
the Company and its subsidiaries, if any, including a
summary discussion of major variances, if any, between
such quarterly statement and the budget.
10. The Company covenants and agrees that until all amounts due
under this Note have been paid in full, by conversion or
otherwise, [and for so long as Holder holds shares of Common
Stock issued upon conversion of this Note] unless the Holder
waives compliance in writing, the Company shall:
(a) Give prompt written notice to the Holder of any Event
of Default as defined in this Note or of any other
matter which has resulted in, or could reasonably be
expected to result in, a materially adverse change in
its financial condition or operations.
(b) Give prompt notice to the Holder of any claim, action
or proceeding which, in the event of any unfavorable
outcome, would or could reasonably be expected to have
a material adverse effect on the financial condition of
the Company.
(c) At all times reserve and keep available out of its
authorized but unissued stock, for the purpose of
effecting the conversion of this Note such number of
its duly authorized shares of Common Stock as shall
from time to time be sufficient to effect the
conversion of the outstanding principal balance of this
Note into shares of Common Stock.
(d) Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or
mutilation of this Note and:
(i) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it, or
(ii) in the case of mutilation, upon surrender and
cancellation of this Note,
the Company at its expense will execute and deliver a
new Note, dated the date of the lost, stolen, destroyed
or mutilated Note.
11. The Holder of this Note, by acceptance hereof, agrees that
this Note is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this
Note or the Shares of Common Stock issuable upon exercise
thereof except under circumstances which will not result in
a violation of the Act or any applicable state Blue Sky laws
or similar laws relating to the sale of securities.
12. In case any provision of this Note is held by a court of
competent jurisdiction to be excessive in scope or otherwise
invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable
to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Note will
not in any way be affected or impaired thereby.
13. This Note constitutes the full and entire understanding and
agreement between the Company and the Holder with respect to
the subject hereof. Neither this Note nor any term hereof
may be amended, waived, discharged or terminated other than
by a written instrument signed by the Company and the
Holder.
14. This Note shall be governed by and construed in accordance
with the laws of the State of Nevada.
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed by an officer thereunto duly authorized.
Dated: June 20, 1999
MIRACOM CORPORATION
By: /s/ Jimmy Sung
Jimmy Sung, President
Terms accepted re: common stock conversion rights and payment of
outstanding legal fees due to date.
/s/ Christopher H. Dieterich
Christopher H. Dieterich
20 Jun 99
<PAGE>
Exhibit 10.3 $10,000 Convertible Note for Investment Banking
Services
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED.
10% CONVERTIBLE NOTE DUE NOVEMBER 1, 2000
THIS NOTE is one of a duly authorized issue of Notes of Miracom,
Inc., a Nevada corporation (the "Company") designated as its 10%
Convertible Note Due November 1, 2000, in an aggregate principal
amount not exceeding $20,000.
FOR VALUE RECEIVED, the Company promises to pay to purchaser or
the registered holder hereof (the "Holder"), the principal sum of
Ten Thousand Dollars ($10,000), on November 1, 2000 (the
"Maturity Date"), and to pay interest on the principal sum
outstanding from time to time in arrears on the Maturity Date, at
the rate of 10% per annum accruing from the date of initial
issuance. Accrual of interest shall commence on the first
business day to occur after the date hereof until payment in full
of the principal sum has been made or duly provided for. All
accrued and unpaid interest shall bear interest at the same rate
as the principal and be due on the date for the principal.
Interest may be paid in the form of Common Stock, issued at the
conversion rates described below in the amounts necessary to
satisfy the outstanding interest amounts then due. The interest
so payable will be paid on the Maturity Date to the person in
whose name this Note (or one or more predecessor Notes) is
registered on the records of the Company regarding registration
and transfers of the Notes (the "Note Register") on the tenth day
prior to the Maturity Date; provided, however, that the Company's
obligation to a transferee of this Note arises only if such
transfer, sale or other disposition is made in accordance with
the terms and conditions of the Regulation 506 Securities
Subscription Agreement executed by the original Holder. The
principal of, and interest on, this Note are payable in such coin
or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts,
at the address last appearing on the Note Register of the Company
as designated in writing by the Holder from time to time. The
Company will pay the principal of and interest upon this Note on
the Maturity Date, less any amounts required by law to be
deducted, to the registered Holder of this Note as of the tenth
day prior to the Maturity Date and addressed to such Holder as
the last address appearing on the Note Register. The forwarding
of such check shall constitute a payment of principal and
interest hereunder and shall satisfy and discharge the liability
for principal and interest on this Note to the extent of the sum
represented by such check less any amounts so deducted.
This Note is subject to the following additional provisions:
1. The Notes are issuable in denominations of Five Thousand
Dollars ($5,000) and integral multiples thereof up to the
aggregate total of $20,000. The Notes are exchangeable for
an equal aggregate principal amount of Notes of different
authorized denominations, as requested by the Holders
surrendering the same. No service charge will be made for
such registration or transfer or exchange.
2. The Company shall be entitled to withhold from all payments
of principal of, and interest on, this Note any amounts
required to be withheld under the applicable provisions of
the Untied States income tax laws or other applicable laws
at the time of such payments.
3. This Note has been issued subject to investment
representations of the original purchaser hereof and may be
transferred or exchanged only in compliance with the
Securities Act of 1933, as amended (the "Act"). Prior to
due presentment for or transfer of this Note, the Company
and any agent of the Company may treat the person in whose
name this Note is duly registered on the Company's Note
Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes,
whether or not this Note be overdue, and neither the Company
nor any such agent shall be affected by notice to the
contrary.
4. The Holder of this Note is entitled, at its option, at any
time commencing One Year after the Closing Date until
maturity hereof to convert any or all of the principal
amounts of these Notes or any portion of the principal
amount (to include accrued interest) hereof into shares of
Common Stock of the Company ("Shares") with the number of
shares issuable upon such conversion being equal to the
dollar amount converted at a price of $1.00 per share,
subject to adjustment in the event of any stock split,
dividend, combination or similar event). Such conversion
shall be effectuated by surrendering the Notes to be
converted to the Company, with the form of conversion notice
attached to the Note as Exhibit A, executed by the Holder of
the Note evidencing such Holder's intention to convert this
Note, and accompanied, if required by the Company, by proper
assignment hereof in blank. No amount of accrued but unpaid
interest shall be subject to conversion, but interest
accrued or accruing from the date of issuance to the date of
conversion shall be waived by the Holder. No fraction of
Shares or script representing fractions of Shares will be
issued on conversion, but the number of Shares issuable
shall be rounded to the nearest whole Share. The date on
which notice of conversion is given shall be deemed to be
the date on which the Holder has delivered this Note, with
the conversion notice duly executed, to the Company, or if
earlier, the date set forth in such notice of conversion if
the Note is received by the Company within five business
days thereafter.
5. No provision of this Note shall alter or impair the
obligation of the Company, which is absolute and
unconditional, to pay the principal of, and interest on,
this Note at the time, place, and rate, and in the coin or
currency herein prescribed. This Note and all other Notes
now or hereafter issued on similar terms are direct
obligations of the Company. This Note ranks equally with
all other Notes now or hereafter issued under the terms set
forth herein.
6. The Company hereby expressly waives demand and presentment
for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, notice of acceleration or
intent to accelerate, bringing of suit and diligence in
taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment
of all sums owing and to be owing hereon, regardless of and
without any notice, diligence, act or omission as or with
respect to the collection of any amount called for
hereunder.
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by Holder
in colection any amount due under this Note.
8. If one or more of the following described "Events of
Default" shall occur:
(a) The Company shall default in the payment of principal
or interest on this Note; or
(b) Any of the representations or warranties made by the
Company herein, in the documents delivered to the
Holder dated as of June 1, 1999 (the "Subscription
Agreement"), or in any certificate or financial or
other statements heretofore or hereafter furnished by
or on behalf of the Company in connection with the
execution and delivery of this Note or the Subscription
Agreement shall be false or misleading in any material
respect at the time made; or
(c) The Company shall fail to perform or observe any other
covenant, term, provision, condition, agreement or
obligation of the Company under this Note and such
failure shall continue uncured for a period of seven
(7) days after notice from the Holder of such failure;
or
(d) The Company shall (1) become insolvent; (2) admit in
writing its inability to pay its debts as they mature;
(3) make an assignment for the benefit of creditors or
commence proceedings for its dissolution; or (4) apply
for or consent to the appointment of a trustee,
liquidator or receiver for it or for a substantial part
of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed
for the Company or for a substantial part of its
property or business without its consent and shall not
be discharged within thirty (30) days after such
appointment; or
(f) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency
shall assume custody or control of the whole or any
substantial portion of the properties or assets of the
Company and shall not be dismissed within thirty (30)
days thereafter, or
(g) Any money judgment, writ or warrant of attachment, or
similar process in excess of Two Hundred Thousand
Dollars ($200,000) in aggregate shall be entered or
filed against the Company or any of its properties or
other assets and shall remain unvacated, unbonded or
unstayed for a period of fifteen (15) days or in any
event later than five (5) days prior to the date of any
proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors
shall be instituted by or against the Company and, if
instituted against the Company, shall not be dismissed
within thirty (30) days after such institution or the
Company shall by any action or answer approve of,
consent, or acquiesce in any such proceedings or admit
the material allegations of, or default in answering a
petition filed in any such proceeding; or
(i) The Company shall have its Common Stock delisted from
an exchange or over-the-counter market, without being
relisted on a public exchange shortly thereafter.
Then, or at any time thereafter, and in each and every such
case, unless such Event of Default shall have been waived in
writing by the Holder (which waiver shall not be deemed to
be a waiver of any subsequent default) at the option of the
Holder and in the Holder's sole discretion, the Holder may
consider this Note immediately due and payable, without
presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, anything herein or in any
note or other instruments contained to the contrary
notwithstanding, and the Holder may immediately and without
expiration of any period of grace, enforce any and all of
the Holder's rights and remedies provided herein or any
other rights or remedies afforded by law.
9. For so long as any amount payable under this Note remains
unpaid, the Company shall furnish to the Holder the
following information:
(a) On or before the commencement of each fiscal year,
commencing with the fiscal year beginning January 1,
2000, a business plan and budget for the Company for
such fiscal year.
(b) No later than one hundred twenty (120) days following
the end of each fiscal year, beginning with the fiscal
year ending December 31, 1999, consolidated balance
sheets, statements of income and statements of cash
flow and shareholders' equity of the Company and its
subsidiaries, if any, prepared in accordance with
generally accepted accounting principles ("GAAP"), and
audited by a firm of independent public accountants.
(c) Within forty-five (45) days after the end of each
quarter (except the fourth quarter) of each fiscal
year, consolidated balance sheets, statements of income
and statements of cash flow and shareholders' equity of
the Company and its subsidiaries, if any, including a
summary discussion of major variances, if any, between
such quarterly statement and the budget.
10. The Company covenants and agrees that until all amounts due
under this Note have been paid in full, by conversion or
otherwise, [and for so long as Holder holds shares of Common
Stock issued upon conversion of this Note] unless the Holder
waives compliance in writing, the Company shall:
(a) Give prompt written notice to the Holder of any Event
of Default as defined in this Note or of any other
matter which has resulted in, or could reasonably be
expected to result in, a materially adverse change in
its financial condition or operations.
(b) Give prompt notice to the Holder of any claim, action
or proceeding which, in the event of any unfavorable
outcome, would or could reasonably be expected to have
a material adverse effect on the financial condition of
the Company.
(c) At all times reserve and keep available out of its
authorized but unissued stock, for the purpose of
effecting the conversion of this Note such number of
its duly authorized shares of Common Stock as shall
from time to time be sufficient to effect the
conversion of the outstanding principal balance of this
Note into shares of Common Stock.
(d) Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or
mutilation of this Note and:
(i) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it, or
(ii) in the case of mutilation, upon surrender and
cancellation of this Note,
the Company at its expense will execute and deliver a
new Note, dated the date of the lost, stolen, destroyed
or mutilated Note.
11. The Holder of this Note, by acceptance hereof, agrees that
this Note is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this
Note or the Shares of Common Stock issuable upon exercise
thereof except under circumstances which will not result in
a violation of the Act or any applicable state Blue Sky laws
or similar laws relating to the sale of securities.
12. In case any provision of this Note is held by a court of
competent jurisdiction to be excessive in scope or otherwise
invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable
to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Note will
not in any way be affected or impaired thereby.
13. This Note constitutes the full and entire understanding and
agreement between the Company and the Holder with respect to
the subject hereof. Neither this Note nor any term hereof
may be amended, waived, discharged or terminated other than
by a written instrument signed by the Company and the
Holder.
14. This Note shall be governed by and construed in accordance
with the laws of the State of Nevada.
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed by an officer thereunto duly authorized.
Dated: July 15, 1999
MIRACOM CORPORATION
By: /s/ Jimmy Sung
Jimmy Sung, President
Terms accepted re: common stock conversion rights and payment of
outstanding investment banking fees due to date.
/s/ James Morse
James Morse/Morse Financial, Inc.
July 15, 1999
