U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
General Form for Registration of Securities of Small Business Issuers
Under Section 12(b) or 12(g) of the Securities Act of 1934.
VOICE MOBILITY INTERNATIONAL, INC.
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(Name of Small Business Issuer in its Charter)
NEVADA 33-0777819
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(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
701-543 Granville Street, Vancouver, British Columbia, Canada V6C 1X8
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(Address of Principal Executive Offices) (Zip Code)
(604) 482-0000
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(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
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Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 Par Value
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(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Section and elsewhere in this
Registration Statement regarding matters that are not historical facts are
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995). Because such forward-looking statements include
risks and uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements. All statements which
address operating performance, events or developments that our management
expects or anticipates to incur in the future, including statements relating to
sales and earnings growth or statements expressing general optimism about future
operating results, are forward-looking statements. The forward-looking
statements are based on our management's current views and assumptions regarding
future events and operating performance. Many factors could cause actual results
to differ materially from estimates contained in our management's
forward-looking statements. The differences may be caused by a variety of
factors, including but not limited to adverse economic conditions, competitive
pressures, inadequate capital, unexpected costs, lower revenues, net income and
forecasts, the possibility of fluctuation and volatility of our operating
results and financial condition, inability to carry out marketing and sales
plans and loss of key executives, among other things.
Summary
We are the parent of Voice Mobility Inc. based in Vancouver and Victoria,
British Columbia, Canada. The predecessor of Voice Mobility, Inc. was
incorporated in 1993. Voice Mobility Inc.'s business concept was to develop and
market voice mailbox servers to voice service providers. The voice service
providers would then sell individual voice mailboxes to their customers.
In February, 1994, Voice Mobility, Inc., in conjunction with British
Columbia Telephone, installed the first Centrex ISDN line in British Columbia.
In July, 1994, it sold its first unified messaging system.
In May, 1998, Voice Mobility Inc. divested itself of its service portfolio
in order to focus on software development and the marketing of its message
management product. This decision has resulted in two full releases of the
software in 1998, one release in July, 1999 and one scheduled for the last
quarter of 1999. Over 95% of the Voice Mobility, Inc.'s latest software release
was developed internally.
We acquired Voice Mobility, Inc. on June 24, 1999. ("We" and "our" will
apply to Voice Mobility International, Inc., as a holding company, or Voice
Mobility Inc., our operating subsidiary, as appropriate.)
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We are engaged in the area of the telecommunications market known as
"unified messaging." We are concentrating our marketing of our unified messaging
platform, trademarked "e-go(tm)" to "Tier II" service providers that, in our
management's opinion, are the most aggressive of the local access providers.
Tier II service providers include Internet service providers (known as "ISPs",
competitive local exchange carriers (known as "CLECs"), cable operators and
smaller incumbent local exchange carriers.
Our Product
The e-go product family is a state-of-the-art resilient message management
platform which has been produced to meet the evolving requirements of telephone
carriers and their customers. e-go facilitates the creation of a single personal
digital mailbox that can receive any type of communication regardless of its
incoming format or medium. Our voice and paging messaging products are based on
our management's perception that, presently, many different types of end users
and consumers must visit many communication locations in order to retrieve
information or messages destined for them. We believe that many of these end
users would subscribe to a service which simplifies the information retrieval
process. To meet this perceived need, we have developed the "Enhanced Services
Platform" as virtual post offices, each containing "cyber" mailboxes for
thousands of people. Each user "rents" a seven-digit virtual mailbox that can
receive, forward and contextualize stored information. e-go gives users easy
access to information and the ability to retrieve it through a variety of means.
For mobile workers, constant access to voice-mail and faxes over a network
has profound ramifications. Wireless providers offering unified messaging as a
value-added service could gain a huge benefit in the increase in per-minute
usage for airtime generated by the placing and receiving of phone calls and for
Internet access to downloaded e-mail, voice-mail, and fax correspondence.
Unified messaging ensures that messages are never lost. It creates a web-based
reservoir of all incoming messages. Inbound cellular phone calls often do not
reach their recipients because the recipient's phone is off, the recipient is
out of range of the carrier's antennae, the volume of traffic is too high or for
other reasons. Increased messaging reliability is essential for business users
who generate or receive messages. Because service providers generate chargeable
airtime and create brand loyalty only when calls are completed, improved
reliability enhances the provider's income stream and competitive position.
Subscribers can call a universal number and have all of their messages
"played" back to them, in spoken words, if required. The e-go platform, with its
inter-working software modules, converts all incoming messages to electronic
records that can be spoken to the user over a telephone or accessed as e-mail.
Due to threads between the different software modules, a fax can be played and
forwarded as voice mail; e-mail likewise can be played and forwarded as voice
mail. Fax and e-mail messages can also be directed to a secondary fax machine or
a temporary fax machine such as one in a client's office or in a hotel. A number
of companies such as Nokia Corporation are developing hand-held devices which
can access e-mail. e-go is a suitable medium for such devices.
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An e-go user can connect securely to a web site and, at a glance, view the
following:
o number of voice mail messages
o telephone numbers of those persons who have left voice mail messages
o time at which each message was left
o number of fax messages
o number of pages of each fax
o number of e-mail messages sent to any of the user's e-mail addresses
o origin of each e-mail message
o subject of each e-mail message
We have designed e-go to function on industry standard hardware such as
Intel processor-based servers. In addition, e-go uses peripheral hardware, such
as communication boards, based upon open system architectures, which support
basic standards. Thus, we have assured compatibility with legacy equipment and
adjunct hardware that may be designed to work in conjunction with the e-go
system.
Each of the independent software modules is described below:
e-go contact:
e-go contact is our full service unified communications solution, combining
all the features of e-go message, described below, with the convenience of one -
phone number service. With e-go contact, subscribers can merge all their wired
and wireless communications, cellular telephone, pager, fax, home and office
numbers, into a single phone number. e-go contact subscribers receive a single
e-contact phone number for voice, faxing and paging. Those upgrading from e-go
fax or e-go message service use their e-go fax number as their e-go contact
number. Callers dial one number; and the system "hunts" for them at the
subscriber's various telephone numbers. Subscribers retain complete control as
they preset the calling sequence of the various contact numbers and schedule
times of day when calls are directed to a specific number. Subscribers can
filter calls so that only specific calls (such as calls from specific phone
numbers) get through. This process creates fewer interruptions, while ensuring
that specific or urgent calls are never missed.
e-go message:
e-go message provides a single "unified e-mailbox" which enables a
subscriber to check for voice messages, faxes and e-mail. Through the use of
e-go message, subscribers no longer need to access faxes at the fax machine, or
listen on the phone to consecutive voice messages. A mouse-click starts, stops
or deletes a voice message, pops up a fax or displays an e-mail. The mailbox
stores a complete record of all messages; and these messages can be retained or
forwarded just as any other e-mail. Traveling subscribers can use their e-mail
program or their e-go Web page to send and receive messages anywhere in the
world, with complete confidentiality and without incurring long distance
charges. e-go message subscribers keep their phone numbers but forward their
messages to their unified mailbox. They receive an e-go fax number, which they
also use to call e-go and retrieve their voice messages, faxes, and e-mail.
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e-go fax:
e-go fax is a private, secure fax-to-e-mail service. The e-go fax converts
faxes to e-mail attachments that subscribers can view on-screen, print, save, or
forward. Confidential faxes remain confidential, instead of sitting in a common
"in-box" for anyone to see. The subscriber has no need for fax machines or
dedicated fax lines, as faxes are as easy to manage as regular e-mail. e-go fax
subscribers receive an e-go fax number. Faxes sent to the e-go fax number are
converted into e-mail attachments that can be viewed, saved, printed, forwarded,
or sent to a local fax machine for printing. Finally, subscribers can receive
fax notification via pager.
Features of e-go
o Greeting. Subscribers can change their customized greetings at any time by
dialing their numbers, entering personal identification numbers and
following instructions.
o Fax. Users receive a dedicated e-fax phone number. Faxes can be forwarded
to a fax machine for printing or converted to graphic files and attached to
e-mail, accessible either through subscribers' e-mail or e-go Web page. In
addition, subscribers can dial in and listen to faxes via text-to-speech
technology.
o Voice. Voice messages can be heard by telephone in the usual way. In
addition, voice messages are converted to sound files and attached to
e-mail, accessible through subscribers' e-mail or e-go Web page.
o Internet/Web. Web access to all e-messages eliminates long-distance
charges. Web pages can be customized by the subscriber or ISP for branding,
advertising, promotions and revenue generation. Web-based "inbox" displays
a summary of waiting messages. Subscribers can forward or delete all
e-messages or save to electronic folders in their computer's hard drive.
Subscribers who find themselves without computer or Internet access can
employ the telephone, which through the use of innovative text-to-speech
technology can "read" e-mail messages over the phone.
o Pager Notification. As the e-go software can also communicate using
standard paging protocols, subscribers with a pager equipped with
alphanumeric capability can be advised upon the arrival of an e-mail, fax
or a voice mail. In addition, users can be informed not only of the number
of the faxing or calling party. but also the subject line of any incoming
e-mail. Further enhancements to this software, which are under development,
will allow for the header of a fax to be sent to the pager as well as the
name of the calling party from a voice mail.
Management's Market Analysis
According to OVUM, a market research firm, worldwide telecommunications
service revenues are projected to grow to well over $1.1 trillion by the end of
the century. (Throughout this registration statement, we refer to United States
dollars as "$" and to Canadian dollars as "Cdn$.") Our management believes that
voice processing services such as those provided by our products should become
an increasingly important element of this revenue growth. Voice processing is
already widely available in North American fixed-line services and is being
deployed worldwide in most mobile networks. In addition, fixed-line networks in
Europe and emerging markets are starting to deploy these services. Likewise, the
number of unified messaging mailboxes is predicted to grow from around 200,000
worldwide at the end of 1997 to more than 110 million by 2003. Worldwide product
revenue should increase rapidly from a negligible market to 9 billion in 2003.
Driving this expanding market is a change in professional culture. More members
of the business community is working in remote locations including homes, hotel
rooms and airports. Having one source for accessing information is critical to
increasing productivity and remaining competitive.
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Overall, the messaging market has been growing rapidly:
o Voice messaging markets are growing at 18% to 21% per year, in contrast to
the growth of the personal computer market which is estimated at
approximately 4% per year.
o The fax machine market is maintaining a growth rate of approximately 14%
per year.
o The number of e-mail users has been estimated to reach 200 million by 2000.
As global commerce and communications continue to evolve, the Internet is
beginning to be viewed more as a utility than a toy. This growing credibility
has placed upon the Internet builders and ISPs the responsibility to ensure the
Internet can be utilized with same ease as the global telephone network. E-mail
has become a pillar tool in the Internet with burgeoning uses in e-commerce,
research, and corporate and public communications. As e-mail props up the growth
of the Internet, our management believes that those connected will require
e-mail to provide a single communications interface carrying the electronic
equivalent of a postcard as well as faxes and voice mail. Thus, we believe that
Internet users will demand a single or "universal" inbox to introduce simplicity
to messages and to redirect calls from office to home or from home to mobile.
This functionality would be a huge step forward in easing complexity and
improving the power of the Internet.
We intend to continue to differentiate ourselves from other integrated
communication software developers and vendors on the basis of speed of
innovation and development as well as price/performance and ease of use. Unified
messaging, because it is among the first introductions of the "One Number"
concept is, we believe, an excellent place to start in the development of new
carrier software tools and applications. Our current research and development
initiatives are centered on the belief that there will exist a broad mix of
carriers and ISPs involved in communications service in the next few years.
Marketing Strategy
We are focusing our sales and development effort on building and selling
products to the Tier II telephone carriers and ISPs experiencing the greatest
level of growth. Our marketing strategy is focused on completely understanding
the needs of the mid-size ISPs in the following market segments:
o Internet Service Providers
o Competitive Local Exchange Providers
o Network Service Providers
o Application Service Providers
o Content Providers (Local, Regional and National Portals)
o Cable Companies
o Wireless Providers
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Data CLECs
Data CLECs, known as "DCLECs," base their business on the efficient
delivery of data services. Some DCLECs are regional, others are wider in
coverage, but most are focused on building high-speed data capacity and on
selling bandwidth to wholesale and/or retail customers. Many DCLECs have
developed divisions that sell Internet access, retail and wholesale, through
large modem pools. These modem pools are distributed as portals around their
network, serving multiple area codes or regions. For DCLECs, there is a rich
opportunity in offering Internet based technology. Internet based messaging to
current customers. Their primary corporate customers are already purchasing
high-speed data connections from them, and have already demonstrated a need for
a communications infrastructure. Thus, DCLECs are in a unique position to offer
combined services.
New exciting technologies, known as digital subscriber loops or more
commonly as "DSLs", are designed to transmit more information and very high
speed connections through the copper wire that connects most of the households
in North America. DSL is growing quite rapidly in the CLEC market. These
technologies have created an opportunity to allow for voice and fax
communications over the same lines to the advantage of the entire unified
messaging market. A DSL user would likely be quite motivated by the opportunity
to combine all of his required services onto one medium.
Voice CLECs
Voice CLECs have generated business by providing competitive choices to
business and residential users for the provisioning of local telephone lines. In
some cases, several voice CLECs have augmented low margin local business by
entering the long-distance business. Unified messaging offers the voice-based
CLEC the opportunity to offer alternatives to the local phone company, both for
provisioning the simple phone line and for enhanced service offerings.
In order to stave off competitive threats, many of the voice centered CLECs
are engaging in simple Internet service offerings for their customers. Unified
messaging offers such an opportunity. The process of connecting one type of
network to another is known as convergence. Typically this phrase is used to
describe the connection of the Internet to the voice network and
ability of both to carry information typically carried by the other. Convergent
technology connects to both the telephone network and the newer Internet network
to allow for unique and cost effective service offerings. This "bridging"
technology joins characteristics from one medium into the other.
Voice CLECs, principally based in the world of telephony, can add
substantial value to their clients by allowing for voice access to data, such as
voice mail that has originated on the Internet.
Wireless Providers
As competition continues to increase in the wireless market, wireless
providers are seeking innovative ways to increase profitability. Subscriber
turnover is one of the major factors in profitability. Subscribers often "churn"
so quickly that customer acquisition costs have not been recovered. In some
cases, it can take more than eighteen months for costs of acquiring a
subscriber's business to be recouped, and up to three years before a
subscriber's revenue provides an adequate return. Investing in customer loyalty
and network innovation are the most common defenses against churning. Although
each circumstance is unique, improving customer loyalty by as little as 5% has
been shown to improve overall profitability by almost 100%. In addition, all
subscribers are not equally profitable. As in many service businesses, a small
percentage of users accounts for the majority of revenues.
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Internet Service Providers
This market segment has recently been undergoing both consolidation and
re-engineering. With the increased competition for dial-up access, there is a
need for the major providers in this market to look for alternative ways to
increase business and to retain the current customer base.
With increasing consumer options for Internet access, many ISPs have begun
to focus on vertical marketing with specialization in certain marketplaces.
Other ISPs have begun to move in the direction of transmission of voice services
by partnering with a CLEC or, in many cases, applying for CLEC status
themselves.
International Markets
International markets should offer particularly strong opportunities.
Advanced international markets are being fueled by rapid deregulation, the rise
of the Internet and competition. Emerging markets are being fueled by the very
basic need for high performance low cost telecommunication infrastructure. In
these developing markets, ongoing problems exist in delivering high capacity
phone or data services to the population. The problem is only now beginning to
be addressed.
We perceive a specific opportunity in jurisdictions where local telephone
access is measured and billed at a per-minute usage rate. ISPs within these
jurisdictions have begun to move toward providing free Internet service to their
subscribers preferring to gain revenue by taking a percentage of the telephone
usage charges. Thus, an ISP which is able to decrease the number of calls a
subscriber must make to access all of the incoming messages (i.e. voice-mail and
fax mail delivered by e-mail) will likely win a greater local market share.
In the interim, we have a particular opportunity as our e-go system can be
used in conjunction with a wireless data service to deliver voice mail and fax
services to users beyond the reach of common carrier voice services. While a
particular user may not have a phone connection, he may have a wireless Internet
connection. e-go can be used to provide a working phone number with voice mail
and fax services to this user despite the fact that the telephone carrier
cannot.
Competition
Segmentation of the unified messaging market has begun to take place. The
market has become divided into two main camps: service provider platforms and
enterprise platforms.
Service Provider Platforms: A service provider platform is built to meet
the high capacity and high resiliency needs of the carrier environment.
Typically, carrier grade systems will have fault tolerant fail-over capability
and be able easily to handle many thousands of subscribers. In addition, a fully
featured billing engine is often designed directly into a carrier grade product.
Enterprise Platforms: An enterprise platform is built to be affixed to a
PBX system already in place and is typically functions not with carrier grade
facilities but facilities more commonly found connecting to office systems.
Capacity is typically under 500 users.
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Vendors developing solutions for enterprise platforms are not considered by
management to be competitors. Only those participating in developing product for
ISPs are considered by management to be competition. In addition, the
marketplace contains many companies which are themselves providers of service
rather than developers of software solutions that are sold to providers.
Most of our competitors which offer integrated messaging solutions sell
their products at significantly higher prices and, thus, appear to target larger
communications companies than those we have selected. Such competitors include
Centigram Communications, Amteva Technologies, Inc., Call Sciences, Inc.,
Pulsepoint Communications, Inc. and Wildfire Communications, Inc. Centigram
markets only to major telephone companies. A subsidiary of Cisco Systems, Inc.
Amteva's services include Internet fax mail, single number reach, voice
messaging and electronic messaging. Amteva has established a testing and
implementation center that its customers can use as a staging ground while
developing in-house systems. We do not have such an implementation center.
Pulsepoint was acquired recently by Unisys Corp. It is difficult to speculate
how Unisys will orient Pulsepoint. Wildfire's marketing strategy has been to
introduce the unified messaging services in easy-to-consume bites under the
theory that once a subscriber is hooked on entry level features, he can upgrade
to more advanced features. We offer a package of features and believe that our
target market is dissimilar from that of Wildfire. Wildfire, as an example, has
elected to focus development and marketing efforts on a speech enabled
interface. However, it has not developed some of the features that we, after
extensive testing using focus groups, believe are needed by users.
Unique competitors that straddle the marketplace, in that they both develop
software and sell solutions to retail customers, also exist. Jfax.com, Inc. is
an example of a company which offers a fax and unified messaging service to
consumers while, at the same time, attempting to develop products to be sold to
ISPs and telecommunications companies. In the opinion our management, many of
the potential customers of Jfax and other such companies will view them as
competitors of their on the retail level.
Our management views Call Sciences as the competitor with the closest
strategic direction and product offerings directed at the Tier II providers. We
are successfully competing with Call Sciences due to our unique commercial
licensing program and through a successful international channel strategy.
In addition, through strategic alliances, we have the ability to offer
carrier to carrier consulting and training not only in the launching of a
unified messaging offering but also in its marketing.
Pricing Strategy
Our ongoing objective is to establish alliances with our component vendors
and, during the development and marketing of the initial e-go systems, we
invested significant effort to ensure that our vendors understood our long-term
goals. As a result, we created an environment in which excellent price points
for our system have been set. We have been able to achieve very high levels of
functionality and performance from our Microsoft NT-based servers, giving us a
wide price advantage compared to the competing systems which are Unix based.
Our management has developed a very unique, annuity based pricing strategy
that is likely to produce excellent result in the short term as unified
messaging starts to have an impact on broader consumer markets.
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The notion driving this pricing model enables us to clearly remove all
significant barriers to entry for service providers of any size. Many
opportunities exist for ISPs to re-label a wholesale product and generate
revenue accordingly but, given the entrepreneurial characteristics of most
service providers, they would all prefer to provide the offering themselves as a
single element in a overall integrated market strategy.
Typical Commercial Licencing contracts are signed for a two year term and
include volume price breaks. All software and support is included in the cost
per user license. In all cases, the provider is expected to purchase the
relevant hardware to launch the offering.
Risk Factors
In order to take advantage of the safe harbor provisions for
forward-looking statements adopted by the Private Securities Litigation Reform
Act of 1995, we are identifying important risks and uncertainties that could
affect our operating results and financial condition and could cause our actual
results to differ materially from our historical results,
Uncertainty of Additional Capital
We will need to raise additional capital either through the sale of our
securities or debt securities in private or public financing or through
strategic partnerships, in order fully to market and upgrade our products. We
cannot offer assurance that funds will be raised when we require them or that we
can raise funds on suitable terms. We can offer no assurance that holders of our
warrants will exercise them.
Dependence on Key Personnel
We are highly dependent on key members of our management, sales and
marketing and engineering team. The loss of the services of one or more of our
team may adversely affect our ability to achieve our business plan. Recruiting
and retaining qualified technical personnel to carry out research and
development and technical support will be critical to our future success.
Although our management believes that we will continue to be successful in
attracting and retaining skilled personnel, we can offer no assurance that we
can accomplish this objective on acceptable terms.
Early-Stage Company
We are at an early stage of entering the commercial marketplace. As a
result, we can provide only limited financial information upon which a
prospective investor could make an evaluation to purchase or sell our
securities. Our future operating results are subject to a number of risks,
including our abilities to implement our strategic plan, to attract qualified
personnel and to raise sufficient financing as required. Our management's
inability to guide growth effectively (including implementing appropriate
systems, procedures and controls) could have an adverse effect on our financial
condition and operating results. (See "Item 7. Certain Relationships and Related
Transactions.") .
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Technological Change
The telecommunications industry is characterized by rapidly changing
technology and evolving industry standards. Our success will depend heavily on
our continuing ability to develop and introduce enhancements to our existing
systems and new products that meet changing markets. We cannot provide assurance
that our technology or systems will not become obsolete due to the introduction
of alternative technologies. If we cannot continue to successfully innovate, our
business and operating results could be adversely affected.
Management of Rapid Growth and Limited Operating Experience
We anticipated that the management of rapid growth will be a key challenge.
Failure to effectively meet this challenge could have a material adverse effect
on our operating results. Successful commercialization of the e-go technology
will require management of a number of operational activities in which we have
little experience. There is no assurance that, in the event our business grows
rapidly, that we will be able to manage such growth successfully.
No Patent Protection
We do not have and do not intend to apply for patents on our products.
Management believes that the patent application process in many countries in
which we intend to sell products would be time - consuming and expensive. In
addition, patents would have the effect of publicizing the source code or other
proprietary aspects of our products. Finally, we intend continually to improve
and upgrade our products. As a consequence, any patent protection may be out of
date by the time the patent is granted.
Dependence on Suppliers
Although we perform almost all of our software development in-house, we
subcontract all of the equipment, which constitutes a significant part of our
e-go product line. We do not have written supply agreements with any suppliers.
Although we believe that alternative sources of supply will always be available
and that the suppliers we have chosen have sufficient capacity to meet any
increase in demand resulting from our projected expansion, a disruption in
supply or degradation in quality could have an adverse impact on our business
and financial results, particularly at a time when we are attempting to build
brand identity and customer loyalty. In addition, an increase in prices from our
suppliers could also have an adverse impact on our business and financial
results.
Unforeseeable Events and Conditions
Unforeseeable events and conditions, many of which are outside our control,
can impact its business. There can be no assurance that our operations will not
be adversely affected by unforeseeable future events.
Government Regulation
Our business is subject to various federal, state and local government
regulations. While we do not expect to experience an inability to obtain or
maintain any necessary governmental licenses, permits or approvals, our failure
to acquire or maintain licenses could have a materially adverse effect on our
operating results.
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Minimal Trading History of Common Stock - Possible Stock Price Volatility
Our common stock has been traded on a limited basis. The market price of
our common stock could fluctuate substantially due to a variety of factors,
including market perception of our ability to achieve our planned growth,
quarterly operating results of other telephony companies, the trading volume in
our common stock, changes in general conditions in the economy, the financial
markets or other developments affecting us or our competitors. In addition, the
stock market is subject to extreme price and volume fluctuations. This
volatility has had a significant effect on the market prices of securities
issued by many companies for reasons unrelated to their operating performance.
Limitation on Officers' and Directors' Liabilities Under Nevada Law.
Our certificate of incorporation and our by-laws provide that we shall
indemnify any officer or director, or any former officer or director, to the
full extent permitted by law. In general, the Nevada Business Corporation Act
permits indemnification of officers and directors in those instances where the
officer or director acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful.
Effect of Anti-Takeover Provisions.
Our authorized capital consists of 50,000,000 shares of common stock and
1,000,000 shares of preferred stock. Our board of directors, without any action
by shareholders, is authorized to designate and issue shares of preferred stock
in such classes or series as it deems appropriate and to establish the rights,
preferences and privileges of such shares, including dividends, liquidation and
voting rights. The rights of holders of shares of preferred stock that may be
issued may be superior to the rights granted to the holders of the existing
shares of our common stock. Further, the ability of our board of directors to
designate and issue such undesignated shares could impede or deter an
unsolicited tender offer or takeover proposal and the issuance of additional
shares having preferential rights could adversely affect the voting power and
other rights of holders of our common stock.
Penny Stock Regulation
Broker-dealer practices in connection with transactions in "penny stocks"
are regulated by certain penny stock 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 Nasdaq provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system) or to other than established customers or accredited
investors. [In general, "accredited investors" are defined as institutions with
assets in excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 with their spouses.]
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 risks
in the penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in connection with the transaction, and
monthly account statements showing the market value of each penny stock held in
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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
special 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. If our securities become subject to the penny stock rules,
investors may find it more difficult to sell their securities.
Year 2000 Issues
We have developed all of the e-go software internally and have ensured that
all date fields are compatible to the year 2000. However, certain sub-components
may not have been properly engineered to ensure date compatibility. Steps have
been taken to confirm sub-component compatibility, but this area still remains
one of moderate risk.
Significant Customers
In early 1998, Maritime Tel & Tel Limited, ("MTT") based in Halifax, Nova
Scotia, one of Canada's largest telephone companies, contracted with Voice
Mobility to deploy a province - wide technical and marketing trial of products
developed by Voice Mobility. MTT conducted extensive testing not only for
technical performance but also for customer preferences and requirements. MTT's
feedback enabled Voice Mobility to refine its products to improve function and
usability.
In January, 1999, both companies agreed to continue and expand the trials
to test more software and to conduct extensive user trials in an effort to
determine buyer behavior. This aspect of the trials was particularly useful as
the unified messaging market was embryonic and absent of tangible consumer
derived data. MTT agreed to continue the trials and Voice Mobility agreed to
help reimburse MTT some of its expenses. It was later agreed we would exchange
1,428,571 shares of our common stock for the reimbursable amount of Cdn$500,000.
MTT will also appoint a person from MTT to become a member of the board of
directors. An agreement embodying these terms entered into on September 16,
1999.
One of our first opportunities to work together was in the preparation of a
joint proposal to Cable and Wireless Bartel located in Barbados. Bartel has
agreed to purchase and deploy e-go version 4 in its business and consumer
marets. We will provide jointly with MTT training, implementation, planning and
marketing training and support.
Licenses, Patents and Trademarks
- --------------------------------
We use component software form the following vendors:
Microsoft Corporation
Allaire Corporation
SendMail Inc.
12
<PAGE>
Where applicable, Voice Mobility has joined the developer programs of each
of the companies and will seek any opportunity to leverage partner programs or
developer relationship where possible. While we have written all of our software
to utilize component software from these developers, we have had extensive
experience with competitive offerings. Although the loss of one of these key
software vendors would represent some delay, our management does not consider
that a prolonged delay would result.
We have applied for trademark registrations in Canada for the e-go
tradename in conjunction with a stylized e-go mark inside a green circle. As of
June, 1999, Voice Mobility has been granted the trademark of both the name and
the visual of e-go in Canada. Further applications are pending for the United
States and Europe.
Employees.
- ----------
As of August 31, 1999, we employed 31 people, 5 of whom are engaged in
marketing and sales, 17 in research and development, and 9 in management and
administration. Our employees are not represented by a collective bargaining
unit. We consider relations with our employees to be good.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS.
----------------------
The following discussion should be read in conjunction with Consolidated
Financial Statements and related notes.
Voice Mobility International, Inc. is a Vancouver-based unified messaging
company focused on emergent technologies for telecommunications providers. We
market our lead product, e-go, both to telephone companies and Internet service
providers. e-go allows subscribers to use a single electronic mailbox to store
and retrieve voicemail, faxes, and e-mail from many types of devices, including
wireline and wireless phones, e-mail or Web browsers.
Results of Operations for the six months ended June 30, 1999 and June 30,
1998
Revenue - Revenue was $83,262 and $64,400 for the six months ended June 30,
1999 and 1998. The increase in revenue was primarily due our management's
decision in December 1997 to divest the entire service portfolio and the sale of
centrex lines, choosing instead to focus efforts on software development and
marketing unified messaging systems. The increase in revenue was also partially
attributable to higher software license sales.
Cost of Revenue - Cost of revenue is primarily comprised of software
licenses, telephony hardware, data and voice transmission costs, and
installation costs. Cost of revenue was $27,727 or 33% of revenue and $42,705 or
66% of revenue for the six months ended June 30, 1999 and 1998. The decrease in
cost of revenue reflects management's decision to divest the entire service
portfolio and the sale of centrex lines. We anticipate that our data and voice
transmission costs will decrease as a result of the divestiture. In contrast, we
anticipate that our software licenses, telephony hardware, and installation
costs, and related operating costs to grow in for the foreseeable future. Cost
of revenue as a percentage of revenue decreased as a result of the increases in
revenue over the same period last year.
13
<PAGE>
Operating Expenses
Sales & Marketing - Our sales and marketing costs consist primarily of
sales and marketing personnel, advertising, promotions, public relations, trade
shows and business development. Sales and marketing expenses were $1,165,542 or
1400% of revenue and $23,318 or 36% of revenue for the six months ended June 30,
1999 and June 30, 1998. The increase of $1,142,224 in sales and marketing
expense between the two periods primarily reflects employee stock option
compensation cost of $908,750 that was determined using the intrinsic method in
accordance with APB25. The additional increase of $233,474 in sales and
marketing expense between the two periods are a result of an increase in sales
and marketing personnel, promotions, and participation in industry trade shows.
The increase also reflects business development efforts that have resulted in a
key strategic relationship with MTT, the primary telecommunications common
carrier in the Canadian Province of Nova Scotia. Sales and marketing as a
percentage of revenue increased as a result of increases in related expenses
over the same period last year. We anticipate that our sales and marketing costs
will increase significantly in the foreseeable future as we continue to develop
and implement our marketing strategy and hire additional sales and marketing
personnel.
Research and Development - Our research and development costs consist
primarily of personnel, data and voice transmission, and the lease of office
space. Research and development costs were $1,555,984 or 1869% of revenue and
$64,411 or 100% of revenue for the six months ended June 30, 1999 and June 30,
1998. The increase of $ $1,491,573 in research and development costs from 1998
to 1999 primarily reflects an employee stock option compensation cost of
$1,268,600 that was determined using the intrinsic method in accordance with
APB25. The additional increase of $222,973 in research and development costs
between the two periods are a result of increases in personnel and leased office
space. Research and development as a percentage of revenue increased as a result
of increases in related expenses over the same period last year. We believe that
research and development is a cornerstone of our business and significant
investments are required to enhance our products as well as develop new products
in order to remain competitive. We anticipate that our research and development
costs will continue to increase in the foreseeable future.
General and Administrative - Our general and administrative costs consist
primarily of personnel costs, professional and legal costs, consulting fees,
travel, and the lease of office space. General and administrative costs were
$1,571,753 or 1888% and $156,522 or 243% for the six months ended June 30, 1999
and June 30, 1998. The increase of $ 1,415,231 primarily reflects an employee
stock option compensation cost of $1,283,188 that was determined using the
intrinsic method in accordance with APB25. The additional increase of $132,043
in general and administrative costs between the two periods are a result of
recruitment of personnel which resulted in an increase of $53,850 from 1998 to
1999, as well as an increase of $31,248 in consulting fees over the same period
last year. General and administrative costs as a percentage of revenue increased
between the two years as a result of increases in expenses over the same
periods. We anticipate that general and administrative costs will continue to
grow in the foreseeable future as we implement our market growth strategies.
14
<PAGE>
Interest Expense (Income), Net - Our interest expense is primarily related
to short-term debt. Interest expense (income), net was $37,800 or 45% of revenue
and $13,935 or 22% of revenue for the six months ended June 30, 1999 and June
30, 1998. We anticipate our interest expense to decrease in the foreseeable
future as the we agreed to debt settlement agreements with three major
creditors. Short-term debt of $250,000 and $33,000 due to shareholders was
settled for in exchange for 750,000 common stock and 101,000 warrants
respectively. The loans were advanced to the us over time beginning in 1995. In
addition, $167,000 of long-term debt was settled in exchange for 500,000
warrants.
Loss on sale of assets and settlement of liabilities - We, (as Equity
Capital Group, Inc.) incurred a loss of $11,965 or 14% of revenues in the six
months ending June 30, 1999. The transaction involved the sale of our assets and
liabilities to Pioneer Growth Corporation. We received common stock of Pioneer
Growth Corporation in consideration which we distributed ratably as a dividend
to our stockholders.
Income Taxes - As of December 31, 1997 the Company had non-capital losses
of $318,965 carried forward and available to offset income in the future. Such
net operating loss carryforwards will begin expiring in the year 2004. For
reconciliation to U.S. GAAP purposes, a valuation allowance was recognized for
the year ending December 31, 1998 to offset deferred tax assets arising from
temporary differences, tax credits and non-capital loss carryforwards, for which
realization is uncertain. The amounts of and benefits from the net operating
loss carryforwards of the former Equity Capital Group, Inc. have not been
included as the net operating loss carryforwards may be impaired or limited
following changes in the ownership of the common stock.
Years Ended December 31, 1998 and 1997
VOICE MOBILITY INC.
Condensed Statements of Operations
For the years ending December 31, 1998 and December 31, 1997
(Expressed in U.S. Dollars)
1998 1997 1998 1997
$ $ % %
- --------------------------------------------------------------------------------
REVENUE
Sales 119,248 519,687 100% 100%
Less: cost of sales (75,439) (260,274) (63) (50)
- --------------------------------------------------------------------------------
43,809 259,413 37 50
- --------------------------------------------------------------------------------
EXPENSES
Sales and marketing 189,691 59,797 159 12
Research and development 283,918 66,126 238 13
General and administrative 460,911 236,158 387 45
- --------------------------------------------------------------------------------
934,520 362,081 784 70
- --------------------------------------------------------------------------------
Loss before other expenses (890,711) (102,668) (747) (20)
Other expenses
Loss on sale of marketable
securities - (39,098) 0 (8) 0
Interest expense (39,887) (26,973) (33) (5)
- --------------------------------------------------------------------------------
(39,887) (66,071) (33) (13)
- --------------------------------------------------------------------------------
Loss for the year (930,598) (168,739) (780%) (32%)
- --------------------------------------------------------------------------------
Loss per share (0.11) (0.13)
- --------------------------------------------------------------------------------
15
<PAGE>
Results of Operations for the Year ended December 31, 1998 and December,
31, 1997
Revenue - Revenue was $119,248 and $519,687 for the years ended December
31, 1998 and 1997. The decrease of $400,439 in revenue was primarily due to
management's decision in December 1997 to divest the entire service portfolio
and the sale of centrex lines.
Cost of Revenue - Cost of revenue is primarily comprised of software
licenses, telephony hardware, data and voice transmission costs, and
installation costs. Cost of revenue was $75,439 or 63% of revenue and $260,273
or 50% of revenue for the years ended December 31, 1998 and 1997. The decrease
of $184,835 in cost of revenue reflects management's decision to divest the
entire service portfolio and the sale of centrex lines, choosing instead to
focus efforts on software development and marketing unified messaging systems.
We anticipate that our data and voice transmission costs will decrease as a
result of the divestiture. In contrast, we anticipate that our software
licenses, telephony hardware, and installation costs, and related operating
costs to increase in the foreseeable future. Cost of revenue as a percentage of
revenue increased as a result of the decreases in revenue over the same period.
Operating Expenses
Sales & Marketing - Our sales and marketing costs consist primarily of
sales and marketing personnel, advertising, promotions, public relations, trade
shows and business development. Sales and marketing expenses were $189,691 or
159% of revenue and $59,797 or 12% of revenue for the years ended December 31,
1998 and 1997. The increase of $129,894 in sales and marketing expense between
the two periods primarily reflect an increase in sales and marketing personnel,
promotions, and participation in industry trade shows. The increase also
reflects business development efforts that have resulted in a key strategic
relationship with MTT, the primary telecommunications common carrier in the
Province of Nova Scotia. Sales and marketing as a percentage of revenue
increased as a result of increases in related expenses over the same period. We
anticipate that our sales and marketing costs will increase significantly in the
foreseeable future as we continue to develop and implement our marketing
strategy and hire additional sales and marketing personnel.
Research and Development - Our research and development costs consist
primarily of personnel, data and voice transmission, and the lease of office
space. Research and development costs were $283,918 or 238% of revenue and
$66,126 or 13% of revenue for the years ended December 31, 1998 and 1997. The
increase of $217,792 in research and development costs from 1997 to 1998
primarily reflects increases in personnel and leased office space. Research and
development as a percentage of revenue increased as a result of increases in
related expenses over the same period last year. We anticipate that our research
and development costs will continue to increase in the foreseeable future.
General and Administrative - Our general and administrative costs consist
primarily of personnel costs, professional and legal costs, consulting fees,
travel, and the lease of office space. General and administrative costs were
$460,911 or 387% and $236,159 or 45% for the years ended December 31, 1998 and
1997. The increase of $224,752 from 1997 to 1998 includes the recruitment of
personnel which resulted in an increase of $74,258 from 1997 to 1998, as well as
an increase of $21,554 in regulatory fees and $20,662 in legal and accounting
fees over the same period. General and administrative costs as a percentage of
revenue increased between the two years as a result of increases in expenses
over the same periods. We anticipate that general and administrative costs will
continue to grow in the foreseeable future.
16
<PAGE>
Interest Expense (Income), Net - Our interest expense is primarily related
to short-term debt. Interest expense (income), net was $39,887 or 33% of revenue
and $26,973 or 5% of revenue for the years ended December 31, 1998 and 1997. We
anticipate our interest expense to decrease in the foreseeable future as the
Company agreed to debt settlement agreements with it three major creditors.
Loss on Sale of Marketable Securities - A loss of $39,098 or 8% of revenues
was incurred on the sale of marketable securities in the year ended December 30,
1997.
Income Taxes - As of December 31, 1997 the Company had non-capital losses
of $318,965 carried forward and available to offset income in the future. Such
net operating loss carryforwards will begin expiring in the year 2004. For
reconciliation to U.S. GAAP purposes, a valuation allowance was recognized for
the year ending December 31, 1998 to offset deferred tax assets arising from
temporary differences, tax credits and non-capital loss carryforwards, for which
realization is uncertain.
Fluctuations in Annual and Quarterly Results
Our annual and quarterly operating results may fluctuate significantly in
the future as a result of numerous factors, including:
1. the amount and timing of expenditures required to develop strategic
relationships to enhance sales and marketing;
2. changes in the growth rate of Internet usage and acceptance by consumers of
unified messaging systems;
3. emergence of new services and technologies in the market in which we
compete; and
4. fluctuations of foreign currency exchange rates.
We have incurred substantial operating losses, net losses and negative cash
flow on both quarterly and annual basis. For the years ending December 31, 1998
and 1997 we had an operating loss of $890,711 and $102,668 respectively. We had
a negative cash flow from operating and investing activities of $1,127,149 and
$35,603 for the years ending December 31, 1998 and 1997. For the six months
ending June 30, 1999 we had an operating loss of $4,237,743 and a negative cash
flow from operating and investing activities of $4,259,982. We expect to
continue to incur net losses for the remainder of the fiscal period ending
December 31, 1999 and do not expect positive cash flow from operating and
investing activities.
We also faces foreign currency exchange risk as a majority of our revenue
is denominated in U.S. currency and a majority of operating costs are incurred
in Canadian currency. Significant fluctuations in the foreign exchange between
U.S. and Canadian currency will result in fluctuations in our annual and
quarterly results. We have minimized our exchange risk by adopting a hedging
program to minimize the possible fluctuations in our annual and quarterly
results.
17
<PAGE>
Our six months ending June 30, 1999 and June 30, 1998 results as well as
our annual results have fluctuated as a result of the time and dollar
expenditures required to develop our strategic relationships. We will continue
to build on our strategic relationship with MTT, as well as develop new
relationships. Our future quarterly and annual results will continue to
fluctuate as we plan to allocate significant resources to sales and marketing
and continue on our growth strategies.
Liquidity and Capital Resources
Since our decision to divest of our entire service portfolio the sale of
centrex lines in December 1997, we have financed our operations primarily
through the private placement of common stock, and short-term debt. At June 30,
1999, we had approximately $209,714 in cash and cash equivalents, increasing
$104,791 from the year-end balance of $104,923.
Net cash used for operating activities was $974,004 and $94,307 for the
years ending December 31, 1998 and 1997. The increase in net cash used in
operating activities between the years ending December 31, 1998 and 1997 is
primarily a result of increasing net losses. Net cash used for operating
activities was $4,347,551 and $274,239 for the six months ending June 30, 1999
and June 30, 1998. The increase in net cash used in operating activities between
the six months ended June 30, 1999 and 1998 is also primarily a result of
increasing net losses.
Net cash provided in investing activities was $58,704 for the year ending
December 31, 1997 as a result of proceeds on sale of marketable securities of
$89,833. The difference of $31,129 was used in investing activities for the year
ending December 31, 1997 for the purchase of equipment. Net cash used in
investing activities was $153,145 for the year ending December 31, 1998 as a
result acquisition of equipment, furniture and fixtures.
Net cash used in investing activities for the six months ending June 30,
1999 and 1998 was $112,431 and $58,207. The increase in net cash used in
investing activities between the six months ending June 30, 1999 and 1998 is
primarily a result of purchase of equipment, furniture, fixtures, as well as
leasehold improvements.
Net cash provided by financing activities increased by $1,127,553 between
from 1997 to 1998. The increase from $35,910 in 1997 to $1,163,463 in 1998
resulted primarily from an increase in notes payable of $717,183 and
subscriptions to private placements of $403,619.
Net cash provided by financing activities increased $4,071,907 from
$365,376 for the six months ending June 30, 1998 to $4,437,283 for the six
months ending June 30, 1999. The change in net cash provided by financing
activities consists of the settlement of short-term debt of $33,000 due to
shareholders in exchange for 101,000 warrants as well as the settlement of
long-term debt of $167,000 due to a shareholder in exchange of 500,000 warrants.
The warrants issued in exchange for the settlement of debt each have an exercise
price $0.50. The change in net cash provided by financing activities also
include the issuance of 750,000 common stock in exchange for the settlement of
short-term loans of $250,000. The loans were advanced to the us over time
beginning in 1995.
Net cash provided by financing activities for the six months ending June
30, 1999 also includes a stock option compensation cost of $3,406,538 which was
determined using the intrinsic method in accordance with APB25. No stock options
have been exercised to date.
18
<PAGE>
Over the next several months Voice Mobility International, Inc. will expect
to receive the proceeds of warrants being exercised. The warrants are expected
to generate $2,156,500 in capital that will be used as working capital. $173,333
was received prior to June 30, 1999 as a result of warrants exercised.
Subsequent to June 30, 1999 an additional $200,000 was received by the Company
as a result of warrants exercised.
Impact of Year 2000 Issue
Like many other companies, the Year 2000 issue creates risks for us. The
Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. Any computer
software program or hardware that has date-sensitive software of embedded chips
may recognize a date using "00" as the year 1900 rather than the year 2000 which
could result in system failures or miscalculations causing disruptions to
operations and normal business activities.
We are a comparatively new company and as a result, the software and
hardware we use to operate our business have all been purchased or developed in
the last several years. While we cannot guarantee that we have eliminated all
risks related to the Year 2000, we can state that steps have been taken to
minimize the risks associated to the Year 2000 issue.
We have developed and implemented Year 2000 compliance plans related to
both our internal business operations, as well as our product compliance. With
respect to our Office Year 2000 plan we have ensured all of our hardware
equipment and software used in normal business operations are certified as Y2K
compliant. Our strategy involves maintaining an extensive inventory of any and
all computer-related systems and software, whether initially thought to be
exposed to the Y2K bug or not. An assessment is made of each inventory item
identifying potential risks or uncertainties. All hardware that is not Year 2000
compliant is disposed of, and all software used is certified to be Year 2000
compliant through written documentation provided by the vendor.
We are committed to providing releases of our software which are certified
as being Year 2000 compliant. We have developed all of the e-go software
internally and have ensured that all date fields are compatible to the year
2000. However, certain subcomponents may not have been properly engineered to
ensure date compatibility. Steps have been taken to confirm sub-components
compatibility, but this area still remains one of moderate risk. Third party
products that are bundled into our unified messaging systems have been
researched for Year 2000 compliancy, and all of the vendors have released
statements indicating they are fully Year 2000 compliant.
ITEM 3. DESCRIPTION OF PROPERTY.
- ------- ------------------------
Our United States office is located in shared modern office premises at
Suite 200, 5031 South Ulster Parkway, Denver Colorado 80237 under a month to
month arrangement with the lessor of the premises who is not affiliated with us.
We pay no rent under an oral understanding.
Our operating subsidiary, Voice Mobility occupies approximately 2,000
square feet at 701-543 Granville Street, Vancouver, British Columbia V6C 1X8.
The lease, with a non-affiliated party, expires March 30, 2002. Rent is $53,276
per year.
19
<PAGE>
Voice Mobility leases an engineering facility at 20 - 3318 Oak Street,
Victoria, BC, V8X 1R1, of 5,387 square feet, under a lease with an unaffiliated
party that expires on May 31, 2004, at $85,138 per year.
Voice Mobility also leases sales offices in Vancouver, BC, and Mississauga,
Ontario on a month to month basis.
We believe that existing facilities are adequate for our needs through at
least the end of 1999. Should we require additional space at that time, or prior
thereto, we believe that such space can be secured on commercially reasonable
terms and without undue operational disruption.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- ------------------------------------------------------------------------
We have set forth in the following table certain information regarding our
common stock beneficially owned on August 31, 1999, for (i) each shareholder we
know to be the beneficial owner of 5% or more of our outstanding common stock,
(ii) each of the our executive officers and directors, and (iii) all executive
officers and directors as a group. In general, a person is deemed to be a
"beneficial owner" of a security if that person has or shares the power to vote
or direct the voting of such security, or the power to dispose or to direct the
disposition of such security. A person is also deemed to be a beneficial owner
of any securities of which the person has the right to acquire beneficial
ownership within 60 days. At August 31, 1999, 17,650,321 shares of our common
stock were outstanding.
NAME AND ADDRESS NUMBER OF SHARES OF COMMON PERCENT OF
OR IDENTITY OF GROUP STOCK BENEFICIALLY OWNED BENEFICIAL OWNERSHIP
- -------------------- -------------------------- --------------------
Edith Marion Both(1) 2,700,000 15.3%
843 Ida Lane, Kamloops
BC, V2B 6V2
Canada
James Jay Hutton(2) 2,0555,000 11.5%
6442-180th St.
Surrey, BC, V3S 7K2
Canada
William E. Krebs(3) 2,443,897 13.6%
300 Stewart Road
Salt Spring Island
BC, V8K 2C4
Canada
Robert Cashman 250,000 1.5%
Mr. Robert L. Cashman
2100 West Orangewood Avenue
Orange, California 92868-1950
Jason Corless(4) 1,238,671 6.9%
312-3277 Glasgow Ave.
Victoria, BC, V8X 1M3
Canada
All Executive Officers and Directors 6,898,894 42.5%
as a Group (4 persons) (5)
- -----------------------
20
<PAGE>
(1) Includes 50,000 Plan Options. These shares are owned by E. W. G.
Investments Ltd. of which Ms. Both is the sole shareholder.
(2) Includes 36,778 shares which are owned by Janice Gurney, his wife, over
which Mr. Hutton disclaims beneficial ownership. Includes 250,000 Plan
Options.
(3) Includes 2,000,000 shares owned by Pacific Western Mortgage Corp. of which
Mr. Krebs is the sole shareholder and 93,897 shares owned by Margit
Kristiansen, Mr. Krebs' wife. Mr. Krebs disclaims beneficial ownership of
the shares owned by his wife. Includes 250,000 Plan Options.
(4) Includes 114,671 shares owned by Cathie Stevens, his wife, over which Mr.
Corless disclaims beneficial ownership. Includes 250,000 Plan Options.
(5) Does not include Plan Options
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
- ------- -------------------------------------------------------------
The following table sets forth the names, positions and ages of our
executive officers and directors. All our directors serve until the next annual
meeting of shareholders or until their successors are elected and qualify.
Officers are elected by the board of directors and their terms of office are,
except to the extent governed by employment contract, at the discretion of the
board of directors.
Name Age Position
---- --- --------
James J. Hutton 33 President, Chief Executive Officer and a Director
William E. Krebs 52 Chairman of the Board of Directors, Secretary
and Treasurer
Edith Marion Both 66 A Director
Robert Cashman 66 A Director
James J.Hutton has also served as President, Chief Executive Officer and a
Director of our subsidiary, Voice Mobility, Inc. since 1998. From 1990 to the
present, he has also served as Director and President of Sycamore Group
Holdings, a family company involved in diversified investments. Mr. Hutton
served as Canadian Regional Manager for Ascend Communications (1995-1998). He
served in various capacities for Gandalf Systems, Inc., from 1989 to 1995,
starting as a sales executive and becoming Western Regional Manager. From 1987
to 1989, Mr. Hutton was a Sales Trainee in the Automotive Electronics Group of
Amp of Canada. Mr. Hutton attended the University of British Columbia.
William E. Krebs has been Chairman of the board of directors of our
subsidiary, Voice Mobility, Inc. since its inception. He also has served as
President and a director of Pacific Western Mortgage Corp. since 1987 and served
as President and a Director of Pacific Western Capital Corp. from 1994 to 1995.
He has been a director of Waverider Communications, Inc., a public company
traded on the Over-the-Counter Bulletin Board since 1997 and was its Secretary
from 1997 through May, 1999. Mr. Krebs served as Director and President of
TelcoPlus Enterprises Ltd. and its wholly owned subsidiary, Intertec
Telecommunications Inc., from 1990 to 1995. Mr. Krebs is a Chartered Accountant
and practiced as such from 1970 to 1978. He served as a Director and President
of CT&T Telecommunications Inc. from 1990 to 1995. Mr. Krebs has been a member
of the Canadian Instititue of Chartered Accountants since 1973.
21
<PAGE>
Edith Marion Both was employed by Transport Canada from 1980 to 1995 and
served as its Resource Manager from 1985 to 1995. She presently serves as the
Regional President of the Elizabeth Fry Society of Canada, a society which
assists woman who have had problems with legal authorities, and was Treasurer of
its National Board. She serves on the board of directors of the Women's Future
Fund, a cross discipline entity adjudicating funding for women issues. Mollie
became a registered Cytotechnologist in 1973.
Robert Cashman has served, from 1993 to the present, as chairman and senior
partner of The Charleston Group, a business consulting and investment banking
firm. From 1975 to 1992, he was President of Pacific Envelope Company. From 1989
to 1992, Mr. Cashman was a director of Pacific Inland Bank. Mr. Cashman owned,
from 1960 to 1974, Cashman Insurance Counselors, a general insurance agency. In
addition, he serves as Secretary and a director of the following companies:
Homelife, Inc. (OTCBB: HMLF) since 1996, Pacific Ocean Restaurants, Inc. since
1998; and Aeromedical Group, Inc. since 1997. He served as President and a
director of our company when it was named Equity Capital Group, Inc., from its
inception in September, 1998 to June 30, 1999 and continues to serve as a
director. Mr. Cashman also is a Commissioner of the Orange County Airport, a
member of the MCAS El Toro Reuse Citizens Advisory Commission and City of
Anaheim Private Industry Council/Economic Development Council. He was a member
of the Los Angeles Olympic Organizing Committee from 1982 to 1984. Mr. Cashman
attended East Central State College, Oklahoma, Santa Ana College, California and
received his B.S. in Business Administration in 1956 from University of
California at Los Angeles
Key Management Employees of Voice Mobility, Inc., our operating subsidiary
are:
James J. Hutton, our President, is also President and a director.
William E. Krebs, our Secretary and Treasurer is Secretary and Treasurer
and a director.
William Gardiner (44 years old) has been Vice President - Business
Development since 1997 and served as a consultant from 1995 to 1997. At Voice
Mobility, he engineered the basic concept of the "follow me" number which is an
integral feature of the e-go platform and was responsible for introducing the
first e-mail to voice service in Canada, as well as call connect, same line fax,
fax to voice, and e-mail to voice. Mr. Gardiner earned a Diploma in Computer
Technology from Computer Data Institute in 1989.
Jason Corless (29 years old) has served as Director of Engineering since
1997 and was a consultant to Voice Mobility from 1994 to 1997 where he assisted
in the design and development of prototypes of e-mail to speech, web paging, and
TNPP paging. Mr. Corless served as a software developer for Hughes Aircraft in
1994 where he was involved in network performance testing of the Canadian
Automated Air-Traffic Control System (known as "CAATS"). In 1991, he was a
software developer for Northern Telecom where he designed and developed software
for the "DSM 250" product line as part of the frame relay billing group. Mr.
Corless received a Bachelor of Science in Computer Science from the University
of Victoria in 1994 and a Master of Science in Computer Science from the
University of Victoria in 1995. His monograph entitled "Publication in Software"
was published in Practice and Experience Journal, Volume 28, Number 12, October
1998.
22
<PAGE>
Budd Stewart (46 years old) has served as Vice President - Operations since
1999. From 1997 to 1999, he was Director of Operations at Enhanced Cellular
Systems Inc. where he was responsible for negotiating and maintaining various
U.S.A. carrier agreements and operating systems, as well as installation and
maintenance of the U.S.A.-based credit card cellular payphone network. From 1995
to 1996, he was Director of Customer Service for Prime Copy Office Systems where
his responsibilities included service, refurbishing and warehouse operations at
Canada's largest Mita copier and Panafax facsimile dealer. Mr. Steward served as
Director of Technical Operations, at Savin (Ricoh) Canada from 1994 to 1995 at
which firm he was in charge of ten branches in Western Canada with a staff of
over 90 service personnel. From 1989 to 1993, he was President and owner of
Stewart/Scotvold Holdings, a project manager for non-residents in custom home
construction. Mr. Stewart was employed by Bell Canada and Bell Canada
International from 1976 to 1989 in various capacities, successively Section
Manager - Repair Service Bureau, Director Operations - Customer Service and
Director Cost and Results. In this last capacity, he was responsible for
negotiating and tracking the $3 billion annual operating expense budget of the
seven business units of Bell Canada. Mr. Stewart received a Bachelor of Arts
from University of Toronto.
Geoff Heston (47 years old) has served as Senior Vice President of Sales
and Marketing since August, 1999. Prior to joining Voice Mobility, Mr. Heston
served, from 1997 to 1999 as Vice President - Wireless Marketing, for Diablo
Research Company, a contract engineering and consulting company. From 1994 to
1997, Mr. Heston was Vice President and General Manager, Canadian Operations, of
Metricom Inc. a provider of wireless Internet access. From 1989 to 1994, Mr.
Heston worked for Motorola successively as Senior Project Manager, Marketing
Manager - Public Wireless Networks and Major Account Manager. From 1984 to 1989,
he was Senior Applications Specialist for Gandalf Data Ltd. From 1976 to 1984,
Mr. Heston specialized in the operation and support of mainframe computers for
school administration and students successively for McGill University,
University of British Columbia and the Vancouver School Board. Mr. Heston
attended Mount Allison University and Marianopolis Collge.
23
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION.
- ------- -----------------------
CASH COMPENSATION.
- ------------------
The following table shows, for the two-year period ended December 31, 1998,
the cash and other compensation we paid to our Chief Executive Officer and to
each of our executive officers who had annual compensation in excess of
$100,000.
SUMMARY COMPENSATION TABLE
--------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
- ------------------ ---- ------ ----- ---------------
Robert Cashman 1998 -0- -0- -0-
President and 1997
Chief Executive Officer
(resigned June, 1999)
James J. Hutton 1999 $72,600 -0- -0- (1)
President and
Chief Executive Officer
of Voice Mobility Inc.
and since June, 1999
of the Company
- ------------------------
1. Compensation was paid to Mr. Hutton by Voice Mobility, Inc., our operating
subsiciary
OPTION GRANTS IN THE LAST FISCAL YEAR.
- --------------------------------------
The following table sets forth information with respect to the grant of
options to purchase shares of common stock during the fiscal year ended December
31, 1998 (Voice Mobility Inc.) and March 31, 1999 (the Company), to each person
named in the Summary Compensation Table.
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE OR
UNDERLYING GRANTED TO BASE PRICE
OPTIONS/SARS EMPLOYEES IN ($/SHARES) EXPIRATION
NAME GRANTED (#) FISCAL YEAR DATE
---- ----------- ----------- ---------- ----------
Robert Cashman 0 0 N/A N/A
James J. Hutton 0 0 N/A N/A*
* Subsequent to the end of the 1998 fiscal year, we have issued 250,000
options to Mr. Hutton. The options are excercisable at $1.00 and expire
June 30, 2004
24
<PAGE>
1996 STOCK OPTION PLAN
- ----------------------
In June 29, 1999, our board of directors adopted the Fiscal 2000 Stock
Option Plan (the "Plan") as a means of increasing employees', board of advisors,
consultants' and non-employee directors' proprietary interest and to align more
closely their interests with the interests of our stockholders. The Plan should
also maintain our ability to attract and retain the services of experienced and
highly qualified employees and non-employee directors.
Under the Plan, we have reserved an aggregate of 5,000,000 shares of common
stock for issuance pursuant to options ("Plan Options"). Our board of directors
or a committee of our board of directors (the "Committee") will administer the
Plan, including, without limitation, the selection of the persons who will be
granted Plan Options under the Plan, the type of Plan Options to be granted, the
number of shares subject to each Plan Option and the Plan Option price.
Plan Options granted under the Plan may either be options qualifying as
incentive stock options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended, or options that do not so qualify
("Non-Qualified Options"). In addition, the Plan also allows for the inclusion
of a reload option provision ("Reload Option"), which permits an eligible person
to pay the exercise price of the Plan Option with shares of common stock owned
by the eligible person and receive a new Plan Option to purchase shares of
common stock equal in number to the tendered shares. Any Incentive Option
granted under the Plan must provide for an exercise price of not less than 100%
of the fair market value of the underlying shares on the date of such grant, but
the exercise price of any Incentive Option granted to an eligible employee
owning more than 10% of our common stock must be at least 110% of such fair
market value as determined on the date of the grant. The term of each Plan
Option and the manner in which it may be exercised is determined by our board of
directors or the Committee, provided that no Plan Option may be exercisable more
than 10 years after the date of its grant and, in the case of an Incentive
Option granted to an eligible employee owning more than 10% of our common stock,
no more than five years after the date of the grant. The exercise price of
Non-Qualified Options shall be determined by our board of directors or the
Committee.
The per share purchase price of shares subject to Plan Options granted
under the Plan may be adjusted in the event of certain changes in our
capitalization, but any such adjustment shall not change the total purchase
price payable upon the exercise in full of Plan Options granted under the Plan.
Our (and any of our subsidiary's) officers, directors, key employees and
consultants will be eligible to receive Non-Qualified Options under the Plan.
Only employees are eligible to receive Incentive Options.
Recipients of Plan Options may not assign or transfer them, except by will
or by the laws of descent and distribution. During the lifetime of the optionee,
an option may be exercised only by such optionee. If an optionee's employment is
terminated for any reason, other than his death or disability or termination for
cause, or if an optionee is not an employee but is a member of our board of
directors and his service as a director is terminated for any reason, other than
death or disability, the Plan Option granted to him shall lapse to the extent
unexercised on the earlier of the expiration date or 30 days following the date
of termination. If the optionee dies during the term of his employment, the Plan
Option granted to him shall lapse to the extent unexercised on the earlier of
the expiration date of the Plan Option or the date one year following the date
of the optionee's death. If the optionee is disabled, the Plan Option granted to
him lapses to the extent unexercised on the earlier of the expiration date of
the option or one year following the date of the disability.
25
<PAGE>
Our board of directors or the Committee may amend, suspend or terminate the
Plan at any time, except that no amendment shall be made which (i) increases the
total number of shares subject to the Plan, or (ii) changes the definition of an
Eligible Person under the Plan.
As of August 31, 1999, we granted 2,706,750 Plan Options pursuant to the
Plan. As of August 31, 1999, no Plan Options had been exercised.
OPTION EXERCISES AND HOLDINGS.
- ------------------------------
The following table sets forth information with respect to the exercise of
options to purchase shares of our common stock during the fiscal year ended
March 31, 1999 to each person named in the Summary Compensation Table and the
unexercised options held as of the end of 1999 fiscal year.
<TABLE>
<CAPTION>
AGGREGATED OPTION/ EXERCISES IN
LAST FISCAL YEAR AND 1998 FISCAL YEAR END OPTION/VALUES
-------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY OPTIONS/
UNEXERCISED OPTIONS SARS AT 1998 FISCAL
AT 1998 FISCAL YEAR YEAR END ($)
END (#) EXERCISABLE/ EXERCISABLE/
SHARES ACQUIRED ON VALUE UNEXERCISABLE UNEXERCISABLE
EXERCISE REALIZED
NAME (#) ($)
---- ------------------- ------------ -------------------- -------------------
<S> <C> <C> <C> <C>
Robert Cashman 0 0 0 0
James J. Hutton 0 0 0 0*
<FN>
- -------------------
* Subsequent to the end of the 1998 fiscal year, we issued 250,000 options to
Mr. Hutton. The options are excercisable at $1.00 and expire June 30, 2004.
The intrinsic value of the options on August 31, 1999, is $375,000 Based on
our determination of fair market value of the purchased shares on the
option exercise date less the exercise price paid for the shares.
</FN>
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
------------------------------------------------------
NUMBER OF SHARES, PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
UNITS OR OTHER OTHER PERIOD UNTIL NON-STOCK PRICE-BASED PLANS
RIGHTS MATURATION OR ------------------------------
(#) PAYOUT THRESHOLD TARGET MAXIMUM
NAME ($ OR #) ($ OR #) ($ OR #)
---- ---------------- ----------------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Robert Cashman 0 0 0 0 0
James Jay Hutton 0 0 0 0 0
</TABLE>
EXECUTIVE EMPLOYMENT AGREEMENTS
- -------------------------------
We have not entered into any employment agreements with our officers and
directors and have paid no compensation to them. Our operating subsidiary, Voice
Mobility Inc. has entered into employment agreements with its executive
employees. James Jay Hutton, President of Voice Mobility Inc., entered into an
employment agreement on April 1, 1998 which terminates on March 31, 2000. He
receives a salary of Cdn$100,000 per year plus 250,000 Plan Options exercisable
at $1.00 per share. William Gardiner, Vice-President - Business Development of
Voice Mobility, Inc., entered into an employment agreement on August 1, 1998
which terminates on August 1, 2001. He receives a salary of Cdn$60,000 per year
plus 200,000 Plan Options exercisable at $1.00 per share. Jason Corless,
Director of Engineering of Voice Mobility Inc., entered into an employment
agreement on October 1, 1998 which terminates on August 1, 2001. He receives a
salary of Cdn$60,000 per year plus 200,000 Plan Options exercisable at $1.00 per
share. (Options to purchase shares of Acrex Ventures Inc. as set in the
employment contracts of Messrs. Hutton, Gardiner and Corless, attached to this
registration statement as exhibits, were amended by resolution of our board of
directors to provide options in our company as stated above in this paragraph.)
Bud Stewart, Vice-President - Operations of Voice Mobility Inc., entered into an
employment agreement on June 20, 1999 which terminates on June 19, 2001. He
receives a salary of Cdn$100,000 per year plus 250,000 Plan Options exercisable
at $1.00 per share. Mr. Stewart may also receive an additional 250,000 Plan
Options pursuant to mutually agreeable performance criteria. Geof Heston, Senior
Vice-President of Sales and Marketing of Voice Mobility Inc., entered into an
employment agreement on August 7, 1998 which terminates on August 6, 2001. He
receives a salary of Cdn$100,000 per year plus 250,000 Plan Options exercisable
at $1.00 per share.
27
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- ------- -----------------------------------------------
We were incorporated in the State of Nevada on October 2, 1997 under the
name Equity Capital Group, Inc. to serve as a merchant banking firm with a
business consulting/investment division and a real estate division. The initial
board of directors consisted of Robert Cashman, Yale Mizrahi and Georgia
Cashman.
Our initial certificate of incorporation authorized 10,100,000 shares of
capital stock divided into: 10,000,000 shares of common stock of $.001 par value
per share and 100,000 shares of preferred stock without par value. Our
certificate of incorporation was amended on June 24, 1999 to authorize the
issuance of 51,000,000 shares of capital stock divided into 50,000,000 shares of
common stock, $.001 par value each and 1,000,000 shares of preferred stock,
$.001 par value each.
On December 20, 1997, we entered into a Plan of Exchange Agreement with
Ward Enterprises, Inc., ("Ward") of which Robert Cashman was the sole
stockholder, for the exchange of all the capital stock of Ward Enterprises, Inc.
for 1,500,000 of our shares of common stock.
During the first quarter of 1998, we sold 100,000 shares of our common
stock under Rule 504 of Regulation D to the Securities Act of 1933 for a total
of $100,000.
On January 15, 1998 Robert Cashman was elected as the Chairman of the board
of directors and John Vilagi was elected to the board of directors upon the
resignation of Yale Misrahi and Georgia Cashman.
On June 15, 1998, we entered into an exchange agreement with HomeLife Inc.,
a Nevada Corporation trading on the Over the Counter Bulletin Board under the
symbol "HMLF". The agreement involved the exchange of 375,000 shares of HomeLife
Inc. common stock in exchange for 75,000 of our shares of our common stock.
In July, 1998, we sold 100,000 shares of HomeLife, Inc. common stock for
cash consideration of $100,000.
Prior to our acquisition of Ward, Ward had sold envelope manufacturing
equipment to Specialty Envelope Company ("Specialty") on credit terms. On
October 20, 1998, we entered into a settlement and mutual release agreement with
Specialty. We took back the equipment as well as inventory, spare parts, tools,
accounts receivable, deposits, pending orders, customer lists and released
Specialty from all liabilities to us. In January, 1999, we transferred the
repossessed assets to ASI Acquisition Corp. ("ASI") for 300,000 of its shares of
common stock representing 15% of its issued and outstanding shares, the
remaining 85% being owned by Robert Cashman. ASI is a private company and used
to equipment and other assets to enter the envelope printing business which it
has continued to the present time.
On November 12, 1998, we formed First Consolidated Securities, Inc. ("First
Consolidated") to acquire Tuschner Financial Group, Inc. ("Tuschner Financial")
which was the parent of Tuschner & Company, Inc., a broker-dealer. We agreed to
issue our common stock in four installments based on the broker-dealer meeting
certain performance criteria. We issued 27,240 of our shares of common stock on
signing. In May, 1999, the acquisition was mutually terminated and we did not
issue any additional shares. We also had transferred 87,000 shares of Time
Financial Services Inc. common stock (OTBB:TIMF) which were owed by Ward to
Consolidated Financial which Consolidated Financial had transfered to Tuschner
Financial; and, as part of the termination of the relationship, Consolidated
Financial transferred the shares to Tuschner Financial Tuschner Financial has
agreed to return these shares to Consolidated.
28
<PAGE>
In January, 1999, we issued in consideration of a promissory note in the
principal amount of $350,000 350,000 of our shares of common stock to Fun Kart
Holdings, Inc.
In March 9, 1999, we issued two promissory notes, one to John Vilagi, then
a director, in the principal amount of $25,000 and one Robert Cashman, a
director, then President, in the principal amount of $22,500 in exchange for
funds in the principal amounts of the promissory notes. The notes bear interest
at 15% and are payable in payable in monthly installments of principal and
interest of $835 and $2,000 respectively. Messrs. Vilagi and Cashman have agreed
release us from the repayment obligations of the notes and to look to Pioneer
Growth Corporation for payment.
On April 1, 1999, we reverse split our shares of common stock 4:1 and on
that date sold an aggregate of 8,293,000 shares of our common stock to 52
persons. On that date, we also entered into an agreement with Pioneer Growth
Corporation under which it received all our assets and assumed our liabilities.
Messrs. Vilagi and Cashman agreed to release us and to look to Pioneer Growth
Corporation for repayment of their promissory notes. Pioneer Growth Corporation
issued to us 2,174,000 of its common stock which we distributed ratably to our
stockholders of record on March 31, 1999.
On June 24, 1999, we entered into an agreement with the stockholders of
Voice Mobility, Inc. a Canadian corporation, under which it would become a
subsidiary in consideration for the issuance of 6,600,000 shares of our common
stock.
On June 24, 1999, we changed our name through an amendment to our
certificate of incorporation to Voice Mobility International, Inc. and on June
30, 1999 changed our trading symbol from EQCG to VMII on the Over the Counter
Bulletin Board.
On September 15, 1993 "454581 B.C. Ltd." was incorporated under the laws of
British Columbia. and owned 100% by Ernest Weir Gardiner. Ernest Weir Gardiner
and Ernest William Gardiner constituted the initial board of directors. Ernest
Weir Gardiner was issued 100 Class "A" Common Shares. In June, 1994, he began to
finance operations through loans.
On July 20, 1994, the charter of "454581 B.C. Ltd." was amended to change
its name W.G.T. Teleserve Canada Inc.
In December, 1995, Pacific Western Mortgage Corporation, a company owned by
William E. Krebs, began to loan funds to W.G.T. Teleserve to fund operations.
On January 29, 1996, Ernest Weir Gardiner transferred 50 of his Class "A"
Shares in W.G.T. Teleserve to Pacific Western Mortgage Corporation.
On October 31, 1997, W.G.T. Teleserve purchased the 100 issued and
outstanding Class "A" common shares from Ernest Weir Gardiner and Pacific
Western Mortgage corp. for $1.00 per share and cancelled them. Concurrently, it
issued Class "B" common shares in the following numbers, for the price of $0.01
per share, as follows:
E.W.G. Investments Ltd. 3,750 shares
James Joseph Hutton 2,250 shares
Pacific Western Mortgage Corp. 1,500 shares
Jason David Corless 900 shares
On October 31, 1997, Ernest Weir Gardiner resigned as a director and
officer and Ernest Williams Gardiner, James Joseph Hutton and William Krebs were
appointed directors. The new board of directors elected Ernest William Gardiner
as President, James Joseph Hutton as Secretary, and William Krebs as Chairman of
the Board.
29
<PAGE>
On November 4th, 1997. W.G.T. Teleserve by special resolution subdivided
its authorized capital of 200,000 shares into 200,000,000 shares. Thus the
authorized capital was 200,000,000 shares divided into:
100,000,000 Preferred shares with a par value of $0.01 each; and
25,000,000 Class "A" voting common shares without par value
25,000,000 Class "B" voting common shares without par value
25,000,000 Class "C" voting common shares without par value
25,000,000 Class "D" non-voting common shares without par value
In December, 1997, W.G.T. Teleserve shareholders agreed to merge it into
Acrex Ventures Ltd. Acrex Ventures subsequently initiated its first private
placement of 1,500,000 shares at Cdn$0.26625 per unit pursuant to a prospectus
exempt securities offering in British Columbia, Canada. Each unit consisted of
one share and one warrant exercisable at Cdn $0.50 to purchase an additional
share of Acrex Ventures Ltd. The resulting proceeds were loaned to W.G.T.
Teleserve to fund research and development activities.
On June 10, 1998, W.G.T. Teleserve changed from being British Columbia
corporation to a Canadian corporation and, simultaneously, changed its name to
Voice Mobility Inc.
In June, 1998, Voice Mobility Inc. began to conduct field trials of its
integrated messaging product with Maritime Tel & Tel Ltd. in Nova Scotia, at the
cost of MTT to be reimbursed by Voice Mobility. In addition, Voice Mobility and
MTT jointly developed new telecommunications applications for telecommunications
services providers.
On August 30, 1998, Voice Mobility and its shareholders entered into an
agreement to sell 100% of its shares to Acrex Ventures, a transaction requiring
the approval of the Vancouver Stock Exchange.
In June 1998 Acrex Ventures initiated its second private placement of
1,000,000 units at Cdn$0.50 per share pursuant to a prospectus exempt securities
offering in British Columbia, Canada. Each unit consisted of one share and one
warrant exercisable at Cdn$0.50. The resulting proceeds were loaned to Voice
Mobility to fund research and development activities.
In January, 1999, Acrex Ventures initiated its third private placement of
2,000,000 units at Cdn$0.50 pursuant to a prospectus exempt securities offering
in British Columbia, Canada. Each unit consisted of one share and one warrant
exercisable at Cdn$0.75. The resulting proceeds were loaned to Voice Mobility to
fund research and development activities.
In May, 1999, Acrex Ventures initiated its fourth private placement of
258,000 units at Cdn$0.50 per unit pursuant to a prospectus exempt securities
offering in British Columbia, Canada. Each unit consisted of one share and one
warrant exercisable at Cdn$0.75. The resulting proceeds were loaned to Voice
Mobility to fund research and development activities.
In June, 1999 Acrex and Voice Mobility mutually rescinded their agreement
whereby Acrex would acquire 100% of the capital stock of Voice Mobility Inc.
On June 24, 1999, we entered into an agreement with the shareholders of
Voice Mobility Inc. under which we agreed to acquire all the issued and
outstanding capital stock of Voice Mobility in exchange for 6,600,000 of our
shares of common stock. The shareholders of Voice Mobility listed below, agreed
that they would initially exchange their capital stock of Voice Mobility for
6,600,000 "exchange" "B" shares of a wholly-owned Canadian subsidiary in which
we would be the sole shareholder of "A" voting stock. From time to time, they
could exchange their shares of the subsidiary for an equal number of our shares
of common stock.
30
<PAGE>
The 6,600,000 "exchange" shares of the Canadian subsidiary are to be
divided among the stockholders of Voice Mobility as follows:
1. E.W.G. Investments Inc. 2,650,000 shares
2. James Hutton 1,750,000 shares
3. Jason Corless 850,000 shares
4. Pacific Western Mortgage Corporation 1,250,000 shares
5. Corey Scholefield 100 000 shares
On June 29, 1999, we issued 750,000 shares of our common stock to Pacific
Western Mortgage Corp., owned by William Krebs, an officer and director, in full
satisfaction of consideration of the cancellation of indebtedness of $250,000 to
Voice Mobility Inc.
On June 29, 1999, Ibex Investments Ltd. forgave indebtedness of $167,000 in
consideration of the receipt of 500,000 warrants exercisable at $.50 per share.
On that date, Ernest Weir Gardiner forgave indebtedness of $33,000 in
consideration of the receipt of 101,000 warrants exercisable at $.50 per share.
On June 29, 1999, we issued an aggregate of 2,706,750 Plan Options to our
employees, directors and consultants. 1,625,000 were issued at $1.00; 1,041,750
at $.75 and 40,000 at $2.72. All options expire June 28, 2004.
On June 30, 1999, Acrex Ventures Ltd. agreed to transfer its loans
outstanding aggregating $1,123,472 from Voice Mobility Inc. to us, in
consideration of our issuing common stock warrants with terms and conditions
substantially identical to the warrants issued by Acrex Ventures to the
subscribers in its four private placements. All classes of warrant terminate on
December 29, 2000. On that date, we issued 1,600,000 Class "A" Warrants
exercisable at Cdn$0.26625; 1,000,000 Class "B" Warrants exercisable at Cdn$.50;
1,1940,000 Class "C" Warrants exercisable at Cdn$.50 per share; and 253,000
Class "D" Warrants exercisable at Cdn$.50 per share.
On June 30, 1999, we began trading on the Over-the-Counter Bulletin Board
under the name Voice Mobility International, Inc. and under the symbol VMII.
In June, July and August, 1999, an aggregate of 400,000 Class A Warrants,
380,000 Class B Warrants and 100,000 Class C Warrants were exercised for an
aggregate of $380,000 into restricted shares of our common stock.
On September 16, we entered into an agreement with MTT whereby we agreed to
issued to MTT 1,428,571 shares of our common stock in satisfaction of the
obligations of Voice Mobility Inc. to MTT and will permit MTT to appoint one of
our directors.
31
<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES
- ------ --------------------------
Under our amended certificate of incorporation, we are authorized to issue
up to 50,000,000 shares of common stock, par value $.001 per share, of which
16,221,750 shares were outstanding as of August 31, 1999. We are also authorized
to issue up to 1,000,000 shares of preferred stock, par value $.001 per share,
of which no shares of were issued and outstanding as of August 31, 1999.
COMMON STOCK.
- -------------
Each shareholder is entitled to one vote for each share of common stock
owned of record. The holders of shares of common stock do not possess cumulative
voting rights, which means that the holders of more than 50% of the outstanding
shares voting for the election of directors can elect all of the directors, and
in such event the holders of the remaining shares will be unable to elect any of
our directors. Holders of outstanding shares of common stock are entitled to
receive dividends out of assets legally available at such times and in such
amounts as our board of directors may determine. Upon our liquidation,
dissolution, or winding, the assets legally available for distribution to our
shareholders will be distributed ratably among the holders of the shares
outstanding at the time. Holders of our shares of common stock have no
preemptive, conversion, or subscription rights, and our shares of common stock
are not subject to redemption. All our outstanding shares of common stock are
fully paid and non-assessable.
PREFERRED STOCK.
- ----------------
Under our amended certificate of incorporation, we are authorized to issue
preferred stock with such designations, rights and preferences as our Board of
Directors may from time to time determine. Accordingly, our board of directors
is empowered, without stockholder approval, to issue preferred stock with
dividend, liquidation, conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of our stock. We could
issue preferred stock as a method of discouraging, delaying or preventing a
change of control of our company. Our board of directors has created one series
of preferred stock, Series A Preferred Stock.
32
<PAGE>
Warrants
On June 30, 1999, Acrex Ventures Ltd. agreed to transfer its loans
outstanding aggregating $1,123,472 from Voice Mobilit, Inc. to us, in
consideration of our issuing common stock warrants with terms and conditions
substantially identical to the warrants issued by Acrex Ventures to the
subscribers in its four private placements. All classes of warrant terminate on
December 29, 2000. The warrants are immediately exercisable and are not
redeemable. All of our shares issuable upon exercise of the warrants will be
fully paid and nonassessable. We intend to register sufficient shares of our
common stock underlying each class of warrant; however, share certificates
issued to holders of warrants who exercise them prior to the effective date of a
registration statement will be legended to prevent sale, hypothecation or
transfer in the absence of an effective registration or an exemption from
registration. On June 30, 1999, we issued 1,600,000 Class "A" Warrants
exercisable at Cdn$0.26625; 1,000,000 Class "B" Warrants exercisable at Cdn$.50;
1,1940,000 Class "C" Warrants exercisable at Cdn$.50 per share; and 253,000
Class "D" Warrants exercisable at Cdn$.50 per share.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
- ------ --------------------------------------------------------------------
OTHER SHAREHOLDER MATTERS.
-------------------------
Our shares of common stock are traded over-the-counter and quoted on the
OTC Electronic Bulletin Board under the symbol "VMII". Prior to the third
calendar quarter of 1999, our shares of common stock were traded under the
symbol "ECGI". The reported high and low bid prices for the common stock are
shown below for the period from inception of trading in the fourth quarter of
1998 through June 30, 1999. All prices have been adjusted to reflect a 4:1
reverse split. The quotations reflect inter-dealer prices and do not include
retail mark-ups, mark-downs or commissions. The prices do not necessarily
reflect actual transactions.
HIGH BID LOW BID
-------- -------
1998
Fourth Quarter $18.00 $18.00
1999
First Quarter $18.00 $18.00
Second Quarter $18.00 $12.00
Third Quarter $ 3.00 $ 2.00
(through August 31, 1999)
The closing price of our common stock on August 31, 1999, was $2.50, as
quoted on the OTC Electronic Bulletin Board. As of August 31, 1999, there were
16,221,750 shares of common stock outstanding, 95 shareholders of record, and
approximately 95 beneficial holders.
Our transfer agent is OTR/Oxford Transfer, 317 Southwest Alder (Suite
1120), Portland Oregon 97204.
We have never paid cash dividends on our common stock and we presently
intend to retain future earnings, if any, to finance the expansion of our
business. We do not anticipate that any cash dividends will be paid in the
foreseeable future. Future dividend policy will depend on ours earnings, capital
requirements, expansion plans, financial condition and other relevant factors.
33
<PAGE>
ITEM 2. LEGAL PROCEEDINGS.
- ------- ------------------
Not applicable.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
- ------- ----------------------------------------------
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
- ------- ----------------------------------------
During the first quarter of 1998, we sold 100,000 shares of our common
stock under Rule 504 of Regulation D to the Securities Act of 1933 to 32
investors for a total of $100,000.
On April 1, 1999, we undertook a 4:1 reverse stock split of our common
stock. All figures set forth below give effect to the reverse split.
On April 1, 1999, we sold for an aggregate of $200,000 an aggregate of
8,293,000 shares of our common stock to xxxx investors under Rule 504 of
Regulation D to the Securities Act of 1933.
On June 24, we entered into an agreement with the stockholders of Voice
Mobility, Inc., a Canadian corporation, under which we will issue 6,600,000 of
its shares of common stock to them in exchange for 100% of the issued and
outstanding common shares of Voice Mobility Inc.
On July 1, 1999, 1999, we issued an aggregate of 4,793,000 Warrants in four
classes to xxxx persons ("Warrantholders") in consideration of the release of an
aggregate of xxx of principal amount of loans which had been extended to us by
Acrex and the simultaneous release of an equal principal amount of indebtedness
from Acrex to the of Warrantholders who were its lenders. The warrants were
issued in the same ratio as the principal amount of the loans from the
Warrantholders to Acrex.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
- ------- ------------------------------------------
Chapter 78 of the Nevada Revised Statutes permits the indemnification of
directors, employees, officers and agents of Nevada corporations as follows:
Section 78.7502 Discretionary and mandatory indemnification of officers,
directors, employees and agents:
- --------------------------------------------------------------------------------
General provisions.
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action, suit
or proceeding if he acted in good faith and in a manner which he reasonably
34
<PAGE>
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding,
he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually
and reasonably incurred by him in connection with the defense or settlement
of the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or suit
was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such expenses as the
court deems proper.
3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in subsections 1 and 2, or in defense of any
claim, issue or matter therein, the corporation shall indemnify him against
expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
Section 78.751 Authorization required for discretionary indemnification;
advancement of expenses; limitation on indemnification and advancement of
expenses.
- --------------------------------------------------------------------------------
1. Any discretionary indemnification under NRS 78.7502 unless ordered by a
court or advanced pursuant to subsection 2, may be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in
the circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
action, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
35
<PAGE>
2. The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that 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. The provisions of
this subsection do not affect any rights to advancement of expenses to
which corporate personnel other than directors or officers may be entitled
under any contract or otherwise by law.
3. The indemnification and advancement of expenses authorized in or ordered by
a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an
action in his official capacity or an action in another capacity while
holding his office, except that indemnification, unless ordered by a
court pursuant to NRS 78.7502 or for the advancement of expenses made
pursuant to subsection 2, may not be made to or on behalf of any
director or officer if a final adjudication establishes that his acts
or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors
and administrators of such a person.
Section 78.752 Insurance and other financial arrangements against liability
of directors, officers, employees and agents.
- ----------------------------------------------------------------------------
1. A corporation may purchase and maintain insurance or make other financial
arrangements on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise for any
liability asserted against him and liability and expenses incurred by him
in his capacity as a director, officer, employee or agent, or arising out
of his status as such, whether or not the corporation has the authority to
indemnify him against such liability and expenses.
2. The other financial arrangements made by the corporation pursuant to
subsection 1 may include the following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
(c) The securing of its obligation of indemnification by granting a
security interest or other lien on any assets of the corporation.
(d) The establishment of a letter of credit, guaranty or surety.
36
<PAGE>
No financial arrangement made pursuant to this subsection may provide
protection for a person adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable for intentional
misconduct, fraud or a knowing violation of law, except with respect to the
advancement of expenses or indemnification ordered by a court.
3. Any insurance or other financial arrangement made on behalf of a person
pursuant to this section may be provided by the corporation or any other
person approved by the board of directors, even if all or part of the other
person's stock or other securities is owned by the corporation.
4. In the absence of fraud:
(a) The decision of the board of directors as to the propriety of the
terms and conditions of any insurance or other financial arrangement
made pursuant to this section and the choice of the person to provide
the insurance or other financial arrangement is conclusive; and
(b) The insurance or other financial arrangement:
(1) Is not void or voidable; and
(2) Does not subject any director approving it to personal liability
for his action, even if a director approving the insurance or
other financial arrangement is a beneficiary of the insurance or
other financial arrangement.
5. A corporation or its subsidiary which provides self-insurance for itself or
for another affiliated corporation pursuant to this section is not subject
to the provisions of Title 57 of NRS.
Our Certificate of Incorporation provides as follows:
Article XI
The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under Nevada Law.
Article XII
The corporation is authorized to indemnify the directors and officers of
the corporation to the fullest extent permissible under Nevada Law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
37
<PAGE>
Our By-Laws provide as follows:
ARTICLE X - INDEMNIFICATION OF DIRECTORS AND OFFICERS
1. INDEMNIFICATION. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that such person is or
was a director, trustee, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, trustee,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, by itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed
to be in or not opposed to the best interest of the corporation, and with
respect to any criminal action or proceeding, had reasonable cause to
believe that such person's conduct was lawful.
2. DERIVATIVE ACTION. The corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in the corporation's favor by reason of the fact that such person
is or was a director, trustee, officer, employee or agent of the
corporation, or is or was serving at the request of the corpporation as a
director, trustee, officer, employee or agent of any other corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding if such person acted in good faith and
in a manner such person reasonably believed to be in or not opposed to the
best interests of the corporation; provided, however, that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable for gross
negligence or willful misconduct in the performance of such person's duty
to the corporation unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that,
despite circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as such court shall deem proper.
The termination of any action, suit or porceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, by itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed
to be in or not opposed to the best interest of the corporation.
3. SUCCESSFUL DEFENSE. To the extent that a director, trustee, officer,
employee or agent of the corporation has been successful, on the merits or
otherwise, in whole or in part, in defense of any action, suit or
proceeding referred to in paragraphs 1 and 2 above, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith.
38
<PAGE>
4. AUTHORIZATION. Any indemnification under paragraph 1 and 2 above (unless
ordered by a court) shall be made by the corporation only as authorized in
the specific case upon a determination that indemnification of the
director, trustee, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard of
conduct set forth in paragarph 1 and 2 above. Such determination shall be
made (a) by the board of directors by a majority vote of a quorum
consisting of directrors who were not parties to such action, suit or
proceeding, (b) if by independent legal counsel (selected by one or more of
the directors, whether or not a quorum and whether or not disinterested) in
a written opinion, or by the shareholders. Anyone making such a
determination under this paragraph 4 may determine that a person has met
the standards therein set forth as to some claims, issues or matters but
not as to others, and may reasonably prorate amounts to be paid as
indemnification.
5. ADVANCES. Expenses incurred in defending civil or criminal actions, suits
or perceedings shall be paid by the corporation, at any time or from time
to time in advance of the final disposition of such action, suit or
proceeding as authorized in the manner provided in paragraph 4 above upon
receipt of an undertaking by or on behalf of the director, trustee,
officer, employee or agent to repay such amount unless it shall ultimately
be determined by the corporation that the payment of expenses is authorized
in this Section.
6. NONEXCLUSIVITY. The indemnification provided in this Section shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled under any law, by-law, agreement, vote of shareholders or
disinterested director or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
trustee, officer, employee or agent and shall insure to the benefit of the
heirs, executors, and administrators of such a person.
7. INSURANCE. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, trustee,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee or
agent of any corporation, partnership, joint venture, trust or other
enterprise, against any liability assessed against such person in any such
capacity or arising out of such person's status as such, whether or not the
corporation would have the power to indemnify such person against such
liability.
8. "CORPORATION" DEFINED. For purpose of this action, references to the
"corporation" shall include, in addition to the corporation, any
constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had the power and authority to indemnify its
directors, trustees, officers, employees or agents, so that any person who
is or was a director, trustee, officer, employee or agent of such of
constituent corporation will be considered as if such person was a
director, trustee, officer, employee or agent of the corporation.
39
<PAGE>
PART F/S
The financial statements and supplementary data are included herein.
FINANCIAL STATEMENTS AND EXHIBITS
- ---------------------------------
CONTENTS
PAGE
TABLE OF CONTENTS 1
ACCOUNTANTS' AUDIT REPORT 2
FINANCIAL STATEMENTS
Balance Sheets 3-4
Statements of Operations 5
Statements of Comprehensive Income/(Loss) 6
Statements of Stockholders' Equity 7
Statements of Cash Flows 8- 9
Notes to Consolidated Financial Statements 10-19
<PAGE>
Independent Auditors' Report
Board of Directors
Equity Capital Group, Inc. and Subsidiary
Orange, California
We have audited the accompanying balance sheets of Equity Capital Group,
Inc. and Subsidiary (a Nevada Corporation, successor to Ward Enterprises, Inc.,
(Note 1)) as of March 31, 1999 and 1998, and the related statements of
operations, comprehensive income, stockholders' equity, and cash flows for the
years then ended March 31, 1999, 1998, and 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly
in all material respects, the financial position of Equity Capital Group, Inc.
and Subsidiary at March 31, 1999 and 1998, and the results of its operations and
its cash flows for the years then ended March 31, 1999, 1998, 1997 in conformity
with generally accepted accounting principles.
Irvine, California
August 30, 1999
<PAGE>
Equity Capital Group, Inc. and Subsidiary
Balance Sheets
As of March 31, 1999 and 1998
ASSETS
March 31, March 31,
1999 1998
---------- -----------
Current Assets
Cash $ 1,454 $ 41,348
Accounts Receivable, net of allowance
for doubtful accounts of $155,215. 6,314 276,200
Accrued Interest Receivable (Note 5) - 30,327
Marketable Equity Securities (Note 3) 614 1,425,198
Notes Receivable - Current (Note 4) - 100,000
Lease Payments Receivable - Current (Note 5) - 7,508
---------- ----------
Total Current Assets $ 8,382 $ 1,880,581
Fixed Assets
Office Furniture & Equipment -
Net (Notes 1 & 2) $ 20,610 $ 21,755
---------- -----------
Total Fixed Assets $ 20,610 $ 21,755
Other Assets
Organization Costs - Net (Note 1) $ 1,073 $ 1,427
Notes Receivable -
Less Current Portion (Note 4) - 300,000
Lease Payments Receivable -
Less Current Portion (Note 5) - 311,469
Accrued Interest Receivable -
Less Current Portion (Note 5) - 112,623
------------ -----------
Total Other Assets $ 1,073 $ 725,519
----------- ----------
Total Assets $ 30,065 $2,627,855
=========== ==========
See accompanying notes and independent auditors' report
<PAGE>
Equity Capital Group, Inc. and Subsidiary
Balance Sheets
As of March 31, 1999 and 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, March 31,
1999 1998
-------- --------
Current Liabilities
Accounts Payable $ 16,499 $ 5,057
Income Taxes Payable (Note 7) 1,600 13,869
Deposits - 14,000
Notes Payable (Note 9) - 4,640
---------- ---------
Total Current Liabilities $ 18,099 $ 37,566
Long Term Liabilities
Deferred Income Taxes (Note 7) $ - 196,829
Unearned Interest Income (Note 5) - 142,950
---------- ----------
Total Long Term Liabilities $ - $ 339,779
Total Liabilities $ 18,099 $ 377,345
---------- ---------
Stockholders' Equity
Common Stock, $.001 Par Value, $ 2,174 $ 1,675
10,000,000 Shares Authorized
2,174,000 Shares Issued and
Outstanding (Notes 1 & 6)
Additional Paid-in Capital 2,520,186 1,841,385
Less: Notes Received for Stock
Issued (Notes 4 & 6) (450,000) -
Retained Earnings/(Deficit) (1,682,295) 407,450
Accumulated Unrealized Holding
Loss on Securities (376,800) -
Treasury Stock,
300 Shares of Common Stock (1,299) -
---------- ---------
Total Stockholders' Equity $ 11,966 $ 2,250,510
---------- ---------
Total Liabilities and Stockholders' Equity $ 30,065 $ 2,627,855
========== =========
<PAGE>
Equity Capital Group, Inc. and Subsidiary
Statements of Operations
For The Years Ended March 31, 1999, 1998 and 1997
March 31, March 31, March 31,
1999 1998 1997
--------- -------- --------
Sales $ 303,213 $ 420,313 $ 15,000
Costs of Sales (269,400) (225,938) (65,000)
General & Administrative Expenses (1,253,187) (70,901) (11,015)
Other Income/(Expense) (1,079,469) 555,689 -
----------- ----------- ----------
Net Income/(Loss) Before Taxes (2,298,843) 679,163 (61,015)
----------- ----------- ----------
Benefit/(Provision)
For Income Taxes (Note 7) 209,098 (210,698) -
----------- ----------- ----------
Net Income/(Loss) $(2,089,745) $ 468,465 $ (61,015)
=========== =========== =========-
Net Income/(Loss)
Per Common Share (Note 1) $ (1.17) $ 1.17 $ (61.02)
========== =========== ==========
Weighted Average Shares Outstanding 1,783,530 400,750 1,000
=========== =========== ==========
<PAGE>
Equity Capital Group, Inc. and Subsidiary
Statements of Comprehensive Income/(Loss)
For The Years Ended March 31, 1999, 1998 and 1997
March 31, March 31, March 31,
1999 1998 1997
-------- --------- ---------
Net Income/(Loss) $ (2,089,745) $ 468,465 $ (61,015)
Other Comprehensive Income/(Loss)
Unrealized Holding Loss on Securities (376,800) - -
---------- ---------- ---------
Total Other Comprehensive Income/(Loss) (376,800) - -
---------- ---------- ---------
Total Comprehensive Income/(Loss) $ (2,466,545) $ 468,465 $ (61,015)
========== ========== ==========
<PAGE>
Equity Capital Group, Inc. and Subsidiary
Statements of Stockholders' Equity
For The Years Ended March 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Retained
Earnings/
Common Common Addtn'l Accum. Total
Stock Stock Paid in Holding Stockholders'
Shares Amount Capital Loss Equity
------ ------ ------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balances, at March 31, 1996 - - - - -
Stock Issued on 6-2-96 (Note 1) 1,000 1,000 228,500 - 229,500
Net Income/(Loss) $ (61,015) (61,015)
-------- ---------- ----------- ------------- ----------
Balances, at March 31, 1997 1,000 $ 1,000 $ 228,500 $ (61,015) $ 168,485
-------- ---------- ----------- ------------- ----------
Stock Retired on 12-31-97 (Note 1) (1,000) (1,000) - - (1,000)
Stock Issued on 12-31-97 (Note 1) 1,600,000 1,600 1,237,960 - 1,239,560
Stock Issued on 3-31-98 (Note 1) 75,000 75 374,925 375,000
Net Income/(Loss) $ 468,465 468,465
---------- ---------- ----------- ------------- ----------
Balances, at March 31, 1998 1,675,000 $ 1,675 $ 1,841,385 $ 407,450 $ 2,250,510
---------- ---------- ----------- ------------- ----------
Stock Issued on 1-7-99 (Note 6) 99,300 99 124,201 - 124,300
Stock Issued on 1-14-99 (Note 6) 360,000 360 359,640 - 360,000
Stock Issued on 2-4-99 (Note 6) 5,000 5 19,995 - 20,000
Stock Issued on 3-1-99 (Note 6) 35,000 35 174,965 - 175,000
Treasury Stock Acquired on 2-1-99 (300) - (1,299) - (1,299)
(Note 6)
Notes Received for Stock Issued - - (450,000) (450,000)
Net Income/(Loss) (2,089,745) (2,089,745)
Unrealized Holding Loss on Securities (376,800) (376,800)
----------- ---------- ----------- ------------- ----------
Balances, at March 31, 1999 2,174,000 $ 2,174 $2,068,887 $ (2,059,095) $ 11,966
=========== ========= =========== ============= ==========
</TABLE>
<PAGE>
Equity Capital Group, Inc. and Subsidiary
Statements of Cash Flows
For The Years Ended March 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
March 31, March 31, March 31,
1999 1998 1997
<S> <C> <C> <C>
Cash Flows Used In Operating Activities:
Net Income/(Loss) $ (2,089,745) $ 468,465 $ (61,015)
Non Cash Items Included in Net Income:
Depreciation 1,145 1,145 -
Amortization 356 357 66
Provision for Bad Debt 163,215 - -
Write-off of Accounts Receivable (8,000) - -
Realized Gain on Sale of Stock (4,454) - -
Unrealized Holding Loss on Securities 376,800 (527,236) -
Change in Unearned Interest Income (148,766) 142,950 -
Change in Accounts Receivable 114,671 (276,200) -
Change in Deposits (14,000) 14,000 -
Change in Deferred Income Taxes (196,829) 196,829 -
Change in Accrued Interest Receivable - (142,950) -
Change in Accounts Payable 11,442 1,614 3,443
Change in Income Tax Payable (12,269) 13,869 -
----------- ------------- -------------
Net Cash Used For Operating Activities $ (1,806,434) $ (107,157) $ (57,506)
Cash Flows Used In Investing Activities
Increase in Investments Receivable $ (52,500) $ - $ -
Change in Lease Payments Receivable 318,977 - -
Change in Organizational Costs - (850) (1,000)
Purchase of Furniture & Equipment - (22,900) -
Increase in Marketable Equity Securities (98,998) (734,462) (163,500)
----------- ------------- -------------
Net Cash Used For Investing Activities $ 167,479 $ (758,212) $ (164,500)
Cash Flows From Financing Activities
Issuance of Common Stock $ 30,000 $ 1,613,560 $ 229,500
Change in Notes Received for Stock Issued 350,000 - -
Increase in Note Payable (4,640) 4,640 -
Issuance of Lease Receivable - (318,977) -
Increase in Note Receivable 400,000 (400,000) -
Notes Receivable Written Off to Bad Debt 825,000 - -
Purchase of Treasury Stock (1,299) - -
----------- ------------- -------------
Net Cash Provided By Financing Activities $ 1,599,061 $ 899,223 $ 229,500
</TABLE>
<PAGE>
Equity Capital Group, Inc. and Subsidiary
Statement of Cash Flows
For The Years Ended March 31, 1999, 1998 and 1997
March 31, March 31, March 31,
1999 1998 1997
---------- ---------- ----------
Net Change In Cash $ (39,894) $ 33,854 $ 7,494
Cash At Beginning Of The Year $ 41,348 $ 7,494 $ -
------------- -------------- --------------
Cash At End Of The Year $ 1,454 $ 41,348 $ 7,494
------------- -------------- --------------
Supplemental Cash Flow
Information: Interest Paid $ (313) $ - $ -
============== ============== ==============
Income Taxes Paid $ - $ - $ -
=============== ============== ==============
PAGE>
Equity Capital Group, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Audit Report)
For The Years Ended March 31, 1999, 1998, and 1997
NOTE 1 - ACCOUNTING POLICIES AND NATURE OF BUSINESS
Nature of Business
The Company will serve as a Merchant Banking Firm consisting of a business
consulting/investment division and a real estate division.
Company Formation
The Company was created on October 2, 1997 as an ultimate successor
corporation to Ward Enterprises, Inc. (Ward). The Company acquired all of the
shares of Ward in a tax-free reorganization pursuant to Internal Revenue Code
Section 368(a)(1)(B) and the regulations thereunder on December 31, 1997,
wherein 1,000 shares of no par value common stock of Ward were exchanged for
1,500,000 shares of $.001 par value common stock of the Company. Subsequently,
Ward was liquidated into its parent pursuant to Internal Revenue Code Section
332 and the regulations thereunder.
The transaction was accounted for as a reverse acquisition under the
pooling method of accounting since the shareholders of Ward had control of the
Company subsequent to the exchange.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary, First Consolidated Securities, Inc.
All intercompany balances and transactions have been eliminated in
consolidation.
Income Taxes
The Company accounts for income taxes under the provisions of Statements of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). SFAS 109 requires a company to recognize deferred tax liabilities and
assets for the expected future tax consequences of events that have been
recognized in a company's financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on the
difference between the financial statement carrying amounts and tax bases of
assets and liabilities using enacted tax rates.
Office Furniture and Equipment
Office furniture and equipment are stated at cost. Major renewals and
betterments are capitalized to the asset accounts while the cost of maintenance
and repairs is charged against income as incurred. At the time assets are
retired or otherwise disposed of, the cost and accumulated depreciation are
removed from the respective accounts and the resulting gain or loss is credited
to or charged against income.
<PAGE>
Equity Capital Group, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Audit Report)
For The Years Ended March 31, 1999, 1998, and 1997
NOTE 1 - ACCOUNTING POLICIES AND NATURE OF BUSINESS (CONTINUED)
Depreciation for financial reporting purposes is calculated by both
straight-line and accelerated methods over the estimated useful lives of the
assets. The Modified Accelerated Cost Recovery System (MACRS) method is used for
income tax purposes.
Organization Costs
Organization costs, totaling $1,850 and $1,000, respectively, are being
amortized using the straight line method over five years. During the years ended
March 31, 1999 and 1998, amortization expense amounted to $356 and $357,
respectively.
Net Income/(Loss) Per Share
Net loss per share is computed based on the weighted average number of
shares of common stock outstanding.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 - OFFICE FURNITURE AND EQUIPMENT
Office Furniture and Equipment
Office Furniture and Equipment are summarized below:
Estimated
useful life Amount
Office Furniture 5 years $ 11,450
Equipment 5 years 11,450
22,900
------------
Less: Accumulated Depreciation (2,290)
------------
$ 20,610
Depreciation expense for the year ended March 31, 1999 was $1,145.
<PAGE>
Equity Capital Group, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Audit Report)
For The Years Ended March 31, 1999, 1998, and 1997
NOTE 3 - MARKETABLE EQUITY SECURITIES
Cost and fair value of marketable equity securities at March 31, 1999 and
1998 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
March 31, 1999
Available for Sale
Equity Securities $ 971,800 $ - $ 971,800 $ -
Trading
Equity Securities 609,350 - 608,736 614
Totals $ 1,581,150 $ - $ 1,580,536 $ 614
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
March 31, 1998
Available for Sale
Equity Securities $ 500,000 $ - $ - $ 500,000
Trading
Equity Securities 397,962 527,236 - 925,198
Totals $ 897,962 $ 527,236 $ - $1,425,198
Pursuant to Statement of Financial Accounting Standards No. 115 (SFAS 115),
the change in net unrealized holding losses on trading securities in the amount
of $608,736 has been included in earnings for the year ended March 31, 1999.
Further, there has been an impairment of value in the Equity Securities
available for sale in the amount of $595,000 which has also been included in
earnings for the year ended March 31, 1999. Finally, there has been a temporary
decline in value in the Equity Securities available for sale in the amount of
$376,800. This amount is shown as a decrease in the equity section of the
balance sheet. Thus, there is a total unrealized loss of $1,580,536 for the year
ended March 31, 1999.
<PAGE>
Equity Capital Group, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Audit Report)
For The Years Ended March 31, 1999, 1998, and 1997
NOTE 4 - NOTES RECEIVABLE
Notes receivable consist of the following:
$350,000 Promissory Note secured by a UCC-1 financing statement on certain
assets. This note bears interest at 7% per annum. Interest only is to be
received until January 10, 2002. Thereafter, the entire balance becomes due and
payable. This note is currently in default. Further, since this note was issued
for stock and no cash was received, the amount is shown as a decrease in
additional paid in capital.
$100,000 Promissory Note secured by a UCC-1 financing statement on certain
assets. This note bears interest at 7% per annum. Interest only is to be
received until January 10, 2002. Thereafter, the entire balance becomes due and
payable. This note is currently in default. Further, since this note was issued
for stock and no cash was received, the amount is shown as a decrease in
additional paid in capital.
There were three notes receivable in the amounts of $300,000, $175,000, and
$250,000, for a total of $725,000, that were written off and charged to bad debt
during the current year.
NOTE 5 - LEASING ARRANGEMENTS
Direct Financing Lease
The Company was a lessor in a direct financing lease whereby an envelope
machine valued at $300,000 was repossessed. A loss in the amount of $20,202 was
incurred with the reacquisition of the machine. This machine was subsequently
sold to ASI Acquisition Corporation for 300,000 shares of ASI Acquisition
Corporation common stock. (Note 8)
No interest was accrued this year on account of foreclosure on direct
financing lease.
Operating Lease
The Company entered into a operating lease agreement with a related party
for office space. The lease term is month to month. Annual rent expense equaled
$18,000 and $7,500 for the years ended March 31, 1999 and 1998, respectively.
<PAGE>
Equity Capital Group, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Audit Report)
For The Years Ended March 31, 1999, 1998, and 1997
NOTE 6 - STOCKHOLDERS EQUITY
Common Stock
On January 7, 1999, the Company issued 24,300 shares of its common stock to
the minority shareholders of the Tuschner Financial Group, Inc. in exchange for
24,300 shares of Tuschner Financial Group, Inc.
Also, on January 7, 1999, the Company issued 75,000 shares to Tuschner &
Company, Inc. in exchange for a note receivable for $100,000. This note is shown
as a decrease in additional paid in capital.
On January 14, 1999, the Company issued 350,000 shares of its common stock
to Fun Karts Holdings, Inc. in exchange for a note receivable in the amount of
$350,000. (Note 4) This note is shown as a decrease in additional paid in
capital.
Also, on January 14, 1999, the Company issued 10,000 shares of its common
stock to Northstar Partners in connection with commission due to them for the
promotion of shares previously issued. The shares were valued at $10,000.
On February 4, 1999, the Company issued, to an unrelated party, 5,000
shares of its common stock valued at $4 per share for $20,000 in cash.
On March 1, 1999, the Company issued 35,000 shares of its common stock
valued at $5 per share to an individual in exchange for a note receivable held
by that individual for $175,000 from Aeromedical Group, Inc. This note was
written off and charged to bad debt during the year.
Treasury Stock
In February 1999, the Company reacquired 300 shares of its common stock on
the open market for $1,299. The stock is accounted for using the cost method of
accounting.
NOTE 7 - DEFERRED INCOME TAXES
The Company has a tax net operating loss of $913,227 available for
carryback to March 31, 1998 and carryforward of up to 20 years for federal
purposes. Pursuant to Internal Revenue Code section 382 and the regulations
thereunder, the amount of utilizable carryover may be limited as a result of
ownership changes or even eliminated if business continuity requirements are not
met. No carrybacks are available for state purposes while carryforwards of 50%
of the loss are permitted for up to 5 years.
<PAGE>
Equity Capital Group, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Audit Report)
For The Years Ended March 31, 1999, 1998, and 1997
NOTE 7 - DEFERRED INCOME TAXES (CONTINUED)
The tax effect of temporary differences giving rise to the Company's
deferred tax liability is as follows:
March 31, March 31,
1999 1998
Current Deferred Tax Liabilities $ - $ -
Total Current Deferred Tax Liabilities $ - $ -
Long-Term Deferred Tax Liabilities:
Tax Depreciation Expense in Excess of
Financial Depreciation $ (6,440) $ 6,440
SFAS 115 Change in Unrealized
Holding Gains (190,389) 190,389
Total Long-Term Deferred Tax Liabilities $ (196,829) $ 196,829
Components of Income Tax Expense are as follows:
March 31, March 31,
1999 1998
CURRENT
Federal $ (13,069) $ 13,069
State 800 800
$ (12,269) $ 13,869
DEFERRED
Tax Depreciation Expense in Excess of
Financial Depreciation (6,440) 6,440
SFAS 115 Change in Unrealized
Holding Gains (190,389) 190,389
$ (209,098) $ 196,829
Net Provision/(Benefit) For Income Taxes $ (209,098) $ 210,698
<PAGE>
Equity Capital Group, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Audit Report)
For The Years Ended March 31, 1999, 1998, and 1997
NOTE 7 - DEFERRED INCOME TAXES (CONTINUED)
The provisions for income taxes differ from the amounts computed by
applying the Federal tax rate of 34% to income before tax. A reconciliation of
these differences is as follows:
Tax Provision (Benefit) Calculated at 34% $ (209,898) $ 210,170
State Income Taxes Net of Federal Benefit 800 528
-------------- -------------
Total $ (209,098) $ 210,698
NOTE 8 - ACQUISITIONS
On November 12, 1998, the Company acquired all the outstanding stock of a
newly formed corporation known as First Consolidated Securities, Inc. for
consideration of a note payable of $1,000. The acquisition was accounted for
under the purchase method of accounting.
On January 9, 1999, Equity Capital Group acquired 15% of the outstanding
common stock of ASI Acquisition Corporation in exchange for previously leased
machinery valued at $300,000. (Note 5) The Company accounts for its investment
in ASI in accordance with SFAS 115, whereby the entire amount was ultimately
written down to zero value. (Note 3)
On January 10, 1999, First Consolidated Securities, Inc. acquired 24.3% of
the outstanding common stock of Tuschner Financial Group, Inc. in exchange for
24,300 shares of Equity Capital Group Stock valued at $1 per share. The Company
accounts for this under the equity method of accounting. Following the
acquisition by the Company, Tuschner Financial Group, Inc. and its wholly owned
subsidiary Tuschner and Company, Inc. have fallen into extreme financial
distress. It is management's position that the value of the investment is
impaired and was written down to zero value pursuant to SFAS 115. (Note 3)
NOTE 9 - RELATED PARTY TRANSACTIONS
The Company has a lease agreement for office space with The Charleston
Group, Inc. for $1,500 per month plus utilities. Robert L. Cashman, who is the
President and Director of Equity Capital Group, Inc. and Subsidiary, is also the
President/Director of The Charleston Group, Inc.
<PAGE>
Equity Capital Group, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Audit Report)
For The Years Ended March 31, 1999, 1998, and 1997
NOTE 9 - RELATED PARTY TRANSACTIONS (CONTINUED)
Robert L. Cashman was also the holder of two promissory notes as follows:
$49,000, 10% note payable, secured by stock in Pacific Ocean Restaurant
Group, Inc. (Note 3) Due on demand. This note was forgiven on March 31, 1999 by
the lender and recorded as Other Income, Debt Forgiveness.
$22,500, 15% note payable, unsecured, payable in monthly installments of
$2,000. Due March 9, 2000. This note was forgiven on March 31, 1999 by the
lender and recorded as Other Income, Debt Forgiveness.
John Vilagi, Secretary and Director of the Company, was the holder of the
following promissory note:
$25,000, 15% note payable, unsecured, payable in monthly installments of
$835. Due April 9, 2002. This note was forgiven on March 31, 1999 by the lender
and recorded as Other Income, Debt Forgiveness.
Management is of the opinion that these transactions were executed under
terms and conditions substantially equivalent to that which would have been
obtained between unrelated parties.
Tuschner & Company, Inc., a wholly owned subsidiary of Tuschner Financial
Group, Inc. (Note 8), is the holder of $52,500 of the Equity Capital Group,
Inc.'s marketable equity securities. These securities are valued as follows:
Trading
Time Financial Services, Inc. $ 52,500
Tuschner & Company, Inc. is registered as a broker and dealer of securities
with various regulatory agencies. As such, the Company is subject to the
Security and Exchange Commission's uniform net capital rule (Rule 15c3-1) which
requires a minimum net capital requirement and debt to equity ratio.
Equity Capital Group, Inc. agreed to pledge the $52,500, valued pursuant to
SFAS 115, to Tuschner & Company, Inc. to assist them in meeting the
aforementioned capital requirements. Due to Tuschner's poor financial situation,
the ultimate return of these securities is unlikely. Therefore, the entire
amount has been written off.
<PAGE>
Equity Capital Group, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Audit Report)
For The Years Ended March 31, 1999, 1998, and 1997
NOTE 10 - LOSS ON SECURITIES
Trading
During the year, the company sold 303,500 of its 410,500 shares of
Homelife, Inc. (OTC BB:HMLF) for a gain of 96,404. However, during the year, the
remaining 119,500 shares of Homelife, Inc. bearer certificates, which were
endorsed and to be used as collateral for a bank loan, were stolen by one of the
Company's consultants. The cost basis of these shares was $91,950, thus
resulting in a net realized gain of $4,454.
In the prior year, the Company recorded an unrealized holding gain relating
to Homelife, Inc. in the amount of $595,236 and included it as income. Since all
the stock was sold/stolen during the year, management accordingly reversed the
gain and charged it back as an unrealized holding loss.
The company also recorded an unrealized holding loss on its investment of
84,000 shares in Time Financial Services, Inc. (OTC BB:TIMF) in the amount of
$13,500.
Available for Sale
At the close of the fiscal year, the Company held 145,000 shares of Pacific
Ocean Restaurants, Inc. These shares were valued at $595,000. However,
management decided that due to the numerous internal reporting and financial
problems that the company was experiencing, coupled with the company's uncertain
future, there was an impairment in value. Thus, an unrealized loss in the amount
of $595,000 was recorded on the entire investment.
The Company experienced an unrealized loss on Tuschner Financial Group,
Inc. stock in the amount of $24,300. In management's opinion, the Company has
experienced numerous personnel changes, legal problems, and its overall solvency
is in question. However, management feels that this is a temporary situation and
subsequently found a buyer for its interest. Accordingly, the loss was recorded
in the equity section of the balance sheet.
NOTE 11 - SUBSEQUENT EVENTS
On April 1, 1999, the Company entered into an agreement with Pioneer Growth
Corporation whereby all the remaining assets and liabilities of Equity Capital
Group, Inc. were transferred to Pioneer in exchange for all of the remaining
outstanding stock of Pioneer.
<PAGE>
Equity Capital Group, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(See Accountants' Audit Report)
For The Years Ended March 31, 1999, 1998, and 1997
NOTE 11 - SUBSEQUENT EVENTS (CONTINUED)
Also, on April 1, 1999 subsequent to the aforementioned transfer and
reverse split, the Company issued 8,293,000 shares of freely tradeable common
stock pursuant to the United States Securities Act of 1933, as amended, for
$200,000. At that time, the Company reverse split its issued and outstanding
stock, 1 for 4.
On June 30, 1999, the Company changed its name to Voice Mobility
International, Inc. and changed its trade symbol to OTC BB:VMII.
NOTE 12 - YEAR 2000 AWARENESS PROGRAM
The Company recognizes that the arrival of the year 2000 poses unique
challenges to the ability of all systems to recognize the date change from
December 31, 1999 to January 1, 2000 and has not adopted a plan designed to
address the issues related to this transition.
Ultimately, the potential impact of the year 2000 issues will depend not
only on corrective measures the Company undertakes, but also on the way in which
the year 2000 issue is addressed by governmental entities, vendors, customers,
counterparts, and other entities who provide or receive data and services from
the Company. Management is addressing these issues and believes they will
develop a year 2000 plan which will permit the Company to function effectively
into the year 2000.
<PAGE>
Financial Statements
Voice Mobility Inc.
December 31, 1998
<PAGE>
AUDITORS' REPORT
To the Shareholders of
Voice Mobility Inc.
We have audited the balance sheets of Voice Mobility Inc. as at December
31, 1998 and 1997 and the statements of earnings, shareholders' deficit and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1998 and 1997
and the results of its operations and cash flows for the years then ended in
accordance with United States generally accepted accounting principles.
Vancouver, British Columbia,
March 29, 1999 Chartered Accountants
<PAGE>
Voice Mobility Inc.
BALANCE SHEET
(presented in United States dollars)
As at December 31
1998 1997
$ $
- --------------------------------------------------------------------------------
ASSETS
Current
Cash 37,113 799
Accounts receivable (net of allowance for doubtful
debts $20,930; 1997 - $24,446) [note 3] 67,810 20,474
Prepaid expenses 17,116 2,882
Work-in-progress 14,919 -
- --------------------------------------------------------------------------------
Total current assets 136,958 24,155
- --------------------------------------------------------------------------------
Equipment and trademarks [note 4] 133,848 57,808
- --------------------------------------------------------------------------------
270,806 81,963
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current
Accounts payable and accrued liabilities 117,092 162,694
Deferred revenue - 26,257
Notes payable [note 5] 792,323 49,669
Due to ACREX Ventures Ltd. [note 6] 419,592 34,725
Due to shareholder [note 7] 239,642 233,568
- --------------------------------------------------------------------------------
Total liabilities 1,568,649 506,913
- --------------------------------------------------------------------------------
Commitments and contingencies [note 10]
Shareholders' deficiency
Share capital [note 8] 59 59
Deficit (1,373,141) (442,542)
Translation adjustment 75,239 17,533
- --------------------------------------------------------------------------------
Total shareholders' deficiency (1,297,843) (424,950)
- --------------------------------------------------------------------------------
270,806 81,963
- --------------------------------------------------------------------------------
See accompanying notes
On behalf of the Board:
/s/ James Jay Hutton /s/ William E. Krebs
Director Director
<PAGE>
Voice Mobility Inc.
STATEMENT OF EARNINGS
(presented in United States dollars)
Years ended December 31
1998 1997
$ $
- --------------------------------------------------------------------------------
REVENUE
Sales 119,248 519,687
Less: cost of sales (75,439) (260,274)
- --------------------------------------------------------------------------------
43,809 259,413
- --------------------------------------------------------------------------------
EXPENSES
Sales and marketing 189,691 59,797
Research and development 283,918 66,126
General and administrative 460,911 236,158
- --------------------------------------------------------------------------------
934,520 362,081
- --------------------------------------------------------------------------------
Loss before other expenses (890,711) (102,668)
Other expenses
Loss on sale of marketable securities - (39,098)
Interest expense (39,887) (26,973)
- --------------------------------------------------------------------------------
(39,887) (66,071)
- --------------------------------------------------------------------------------
Loss for the year (930,598) (168,739)
- --------------------------------------------------------------------------------
Loss per share (0.11) (0.13)
- --------------------------------------------------------------------------------
Weighted average number of shares outstanding 8,400,000 1,335,775
- --------------------------------------------------------------------------------
See accompanying notes
<PAGE>
Voice Mobility Inc.
STATEMENTS OF SHAREHOLDERS' DEFICIT
(presented in United States dollars)
Years ended December 31
1998 1997
Ending Activity Ending Activity Beginning
Balance Balance Balance
Common stock shares
Isued and outstanding 8,400,000 - 8,400,000 8,399,900 100
Common stock, no par value $ 59 - 59 58 1
Accumulated deficit (1,373,141)(930,599) (442,542) (168,739 (273,803)
Accumulated foreign
currency translation 75,239 57,706 17,533 16,657 876
Accumulated comprehensive loss (1,297,902)(872,893) (425,009) (152,082)(272,927)
Total shareholders' deficit (1,297,843)(872,893) (424,950) (152,024)(272,926)
- --------------------------------------------------------------------------------
See accompanying notes
<PAGE>
Voice Mobility Inc.
STATEMENT OF CASH FLOWS
(presented in United States dollars)
Years ended December 31
1998 1997
$ $
- --------------------------------------------------------------------------------
OPERATING ACTIVITIES
Cash receipts from customers 44,047 456,997
Cash paid to suppliers and employees (1,014,350) (542,637)
Interest paid (3,701) (8,667)
- --------------------------------------------------------------------------------
Cash used in operating activities (974,004) (94,307)
- --------------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition of equipment (153,145) (31,129)
Proceeds on sale of marketable securities - 89,833
- --------------------------------------------------------------------------------
Cash provided by (used in) investing activities (153,145) 58,704
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase in notes payable 753,033 35,850
Increase in advances from ACREX Ventures Ltd. 403,619 -
Increase in advances from a shareholder 6,811 -
Shares issued - 60
- --------------------------------------------------------------------------------
Cash provided by financing activities 1,163,463 35,910
- --------------------------------------------------------------------------------
Increase (decrease) in cash 37,912 307
Cash, beginning of year 799 492
- --------------------------------------------------------------------------------
Cash, end of year 37,113 799
- --------------------------------------------------------------------------------
See accompanying notes
<PAGE>
Voice Mobility Inc.
NOTES TO FINANCIAL STATEMENTS
(presented in United States dollars)
December 31, 1998 and 1997
1. NATURE OF OPERATIONS
Voice Mobility Inc. is a private company registered under the laws of the
Canada Business Corporations Act.
The Company is in the business of developing and marketing a telephone
message platform that seamlessly integrates the user's telephones, e-mail, fax
and paging into a unified message service.
The Company incurred an operating loss of $930,598 [1997 - $168,739] for
the year ended December 31, 1998 and had a working capital deficiency of
$1,431,691 [1997 - 482,758] as at December 31, 1998. The ability of the Company
to continue as a going concern is dependent upon the ability of the Company to
obtain necessary financing to complete the research and development and to
attain future profitable production or proceeds from the disposition thereof.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumption that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reporting period. Actual results could differ from those
estimates.
Revenue recognition
Sales revenue on hardware installations is recognized when the equipment is
put in service. Fees billed as long-term service contracts are recognized over
the period of the contracts.
Advertising
Advertising costs are charged to income as incurred.
Work-in-progress
Work-in-progress represents only equipment and materials at cost.
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.)
Equipment
Equipment is recorded at cost and depreciated over the estimated useful
lives of the assets, commencing in the year the assets are put into use, as
follows:
Computer equipment 30% declining balance method
Computer software 100% declining balance method
Office equipment and furniture 20% declining balance method
Leasehold improvements 5 year straight line
One-half of the above rates is applied in the year of acquisition.
Trademarks
Trademarks are recorded at cost and depreciated over a three year period.
Research and development costs
Research and development costs are expensed as incurred.
Financial instruments
The Company's financial instruments consists of cash, accounts receivable,
accounts payable, notes payable and a shareholder loan.
A portion of the notes payable is interest free. It is management's opinion
that the Company is not exposed to significant interest, currency or credit risk
arising from its other financial instruments mentioned and that their fair
values approximate their carrying values, unless otherwise noted.
Foreign currency translation
The functional currency of the Company is the Canadian dollar. Assets and
liabilities are translated into US dollars at the rates of exchange in effect at
the balance sheet dates and revenues and expenses are translated at average
exchange rate for the periods. Translation adjustments are not included in
determining net income but are accumulated in a separate component of
shareholders' deficiency.
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.)
Segment information
The Company operates in one principal business segment in Canada. No other
foreign country or geographic area accounted for more than 10% of sales in any
of the years presented. There were no transfers between geographic areas during
the years ended December 31, 1998 and December 31, 1997.
Comprehensive income
The Company has adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS No. 130") effective December 31,
1998. SFAS No. 130 establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No. 130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. For the years ended December 31, 1998 and 1997, there were
no material differences between comprehensive income and net income.
Loss per share
Basic loss per share excludes any dilutive effects of options. Basic loss
per share is computed using the weighted-average number of common shares
outstanding during the period. Diluted loss per share is equal to the basic loss
per share as the effect of the stock options is anti-dilutive. There are no
other dilutive common stock equivalent shares outstanding during the period.
Common stock equivalent shares are excluded from the computation if their effect
is anti-dilutive.
Cash and cash equivalents
The Company has defined cash and cash equivalents to include cash and time
deposits with original maturities of 90 days or less.
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.)
Deferred income taxes
The Company follows the deferral method of accounting for income taxes.
Under U.S. GAAP, the liability method is used in accounting for income taxes
pursuant to Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes" (SFAS 109). SFAS 109 requires recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that have
been included in the financial statements or tax returns. Under this method,
deferred tax assets and liabilities are determined based on the difference
between the financial reporting and tax bases of assets and liabilities using
enacted tax rates that will be in effect for the year in which the differences
are expected to reverse.
A valuation allowance has been recognized to offset deferred tax assets
arising from temporary differences, tax credits and non-capital loss
carryforwards, for which realization is uncertain.
Effect of recently issued accounting standards
New accounting pronouncements having relative applicability to the Company
include Statements of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits", effective for
fiscal years beginning after December 15, 1998 and No. 133, "Accounting for
Derivative Instruments and Hedging Activities", effective for fiscal years
beginning after June 15, 2000.
SFAS No. 132 revises employers' disclosures about pension and other
postretirement benefit plans.
SFAS No. 133 requires that all derivative instruments be recorded on the
consolidated balance sheets at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designed as part of a hedge
transaction and, if it is, the type of hedge transaction.
The Company does not expect that the adoption of SFAS Nos. 132 and 133 will
have a material impact on its consolidated financial statements because the
Company does not provide for pension or other postretirement benefits, nor does
it currently hold any derivative instruments. Adoption of these statement will
not impact the Company's financial position, results of operations or cash flows
and any effect will be limited to the form and content of disclosures.
Additionally, the Accounting Standards Executive Committee of the American
Institute of CPA's issued Statement of Position 98-1, "Accounting for the Cost
of Computer Software Developed or Obtained for Internal Use" and Statement of
Position 98-5 "Reporting on the Costs of Start-up Activities", which are
effective for fiscal years beginning after December 15, 1998. Adoption of these
standards is not expected to have a material impact on the Company's financial
position, results of operations or cash flows.
3. ACCOUNTS RECEIVABLE
One customer represents 68% of the accounts receivable balance [1997 - two
customers represent 30% of the accounts receivable balance].
4. EQUIPMENT AND TRADEMARKS
Accumulated Net Book Value
Cost Depreciation 1998 1997
$ $ $ $
- --------------------------------------------------------------------------------
Computer equipment 104,357 22,486 81,870 48,569
Computer software 32,345 16,265 16,080 1,637
Equipment and fixtures 19,937 6,210 13,728 17,602
Leasehold improvements 18,476 616 17,860 -
- --------------------------------------------------------------------------------
175,115 45,577 129,538 57,808
Intangible property
Trademarks 4,310 - 4,310 -
- --------------------------------------------------------------------------------
179,425 45,577 133,848 57,808
- --------------------------------------------------------------------------------
5. NOTES PAYABLE
1998 1997
$ $
- --------------------------------------------------------------------------------
Note payable - Interest at 10% per annum,
no fixed terms of repayment. Secured by a general
security agreement over the assets of the Company. 754,317 -
Note payable - Interest at the bank prime rate
[1997 - fixed rate of 10% per annum], unsecured
and no fixed terms of repayment. Bank prime at
December 31, 1998 was 6.75% [see note 11]. 38,006 49,669
- --------------------------------------------------------------------------------
792,323 49,669
- --------------------------------------------------------------------------------
6. DUE TO ACREX VENTURES LTD.
The advances from ACREX Ventures Ltd. are unsecured, interest free and have
no specific terms of repayment.
<PAGE>
7. DUE TO SHAREHOLDER
The amount due to shareholder is secured by a second fixed charge against
the Company's assets, with interest at the bank prime rate [1997 - fixed rate of
10% per annum]. Bank prime at December 31, 1998 was 6.75%.
8. CAPITAL STOCK
The authorized and issued share capital of the Company is as follows:
<TABLE>
<CAPTION>
Issued
- -----------------------------------------------------------------------------------------------------
1998 1997
Authorized Number Amount Number Amount
# # $ # $
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A Common, voting, without par value 25,000,000 - - - -
B Common, voting, without par value 25,000,000 8,400,000 59 8,400,000 59
C Common, voting, without par value 25,000,000 - - - -
D Common, non-voting, without par value 25,000,000 - - - -
Preferred, non-voting, par value of $0.01 - - - -
- -----------------------------------------------------------------------------------------------------
200,000,000 8,400,000 59 8,400,000 59
- -----------------------------------------------------------------------------------------------------
</TABLE>
9. INCOME TAXES
The Company has non-capital and capital loss carryforwards, and credits in
respect of scientific research and development tax costs which may, subject to
certain restrictions, be available to offset future taxable income or taxes
payable. No future benefit of these losses and credits has been recognized in
these financial statements.
10. COMMITMENTS AND CONTINGENCIES
[i] Real estate lease commitments for the base rental payments for offices are
as follows:
$
- --------------------------------------------------------------------------------
2000 42,470
2001 43,123
2002 41,163
2003 18,494
- --------------------------------------------------------------------------------
128,716
- --------------------------------------------------------------------------------
<PAGE>
10. COMMITMENTS AND CONTINGENCIES (continued)
[ii] The Company is subject to a claim that arose in the ordinary course of
business as a result of a signed contract by unauthorized personnel. It is
management's opinion that the total liability will not exceed $11,761. The
outcome of this matter is not presently determinable and will be recorded
in the accounts in the period of settlement.
11. RELATED PARTY TRANSACTIONS
A note payable to shareholder [Note 5] amounting to $38,006 [1997 - 49,669]
which bears interest at bank prime rate [1997 - fixed rate of 10% per annum] is
unsecured and has no fixed terms of repayment. Interest amounting to $2,086
[1997 - $4,708] was earned by the shareholder during the year.
The amount due to shareholder [Note 7] of $239,642 [1997 - $233,568] is
secured by a second fixed charge against the Company's assets, bearing interest
at the bank prime rate [1997 - fixed rate of 10% per annum]. Interest amounting
to $15,014 [1997 - $21,418] was earned by the shareholder during the year.
The advances from ACREX Ventures Ltd., which is controlled by two of the
companies directors, are unsecured, interest free and have no specific terms of
repayment.
12. YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect the Company's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers, or
other third parties will be fully resolved.
13. SUBSEQUENT EVENT
Contingent obligation settlement
By an agreement dated March 26, 1999 between ACREX Ventures Ltd., Maritime
Tel & Tel Limited (MT&T) and the Company, the Company will assume an obligation
to pay MT&T $500,000 Canadian dollars for certain development work performed by
them on behalf of the Company. The obligation becomes payable on completion of
the acquisition of the Company by ACREX. In the event that the purchase does not
take place then the obligation is automatically extinguished.
<PAGE>
VOICE MOBILITY INTERNATIONAL, INC.
Consolidated Balance Sheets
As at June 30, 1999 and June 30, 1998
(Unaudited)
1999 1998
- --------------------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $14,414 $35,262
Accounts receivable (net of allowance
for doubtful debts: 1999 - $21,766; 49,300 4,899
1998 - $23,843)
Notes Receivable - Acrex Ventures Ltd. 146,000
Prepaid expenses 14,605 4,946
Work-in progress 68,781
- --------------------------------------------------------------------------------
293,099 45,106
Equipment and leasehold improvements
(net of accumulated depreciation 212,137 79,946
and amortization; 1999 - $79,719;
1998 - $59,894)
- --------------------------------------------------------------------------------
$505,236 $125,052
================================================================================
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued liabilities 155,897 89,310
Other payables 40,692 30,043
Current portion on long-term debt 49,308
Notes payable 232,837
Due to Acrex Ventures Ltd. 148,087
Due to shareholder 286,394
- --------------------------------------------------------------------------------
245,897 786,669
Long-term debt 514,721
- --------------------------------------------------------------------------------
$760,618 $786,669
Stockholders' Equity
Common stock 16,222
60
Additional paid-in capital 7,430,875
Retained earnings (Deficit) (7,921,043) (679,034)
Share subscriptions 173,333
Currency translation gains (losses) 45,231 17,357
- --------------------------------------------------------------------------------
(255,382) (661,618)
================================================================================
$505,236 $125,052
================================================================================
VOICE MOBILITY INTERNATIONAL, INC.
Consolidated Statements of Operations
For the six months ending June 30, 1999 and June 30, 1998
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
Sales 83,262 64,400 100% 100%
Less cost of sales (27,727) (42,705) (33%) (66%)
- ------------------------------------------------------------------------------------------------------------------------------
55,535 21,694 67% 34%
Operating Expenses
Sales and Marketing 1,165,542 23,318 1400% 36%
Research and Development 1,555,984 64,411 1869% 100%
General and Administrative 1,571,753 156,522 1888% 243%
- ------------------------------------------------------------------------------------------------------------------------------
4,293,278 244,252 5156% 379%
- ------------------------------------------------------------------------------------------------------------------------------
Loss before other items (4,237,743) (222,557) (5090%) (346%)
Loss on disposition of assets & settlement of liabilities (211,965) (-255%)
Interest expense (37,800) (13,935) (-45%) (-22%)
- ------------------------------------------------------------------------------------------------------------------------------
(249,765) (13,935) (-300%) (-22%)
- ------------------------------------------------------------------------------------------------------------------------------
Net loss (4,487,508) (236,492) (-5390%) (-367%)
==============================================================================================================================
Loss per share (0.42)
(0.41)
==============================================================================================================================
Weighted average number of shares outstanding 10,800,079 578,750
==============================================================================================================================
</TABLE>
VOICE MOBILITY INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
For the six months ending June 30, 1999 and June 30, 1998
(Unaudited)
1999 1998
- --------------------------------------------------------------------------------
OPERATIONS
Net loss ($4,487,508) ($236,492)
Non cash items included in net loss
Loss on disposition of assets & settlement
of liabilities 11,965
Unrealized holding loss on securities
Depreciation and amortization 34,978 18,916
- --------------------------------------------------------------------------------
(4,440,565)
(217,577)
Change in accounts receivable 47,738 11,322
Change in accounts payable 74,017 (19,344)
Change in work-in progress (53,862)
Change in prepaid expenses
2,512 (2,174)
Change in accrued liabilities (38,891) (44,164)
Change in taxes payable 12,192 (2,302)
Change in current portion of long-term debt 49,308
- --------------------------------------------------------------------------------
(4,347,551)
(274,239)
INVESTING
Acquisition of equipment & leasehold improvements (112,431) (58,207)
FINANCING
Decrease in notes payable (277,602) 234,917
Decrease in advances from ACREX Ventures Ltd. (419,592) 116,355
Decrease in advances from shareholders (239,642) 14,719
Increase in notes receivable - Acrex Ventures Ltd. (146,000)
Increase in common stock 16,163
Change in currency translation gains/(losses) (30,008) (615)
Stock option compensation 3,460,538
Increase in share subscriptions 173,333
Increase in Paid-in Capital 1,900,093
- --------------------------------------------------------------------------------
4,437,283 365,376
- --------------------------------------------------------------------------------
Increase (decrease) in cash (22,699) 32,930
Cash, beginning of period 37,113 2,332
- --------------------------------------------------------------------------------
Cash, end of period 14,414 35,262
================================================================================
VOICE MOBILITY INTERNATIONAL, INC.
Consolidated Statement of Stockholders' Equity
For the years ending December 31, 1993, 1994, 1995, 1996, 1997, 1998,
and six months ending June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Accum.
Common Common Addtn'l Retained Total
Stock Stock Paid in Earnings Stockholders'
<S> <C> <C> <C> <C> <C> <C>
Issued Amount Capital (Deficit) Other Equity
- ------------------------------------------------------------------------------------------------------------------------------------
Stock Issued on September 15, 1993 100 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 100 1 1
1994 Net loss (32,988) (32,988)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 100 1 (32,988) (32,987)
1995 Net loss (49,525) (49,525)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 100 1 (82,513) (82,512)
1996 Net loss (191,290) (191,290)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 100 1 (273,803) (273,802)
November 4, 1997 re-organization:
Redemption and cancellation (100) (1) (1)
New subscriptions 8,400 59 59
1:1,000 stock split 8,400,000
1997 Net loss (168,739) (168,739)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 8,400,000 59 (442,542) (442,483)
.
1998 Net loss (930,598) (930,598)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 8,400,000 59 (1,373,141) (1,373,082)
EQCG balances on April 1, 1999 2,174,000 2,174 2,070,185 (2,060,394) 11,965
EQCG subscribed stock issued on June 24, 1999 141,000 141 141
EQCG 1:4 consolidation on April 1, 1999 (1,736,250) (1,736) 1,736 0
Stock issued for cash on April 7, 1999 8,293,000 8,293 191,707 200,000
Stock issued on acquisition of VMI June 24, 1999 6,600,000 6,600 (6,600) 0
Adjust pre-acquisition balance of VMI (8,400,000) (59) 59 0
Stock issued on debt settlement on June 29, 1999 750,000 750 249,250 250,000
Warrants issued on debt settlement on June 29, 1999 200,000 200,000
Warrants exercised in June 1999 173,333 173,333
Warrants issued on assignment of VMI note payable 1,264,000 1,264,000
Currency translation gains (losses) 45,231 45,231
Stock option compensation 3,460,538 3,460,538
Net loss for 6 months ending June 30, 1999 (4,487,508) (4,487,508)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, at June 30, 1999 $16,221,750 16,222 $7,430,875 ($7,921,043) $218,564 ($255,382)
====================================================================================================================================
</TABLE>
VOICE MOBILITY INTERNATIONAL, INC.
Notes to Consolidated Financial Information
June 30, 1999
Note 1 - Basis of Presentation
The accompanying financial information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements, related notes and other financial
information included elsewhere in this registration statement. By a reverse
takeover, control of the Company changed on June 24, 1999 as did the name of the
Company from Equity Capital Group, Inc.(EQGC) to Voice Mobility International,
Inc. (VMII). Consequently the Company now reports its operations and financial
position based on a December 31 fiscal year-end of the "acquirer", Voice
Mobility Inc. (VMI), as opposed to the March 31 fiscal year-end of EQCG. The
financial statements from which data has been selected or summarized are as
follows:
VMII - unaudited interim statements -
six month period ended June 30, 1999 and 1998
VMI - audited year-end - December 31, 1998 and 1997
EQCG - audited year-end - March 31, 1999, 1998 and 1997
In the opinion of management, these unaudited interim financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of operations for such periods
and the financial position at such date. Historical results are not necessarily
indicative of future results, and results for any interim period are not
necessarily indicative of results for a full year.
Note 2 - Reverse Takeover
On June 24, 1999 the Company acquired, for consideration of 6,600,000
shares of the Company, all the outstanding shares of Voice Mobility Inc. (VMI),
a company that is developing certain telecommunications messaging systems. As a
result of the transaction the original shareholders of VMI became the
controlling shareholders of the Company. Generally accepted accounting
principles require that consolidated financial statements of a company prepared
after such a reverse takeover should be those of the "legal subsidiary", in this
case VMI, but issued under the name of the "legal parent", Voice Mobility
International, Inc.(VMII)(previously Equity Capital Group, Inc.). These
consolidated financial statements have therefore been prepared on the basis that
VMI was the acquirer and reflect a continuation of the financial statements of
VMI. The cost of the Company's investment in VMI has been treated as a reduction
in the amount of paid in capital in the consolidated financial statements. The
number of shares issued and outstanding reflects the number of VMII shares
issued and outstanding including the number of shares issued to reflect the
reverse takeover. Comparative amounts are as previously reported by VMI and have
not been restated to reflect the current method of consolidation.
Note 3 - Year-end
VMI has a December 31 year-end. Accordingly, as these consolidated
financial statements reflect a continuation of VMI, these financial statements
are for the six month period ended June 30, 1999 with the comparative figures
for the six month period ended June 30, 1998.
Note 4 - Currency
The financial information provided in these statements are reported in
United States dollars. Monetary assets and liabilities of the Company
denominated in foreign currencies are translated at the year end exchange rates.
Retained earnings are translated using the average exchange rate prevalent in
the respective periods, and any differences are recognized on the Balance Sheet
as currency translation gains or (losses). Other assets, liabilities, revenues
and expenses are translated at the rates prevailing on the respective
transaction dates. Exchange gains and losses are recognized on income.
Note 5 - Weighted Average Loss per share
The Company has adopted SFAS No 128, "Earnings Per Share." Basic net loss
per share is computed using the weighted-average number of common shares
outstanding during the period and includes common shares issued subsequent to
the period end for which all consideration had been received prior to the period
end and which no other contingencies existed. Basic loss per share excludes any
dilutive effects of options. Diluted loss per share is equal to the basic loss
per share as the effect of the stock options is anti-dilutive. There are no
other dilutive common stock equivalent shares outstanding during the period.
Common stock equivalent shares are excluded from the computation if their effect
is anti-dilutive
Note 6 - Employee Stock Option Plan
On June 29, 1999 a stock option plan was adopted by the Company authorizing
an aggregate amount of 5,000,000 stock to be purchased pursuant to the exercise
of options. The following stock options were issued on June 29, 1999:
No of common shares issuable Exercise price ($)
Senior Management 1,150,000 $1.00
Employees 1,041,750 $0.75
Employee 40,000 $2.72
Total 2,706,750
The total options outstanding as at June 30, 1999 were 2,706,750 and were
exercisable upon this date. A stock option compensation cost of $3,406,538 was
determined using the intrinsic method in accordance with APB25. Had compensation
cost been determined based on the fair value at the grant dates for those
options issued to senior management and employees, consistent with the method
described in SFAS No. 123, the Company's loss and loss per share for the six
months ending June 30, 1999 would have been increased to the pro forma amount
indicated below:
Loss As reported $4,287,508
Pro Forma $5,791,094
The fair value of each option granted in the six months ended June 30, 1999
was estimated on the date of the grant using the Black Scholes option pricing
model with the following assumptions: no dividend yield; risk free interest rate
of 5.5%; expected volatility of 0.876 using the Company's closing stock price
for the 37 days traded beginning June 29, 1999; and an expected life of five
years.
No diluted loss per common share is provided as the options are considered
to be anti-dilutive.
Subsequent to June 30, 1999 the following employee stock options were
granted:
No of common shares issuable Exercise price ($)
July 14, 1999 35,000 $2.81
August 3, 1999 70,000 $2.94
August 20, 1999 55,000 $2.63
September 1, 1999 25,000 $2.45
-------
Total 185,000
PART III
--------
ITEM 2. INDEX TO EXHIBITS.
- ------- ------------------
EXHIBIT NO. DESCRIPTION OF DOCUMENT
----------- -----------------------
3.1 Articles of Incorporation
3.2 Articles of Amendment of Articles of Incorporation
3.6 By-Laws
3.7 Common Stock Certificate (to be submitted by amendment)
3.8 Class A Warrant (to be submitted by amendment)
3.9 Class B Warrant (to be submitted by amendment)
3.10 Class C Warrant (to be submitted by amendment)
3.11 Class D Warrant (to be submitted by amendment)
10.1 Fiscal 2000 Stock Option Plan
10.2 Employment Agreement of James Jay Hutton
10.3 Employment Agreement of William Gardiner
10.4 Employment Agreement of Jason Corless
10.5 Employment Agreement of Bud Stewart
10.6 Employment Agreement of Geof Heston
10.7 Acquisition Agreement of Voice Mobility Inc.
10.8 List of Subsidiaries of Registrant
10.9 Agreement and Plan of Distribution of Equity Capital Group, Inc.
10.10 Debt Settlement Agreement with Maritime Tel & Tel
23.1 Consent of Hoffski & Pisano
23.2 Consent of Bedford Curry & Co.
27.1 Financial Data Schedule
SIGNATURES
----------
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
VOICE MOBILITY INTERNATIONAL, INC.
Date: September , 1999 By: /S/James J. Hutton
-----------------------
James J. Hutton, President
ARTICLES
OF
INCORPORATION
OF
EQUITY CAPITAL GROUP, INC.
ARTICLE I
The complete name of the Corporation is to Be:
EQUITY CAPITAL GROUP, INC.
ARTICLE II
Its principal office in the state of Nevada is to be located at 318 North
Carson Street, Suite 208, in the City of Carson City, County of Carson. The
registered agent in charge thereof is Paracorp Incorporated.
ARTICLE III
The purpose of this Corporation is to engage in any lawful act or activity
for which a Corporation may be organized under the general Corporation laws of
Nevada.
ARTICLE IV
This Corporation shall have the authority to issue 2 classes of capital
stock the total of which shall be 10,100,000 shares.The classification and par
value of 10,000,000 shares shall be common voting stock having a par value of
$.001 each share, each share shall be entitled to the same dividend,
liquidation, and voting rights; the classification and par value of 100,000
shares shall be preferred stock with no par value each share, Said preferred
stock may be issued from time to time in one or more classes or series with such
dividend rates, voting rights, rights of conversion, rights upon dissolution or
liquidation, and with such designations or restrictions thereof as shall be
determined by resolution adopted by the board of directors at the time such
stock is issued without further approval of the shareholders.
<PAGE>
ARTICLE V
The members of the governing board of this Corporation shall be called
directors and the number thereof at the inception of this Corporation shall be
one (1) . Directors need not be Shareholders of this corporation, nor residents
of the State of Nevada, The number of Directors may from time to time be
increased or decreased in such manner as shall be provided for by the By-Laws of
the Corporation.
The name and post office address of the first board of directors who shall
hold office until his successor is duly elected, is as follows:
Name: Address
Robert L. Cashman 2164 N. Glassell Street
Orange, California 92865
ARTICLE VI
The Capital stock of this Corporation, after the amount of the subscription
price has been paid in, shall never be assessable, or assessed to pay debts of
this Corporation.
ARTICLE VII
The name and address of the Incorporator signing these Articles of
Incorporation is as follows:
Name: Address
Robert L. Cashman 2164 N. Glassell Street
Orange, California 92865
ARTICLES VIII
The period of duration of this Corporation shall be perpetual unless
otherwise amended by the Shareholders.
ARTICLE IX
The Directors shall have the power to make and to alter or amend the
By-Laws; to fix the amount to be reserved as working capital and to authorize
and cause to be executed mortgages and liens, without limit as to amount, upon
the property and franchise of this Corporation.
With the consent in writing, and pursuant to a vote of the majority of the
holders of the capital stock issued and outstanding, the Directors shall have
the authority to dispose of, in any manner, the whole property of this
Corporation.
Page 2
<PAGE>
The By-Laws shall determine whether and to what extent the accounts and
books of the Corporation, or any of them shall be open to the inspection of the
Shareholders; and no shareholder shall have any right of inspection of any
account, book or document of this Corporation, except conferred by the law or
By-Laws or by resolution of the Shareholders.
The Shareholders and Directors shall have the power to hold meetings and
keep the books , documents and papers of this Corporation, except as conferred
by the law or By-Laws or by resolution of the Shareholders.
The Shareholders and Directors shall have the power to hold meetings and
keep the books, documents and papers of the Corporation outside of the State of
Nevada, at such places as may be from time to time designated by the By-Laws or
by resolution of the Shareholders and Directors, except as otherwise required by
the laws of Nevada.
It is the intention that the objects, purposes and powers specified in
ARTICLE III hereof shall, except where otherwise specified in ARTICLE III, be
nowise limited or restricted by reference to or inference from the terms of any
other clause or ARTICLE on this Certificate of Incorporation, but that the
object, purpose, and powers specified in ARTICLE III and each of the clauses or
Articles of this Charter shall be regarded a independent objects, purposes, and
powers.
ARTICLE X
After the formation of this Corporation, each Shareholder shall be entitled
to purchase and/or subscribe for the number of shares of this Corporation which
may hereafter be authorized and issued for money. Each Shareholder shall have
the same rights as any individual to purchase said stock, but shall not have any
pre-emptive rights as that term is defined under NRS 78.265.
IN WITNESS WHEREOF, I, the undersigned, constituting the sole incorporator
and intended Shareholder, being less than three Shareholders, for the purpose of
forming a Corporation under the laws of the State of Nevada, do make file and
record these articles of Incorporation, and do certify that the facts herein are
true and I have accordingly hereunto set my hand this 1st day of October, 1997.
/s/Robert L. Cashman
----------------------
Robert L. Cashman
Incorporator
Page 3
<PAGE>
County of Orange )
SS.
State of California )
On this 1st Day of October, 1997 before me, a Notary Public in and for said
County and State, personally appeared Robert L. Cashman known to me to be the
person whose name is subscribed to the foregoing instrument, who duly
acknowledged to me that he executed the same for the purpose therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official sea in said
County and State this 1st day of October, 1997.
RICHARD W. LEVY
COMM. #1121997
Notary Public - California By: /s/Richard W. Levy
-------------------
ORANGE COUNTY Notary Public.
My Comm. Exp. March 7, 2001
Page 4
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
EQUITY CAPITAL GROUP, INC.
We the undersigned President and Secretary of Equity Capital Group, Inc. do
hereby certify: That the Board of Directors of said corporation at a meeting
duly convened, held on the 24th day of June, 1999, adopted a resolution to amcad
the original articles of incorporation as follows
Article I is hereby amended to read as follows:
The complete name of the Corporation is:
VOICE MOBILITY INTERNATIONAL, INC.
Article IV is hereby amended to read as follows:
This corporation shall have the authority to issue two (2) classes of
capital stock the total of which shall be 51,000,000 shares. The classification
and par value of 50,000,000 shares shall be common voting stock having a par
value of $.001 per share, and each share shall be entitled to the same dividend,
liquidation, and voting rights; the classification and par value of 1,000,000
shares shall be preferred stock having a par value of $.001 per share. Said
preferred stock may be issued from time to time in one or more classes or series
with such dividend rates, voting rights, rights of conversion, rights upon
dissolution or liquidation, and with such designations or restrictions thereof
as shall be determined by resolution adopted by the Board of Directors at the
time such stock is issued without further approval of the shareholders.
A new Article XI is hereby adopted to read as follows:
The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under Nevada Law.
A new Article XII is hereby adopted to read as follows:
The corporation is authorized to indemnify the directors and officers of
the corporation to the fullest extent permissible under Nevada Law.
The number of shares of the corporation outstanding and entitled to vote on
amendments to the Articles of Incorporation is 2,315,000; that the said
amendments have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote hereon.
/s/Robert L. Cashman /s/John W. Vilagi
-------------------------- -----------------------
Robert Cashman, President John Vilagi, Secretary
State of California
County of Orange
On June 24, 1999, personally appeared before me, a Notary Public, Robert
Cashman aad John Vilagi, who acknowledge that they executed the above
instrument.
Karen J. Fowler
Commission #1169310
Notary Public California
Orange County
/s/ Karen J. Fowler
Signature of Notary
(Notary Stamp or Seal)
AMENDED BY-LAWS
OF
EQUITY CAPITAL GROUP, INC.
ARTICLE I - OFFICES
The principal office of the corporation in the State of Nevada shall be
located at 318 N. Carson Street, Suite 208, in the city of Carson City. The
corporation may have such other offices, either within or without the State of
incorporation as the board of directors may designate or as the business of the
corporation may from time to time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING. The annual meeting of the stockholders shall be held on the
2nd Tuesday of August in each year, beginning with the year 1997 at the
hour of 1 o'clock P.M. local time for the purpose of the election of
directors and for the transaction of such other business as may come before
the meeting. If the day fixed for the annual meeting shall be a legal
holiday such meeting shall be held on the next succeeding business day.
2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by the
president or by a director, and shall be called by the president at the
request of the holders of not less than twenty-five (25%) percent of all
the outstanding shares of the corporation entitled to vote at the meeting.
3. PLACE OF MEETING. The directors may designate any place, either within or
without the state unless otherwise prescribed by statute, as the place of
meeting for any annual meeting or for any special meeting called by the
directors. A waiver of notice signed by all stockholders entitled to vote
at a meeting may designate any place, either within or without the state
unless otherwise prescribed by statute, as the place for holding such
meeting. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the
corporation.
4. NOTICE OF MEETING. Written or printed notice stating the place, day and
hour of the meeting and, in the case of a special meeting being called,
shall be delivered not less than ten (10) days nor more than fifty (50)
days before the date of the meeting, either personally or by mail, by the
direction of the president, or secretary, or the director calling the
meeting. If mailed', such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the stockholder at his
address as it appears on the stock transfer books of the corporation, with
postage thereon prepaid.
<PAGE>
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, of stockholders entitled to
receive payment of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case twenty (20) days. If the stock
transfer books be closed for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such books
shall be closed for at least the notice period as set forth in paragrah 4
but not to exceed twenty (20) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the directors may fix in advance
a date as the record date for any such determination of stockholders, such
date in any case to be not more than the notice period as set forth in
paragraph 4. When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
6. WAIVER OF NOTICE. Notice of the time, place and purpose of any meeting may
be waived in writing and will be waived by any stockholder by his/her
attendance therat in person or by proxy. Any stockholder so waiving shall
be bound by the proceedings of any such meeting in all respects as if due
notice thereof had been given.
7. VOTING LIST. The officer of agent having charge of the stock transfer books
for the shares of the corporation shall make, at least ten (10) days before
each meeting of stockholders, a complete list of stockholders entitled to
vote at such meeting, or any adjournment thereof, arranged in alphabetical
order, with the address of and number of shares held by each, which list,
for a period of the ten (10) days prior to such meeting, shall be kept on
file at the principal office of the corporation and shall be subject to
inspection by any stockholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any stockholder during
the whole time of the meeting. The original transfer book shall be prima
facie evidence as to who are the stockholders entitled to examine such list
or transfer books or to vote at the meeting of stockholders.
8. QUORUM. At any meeting of stockholders fifty-one percent (51%) of the
outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders.
If less than said number of the outstanding shares are represented at a
meeting, a majority of the outstanding shares so represented may adjourn
the meeting from time to time without further notice. 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 originally
noticed. The stockholders present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
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9. PROXIES. At all meetings of the stockholders, a stockholder may vote by
proxy executed in writing by the stockholder or by his duly authorized
attomey-in-fact Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid
after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy.
10. VOTING. Each shareholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by proxy, for each share of stock
entitled to vote held by such shareholder. Upon the demand of any
stockholder, the vote for directors and upon any question before the
meeting shall be by ballot All elections for directors shall be decided by
plurality vote; all other questions shall be decided by majority vote
except as otherwise provided by the Certificate of Incorporation or the
laws of Nevada.
11. ORDER OF BUSINESS. The order of business at all meetings of the
stockholders, shall be as follows:
a. Roll Call.
b. Proof of notice of meeting or waiver of notice.
C. Reading of minutes of preceding meeting.
d. Reports of Officers.
e. Reports of Committees.
f. Election of Directors.
9. Unfinished Business.
h. New Business.
12. INFORMAL ACTION BY STOCKHOLDERS. Unless otherwise provided by law, any
action required to be taken at a meeting of the stockholder, or any other
action which may be taken at a meeting of the stockholders, may be taken
without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by stockholder e holding a majority of the
outstanding shares of the Corporation ntitled to vote with respect to the
subject matter thereof.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS. The business and affairs of the corporation shall be
managed by its board of directors. The directors shall in all cases act as
a board, and they may adopt such rules and regulations for the conduct of
their meetings and the management of the corporation, as they may deem
proper, not inconsistent with these by-laws and the laws of the State of
Nevada.
2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of the
corporation shall be a minimum of one (1) and a maximum of (7) seven. Each
director shall hold office until the next annual meeting of stockholders
and until his successor shall has been elected and qualified.
3. REGULAR MEETINGS. A regular meeting of the board of directors, shall be
held without notice immediately after, and at the same place as, the annual
meeting of stockholders. Regular meetings of the board of directors shall
be held at such place and on such day and hour as shall from time to time
be fixed by resolution of the board of directors. No notice of regular
meetings of the board of directors shall be necessary.
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4. SPECIAL MEETINGS. Special meetings of the board of directors may be called
by or at the request of the president or any two directors. The person or
persons authorized to call special meetings of the directors may fix the
place for holding any special meeting of the directors called by them.
5. NOTICE OF SPECIAL MEETING. Notice of any special meeting of the board of
directors shall be given at least one day previously thereto by written
notice delivered personally, or by facsimile or mailed to each director at
his business address. If mailed, such notice shall be deemed to be
delivered when delivered to the address of the director. The attendance of
a director at a meeting or waiver of notice by mail, telegram, facsimile,
telephone or personal communication shall constitute a waiver of notice of
such meetin& except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting
is not lawfully called or convened.
6. QUORUM. At any meeting of the board of directors fifty percent (50%) shall
constitute a quorum for the transaction of business, but if less than said
number is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice. The directors
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough directors to leave
less than a quorum.
7. MANNER OF ACTING. The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the board of
directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly created directorships
resulting from an increase in the number of directors and vacancies
occurring on the board for any reason except the removal of directors
without cause may be filled by a vote of the majority of the directors then
in office, although less than a quorum exists. Vacancies occurring by
reason of the removal of directors without cause shall be filled by vote of
the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the
unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS. Any and all of the directors may be removed for cause
by vote of the stockholders or by action of the board of directors.
Directors may be removed without cause only by vote of the stockholders.
10. RESIGNATION. A director may resign at any time by giving written notice to
the board of directors, the president or the secretary of the corporation.
Unless otherwise specified in the notice, the resignation shall take effect
upon receipt thereof by the board or such officer, and the acceptance of
the resignation shall not be necessary to make it effective.
11. COMPENSATION. No compensation shall be paid to directors, as such, for
their services, but by resolution of the board of directors a fixed sum and
expenses for actual attendance at each regular or special meeting of the
board may be authorized. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity
and receiving compensation therefor. Bonus options may be rewarded
directors for their service on the board of directors.
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12. EXECUTIVE AND OTHER COMMITTEES. The board, by resolution, may designate
from among its members an executive committee and other committees, each
consisting of one (1) or more directors. Each such committee shall serve at
the pleasure of the board.
13. PRESUMPTION OF ASSENT. A director who is present at a meeting of the board
of directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his/her dissent
shallbe entered in the minutes of the meeting or unless he/she shall file
his/her written dissent to swuch action with the person acting as the
secretary of the meeting before the adjournemmnt thereof or shall forware
such dissent by regiwstered mail to the secretary of the Corporation imme
ARTICLE IV - OFFICERS
1. NUMBER. The officers of the corporation shall be the president, a secretary
and a treasurer, each of whom shall be elected by the directors. Such other
officers and assistant officers as may be deemed necessary may be elected
or appointed by the directors.
2. ELECTION AND TERM OF OFFICE. The officers of the corporation to be elected
by the directors shall be elected annually at the first meeting of the
directors held after each annual meeting of the stockholders. Each officer
shall hold office until his successor shall have been duly elected and
shall have qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided.
3. REMOVAL. Any officer or agent elected or appointed by the directors may be
removed by the directors whenever in their judgment the best interest of
the corporation would be served thereby, but such removal shall be without
prejudice to contract rights, if any, of the person so removed.
4. VACANCIES. A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the
unexpired portion of the term.
5. PRESIDENT. The president shall be the principal executive officer of the
corporation and, subject to the control of the directors, shall in general
supervise and control all of the business and affairs of the corporation.
He shall, when present, preside at all meetings of the stockholders and of
the directors. He may sign, with the secretary or any proper officer of the
corporation thereunto authorized by the directors, certificates for shares
of the corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the directors have authorized to be executed, except in
cases where the directors or by these ByLaws to some other officer or agent
of the corporation, or shall be required by law to be otherwise signed or
executed; and in general shall perform all duties incident to the office of
president and such other duties as may be prescribed by the directors from
time to time.
6. CHAIRMAN OF THE BOARD. In the absence of the president or in the event of
his death, inability or refusal to act, the chairman of the board of
directors shall assume the duties of the president, and when so acting,
shall have all the powers of and be subject to all the restrictions upon
the president The chairman of the board of directors shall perform such
other duties as from time to time may be assigned to him by the directors.
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7. SECRETARY. The secretary shall keep the minutes of the stockholders' and of
the directors' meetings in one or more books provided for that purpose, see
that all notices are duly given in accordance with the provisions of these
By-Laws or as required, be custodian of the corporate records and of the
seal of the corporation and keep a register of the post office address of
each stockholder which shall be furnished to the secretary by such
stockholder, have general charge of the stock transfer books of the
corporation and in general perform all the duties incident to the office of
secretary and such other duties as from time to time may be assigned to him
by the president or by the directors.
8. TREASURER. If required by the directors, the treasurer shall give a bond
for the faithful discharge of his duties in such sum and with such surety
or sureties as the directors shall determine. He shall have charge and
custody of and be responsible for all funds and securities of the
corporation; receive and give receipts for moneys due and payable to the
corporation from any source whatsoever, and deposit all such money in the
name of the corporation in such banks, trust companies or other
depositories as shall be selected in accordance with these by-laws and in
general perform all of the duties incident to the office of treasurer and
such other duties as from time to time may be assigned to him by the
president or by the directors.
9. SALARIES. The salaries of the officers shall be fixed from time to time by
the directors; and no officer shall be prevented from receiving such salary
by reason of fact that he is also a director of the corporation.
ARTICLE V - STOCK
1. CERTIFICATES. The shares of stock shall be represented by consecutively
numbered certificates signed in the name of the Corporation by its
President or Vice President and the Secretary or an Assistant Secretary,
and shall be sealed with the seal of the Corporation, or with a facsimile
thereof. The signatures of the Corporation's officers on such certificates
may also be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar other than the Corporation itself or an
employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased
to be an officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of
its issue. Certificates of stock shall be in such form consistent with law
as shall be prescribed by the Board of Directors. No certificate shall be
issued until the shares represented thereby are fully paid.
2. NEW CERTIFICATES. No new certificates evidencing shares shall be issued
unless and until the old certificate or certificates, in lieu of which the
new certificates is issued, shall be surrendered for cancellation, except
as provided in paragraph 2 of this Article V.
In case of loss or destruction of any certificate evidencing shares,
another may be issued in its place upon proof of such loss or destruction
and upon the giving of a satisfactory bond of indemnity to the corporation.
A new certificate may be issued without requiring any bond, when in the
judgmen of the board of directors it is proper to do so.
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<PAGE>
3. RESTRICTIONS OF TRANSFER. No certificate shall be issued or re-issued
without a restriction of transferability clearly imprinted thereupon unless
registered as required by law or an exemption from registration is
available.
ARTICLE VI - CONTRACTS, LOANS, CHECKS, AND DEPOSITS
1. CONTRACTS. The directors may authorize any officer or officers, agent or
agents, to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the corporation, and such authority may be
general or confined to specific instances.
2. LOANS. No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by
a resolution of the directors. Such authority may be general or confined to
specific instances.
3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be
determined by resolution of the directors.
4. DEPOSITS. All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositories as the directors may select.
ARTICLE VII -FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of January
each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - CORPORATE SEAL
The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal."
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ARTICLE X - INDEMNIFICATION OF DIRECTORS AND OFFICERS
1. INDEMNIFICATION. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that such person is or
was a director, trustee, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, trustee,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's condduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, by itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed
to be in or not opposed to the best interest of the corporation, and with
respect to any criminal action or proceeding, had reasonable cause to
believe that such person's conduct was lawful.
2. DERIVATIVE ACTION. The corporation shall indemnify any person who was or is
a party or is threatened to be made a pary to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in the corporation's favor by reason of the fact that such person
is or was a director, trustee, officer, employee or agent of the
corpoation, or is or was serving at the request of the corpration as a
director, trustee, officer, employee or agent of any other corporation,
partnershi[p, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding if such person acted in good faith and
in a manner such person reasonably believed to be in or not opposed to the
best interests of the corporation; provided, however, that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable for gross
negligence or willful misconduct in the performance of such person's duty
to the corporation unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that,
despite circumstanes of the case, such person is fairly and reasonably
entitled to indmenity for such expenses as such court shall deem proper.
The termination of any action, suit or porceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, by itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed
to be in or not opposed to the best interest of the corporation.
3. SUCCESSFUL DEFENSE. To the extent that a director, trustee, officer,
employee or agent of the corporation has been successful, on the merits or
otherwise, in whole or in part, in defense of any action, suit or
proceeding referred to in paragraphs 1 and 2 above, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith.
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4. AUTHORIZATION. Any indemnification under paragraph 1 and 2 above (unless
ordered by a court) shall be made by the corporation only as authorized in
the specific case upon a determination that indemnification of the
director, trustee, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard of
conduct set forth in paragraph 1 and 2 above. Such determination shall be
made (a) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, (b) if by independent legal counsel (selected by one or more of
the directors, whether or not a quorum and whether or not disinterested) in
a written opinion, or by the shareholders. Anyone making such a
determination under this paragraph 4 may determine that a person has met
the standards therein set forth as to some claims, issues or matters but
not as to others, and may reasonably prorate amounts to be paid as
indemnification.
5. ADVANCES. Expenses incurred in defending civil or criminal actions, suits
or proceedings shall be paid by the corporation, at any time or from time
to time in advance of the final disposition of such action, suit or
proceeding as authorized in the manner provided in paragraph 4 above upon
receipt of an undertaking by or on behalf of the director, trustee,
officer, employee or agent to repay such amount unless it shall ultimately
be determined by the corporation that the payment of expenses is authorized
in this Section.
6. NONEXCLUSIVITY. The indemnification provided in this Section shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled under any law, by-law, agreement, vote of shareholders or
disinterested director or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
trustee, officer, employee or agent and shall insure to the benefit of the
heirs, executors, and administrators of such a person.
7. INSURANCE. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, trustee,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee or
agent of any corporation, partnership, joint venture, trust or other
enterprise, against any liability assessed against such person in any such
capacity or arising out of such person's status as such, whether or not the
corporation would have the power to indemnify such person against such
liability.
8. "CORPORATION" DEFINED. For purpose of this action, references to the
"corporation" shall include, in addition to the corporation, any
constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had the power and authority to indemnify its
directors, trustees, officers, employees or agents, so that any person who
is or was a director, trustee, officer, employee or agent of such of
constituent corporation will be considered as if such person was a
director, trustee, officer, employee or agent of the corporation.
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ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTTCLE XI - AMENDAUNTS
These by-laws may be altered, amended or repealed and new By-Laws may be
adopted by a vote of the stockholders representing a majority of all the shares
issued and outstanding, at any annual stockholders' meeting or at any special
stockholders' meeting when the proposed amendment has been set out in the notice
of such meeting.
10
VOICE MOBILITY INTERNATIONAL, INC.
1999 STOCK OPTION PLAN
1. GRANT OF OPTIONS GENERALLY.
In accordance with the provisions hereinafter set forth in this stock
option plan, the name of which is the VOICE MOBILITY INTERNATIONAL, INC.
1999 STOCK OPTION PLAN (the "Plan"), the Board of Directors (the "Board")
or, the Compensation Committee (the "Stock Option Committee") of VOICE
MOBILITY INTERNATIONAL, INC. (the "Corporation") is hereby authorized to
issue from time to time on the Corporation's behalf to any one or more
Eligible Persons, as hereinafter defined, options to acquire shares of the
Corporation's $.001 par value common stock (the "Stock").
2. TYPE OF OPTIONS.
The Board or the Stock Option Committee is authorized to issue options
which meet the requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), which options are hereinafter referred to
collectively as ISOs, or singularly as an ISO. The Board or the Stock
Option Committee is also, in its discretion, authorized to issue options
which are not ISOs, which options are hereinafter referred to collectively
as NSOs, or singularly as an NSO. The Board or the Stock Option Committee
is also authorized, but not obligated, to issue "Reload Options" in
accordance with Paragraph 8 herein, which options are hereinafter referred
to collectively as Reload Options, or singularly as a Reload Option. Except
where the context indicates to the contrary, the term "Option" or "Options"
means ISOs, NSOs and Reload Options.
3. AMOUNT OF STOCK.
The aggregate number of shares of Stock which may be purchased pursuant to
the exercise of Options shall be 5,000,000 shares. Of this amount, the
Board or the Stock Option Committee shall have the power and authority to
designate whether any Options so issued shall be ISOs or NSOs, subject to
the restrictions on ISOs contained elsewhere herein. If an Option ceases to
be exercisable, in whole or in part, the shares of Stock underlying such
Option shall continue to be available under this Plan. Further, if shares
of Stock are delivered to the Corporation as payment for shares of Stock
purchased by the exercise of an Options granted under this Plan, such
shares of Stock shall also be available under this Plan. If there is any
change in the number of shares of Stock on account of the declaration of
stock dividends, recapitalization resulting in stock split-ups, or
combinations or exchanges of shares of Stock, or otherwise, the number of
shares of Stock available for purchase upon the exercise of Options, the
shares of Stock subject to any Option and the exercise price of any
outstanding Option shall be appropriately adjusted by the Board or
the-Stock Option Committee. The Board or the Stock Option Committee shall
give notice of any adjustments to each Eligible Person granted an Option
under this Plan, and such adjustments shall be effective and binding on all
Eligible Persons. If because of one or more recapitalizations,
reorganizations or other corporate events, the holders of outstanding Stock
receive something other than shares of Stock then, upon exercise of an
Option, the Eligible Person will receive what the holder would have owned
if the holder had exercised the Option immediately before the first such
corporate event and not disposed of anything the holder received as a
result of the corporate event.
<PAGE>
4. ELIGIBLE PERSONS
(a) With respect to ISOs, an Eligible Person means any individual who has
been employed by the Corporation or by any subsidiary of the
Corporation for a continuous period of at least sixty (60) days.
(b) With respect to NSOs, an Eligible Person means (i) any individual who
has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least sixty (60) days, (ii)
any director of the Corporation or any subsidiary of the Corporation
(iii) any member of the Corporations advisory board member or of any
of the Corporation's subsidiar(ies), or (iv) any consultant of the
Corporation or by any subsidiary of the Corporation.
5. GRANT OF OPTIONS.
The Board or the Stock Option Committee has the right to issue the Options
established by this Plan to Eligible Persons. The Board or the Stock Option
Committee shall follow the procedures prescribed for it elsewhere in this
Plan. A grant of Options shall be set forth in a writing signed on behalf
of the Corporation or by a majority of the members of the Stock Option
Committee. The writing shall identify whether the Option being granted is
an ISO or an NSO and shall set forth the terms which govern the Option. The
terms shall be determined by the Board or the Stock Option Committee, and
may include, among other terms, the number of shares of Stock that may be
acquired pursuant to the exercise of the Options, when the Options may be
exercised, the period for which the Option is granted and including the
expiration date, the effect on the Options of the Eligible Person
terminates employment and whether the Eligible Person may deliver shares of
Stock to pay for the shares of Stock to be purchased by the exercise of the
Option. However, no term shall be set forth in the writing which is
inconsistent with any of the terms of this Plan. The terms of an Option
granted to an Eligible Person may differ from the terms of an Option
granted to another Eligible Person, and may offer form the terms of an
earlier Option granted to the same Eligible Person
6. OPTION PRICE.
The option price per share shall be determined by the Board or the Stock
Option Committee at the time any Option is granted, and shall be not less
than (i) in the case of an ISO, the fair market value, (ii) in the case of
an ISO granted to a ten percent or greater stockholder, 110% of the fair
market value, or (iii) in the case of an NSO, not less than 75% of the fair
market value (but in no event less than the par value) of one share of
Stock on the date the Option is granted, as determined by the Board or the
Stock Option Committee. Fair market value as used herein shall be:
(a) If shares of Stock shall be traded on an exchange or over-the-counter
market, the closing price or the closing bid price of such Stock on
such exchange or over-the-counter market on which such shares shall be
traded on that date, or if such exchange or over-the-counter market is
closed or if no shares shall have traded on such date, on the last
preceding date on which such shares shall have traded, or such other
value as determined by the Board or the Stock Option Committee of the
Corporation.
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(b) If shares of Stock shall not be traded on an exchange or
over-the-counter market, the value as determined by the Board or the
Stock Option Committee of the Corporation.
7. PURCHASE OF SHARES.
An Option shall be exercised by the tender to the Corporation of the full
purchase price of the Stock with respect to which the Option is exercised
and written notice of the exercise. The purchase price of the Stock shall
be in United States dollars, payable in cash or by check, or in property or
Corporation stock or Options, if so permitted by the Board or the Stock
Option Committee in accordance with the discretion granted in Paragraph 5
hereof, having a value equal to such purchase price. The Corporation shall
not be required to issue or deliver any certificates for shares of Stock
purchased upon the exercise of an Option prior to (i) if requested by the
Corporation, the filing with the Corporation by the Eligible Person of a
representation in writing that it is the Eligible Persons then present
intention to acquire the Stock being purchased for investment and not for
resale, and/or (ii) the completion of any registration or other
qualification of such shares under any government regulatory body, which
the Corporation shall determine to be necessary or advisable.
8. GRANT OF RELOAD OPTIONS
In granting an Option under this Plan, the Board or the Stock Option
Committee may, but shall not be obligated to include, a Reload Option
provision therein, subject to the provisions set forth in Paragraphs 20 and
21 herein. A Reload Option provision provides that if the Eligible Person
pays the exercise price of shares of Stock to be purchased by the exercise
of an ISO, NSO or another Reload Option (the "Original Option") by
delivering to the Corporation shares of Stock already owned by the Eligible
Person (the "Tendered Shares"), the Eligible Person shall receive a Reload
Option which shall be a new Option to purchase shares of Stock equal in
number to the tendered shares. The terms of any Reload Option shall be
determined by the Board or the Stock Option Committee consistent with the
provisions of this Plan.
9. STOCK OPTION COMMITTEE
The Stock Option Committee may be appointed from time to time by the Board.
The Board may from time to time remove members from or add members to the
Stock Option Committee. The Stock Option Committee shall be constituted so
as to permit the Plan to comply in all respects with the provisions set
forth in Paragraph 20 herein. The members of the Stock Option Committee may
elect one to its members as its chairman. The Stock Option Committee shall
hold its meetings at such time and places as its chairman shall determine.
A majority of the Stock Option Committee's members present in person shall
constitute a quorum for the transaction of business. All determinations of
the Stock Option Committee will be made by the majority vote of the members
constituting the quorum. The members may participate in a meeting of the
Stock Option Committee by conference telephone or similar communications
equipment by means of which all members participating in the meeting can
hear each other. Participation in a meeting in that manner will constitute
presence in person at the meeting. Any decision or determination reduced to
writing and signed by all members of the Stock Option Committee will be
effective as if it had been made by a majority vote of all members of the
Stock Option Committee at a meeting which is duly called and held.
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10. ADMINISTRATION OF PLAN
In addition to granting Options and to exercising the authority granted to
it elsewhere in this Plan, the Board or the Stock Option Committee is
granted the full right and authority to interpret and construe the
provisions of this Plan, promulgate, amend and rescind rules and procedures
relating to the implementation of the Plan and to make all other
determinations necessary or advisable for the administration of the Plan,
consistent, however, with the intent of the Corporation that Options
granted or awarded pursuant to the Plan comply with the provisions of
Paragraph 20 and 21 herein. All determinations made by the Board or the
Stock Option Committee shall be final, binding and conclusive on all
persons including the Eligible Person, the Corporation and its
stockholders, employees, officers and directors and consultants. No member
of the Board or the Stock Option Committee will be liable for any act or
omission in connection with the administration of this Plan unless it is
attributable to that member's willful misconduct.
11. PROVISIONS APPLICABLE TO ISOs.
The following provisions shall apply to all ISOs granted by the Board or
the Stock Option Committee and are incorporated by reference into any
writing granting an ISO:
(a) An ISO may only be granted within ten (10) years from June 29, 1999,
the date that this Plan was originally adopted by the Board.
(b) An ISO may not be exercised after the expiration of ten (10) years
from the date the ISO is granted.
(c) The option price may not be less than the fair market value of the
Stock at the time the ISO is granted.
(d) An ISO is not transferable by the Eligible Person to whom it is
granted except by will, or the laws of descent and distribution, and
is exercisable during his or her lifetime only by the Eligible Person.
(e) If the Eligible Person receiving the ISO owns at the time of the grant
stock possessing more than ten (10%) percent of the total combined
voting power of all classes of stock of the employer corporation or of
its parent or subsidiary corporation (as those terms are defined in
the Code), then the option price shall be at least 110% of the fair
market value of the Stock, and the ISO shall not be exercisable after
the expiration of five (5) years from the date the ISO is granted.
(f) Even if the shares of Stock which are issued upon exercise of an ISO
are sold within one year following the exercise of such ISO so that
the sale constitutes a disqualifying disposition for ISO treatment
under the Code, no provision of this Plan shall be construed as
prohibiting such a sale.
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(g) This Plan was adopted by the Corporation on June 29, 1999, by virtue
of its approval by the Board. Approval by the stockholders of the
Corporation is to occur as soon as practicable.
12. DETERMINATION OF FAIR MARKET VALUE
In granting ISOs under this Plan, the Board or the Stock Option Committee
shall make a good faith determination as to the fair market value of the
Stock at the time of granting the ISO.
13. RESTRICTIONS ON ISSUANCE OF STOCK
The Corporation shall not be obligated to sell or issue any shares of Stock
pursuant to the exercise of an Option unless the Stock with respect to
which the Option is being exercised is at that time effectively registered
or exempt from registration under the Securities Act of 1933, as amended,
and any other applicable laws, rules and regulations. The Corporation may
condition the exercise of an Option granted in accordance herewith upon
receipt from the Eligible Person, or any other purchaser thereof, of a
written representation that at the time of such exercise it is his or her
then present intention to acquire the shares of Stock for investment and
not with a view to, or for sale in connection with, any distribution
thereof; except that, in the case of a legal representative of an Eligible
Person, "distribution" shall be defined to exclude distribution by will or
under the laws of descent and distribution. Prior to issuing any shares of
Stock pursuant to the exercise of an Option, the Corporation shall take
such steps as it deems necessary to satisfy any withholding tax obligations
imposed upon it by any level of government.
14. EXERCISE IN THE EVENT OF DEATH OF TERMINATION OR EMPLOYMENT
(a) If an optionee shall die (i) while an employee of the Corporation or a
Subsidiary or within three months after termination of his employment
with the Corporation or a Subsidiary because of his disability, or
retirement or otherwise, his Options may be exercised, to the extent
that the optionee shall have been entitled to do so on the date of his
death or such termination of employment by the person or persons to
whom the optionee's right under the Option pass by will or applicable
law, or if no such person has such right, by his executors or
administrators, at any time, or from time to time. In the event of
termination of employment because of his death while an employee or
because of disability, his Options may be exercised not later than the
expiration date specified in Paragraph 5 or one year after the
optionee's death, whichever date is earlier, or in the event of
termination of employment because of retirement or otherwise, not
later than the expiration date specified in Paragraph 5 hereof or one
year after the optionee's death, whichever date is earlier.
(b) If an optionee's employment by the Corporation or a Subsidiary shall
terminate because of his disability and such optionee has not died
within the following three months, he may exercise his Options, to the
extent that he shall have been entitled to do so at the date of the
termination of his employment, at any time, or from time to time, but
not later than the expiration date specified in Paragraph 5 hereof or
one year after termination of employment, whichever date is earlier.
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(c) If an optionee's employment shall terminate by reason of his
retirement in accordance with the terms of the (c) If an optionee's
employment shall terminate by reason of his retirement in accordance
with the terms of the Corporation's retirement plans or with the
consent of the Board or the Stock Option Committee or involuntarily
other than by termination for cause, and such optionee had not died
within the following three months, he may exercise his Option to the
extent he shall have been entitled to do so at the date of the
termination of his employment, at any time and from time to time, but
not later than the expiration date specified in Paragraph 5 hereof.
(d) If an optionee's employment shall terminate for cause, all right to
exercise his Options shall terminate at the date of such termination
of employment.
15. CORPORATE EVENTS
In the event of the proposed dissolution or liquidation of the Corporation,
a proposed sale of all or substantially all of the assets of the
Corporation, a merger or tender for the Corporation's shares of Common
Stock the Board shall declare that each Option granted under this Plan
shall terminate as of a date to be fixed by the Board; provided that not
less than thirty (30) days written notice of the date so fixed shall be
given to each Eligible Person holding an Option, and each such Eligible
Person shall have the right, during the period of thirty (30) days
preceding such termination, to exercise his Option as to all or any part of
the shares of Stock covered thereby, including shares of Stock as to which
such Option would not otherwise be exercisable. Nothing set forth herein
shall extend the term set for purchasing the shares of Stock set forth in
the Option.
16. NO GUARANTEE OF EMPLOYMENT
Nothing in this Plan or in any writing granting an Option will confer upon
any Eligible Person the right to continue in the employ of the Eligible
Person's employer, or will interfere with or restrict in any way the right
of the Eligible Person's employer to discharge such Eligible Person at any
time for any reason whatsoever, with or without cause.
17. NONTRANSFERABILITY
No Option granted under the Plan shall be transferable other than by will
or by the laws of descent and distribution. During the lifetime of the
optionee, an Option shall be exercisable only by him.
18. NO RIGHTS AS STOCKHOLDER
No optionee shall have any rights as a stockholder with respect to any
shares subject to his Option prior to the date of issuance to him of a
certificate or certificates for such shares.
19. AMENDMENT AND DISCONTINUANCE OF PLAN
The Board may amend, suspend or discontinue this Plan at any time. However,
no such action may prejudice the rights of any Eligible Person who has
prior thereto been granted Options under this Plan. Further, no amendment
to this Plan which has the effect of (a) increasing the aggregate number of
shares of Stock subject to this Plan (except for adjustments pursuant to
Paragraph 3 herein), or (b) changing the definition of Eligible Person
under this Plan, may be effective unless and until approval of the
stockholders of the Corporation is obtained in the same manner as approval
of this Plan is required. The Board is authorized to seek the approval of
the Corporation's stockholders for any other changes it proposes to make to
this Plan which require such approval, however, the Board may modify the
Plan as necessary, to effectuate the intent of the Plan as a result of any
changes in the tax, accounting or securities laws treatment of Eligible
Persons and the Plan, subject to the provisions set forth in this Paragraph
19, and Paragraphs 20 and 21.
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20. COMPLIANCE WITH RULE 16B-3
This Plan is intended to comply in all respects with Rule 16b-3 ("Rule
16b-3") promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with
respect to participants who are subject to Section 16 of the Exchange Act,
and any provision(s) herein that is/are contrary to Rule 16b-3 shall be
deemed null and void to the extent appropriate by either the Stock Option
Committee or the Board.
21. COMPLIANCE WITH CODE
The aspects of this Plan on ISOs are intended to comply in every respect
with Section 422 of the Code and the regulations promulgated thereunder. in
the event any future statute or regulation shall modify the existing
stature, the aspects of this Plan on ISOs shall be deemed to incorporate by
reference such modification. Any stock option agreement relating to any
Option granted pursuant to this Plan outstanding and unexercised at the
time any modifying statute or regulation becomes effective shall also be
deemed to incorporate by reference such modification and no notice of such
modification need to be given to optionee.
If any provision of the aspects of this Plan on ISOs is determined to
disqualify the shares purchasable pursuant to the Options granted under
this Plan from the special tax treatment provided by Code Section 422, such
provision shall be deemed null and void and to incorporate by reference the
modification required to qualify the shares for said tax treatment.
22. COMPLIANCE WITH OTHER LAWS AND REGULATIONS
The Plan, the grant and exercise of Options thereunder, and the obligation
of the Corporation to sell and deliver Stock under such options, shall be
subject to all applicable federal and state laws, rules, and regulations
and to such approvals by any government or regulatory agency as may be
required. The Corporation shall not be required to issue or deliver any
certificates for shares of Stock prior to (a) the listing of such shares on
any stock exchange or over-the-counter market on which the Stock may then
be fisted and (b) the completion of any registration or qualification of
such shares under any federal or state law, or any ruling or regulation of
any government body which the Corporation shall, in its sole discretion,
determine to be necessary or advisable. Moreover, no option may be
exercised if its exercise or the receipt of Stock pursuant thereto would be
contrary to applicable laws.
23. DISPOSITION OF SHARES.
In the event any share of Stock acquired by an exercise of an Option
granted under the Plan shall be transferable other than by will or by the
laws of descent and distribution within two years of the date such Option
was granted or within one year after the transfer of such Stock pursuant to
such exercise, the optionee shall give prompt written notice thereof to the
Corporation or the Stock Option Committee.
24. NAME.
The Plan shall be known as the "Voice Mobility 1999 Stock Option Plan."
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25. NOTICES
Any notice hereunder shall be in writing and sent by certified mail, return
receipt requested or by facsimile transmission (with electronic or written
confirmation of receipt) and when addressed to the Corporation shall be
sent to it at its office, 701-543 Granville Street, Vancouver, British
Columbia V6C 1X8 Canada and when addressed to the Committee shall be sent
to it 701-543 Granville Street, Vancouver, British Columbia V6C 1X8 Canada,
subject to the right of either party to designate at any time hereafter in
writing some other address, facsimile number or person to whose attention
such notice shall be sent.
26. HEADINGS
The headings preceding the text of Sections and subparagraphs hereof are
inserted solely for convenience of reference, and shall not constitute a
part of this Plan nor shall they affect its meaning, construction or
effect.
27. EFFECTIVE DATE
The Plan, was adopted by the Board on June 29, 1999. The effective date of
the Plan shall be the same date.
Dated as of June 20, 1999
VOICE MOBILITY INTERNATIONAL, INC.
----------------------------------
By:/s/ James J. Hutton
James J. Hutton
Its President
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EMPLOYMENT AGREEMENT
THIS AGREEMENT made and effective this 1st day of April, 1998.
BETWEEN:
VOICE MOBILITY INC., Incorporated pursuant to the laws of British Columbia,
(herein called the "Corporation")
OF THE FIRST PART
AND:
JAMES HUTTON, of the City of Surrey in the Province of British Columbia
(herein called the "Executive")
OF THE SECOND PART
WHEREAS the Corporation is currently employing the Executive and the
parties desire to enter into this agreement (the "Employment Agreement") to
review the terms of such employment.
IN CONSIDERATION of the recitals and mutual covenants contained herein and
for other good and valuable consideration, the parties agree as follows:
1. EMPLOYMENT
The Corporation hereby employs the Executive and the Executive hereby
accepts employment with the Corporation for the term of this Employment
Agreement set forth in Section 2 below, in a position and with the duties,
responsibilities and authority as the Executive has ordinarily heretofore
enjoyed and as the Corporation may. from time to time, reasonably assign to him
commensurate with his office including those duties, responsibilities and
authority more particularly set forth in Section 3 below, and upon all other
terms and conditions set forth in this Employment Agreement.
2. TERM
The term (the "term") of the Executive's employment shall commence on the
later of the date above and shall continue until March 31, 2000, subject to
those provisions of this Employment Agreement providing for earlier termination
of the Executive's employment in certain circumstances. Thereafter, the term may
be extended for additional one year periods from and after March 31, 2,000 upon
the agreement of the Executive and the Board of Directors of the Corporation,
subject always to the provisions of paragraph 9 hereof.
3. POSITION, RESPONSIBILITY
It is intended that the Executive shall serve as the President and Chief
Executive Officer for the Corporation.
<PAGE>
Throughout the term of this Employment Agreement, the Executive shall
devote substantially his full business time and attention during normal business
hours to the business and affairs of the Corporation, except for vacations and
except for illness or incapacity. Subject to Section 9, and subject to the
approval of the Board of Directors of the Corporation, which will not be
unreasonably withheld, nothing in this Employment Agreement shall preclude the
Executive from devoting reasonable periods required for serving, as appropriate,
on the Boards of Directors of other corporations, from engaging in charitable
and public service activities, and from managing his personal investments,
provided such activities do not materially interfere with the performance of his
duties and responsibilities under this Employment Agreement and do not
constitute a conflict of interest with respect to his employment herein.
4. REMUNERATION: CASH AND STOCK OPTIONS.
(a) Cash - For services rendered by the Executive during the term of this
Agreement, the Executive shall be entitled to receive aggregate annual
base pay remuneration in cash in the amount of $100,000, payable
semi-monthly.
(b) Stock Options - The Corporation shall cause its intended parent
company, Acrex Ventures Inc. ("Acrex"), to grant to the Executive a
five year Stock Option for a total of 250,000 Common Shares in the
capital stock of Acrex exercisable at the minimum price permitted by
the Vancouver Stock Exchange. The granting of these options is
expressly subject to the approval of the board of directors and the
completion of a purchase of all the outstanding stock of the
Corporation by Acrex Ventures Inc. as well as all terms and conditions
(including price) as may be imposed by the Vancouver Stock Exchange on
all Acrex options generally. The Parties acknowledge the availability
of this Option will be subject to VSE permitting an Option Plan for
Acrex which allots in excess of 10% of outstanding shares as available
for Option. These options may be deferred or waived by the Corporation
in the event that the granting of the options is a deterrent in other
staffing.
(c) Remuneration Reviews - The Executive will have annual compensation
reviews shortly after March 1st of each year. These compensation
reviews will result in an increase of no less than 15% of base pay
effective on each April 1st thereafter. The review can occur before or
after that date but the compensation must be effective that date.
5. PERQUISITES AND BUSINESS EXPENSES
The Executive will receive in addition to remuneration in paragraph 4 a car
allowance of $500 per month and shall be reimbursed for all reasonable expenses
incurred by him in connection with the conduct of the Corporation's business
upon presentation of sufficient evidence of such expenditures and provided the
same are authorized expenditures pursuant to policies adopted by the Board of
Directors of the Corporation from time to time.
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6. BENEFIT PROGRAMS
The Executive will be entitled to participate in all Executive benefit
programs of the Corporation from time to time in effect under the terms and
conditions of such programs, including, but not limited to, pension, share
incentive and other benefit plans, group life insurance, hospitalization and
surgical and major medical coverages, dental insurance, sick leave, including
salary continuation arrangements, vacations and holidays, long-term disability,
and such other fringe benefits as are or may be available from time to time to
other executives of the Corporation.
7. VACATION
The Executive shall be entitied to all usual public holidays and, in
addition, 3 weeks annual vacation during each year of employment hereunder. Such
vacation time shall be utilized by the Executive at mutually reasonably
acceptable times.
8. TERMINATION OF EMPLOYMENT
For the full term of this agreement the Executive cannot be terminated by
the Corporation without cause.
(a) Death - In the event of the death of the Executive during the term of
this Employment Agreement, the Executive's salary will be paid to the
Executive's designated beneficiary, and in the absence of such
designation, to the estate or other legal representatives of the
Executive, through the end of the month in which death occurs, Rights
and benefits of the Executive under the Executive benefit plans and
programs of the Corporation, including life insurance, will be
determined in accordance with the terms and conditions of such plans
and programs.
(b) Disability - The Executive's employment shall terminate automatically
upon written notice from the Corporation in the event of the
Executive's absence or inability to render the services required
hereunder due to disability, illness, incapacity or otherwise for an
aggregate of one hundred and eighty days during any 12 month period
during the term, In the event of any such absence or inability, the
Executive shall be entitled to receive the compensation provided for
herein for such period, and thereafter the Executive shall be entitled
to receive compensation in accordance with the Corporation's long-term
disability plan, if any, together with such compensation, if any, as
may be determined by the Board of Directors of the Corporation.
(C) Termination by the Corporation for Cause - In the event of a
termination for cause, there will be no continued salary payments by
the Corporation to the Executive and any rights and benefits of the
Executive under the Executive benefit plans and programs of the
Corporation will be determined in accordance with the terms of such
plans and programs. For the purposes of this Sub Section and of the
Executive's employment with the Corporation, "cause" shall mean that:
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(i) The Executive has committed a felony or indictable offence or has
improperly enriched himself at the expense of the Corporation or
has committed an act evidencing dishonesty or moral turpitude,
including without limitation an act of theft;
(ii) The Executive, in carrying out his duties hereunder, (A) has been
willfully or grossly negligent, or (B) has committed willful and
gross misconduct or, (C) has failed to comply with clear and
reasonable, instructions or directives from the Board of
Directors of the Corporation after having been informed in
writing of a failure to so comply having been given reasonable
opportunity to comply or correct a matter;
(iii)The Executive has breached a material term of this Employment
Agreement and such breach is either not promptly remedied upon
notice or is incapable of remedy;
(iv) The Executive becomes bankrupt or in the event a receiving order
(or any analogous order under any applicable law) is made against
the Executive or in the event the Executive makes any general
disposition or assignment for the benefit of his creditors which
materially interferes with his ability to render services
hereunder,
(v) The Executive commits any other act giving the Corporation cause
to terminate the Executive's employment, including, but not
limited to chronic alcoholism or drug addiction, material
malfeasance or non4easance with respect to the Executive's duties
hereunder.
Prior to any termination of the Executive for cause due to the
first only of any occurrence described in subparagraphs ii),
(iii), and (v) above, the Corporation shall notify the Executive
in writing of the particulars of the occurrence upon which
termination would be based and shall in such notice advise the
Executive as to whether, in that Corporation's reasonable
opinion, the default of the Executive occasioned by such
occurrence is capable of being cured or rectified in full without
material loss or damage to the Corporation, in which case the
Corporation shall afford the Executive a reasonable period of not
less than five business days in which to cure or rectify such
default. In such event and provided the Executive cures or
rectifies such default in full without material loss or damage to
the Corporation, the Executive's employment shall not be
terminated on the basis of such occurrence.
(d) Termination by the Executive - The Executive shall be entitled to
terminate this agreement at any time upon giving the Corporation three
(3) months written notice.
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9. NON-COMPETITION
(a) The Executive agrees that during the period of the Executive's
employment with the Corporation and for a period of twelve months from
the last payment of monthly compensation to the Executive by the
Corporation, the Executive shall not engage in or participate in any
business activity that competes, directly in the Global market, with
the business of the Corporation, or that of any parent, subsidiary or
affiliate companies, organizations or entities. For purposes of this
Section the business of the Corporation means that area of
telecommunications presently engaged in by the Company and includes
all future activities as may be described in the business plan of the
company as approved by the Board of Directors from time to time.
(b) For the purposes of this Section, the Executive shall be deemed to
"compete, directly or indirectly, with the business of the Corporation
or its parent, subsidiary, or affiliate companies, organizations or
entities" if the Executive is or becomes engaged, otherwise than at
the request of the Corporation, as an officer, director or the
Executive of, or is or becomes associated in a management, employee,
ownership, consultancy or agency capacity with any corporation,
partnership or other enterprise or venture whose business includes the
distribution of competing services or products.
(c) It is the desire and intent of the parties that the provisions of this
Section shall be enforceable to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular portion of this
Section is adjudicated unenforceable in any jurisdiction such
adjudication shall apply only in that particular jurisdiction in which
such adjudication is made.
10. NON-SOLICITATION
The Executive agrees that for a period of one year following the
termination of the Executive's employment with the Corporation, for any reason
whatsoever, the Executive will not, whether as principal, agent, executive,
employer, director, officer, shareholder or in any other individual or
representative capacity, solicit or attempt to retain in any way whatsoever, any
of the Executives or employees of either of the Corporation or its parent,
subsidiary or affiliate companies, organizations or entities.
11. CONFIDENTIAL INFORMATION
All confidential records, material and information and copies thereof and
any and all trade secrets concerning the business or affairs of the Corporation
or any of its parent, subsidiary, or affiliate companies, organizations or
entities, obtained by the Executive in the course and by the reason of his
employment shall remain the exclusive property of that Corporation. During the
Executive's employment or at any time thereafter, the Executive shall not
divulge the contents of such confidential records or any of such confidential
information or trade secrets to any person other than to the Coiporation, or to
the Corporation's qualified Officers or Executives, and the Executive shall not,
following the termination of his employment hereunder, for any reason use the
contents of such confidential records or other confidential information or trade
secrets for any purpose whatsoever.
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12. WITHHOLDING
Anything to the contrary notwithstanding, all payments required to be made
by the Corporation hereunder to the Executive or his estate or beneficiaries,
shall be subject to the withholding of such amounts relating to taxes as the
Corporation may reasonably determine, after consultation with the Executive, it
should withhold pursuant to any applicable law or regulation. In lieu of
withholding such amounts, in whole or in part, the Corporation may, in its sole
discretion, accept other provisions for payment of taxes and withholdings as
required by law, provided that the Corporation is satisfied that all
requirements of law affecting the Corporation's responsibilities to withhold
have been complied with.
13. ENTIRE AGREEMENT
This Employment Agreement contains the entire agreement between the parties
hereto with respect to matters herein and supersedes all prior agreements and
understandings, oral or written, between the parties hereto relating to such
matters.
14. ASSIGNMENT
Except as herein expressly provided, the respective rights and obligations
of the Executive and the Corporation under this Employment Agreement shall not
be assignable by either party without the written consent of the other party and
shall enure to the benefit of and be binding upon the Executive and the
Corporation and their permitted successors or assigns, including, in the case of
the Corporation, any other corporation or entity with which such Corporation may
be merged or otherwise combined or which may acquire that Corporation or its
assets in whole or in substantial part, and, in the case of the Executive, his
estate or other legal representatives. Nothing herein expressed or implied is
intended to confer on any person other than the parties hereto any rights,
remedies, obligations or liabilities under or by reason of this Employment
Agreement.
15. APPLICABLE LAW
This Employment Agreement shall be deemed a contract under, and for all
purposes shall be governed by and construed in accordance with, the laws of the
Province of British Columbia without regard to the conflict of laws rules
thereof. The Corporation and the Executive hereby irrevocably consent and affirm
to the jurisdiction of the courts of the Province of British Columbia with
respect to any dispute or proceeding arising in connection with this Employment
Agreement.
16. AMENDMENT OR MODIFICATION: WAIVER
No provision of this Employment Agreement may be amended or waived unless
such amendment or waiver is authorized by the Corporation (including any
authorized officer or committee of the Board of Directors) and is in writing
signed by the Executive and by a duly authorized officer of The Corporation.
Except as otherwise specifically provided in this Employment Agreement, no
waiver by any party hereto of any breach by the other parties of any condition
or provision of this Employment Agreement to be performed by such other party or
parties shall be deemed a waiver of a similar or dissimilar breach, condition or
provision at the same time or at any prior or subsequent time.
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17. PROVISIONS SURVIVING TERMINATION
It is expressly agreed that notwithstanding termination of the Executive's
employment with and by the Corporation for any reason or cause or in any
circumstances whatsoever, such termination shall be without prejudice to the
rights and obligations of the Executive and the Corporation, in relation or
arising up to the time up to and including the date of termination; and the
provisions of Sections 9 through 12 inclusive, shall all remain and continue in
full forte and effect.
18. SEVERABILITY
In the event that any provision or portion of this Employment Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Employment Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law. Corporation acknowledges that Executive has previously filed an assignment
in bankruptcy. Corporation agrees to reexecute this Agreement at the request of
the Executive upon the discharge of the Executive.
19. COUNTERPARTS
This Employment Agreement may be executed in counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
20. REFERENCES
In the event of the Executive's death or a judicial determination of his
incompetency, reference in this Employment Agreement to the Executive shall be
deemed, where appropriate, to refer to his beneficiary or beneficiaries.
21. CAPTIONS
Captions to the Sections of this Employment Agreement are solely for
convenience and no provision of this Agreement is to be construed by reference
to the captions of that Section.
IN WITNESS WHEREOF this Employment Agreement has been executed by a duly
authorized officer of the Corporation and the Executive as of the day first
above written.
VOICE MOBILITY INC.
By: /s/William E. Krebs
William E. Krebs
Signed, Sealed and Delivered by )
JAMES HUTTON )
In the presence of: )
)
Witness /s/Lynne Baker ) /s/James Hutton
Lynne Baker ) JAMES HUTTON
)
Address: North Vancouver, BC )
7
EMPLOYMENT AGREEMENT
THIS AGREEMENT made and effective this 1st day of August, 1998.
B E T W E E N:
VOICE MOBILITY INC., ("VMI"),
Incorporated pursuant to the laws of British Columbia,
(herein called the "Corporation")
OF THE FIRST PART
and
WILLIAM GARDINER, of the City of Vancouver in the Province of British Columbia,
(herein called the "the Executive")
OF THE SECOND PART
WHEREAS the Corporation desires to employ the Executive and to enter into
this agreement (the "Employment Agreement") embodying the terms of such
employment;
AND WHEREAS the Executive has accepted such employment on the basis of the
terms and conditions set forth herein;
IN CONSIDERATION of the recitals and mutual covenants contained herein and
for other good and valuable consideration, the parties agree as follows:
1. EMPLOYMENT
The Corporation hereby employs the Executive and the Executive hereby
accepts employment with the Corporation for the term of this Employment
Agreement set forth in Section 2 below, in a position and with the duties,
responsibilities and authority as the Corporation may, from time to time, assign
to him, including, without limitation, those duties, responsibilities and
authority more particularly set forth in Section 3 below, and upon all other
terms and conditions set forth in this Employment Agreement.
<PAGE>
2. TERM
The term (the "term") of the Executive's employment shall commence on
August 01, 1998 and shall continue until August 01, 2001, subject to those
provisions of this Employment Agreement providing for earlier termination of the
Executive's employment in certain circumstances. Thereafter, the term may be
extended for additional one year periods from and after August 01, 2001 upon the
agreement of the Executive and the Board of Directors of the Corporation,
subject always to the provisions of paragraph 9 hereof.
<PAGE>
3. POSITION, RESPONSIBILITY
It is intended that the Executive shall serve as the Vice President of
Business Development for the corporation.
Throughout the term of this Employment Agreement, the Executive shall
devote his full business time and undivided attention during normal business
hours to the business and affairs of the Corporation, except for vacations and
except for illness or incapacity. Subject to Section 10, and subject to the
approval of the Board of Directors of the Corporation, which will not be
unreasonably withheld, nothing in this Employment Agreement shall preclude the
Executive from devoting reasonable periods required for serving, as appropriate,
on the Boards of Directors of other corporations, from engaging in charitable
and public service activities, and from managing his personal investments,
provided such activities do not materially interfere with the performance of his
duties and responsibilities under this Employment Agreement and do not
constitute a conflict of interest with respect to his employment herein.
4. REMUNERATION: CASH AND STOCK OPTIONS.
(a) Cash - For services rendered by the Executive during the term of this
Agreement, the Executive shall be entitled to receive annual
remuneration in cash in the amount of $60,000 payable semi-monthly.
(b) Stock Options - The Executive shall also be eligible to receive Stock
Options for a total of 100,000 Common Shares in the capital stock of
Acrex Ventures Inc. The granting of these options is expressly subject
to completion of a purchase of all the outstanding stock of the
Corporation by Acrex Ventures Inc. as well as all terms and conditions
(including price) as may be imposed by lawful regulatory authority and
otherwise as may be set by the Board of Directors of Acrex Ventures
Inc; provided however, that unless otherwise determined by lawful
regulatory authority, the granting of such options together with the
vesting thereof, shall occur immediately upon the approval of such
lawful regulatory authority and provided further that in the event the
Executive voluntarily terminates his position of employment with the
Corporation, dies, or is disabled within the meaning of subparagraph
9(b) , or is terminated for cause pursuant to subparagraph 9(c)
hereof, all options which have not yet vested and all right thereto
shall be forfeited by the Executive, effective the date of notice of
such termination.
(c) Renumeration Reviews- The Executive will have compensation reviews
every January 01. This compensation review will result in an immediate
increase of no less than 15% of base pay at that time. The review can
occur before or after that date but the compensation must be effective
that date.
5. PERQUISITES AND BUSINESS EXPENSES
The Executive will be reimbursed for all reasonable expenses incurred by
him in connection with the conduct of the Corporation's business upon
presentation of sufficient evidence of such expenditures and provided the same
are authorized expenditures pursuant to policies adopted by the Board of
Directors of the Corporation from time to time.
2
<PAGE>
6. BENEFIT PROGRAMS
The Executive will be entitled to participate in all Executive benefit
programs of of the Corporation from time to time in effect under the terms and
conditions of such programs, including, but not limited to, pension and other
retirement plans, group life insurance, hospitalization and surgical and major
medical coverages, dental insurance, sick leave, including salary continuation
arrangements, vacations and holidays, long-term disability, and such other
fringe benefits as are or may be available from time to time to other executives
of the Corporation.
7. VACATION
The Executive shall be entitled to all usual public holidays and, in
addition, such paid vacation time as he is entitled to from time to time under
the Employment Standards Act of British Columbia. Such vacation time shall be
utilized by the Executive at such time or times as do not materially interfere
with the ongoing conduct of the Corporation's business and operations.
8. TERMINATION OF EMPLOYMENT
For the full length of this agreement the Executive cannot be terminated by
the company without cause.
(a) Death - In the event of the death of the Executive during the term of
this Employment Agreement, the Executive's salary will be paid to the
Executive's designated beneficiary, and in the absence of such
designation, to the estate or other legal representatives of the
Executive, through the end of the month in which death occurs. Rights
and benefits of the Executive under the Executive benefit plans and
programs of the Corporation, including life insurance, will be
determined in accordance with the terms and conditions of such plans
and programs.
(b) Disability - The Executive's employment shall terminate automatically
upon written notice from the Corporation in the event of the
Executive's absence or inability to render the services required
hereunder due to disability, illness, incapacity or otherwise for an
aggregate of one hundred and eighty days during any 12 month period
during the term. In the event of any such absence or inability, the
Executive shall be entitled to receive the compensation provided for
herein for such period, and thereafter the Executive shall be entitled
to receive compensation in accordance with the Corporation's long-term
disability plan, if any, together with such compensation, if any, as
may be determined by the Board of Directors of the Corporation.
(c) Termination by the Corporation for Cause - In the event of a
termination for cause, there will be no continued salary payments by
the Corporation to the Executive and any rights and benefits of the
Executive under the Executive benefit plans and programs of the
Corporation will be determined in accordance with the terms of such
plans and programs. For the purposes of this Sub-Section and of the
Executive's employment with the Corporation, "cause" shall mean that:
3
<PAGE>
i) The Executive has committed a felony or indictable offence or has
improperly enriched himself at the expense of the Corporation or
has committed an act evidencing dishonesty or moral turpitude,
including without limitation an act of theft;
ii) The Executive, in carrying out his duties hereunder, (A) has been
wilfully or grossly negligent, or (B) has committed wilful and
gross misconduct or, (C) has failed to comply with a clear
instructions or directives from the Board of Directors of the
Corporation after having been informed of a failure to so comply;
iii) The Executive has breached a material term of this Employment
Agreement;
iv) The Executive becomes bankrupt or in the event a receiving order
(or any analogous order under any applicable law) is made against
the Executive or in the event the Executive makes any general
disposition or assignment for the benefit of his creditors; or
v) The Executive commits any other act giving the Corporation cause
to terminate the Executive's employment, including, but not
limited to chronic alcoholism or drug addiction, material
malfeasance or non-feasance with respect to the Executive's
duties hereunder.
Priorto any termination of the Executive for cause due to the
first only of any occurrence described in subparagraphs ii),
(iii), and (v) above, the Corporation shall notify the Executive
in writing of the particulars of the occurrence upon which
termination would be based and shall in such notice advise the
Executive as to whether, in that Corporation's sole discretion,
the default of the Executive occasioned by such occurrence is
capable of being cured or rectified in full without loss or
damage to the Corporation, in which case the Corporation shall
afford the Executive a reasonable period of not less than five
business days in which to cure or rectify such default. In such
event and provided the Executive cures or rectifies such default
in full without loss or damage to the Corporation, the
Executive's employment shall not be terminated on the basis of
such occurrence.
(d) Termination by the Executive - The Executive shall be entitled to
terminate this agreement at any time upon giving the Corporation three
(3) months written notice.
9. NON-COMPETITION
The Executive agrees that during the period of the Executive's employment
with the Corporation and for a period of twelve months from the last payment of
compensation to the Executive by the Corporation, the Executive shall not engage
in or participate in any business activity that competes, directly or indirectly
in the North American market, with the business of the Corporation, or that of
its parent, subsidiary or affiliate companies, organizations or entities.
4
<PAGE>
For the purposes of this Section, the Executive shall be deemed to
"compete, directly or indirectly, with the business of the Corporation or its
parent, subsidiariy, or affiliate companies, organizations or entities" if the
Executive is or becomes engaged, otherwise than at the request of the
Corporation, as an officer, director or the Executive of, or is or becomes
associated in a management, ownership, consultantancy or agency capacity with
any corporation, partnership or other enterprise or venture whose business
includes the distribution of competing services or products.
It is the desire and intent of the parties that the provisions of this
Section shall be enforceable to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of this Section is adjudicated
unenforceable in any jurisdiction such adjudication shall apply only in that
particular jurisdiction in which such adjudication is made.
10. NON-SOLICITATION
The Executive agrees that for a period of one year following the
termination of the Executive's employment with the Corporation, for any reason
whatsoever, the Executive will not, whether as principal, agent, executive,
employer, director, officer, shareholder or in any other individual or
representative capacity, solicit or attempt to retain in any way whatsoever, any
of the Executives or employees of either of the Corporation or its parent,
subsidiary or affiliate companies, organizations or entities.
11. CONFIDENTIAL INFORMATION
All confidential records, material and information and copies thereof and
any and all trade secrets concerning the business or affairs of the Corporation
or any of its parent, subsidiary, or affiliate companies, organizations or
entities, obtained by the Executive in the course and by the reason of his
employment shall remain the exclusive property of that Corporation. During the
Executive's employment or at any time thereafter, the Executive shall not
divulge the contents of such confidential records or any of such confidential
information or trade secrets to any person other than to the Corporation, or to
the Corporation's qualified Officers or Executives, and the Executive shall not,
following the termination of his employment hereunder, for any reason use the
contents of such confidential records or other confidential information or trade
secrets for any purpose whatsoever.
12. WITHHOLDING
Anything to the contrary notwithstanding, all payments required to be made
by the Corporation hereunder to the Executive or his estate or beneficiaries,
shall be subject to the withholding of such amounts relating to taxes as the
Corporation may reasonably determine, after consultation with the Executive, it
should withhold pursuant to any applicable law or regulation. In lieu of
withholding such amounts, in whole or in part, the Corporation may, in its sole
discretion, accept other provisions for payment of taxes and withholdings as
required by law, provided that the Corporation is satisfied that all
requirements of law affecting the Corporation's responsibilities to withhold
have been complied with.
13. ENTIRE AGREEMENT
This Employment Agreement contains the entire agreement between the parties
hereto with respect to matters herein and supersedes all prior agreements and
understandings, oral or written, between the parties hereto relating to such
matters.
5
<PAGE>
14. ASSIGNMENT
Except as herein expressly provided, the respective rights and obligations
of the Executive and the Corporation under this Employment Agreement shall not
be assignable by either party without the written consent of the other party and
shall enure to the benefit of and be binding upon the Executive and the
Corporation and their permitted successors or assigns, including, in the case of
the Corporation, any other corporation or entity with which such Corporation may
be merged or otherwise combined or which may acquire that Corporation or its
assets in whole or in substantial part, and, in the case of the Executive, his
estate or other legal representatives. Nothing herein expressed or implied is
intended to confer on any person other than the parties hereto any rights,
remedies, obligations or liabilities under or by reason of this Employment
Agreement.
15. APPLICABLE LAW
This Employment Agreement shall be deemed a contract under, and for all
purposes shall be governed by and construed in accordance with, the laws of the
Province of British Columbia without regard to the conflict of laws rules
thereof. The Corporation and the Executive hereby irrevocably consent and attorn
to othe jurisdiction of the courts of the Province of British Columbia with
respect to any dispute or proceeding arising in connection with this Employment
Agreement.
16. AMENDMENT OR MODIFICATION: WAIVER
No provision of this Employment Agreement may be amended or waived unless
such amendment or waiver is authorized by the Corporation (including any
authorized officer or committee of the Board of Directors) and is in writing
signed by the Executive and by a duly authorized officer of the Corporation.
Except as otherwise specifically provided in this Employment Agreement, no
waiver by any party hereto of any breach by the other parties of any condition
or provision of this Employment Agreement to be performed by such other party or
parties shall be deemed a waiver of a similar or dissimilar breach, condition or
provision at the same time or at any prior or subsequent time.
17. RESIGNATIONS
The Executive hereby agrees that, upon termination of this employment for
any reason whatsoever, the Executive shall thereupon be deemed, upon the request
of the Corporation, to have immediately resigned any position the Executive may
have as an officer and/or director of the Corporation, together with any other
office, position or directorship which the Executive may hold with any of the
Corporation's parent, subsidiary or related entities in connection with or
arising from the performance of the Executive duties of employment under this
Employment Agreement. In such event, the Executive shall, at the reasonable
request of the Corporation, forthwith execute any and all documents appropriate
to evidence such resignations which are consistent with the terms of this
Employment Agreement.
<PAGE>
6
18. PROVISIONS SURVIVING TERMINATION
It is expressly agreed that notwithstanding termination of the Executive's
employment with and by the Corporation for any reason or cause or in any
circumstances whatsoever, such termination shall be without prejudice to the
rights and obligations of the Executive and the Corporation, in relation or
arising up to the time up to and including the date of termination; and the
provisions of Sections 9(c) and (d), 10 to 13 inclusive, 16, and 18 to 23
inclusive of this Employment Agreement, shall all remain and continue in full
force and effect unless and until the Board of Directors of the Corporation at
their absolute discretion resolves otherwise and so notifies the Executive in
writing.
19. SEVERABILITY
In the event that any provision or portion of this Employment Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Employment Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
20. COUNTERPARTS
This Employment Agreement may be executed in counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
21. REFERENCES
In the event of the Executive's death or a judicial determination of his
incompetency, reference in this Employment Agreement to the Executive shall be
deemed, where appropriate, to refer to his beneficiary or beneficiaries.
22. CAPTIONS
Captions to the Sections of this Employment Agreement are solely for
convenience and no provision of this Agreement is to be construed by reference
to the captions of that Section.
IN WITNESS WHEREOF this Employment Agreement has been executed by a duly
authorized officer of the Corporation and the Executive as of the day first
above written.
VOICE MOBILITY INC.
By: /s/ JAMES HUTTON
----------------
JAMES HUTTON
SIGNED, SEALED and )
DELIVERED in the presence of: )
)
)
/S/ MICHELLE JACOBSEN ) /S/ WILLIAM GARDINER
MICHELLE JACOBSEN WILLIAM GARDINER
7
EMPLOYMENT AGREEMENT
THIS AGREEMENT made and effective this 1st day of October, 1998.
BETWEEN:
VOICE MOBILITY INC., ("VMI")
Incorporated pursuant to the laws of British Columbia,
(herein called the "Corporation")
OF THE FIRST PART
and
JASON CORLESS, of the City of Victoria in the Province of British Columbia,
(herein culled the "the Executive")
OF THE SECOND PART
WHEREAS the Corporation is currently employing the Executive and the
parties desire to enter into this agreement (the "Employment Agreement") to
formalize the terms of such employment.
IN CONSIDERATION of the recitals and mutual covenants contained herein and
for other good and valuable consideration, the parties agree as follows:
1. EMPLOYMENT
The Corporation hereby employs the Executive and the Executive hereby
accepts employment with the Corporation for the term of this Employment
Agreement set forth in Section 2 below, in a position and with the duties,
responsibilities and authority as the Executive has ordinarily heretofore
enjoyed and as the Corporation may, from time to time, reasonably assign to him
commensurate with his offices including those duties, responsibilities and
authority more particularly set forth in Section 3 below1 and upon all other
terms and conditions set forth in this Employment Agreement.
2. TERM
The term (the "term") of the Executive's employment shall commence on
October 01, 1998 and shall continue until October 01, 2001, subject to those
provisions of this Employment Agreement providing for earlier termination of the
Executive's employment in certain circumstances. Thereafter, the term may be
extended for additional one year periods from and after October 01, 2001, upon
the agreement of the Executive and the Board of Directors of the Corporation,
subject always to the provisions of paragraph 9 hereof.
3. POSITION, RESPONSIBILITY
It is intended that the Executive shall serve as the Director of
Engineering.
<PAGE>
Throughout the term of this Employment Agreement, the Executive shall
devote substantially his full business time and undivided attention during
normal business hours to the business and affairs of the Corporation, except for
vacations and except for illness or incapacity. Subject to Section 9, and
subject to the approval of the Board of Directors of the Corporation. which will
not be unreasonably withheld, nothing in this Employment Agreement shall
preclude the Executive from devoting reasonable periods required for serving, as
appropriate, on the Boards of Directors of other corporations, from engaging in
charitable and public service activities, and from managing his personal
investments, provided such activities do not materially interfere with the
performance of his duties ad responsibilities under this Employment Agreement
and do not constitute a conflict of interest with respect to his employment
herein.
3. REMUNERATlON: CASH AND STOCK OPTIONS
(a) Cash -- For services rendered by the Executive during the term of this
Agreement, the Executive shall be entitled to receive annual
remuneration in cash in the amount of $60,000 payable as to $2,500
semi-monthly.
(b) Stock Options - The Corporation shall cause its intended parent
company, Acrex Ventures Inc. ("Acrex") to grant to the Executive a
five year Stock Option for a total of 250,000 Common Shares in the
capital stock of Acrex exercisable at the minimum price permitted by
the Vancouver Stock Exchange. The granting of these options is
expressly subject to the approval of the board of directors and the
completion of a purchase of all the outstanding stock of the
Corporation by Acrex Ventures Inc., as well as all the terms arid
conditions (including price) as may be imposed by the Vancouver Stock
Exchange on all Acrex options generally. The Parties acknowledge the
availability oft. Option will be subject to the VSB permitting an
Option Plan for Acrex which allots in excess of 10% of outstanding
shares as available for Option. These options may be deferred or
waived by the Corporation in the event that the granting of the
options is a deterrent in other staffing.
(c) Remuneration Reviews - the Executive will have compensation reviews
every April 01. This compensation review will result in an immediate
increase of no less than 15% of base pay at that time. The review can
occur before or after that date but the compensation must be effective
that date.
5. PERQUISITES AND BUSINESS EXPENSES
The Executive will be reimbursed for all reasonable expenses incurred by
him in connection with the conduct of the Corporation's business upon
presentation of sufficient evidence of such expenditures and provided the same
are authorized expenditures pursuant to policies adopted by the Board of
Directors of the Corporation from time to time.
6. BENEFIT PROGRAMS
The Executive will be entitled to participate in all Executive benefit
programs of the Corporation from time to time in effect under the terms and
conditions of such programs. including, hut not limited to, pension and other
retirement plans, group life insurance, hospitalization and surgical and major
medical coverage, dental insurance, sick leave, including salary continuation
arrangements, vacations and holidays, long-term disability, and such other
fringe benefits as are or may be available from time to time to other executives
of the Corporation.
2
<PAGE>
7. VACATION
The Executive shall be entitled to all usual public holidays and, in
addition, 3 weeks annual vacation during each year of employment hereunder. Such
vacation time shall be utilized by the Executive at such time or times as do not
materially interfere with the ongoing conduct of the Corporation's business and
operations.
8. TERMINATION OF EMPLOYMENT
For the full length of this agreement the Executive cannot be terminated by
the company without cause.
(a) Death - In the event of the death of the Executive during the term of
this Employment Agreement, the Executive's salary will be paid to the
Executive's designated beneficiary, and in the absence of such
designation, to the estate or other legal representatives of the
Executive, through the end of the month in which death occurs. Rights
and benefits of the Executive under the Executive benefit plans and
programs of the Corporation, including life Insurance, will be
determined In accordance with the terms and conditions of such plans
and programs.
(b) Disability - The Executive's employment shall terminate automatically
upon written notice from the Corporation in the event of the
Executive's absence or inability to render the services required
hereunder due to disability, illness, incapacity or otherwise for an
aggregate of one hundred and eighty days during any l2 month period
during the term. In the event of any such absence or inability, the
Executive shall be entitled to receive the compensation provided for
herein for such period, and thereafter the
Executive shall be entitled to receive compensation in accordance with
the Corporation's long-term disability plan, if any, together with
such compensation. if any, as may be determined by the Board of
Directors of the Corporation.
(c) Termination by the Corporation for Cause - In the event of a termination
for cause, there will be no continued salary payments by the Corporation to
the Executive and any rights and benefits of the Executive under the
Executive benefit plans and programs of the Corporation will be determined
in accordance with the terms of such plans and programs. For the purposes
of this Sub-Section and of the Executive's employment with the Corporation,
"cause" shall mean that:
i) The Executive has committed a felony or indictable offence or has
improperly enriched himself at the expense of the Corporation or has
committed an act evidencing dishonesty or moral turpitude, including
without limitation an act of theft;
ii) The Executive, in carrying out his duties hereunder, (A) has been
willfully or grossly negligent, or (B) has committed willful and gross
misconduct or, (C) has failed to comply with a clear instructions or
directives from the Board of Directors of the Corporation miter having
been informed of a failure to so comply;
iii) The Executive has breached a material term of this Employment
Agreement and such breach is not
promptly remedied upon notice or is incapable of remedy;
3
<PAGE>
iv) The Executive becomes bankrupt or in the event a receiving order (or
any analogous order under any applicable law) is made against the
Executive or in the event the Executive makes any general disposition
or assignment for the benefit of his creditors; or
v) The Executive commits any other act giving the Corporation cause to
terminate the Executive's employment, including, but not limited to
chronic alcoholism or drug addiction, material malfeasance or
nonfeasance with respect to the Executive's duties hereunder.
Prior to any termination of the Executive for cause due to the first
only of any occurrence described in subparagraphs (ii), (iii), and (v)
above, the Corporation shall notify the Executive in writing of the
particulars of the occurrence upon which termination would be based
and shall in such notice advise the Executive as to whether, in that
Corporation's sole discretion, the default of the Executive occasioned
by such occurrence is capable of being cured or rectified in full
without loss or damage to the Corporation, in which case the
Corporation shall afford the Executive a reasonable period of not less
than five business days in which to cure or rectify such default. In
such event and provided the Executive cures or rectifies such default
in full without loss or damage to the Corporation, the Executive's
employment shall not be terminated on the basis of such occurrence.
(d) Termination by the Executive - The Executive shall be entitled to
terminate this agreement at any time upon giving the Corporation three
(3) months written notice.
9. NON-COMPETITION
The Executive agrees that during the period of the Executive's employment
with the Corporation and for a period of twelve months from the last payment of
compensation to the Executive by the Corporation, the Executive shall not engage
in or participate in any business activity that competes, directly or indirectly
in the North American market, with the business of the Corporation, or that of
its parent, subsidiary or affiliate companies, organizations or entities.
For the purposes of this Section, the Executive shall be deemed to
"compete, directly or indirectly, with the business of the Corporation or its
parent, subsidiary, or affiliate companies, organizations or entities". If the
Executive is or becomes engaged, otherwise than at the request of the
Corporation. as an officer, director or the Executive of, or is or becomes
associated in a management, ownership, consultancy or agency capacity with any
corporation, partnership or other enterprise or venture whose business includes
the distribution of competing services or products.
It is the desire and intent of the parties that the provisions of this
Section shall be enforceable to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of this Section is adjudicated
unenforceable in any jurisdiction such adjudication shall apply only in that
particular jurisdiction in which such adjudication is made.
4
<PAGE>
10. NON-SOLICITATION
The Executive specs that for a period of one year following the termination
of the Executive's employment with the Corporation, for any reason whatsoever,
the Executive will not, whether as principal, agent, executive, employer,
director, officer, shareholder or in any other individual or representative
capacity, solicit or attempt to retain In any way whatsoever, any of the
Executives or employees of either of the Corporation or its parent, subsidiary
or affiliate companies, organizations or entities.
11. CONFIDENTIAL INFORMATION
All confidential records, material and information and copies thereof and
any and all trade secrets concerning the business or affairs of the Corporation
or any of its parent, subsidiary, or affiliate companies, organizations or
entities, obtained by the Executive in the course and by the reason of his
employment shall remain the exclusive property of that Corporation. During the
Executive's employment or at any time thereafter, the Executive shall not
divulge the contents of such confidential records or any of such confidential
information or trade secrets to any person other than to the Corporation, or to
the Corporation's qualified Officers or Executives, and the Executive shall not,
following the termination of his employment hereunder, for any reason use the
contents of such confidential records or other confidential information or trade
secrets for any purpose whatsoever.
12. WITHHOLDING
Anything to the contrary notwithstanding, all payments required to be made
by the Corporation hereunder to the Executive or his estate or beneficiaries,
shall be subject to the withholding of such amounts relating to taxes as the
Corporation may reasonably determine, after consultation with the Executive, It
should withhold pursuant to any applicable law or regulation. In lieu of
withholding such amounts, in whole or in part, the Corporation may, in its sole
discretion, accept other provision for payment of taxes and withholdings as
required by law, provided that the Corporation is satisfied that all
requirements of law affecting the Corporation's responsibilities to withhold
have been complied with.
13. ENTIRE AGREEMENT
This Employment Agreement contains the entire agreement between the parties
hereto with respect to matters herein and supersedes all prior agreements and
understandings, oral or written, between the parties hereto relating to such
matters.
14. ASSIGNMENT
Except as herein expressly provided, the respective rights and obligations
of the Executive and the Corporation under this Employment Agreement shall not
be assignable by either party without the written consent of the other party and
shall enure to the benefit of and be binding upon the Executive and the
Corporation and their permitted successors or assigns, including, in the case of
the Corporation, any other corporation or entity with which such Corporation may
be merged or otherwise combined or which may acquire that Corporation or its
assets in whole or in substantial part, and, in the case of the Executive, his
estate or other legal representatives. Nothing herein expressed or implied is
intended to confer on any person other than the parties hereto any rights,
remedies, obligations or liabilities under or by reason of this Employment
Agreement.
5
<PAGE>
14. APPLICABLE LAW
This Employment Agreement shall be deemed a contact under, and for all
purposes shall be governed by and construed in accordance with, the laws of the
Province of British Columbia without regard to the conflict of laws rules
thereof. The Corporation and the Executive hereby irrevocably consent and attorn
to the jurisdiction of the courts of the Province of British Columbia with
respect to any dispute or proceeding arising in connection with this Employment
Agreement.
16. AMENDMENT OR MODIFICATION WAIVER
No provision of this Employment Agreement may be amended or waived unless
such amendment or waiver is authorized by the Corporation (including any
authorized officer or committee of the Board of Directors) and is in writing
signed by the Executive and by a duly authorized officer of the Corporation.
Except as otherwise specifically provided in this Employment Agreement, no
waiver by any party hereto of any breach by the other parties of any condition
or provision of this Employment Agreement to be performed by such other party or
parties shall be deemed a waiver of a similar or dissimilar breach, condition or
provision at the same time or at any prior or subsequent time.
17. PROVISIONS SURVIVING TERMINATION
It is expressly agreed that notwithstanding termination of the Executive's
employment with and by the Corporation for any reason or cause or in any
circumstances whatsoever, such termination shall be without prejudice to the
rights and obligations of the Executive and the Corporation, In relation or
arising up to the time up to and including the date of termination; and the
provisions of Sections 9(c) and (d), 10 to 13 inclusive, 16, and 18 to 23
inclusive of this Employment Agreement, shall all remain and continue in full
force and effect unless and until the Board of Directors of the Corporation at
their absolute discretion resolves otherwise and so notifies the Executive in
writing.
18. SEVERABILITY
In the event that any provision or portion of this Employment Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Employment Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
19. COUNTERPARTS
This Employment Agreement may be executed in counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
20. REFERENCES
In the event of the Executive's death or a judicial determination of his
incompetency, reference in this Employment Agreement to the Executive shall be
deemed, where appropriate, to refer to his beneficiary or beneficiaries.
6
<PAGE>
21. CAPTIONS
Captions to the Sections of this Employment Agreement are solely for
convenience and no provision of this Agreement Is to be construed by reference
to the captions of that Section.
IN WITNESS WHEREOF this Employment Agreement has been executed by a duly
authorized officer of the Corporation and the Executive as of the day first
above written.
VOICE MOBILITY INC.
By: /s/JAMES HUTTON
-------------------
JAMES HUTTON
SIGNED, SEALED and )
DELIVERED in the presence of: )
)
)
Witness: /s/Krista Stellar ) /s/JASON CORLESS
Krista Stellar )
7
EMPLOYMENT AGREEMENT
Agreement (this "Agreement"), dated as of June 20, 1999, by and between
VOICE MOBILITY INC., a British Columbia corporation, having its principal place
of business at 701- 543 Granville Street, Vancouver, British Columbia, V6C 1X8
Canada (the "Corporation"), and Budd Stewart, residing at 852 Prspect Ave.,
North Vancouver, V7R 2M3 (the "Executive").
WHEREAS, the Corporation desires to employ the Executive as an executive
officer, and the Executive is willing to accept such employment, all subject to
the terms and conditions set forth herein:
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto (the "Parties") agree as
follows:
1. EMPLOYMENT AND TERM
Subject to the terms and conditions hereof, the Corporation hereby employs
the Executive, and the Executive hereby accepts employment by the Corporation,
for a period of three (2) years commencing on the date hereof.
2. DUTIES
The Executive shall serve the Corporation as its Vice President of
Operations and, in such capacity, subject to the direction of the Corporation's
President, Chief Executive Officer and Board of Directors, he shall be
responsible for the all duties as outlined in the attached job description.
3. COMPENSATION
(a) Base Salary. As base compensation for the services to be rendered by
the Executive hereunder, the Corporation agrees to pay the Executive
an annual base salary in the amount of $100,000, such salary to be
paid in bi-weekly installments.
(b) Additional compensation in the form of stock options will be available
to the Executive pursuant to the Stock Option Plan.
4. INITIAL GRANT OF OPTIONS.
As a signing bonus, the Corporation shall grant to the Executive as of the
date hereof and pursuant to a separate Stock Option Agreement, 250,000 stock
options. Availablity of said options will be subject to the option plan as
adopted by the Board of Directors. A further 250,000 will be made availbale
based upon an agreed to performance criteria.
5. EXPENSE REIMBURSEMENT.
The Executive shall be entitled, on a basis consistent with the
Corporation's policy applicable to its executives, to reimbursement for all
normal and reasonable travel, entertainment and other expenses necessarily
incurred by him in the performance of his obligations hereunder. The Corporation
shall reimburse the Executive for such expenses upon presentation to the
Corporation, within a reasonable time after such expenses are incurred, of an
itemized account of such expenses, together with such vouchers or receipts for
individual expense items as the Corporation may from time to time require under
its established policies and procedures.
<PAGE>
6. OTHER BENEFITS.
(a) Car Allowance. The Corporation shall also pay the executive an
allowance to cover the cost of leasing an automobile of his choice,
with such allowance not to exceed $500 per month..
(b) Participation in Benefit Plans. The Executive shall be entitled to
participate in or benefit from, in accordance with the eligibility and
other provisions thereof, any such medical insurance, pension,
retirement, life insurance, bonus, profit-sharing, or other fringe
benefit plans or policies as the Corporation may make available to, or
have in effect for, its executive personnel from time to time,
including, without limitation, those plans set forth on Schedule "A".
Plans and benefits may be modified or eliminated by the Corporation
from time to time as it determines in its sole discretion.
(c) Vacation. The Executive shall be entitled to a minimum of three (3)
weeks of paid vacation each calendar year.
7. TERMINATION ON DISABILITY OR DEATH
(a) In the event that the Executive is unable to perform his services to
the Corporation by reason of physical or mental disability or
incapacity for a period of more than three successive months, the
Corporation may terminate this Agreement. Periods of disability shall
not be counted as successive if the Executive has returned to work for
at least one month between such periods of disability. To the extent
that the Corporation maintains disability insurance for the benefit of
the Executive, any compensation paid to the Executive by the
Corporation during the term of Executive's disability shall be repaid
to the Corporation to the extent that the Executive receives
disability benefits for the same time period. Once disability benefits
have begun, any compensation due under this Agreement shall be reduced
by the same amount received by the Executive. The Executive's
employment shall terminate immediately upon his death.
(b) Upon termination of the Executive's employment by reason of his death
or disability as aforesaid, the Executive, or in the case of the
Executive's death, the Executive's personal representatives, shall be
entitled to receive all base compensation earned or accrued to the
date of such termination and not theretofore paid.
8. TERMINATION FOR CERTAIN CAUSES.
In the event of (i) the conviction of the Executive of any criminal code
offence under federal or provincial law, or (ii) willful gross misconduct of the
Executive in the performance of his duties hereunder; (iii) a material breach of
any of the provisions of this Agreement, where such breach has not been cured by
the Executive within a period of ten days of receipt of written notice from the
Corporation of proposed termination specifying the particular breach; (iv) the
Executive's abuse of alcohol or illegal drugs, unless, in the sole discretion of
the Corporation, the Executive shall successfully complete a qualified
rehabilitation program; (v) any act of theft or fraud by the Executive against
the Corporation.
Termination without cause entitles the Executive to three months' salary
and benefits.
2
<PAGE>
9. DISCLOSURE AND ASSIGNMENT OF DISCOVERIES
(a) The Executive hereby covenants and agrees to disclose promptly and
fully, in writing, whenever possible, to the Corporation and its
attorneys and designated representatives, without additional
compensation, all ideas, formulae, programs, systems, devices,
inventions, processes, business concepts, discoveries, improvements,
developments, works of authorship, product marks and designations,
technical information and know-how, whether or not patentable,
copyrightable or otherwise protectable relating to the business and
products of the Corporation (together, the "Developments"), which he
may conceive, develop, reduce to practice, acquire or make, along or
jointly with others:
(i) during the term of his employment with the Corporation, whether
during or outside of the usual hours of work;
(ii) within a period of two years after termination of his employment
with the Corporation; and
(iii)at any time after termination of his employment with the
Corporation, if such Developments arise out of any work done or
concepts developed by the Executive, alone or with others, during
his employment by the Corporation.
The Executive hereby agrees that all of his right, title, and interest in
and to such Developments shall be deemed as held by him in a fiduciary capacity
solely for the benefit of the Corporation, shall be the sole and exclusive
property of the Corporation and shall be subject to the confidentiality
provisions of Paragraph 11 as confidential information of the Corporation.
(b) The Executive, when required to do so, either during or after the term
of his employment with the Corporation, shall:
(i) assign and convey to the Corporation his entire right, title and
interest in and to the Developments to the extent not owned by
the Corporation as a matter of law from the time of their
creation and execute, acknowledge and deliver all such further
instruments and documents, in form and substance satisfactory to
the Corporation, as it shall deem reasonably necessary or
advisable to evidence the vesting in the Corporation of all
right, title and interest of the Executive in and to the
Developments;
(ii) assist the Corporation and its agents in preparing patent
applications, domestic and foreign, covering the Developments;
(iii)sign and deliver all such applications and assignments of the
same to the Corporation; and
(iv) generally give all information and testimony, sign all papers and
do all things which may be needed or requested by the Corporation
to the end that the Corporation may obtain, extend, reissue,
maintain and enforce United States and foreign patents covering
the Developments.
3
<PAGE>
(c) The Executive hereby irrevocably nominates and appoints the
Corporation his attorney-in-fact to sign and deliver all such papers,
and perform all such acts, mentioned in Paragraph 9(b), in the event
of the Executive's absence, unavailability, refusal, or death, such
nomination and appoint hereby being granted with full authority in the
premises, and such authority to be deemed coupled with an interest
vested in the Corporation.
(d) The Corporation agrees to bear all expenses which it causes to be
incurred in obtaining, extending, issuing, maintaining and enforcing
such patents and in investing and perfecting title thereto in the
Corporation, and agrees further to pay the Executive for any time
which it may require of him therefore, and for any services that may
be required of him pursuant to Paragraph 9(b), subsequent to the
termination of his employment with the Corporation, such payment to be
at an hourly rate equivalent to that at which the Executive is paid at
the time of the termination of his employment by the Corporation.
(e) In the event of the unenforceability of all or part of the foregoing
provisions in this Paragraph 9, as determined by a court of competent
jurisdiction, the Executive hereby transfers and assigns to the
Corporation such lesser interests in the Developments, including
without limitation, any and all United States and foreign patent
rights therein and renewals thereof, as may be determined by such a
court to be a reasonable grant of interests under the circumstances,
but, in any event, and without limitation, the Executive shall be
deemed to have granted to the Corporation not less than an
irrevocable, non-exclusive license, with the right to sublicense
others, to manufacture, use, lease and sell the Developments which
have not been assigned to the Corporation under the provisions of
Paragraph 9(b), without payment of any royalty.
10. CONFIDENTIALITY
(a) The Executive understands and hereby acknowledges that as a result of
his employment with the Corporation, he will necessarily become
informed of, and have access to, certain valuable and confidential
information of the Corporation and its subsidiaries, joint ventures
and affiliates, including, without limitation, inventions, trade
secrets, technical information, know-how, plans, specifications,
identity of customers and suppliers, and that such information, even
though it may be developed or otherwise acquired by the Executive, is
the exclusive property of the Corporation to be held by the Executive
in trust and solely for the Corporation's benefit. Accordingly, the
Executive hereby agrees that he shall not, at any time, either during
or subsequent to his employment hereunder, use, reveal, report,
publish, transfer or otherwise disclose to any person, corporation or
other entity, any of the Corporation's confidential information
without the prior written consent of the Corporation, except to
responsible officers and employees of the Corporation and other
responsible persons who are in contractual or fiduciary relationship
with the Corporation or who have a need for such information for
purposes in the interest of the Corporation, and except for such
information for purposes in the interest of the Corporation, and
except for such information which legally and legitimately is or
becomes of general public knowledge from authorized sources other than
the Executive.
4
<PAGE>
(b) Upon the termination of his employment with the Corporation for any
reason whatsoever, the Executive shall promptly deliver to the
Corporation all drawings, manuals, letters, notes, notebooks, reports
and copies thereof, and all other materials, including, without
limitation, those of a secret and confidential nature, relating to the
Corporation's business which are in the Executive's possession or
control.
11. NON-COMPETITION.
The Executive agrees that, during the term of this Agreement and for a
period of one year after the expiration or termination of his employment with
the Corporation, he shall not, anywhere in the United States of America or
elsewhere in the world (or in such small area or for such lesser period as may
be determined by a court of competent jurisdiction to be a reasonable limitation
on the competitive activity of the Executive), directly or indirectly:
(i) engage in a competitive line of business to the business carried
on by the Corporation, either for his own account or with or for
anyone else;
(ii) solicit or attempt to solicit business of any customers of the
Corporation for products or services the same or similar to those
offered, sold, produced or under development by the Corporation;
(iii)otherwise divert or attempt to divert from the Corporation any
business whatsoever;
(iv) solicit or attempt to solicit for any business endeavor any
employee of the Corporation;
(v) interfere with any business relationship between the Corporation
and any other person; or
(vi) render any services as an officer, director, employee, partner,
consultant or otherwise to, or have any interest as a partner,
lender or otherwise in, any person which is so engaged.
For purposes of subparagraph 11(i) and (ii) it shall not be deemed a
violation of these subparagraphs if after the expiration or termination of this
Agreement, the Executive, either for his own account or with or for anyone else,
engages in the sale, manufacture, distribution or marketing of products or
services that are not at that time sold, manufactured distributed or marketed by
the Corporation.
12. REMEDIES
Because the Corporation does not have an adequate remedy at law to protect
its business from the Executive's competition or to protect its interests in its
trade secrets, privileged, proprietary or confidential information and similar
commercial assets, the Corporation shall be entitled to injunctive relief, in
addition to such other remedies and relief that would, in the event of a breach
of the provisions of Paragraphs 9, 10, and 11, be available to the Corporation.
In the event of such a breach, in addition to any other remedies, the
Corporation shall be entitled to receive from the Executive payment of, or
reimbursement for, its reasonable attorneys' fees and disbursements incurred in
enforcing any such provision.
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<PAGE>
13. SURVIVAL
The provisions of Paragraphs 9, 10, and 11 shall survive termination of
this Agreement for any reason.
14. ENTIRE AGREEMENT
This Agreement sets forth the entire understanding of the Parties and
merges and supersedes any prior or contemporaneous agreements between the
Parties pertaining to the subject matter hereof. This Agreement may not be
changed or terminated orally, and no change, termination or attempted waiver of
any of the provisions hereof shall be binding unless in writing and signed by
the Party against whom the same is sought to be enforced; provided, however,
that the Executive's compensation may be increased at any time by the
Corporation without in any way affecting any of the other terms and conditions
of this Agreement, which in all other respects shall remain in full force and
effect. Failure of a Party to enforce one or more of the provisions of this
Agreement or to require at any time performance of any of the obligations hereof
shall not be construed to be a waiver of such provisions by such Party nor to in
any way affect the validity of this Agreement of such Party's right thereafter
to enforce any provision of this Agreement, nor to preclude such party from
taking any other action at any time which it would legally be entitled to take.
15. SUCCESSORS AND ASSIGNS
Neither Party shall have the right to assign this Agreement, or any rights
or obligations hereunder, without the consent of the other Party; provided,
however, that upon the sale of all or substantially all of the assets, business
and goodwill of the Corporation to another corporation, or upon the merger or
consolidation of the Corporation with another corporation, this Agreement shall
inure to the benefit of, and be binding upon, both the Executive and the
corporation purchasing such assets, business and goodwill, or surviving such
merger or consolidation, as the case may be, in the same manner and to the same
extent as though such other corporation were the Corporation. Subject to the
foregoing, this Agreement shall inure to the benefit of, and bind, the Parties
and their legal representatives, heirs, successors and assigns.
16. ADDITIONAL ACTS
The Executive and the Corporation each agrees that h or it shall, as often
as requested to do so, execute, acknowledge and deliver and file, or cause to be
executed, acknowledged and delivered and filed, any and all further instruments,
agreements or documents as may be necessary or expedient in order to consummate
the transactions provided for in this Agreement and do any and all further acts
and things as may be necessary or expedient in order to carry out the purpose
and intent of this Agreement.
17. COMMUNICATIONS
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been given at the time
when mailed in any post office enclosed in a registered or certified postage
prepaid envelope and addressed to the addresses set forth at the beginning of
this Agreement, or to such other address as any party may specify by notice to
the other party; provided, however, that any notice of change of address shall
be effective only upon receipt.
6
<PAGE>
18. CONSTRUCTION
The headings of the paragraphs of this Agreement have been inserted for
convenience of reference only and shall in no way restrict or otherwise affect
the construction of the terms or provisions hereof. References in this Agreement
to Paragraphs are to the paragraphs of this Agreement.
19. COUNTERPARTS
This Agreement may be executed in multiple counterparts, each of which
shall be deemed to be an original and all of which together shall be deemed to
be one and the same instrument.
20. SEVERABILITY
If any provision of this Agreement is held to be invalid or unenforceable
by a court or tribunal of competent jurisdiction, such invalidity or
unenforceability shall not affect the validity and enforceability of the other
provisions of this Agreement and the provision held to be invalid or
unenforceable shall be carried out as nearly as possible according to its
original terms and intent to eliminate such invalidity or unenforceability.
21. GOVERNING LAW
This Agreement is made and executed and shall be governed by the laws of
the Province of British Columbia, Canada applicable to contacts made in and to
be performed in British Columbia.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first set forth above.
VOICE MOBILITY INC.
By: /s/James J. Hutton
James J. Hutton,
President
/s/Bud Stewart
------------------------
Bud Stewar1,
The Executive
7
EMPLOYMENT AGREEMENT
Agreement (this "Agreement"), dated as of August 7, 1999, by and between
VOICE MOBILITY INC., a British Columbia corporation, having its principal place
of business at 701- 543 Granville Street, Vancouver, British Columbia, V6C 1X8
Canada (the "Corporation"), and Geoff Heston of 13910-25A Ave., Surrey, B.C. V4P
2L9(the "Executive").
WHEREAS, the Corporation desires to employ the Executive as an executive
officer, and the Executive is willing to accept such employment, all subject to
the terms and conditions set forth herein:
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto (the
"Parties") agree as follows:
1. EMPLOYMENT AND TERM
Subject to the terms and conditions hereof, the Corporation hereby employs
the Executive, and the Executive hereby accepts employment by the Corporation,
for a period of three (3) years commencing on the date hereof.
2. DUTIES
The Executive shall serve the Corporation as its Vice President of Sales
and Marketing and, in such capacity, subject to the direction of the
Corporation's President, Chief Executive Officer and Board of Directors, he
shall be responsible for the all duties as outlined in the attached job
description.
3. COMPENSATION
(a) Base Salary. As base compensation for the services to be rendered by
the Executive hereunder, the Corporation agrees to pay the Executive
an annual base salary in the amount of $120,000, such salary to be
paid in bi-weekly installments. (b) Additional compensation in the
form of shares and stock options are outlined under separate cover.
The stock options will be governed by the rules and guidelines
established under the Stock Option Plan.
4. INITIAL GRANT OF OPTIONS.
As a signing bonus, the Corporation shall grant to the Executive as of the
date hereof and pursuant to a separate Stock Option Agreement, 200,000 stock
options. Availability of said options will be subject to the option plan as
adopted by the Board of Directors.
5. EXPENSE REIMBURSEMENT.
The Executive shall be entitled, on a basis consistent with the
Corporation's policy applicable to its executives, to reimbursement for all
normal and reasonable travel, entertainment and other expenses necessarily
incurred by him in the performance of his obligations hereunder. The Corporation
shall reimburse the Executive for such expenses upon presentation to the
Corporation, within a reasonable time after such expenses are incurred, of an
itemized account of such expenses, together with such vouchers or receipts for
individual expense items as the Corporation may from time to time require under
its established policies and procedures.
<PAGE>
6. OTHER BENEFITS
(a) Car Allowance. The Corporation shall also pay the executive an
allowance to cover the cost of leasing an automobile of his choice,
with such allowance not to exceed $500 per month..
(b) Participation in Benefit Plans. The Executive shall be entitled to
participate in or benefit from, in accordance with the eligibility and
other provisions thereof, any such medical insurance, pension,
retirement, life insurance, bonus, profit-sharing, or other fringe
benefit plans or policies as the Corporation may make available to, or
have in effect for, its executive personnel from time to time,
including, without limitation, those plans set forth on Schedule "A".
Plans and benefits may be modified or eliminated by the Corporation
from time to time as it determines in its sole discretion.
(c) Vacation. The Executive shall be entitled to a minimum of three (3)
weeks of paid vacation each calendar year.
7. TERMINATION ON DISABILITY OR DEATH
(a) In the event that the Executive is unable to perform his services to
the Corporation by reason of physical or mental disability or
incapacity for a period of more than three successive months, the
Corporation may terminate this Agreement. Periods of disability shall
not be counted as successive if the Executive has returned to work for
at least one month between such periods of disability. To the extent
that the Corporation maintains disability insurance for the benefit of
the Executive, any compensation paid to the Executive by the
Corporation during the term of Executive's disability shall be repaid
to the Corporation to the extent that the Executive receives
disability benefits for the same time period. Once disability benefits
have begun, any compensation due under this Agreement shall be reduced
by the same amount received by the Executive. The Executive's
employment shall terminate immediately upon his death.
(b) Upon termination of the Executive's employment by reason of his death
or disability as aforesaid, the Executive, or in the case of the
Executive's death, the Executive's personal representatives, shall be
entitled to receive all base compensation earned or accrued to the
date of such termination and not theretofore paid.
8. TERMINATION FOR CERTAIN CAUSES
In the event of (i) the conviction of the Executive of any criminal code
offence under federal or provincial law, or (ii) willful gross misconduct of the
Executive in the performance of his duties hereunder; (iii) a material breach of
any of the provisions of this Agreement, where such breach has not been cured by
the Executive within a period of ten days of receipt of written notice from the
Corporation of proposed termination specifying the particular breach; (iv) the
Executive's abuse of alcohol or illegal drugs, unless, in the sole discretion of
the Corporation, the Executive shall successfully complete a qualified
rehabilitation program; (v) any act of theft or fraud by the Executive against
the Corporation.
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<PAGE>
9. DISCLOSURE AND ASSIGNMENT OF DISCOVERIES
(a) The Executive hereby covenants and agrees to disclose promptly and
fully, in writing, whenever possible, to the Corporation and its
attorneys and designated representatives, without additional
compensation, all ideas, formulae, programs, systems, devices,
inventions, processes, business concepts, discoveries, improvements,
developments, works of authorship, product marks and designations,
technical information and know-how, whether or not patentable,
copyrightable or otherwise protectable relating to the business and
products of the Corporation (together, the "Developments"), which he
may conceive, develop, reduce to practice, acquire or make, along or
jointly with others:
(i) during the term of his employment with the Corporation, whether
during or outside of the usual hours of work;
(ii) within a period of two years after termination of his employment
with the Corporation; and
(iii)at any time after termination of his employment with the
Corporation, if such Developments arise out of any work done or
concepts developed by the Executive, alone or with others, during
his employment by the Corporation.
The Executive hereby agrees that all of his right, title, and interest in
and to such Developments shall be deemed as held by him in a fiduciary capacity
solely for the benefit of the Corporation, shall be the sole and exclusive
property of the Corporation and shall be subject to the confidentiality
provisions of Paragraph 11 as confidential information of the Corporation.
(b) The Executive, when required to do so, either during or after the term
of his employment with the Corporation, shall:
(i) assign and convey to the Corporation his entire right, title and
interest in and to the Developments to the extent not owned by
the Corporation as a matter of law from the time of their
creation and execute, acknowledge and deliver all such further
instruments and documents, in form and substance satisfactory to
the Corporation, as it shall deem reasonably necessary or
advisable to evidence the vesting in the Corporation of all
right, title and interest of the Executive in and to the
Developments;
(ii) assist the Corporation and its agents in preparing patent
applications, domestic and foreign, covering the Developments;
(iii)sign and deliver all such applications and assignments of the
same to the Corporation; and
(iv) generally give all information and testimony, sign all papers and
do all things which may be needed or requested by the Corporation
to the end that the Corporation may obtain, extend, reissue,
maintain and enforce United States and foreign patents covering
the Developments.
3
<PAGE>
(c) The Executive hereby irrevocably nominates and appoints the
Corporation his attorney-in-fact to sign and deliver all such papers,
and perform all such acts, mentioned in Paragraph 9(b), in the event
of the Executive's absence, unavailability, refusal, or death, such
nomination and appoint hereby being granted with full authority in the
premises, and such authority to be deemed coupled with an interest
vested in the Corporation.
(d) The Corporation agrees to bear all expenses which it causes to be
incurred in obtaining, extending, issuing, maintaining and enforcing
such patents and in investing and perfecting title thereto in the
Corporation, and agrees further to pay the Executive for any time
which it may require of him therefore, and for any services that may
be required of him pursuant to Paragraph 9(b), subsequent to the
termination of his employment with the Corporation, such payment to be
at an hourly rate equivalent to that at which the Executive is paid at
the time of the termination of his employment by the Corporation.
(e) In the event of the unenforceability of all or part of the foregoing
provisions in this Paragraph 9, as determined by a court of competent
jurisdiction, the Executive hereby transfers and assigns to the
Corporation such lesser interests in the Developments, including
without limitation, any and all United States and foreign patent
rights therein and renewals thereof, as may be determined by such a
court to be a reasonable grant of interests under the circumstances,
but, in any event, and without limitation, the Executive shall be
deemed to have granted to the Corporation not less than an
irrevocable, non-exclusive license, with the right to sublicense
others, to manufacture, use, lease and sell the Developments which
have not been assigned to the Corporation under the provisions of
Paragraph 9(b), without payment of any royalty.
10. CONFIDENTIALITY
(a) The Executive understands and hereby acknowledges that as a result of
his employment with the Corporation, he will necessarily become
informed of, and have access to, certain valuable and confidential
information of the Corporation and its subsidiaries, joint ventures
and affiliates, including, without limitation, inventions, trade
secrets, technical information, know-how, plans, specifications,
identity of customers and suppliers, and that such information, even
though it may be developed or otherwise acquired by the Executive, is
the exclusive property of the Corporation to be held by the Executive
in trust and solely for the Corporation's benefit. Accordingly, the
Executive hereby agrees that he shall not, at any time, either during
or subsequent to his employment hereunder, use, reveal, report,
publish, transfer or otherwise disclose to any person, corporation or
other entity, any of the Corporation's confidential information
without the prior written consent of the Corporation, except to
responsible officers and employees of the Corporation and other
responsible persons who are in contractual or fiduciary relationship
with the Corporation or who have a need for such information for
purposes in the interest of the Corporation, and except for such
information for purposes in the interest of the Corporation, and
except for such information which legally and legitimately is or
becomes of general public knowledge from authorized sources other than
the Executive.
4
<PAGE>
(b) Upon the termination of his employment with the Corporation for any
reason whatsoever, the Executive shall promptly deliver to the
Corporation all drawings, manuals, letters, notes, notebooks, reports
and copies thereof, and all other materials, including, without
limitation, those of a secret and confidential nature, relating to the
Corporation's business which are in the Executive's possession or
control.
11. NON-COMPETITION.
The Executive agrees that, during the term of this Agreement and for a
period of one year after the expiration or termination of his employment with
the Corporation, he shall not, anywhere in the United States of America or
elsewhere in the world (or in such small area or for such lesser period as may
be determined by a court of competent jurisdiction to be a reasonable limitation
on the competitive activity of the Executive), directly or indirectly:
(i) engage in a competitive line of business to the business carried
on by the Corporation, either for his own account or with or for
anyone else;
(ii) solicit or attempt to solicit business of any customers of the
Corporation for products or services the same or similar to those
offered, sold, produced or under development by the Corporation;
(iii)otherwise divert or attempt to divert from the Corporation any
business whatsoever;
(iv) solicit or attempt to solicit for any business endeavor any
employee of the Corporation;
(v) interfere with any business relationship between the Corporation
and any other person; or
(vi) render any services as an officer, director, employee, partner,
consultant or otherwise to, or have any interest as a partner,
lender or otherwise in, any person which is so engaged.
For purposes of subparagraph 11(i) and (ii) it shall not be deemed a
violation of these subparagraphs if after the expiration or termination of this
Agreement, the Executive, either for his own account or with or for anyone else,
engages in the sale, manufacture, distribution or marketing of products or
services that are not at that time sold, manufactured distributed or marketed by
the Corporation.
12. REMEDIES
Because the Corporation does not have an adequate remedy at law to protect
its business from the Executive's competition or to protect its interests in its
trade secrets, privileged, proprietary or confidential information and similar
commercial assets, the Corporation shall be entitled to injunctive relief, in
addition to such other remedies and relief that would, in the event of a breach
of the provisions of Paragraphs 9, 10, and 11, be available to the Corporation.
In the event of such a breach, in addition to any other remedies, the
Corporation shall be entitled to receive from the Executive payment of, or
reimbursement for, its reasonable attorneys' fees and disbursements incurred in
enforcing any such provision.
5
<PAGE>
13. SURVIVAL
The provisions of Paragraphs 9, 10, and 11 shall survive termination of
this Agreement for any reason.
14. ENTIRE AGREEMENT
This Agreement sets forth the entire understanding of the Parties and
merges and supersedes any prior or contemporaneous agreements between the
Parties pertaining to the subject matter hereof. This Agreement may not be
changed or terminated orally, and no change, termination or attempted waiver of
any of the provisions hereof shall be binding unless in writing and signed by
the Party against whom the same is sought to be enforced; provided, however,
that the Executive's compensation may be increased at any time by the
Corporation without in any way affecting any of the other terms and conditions
of this Agreement, which in all other respects shall remain in full force and
effect. Failure of a Party to enforce one or more of the provisions of this
Agreement or to require at any time performance of any of the obligations hereof
shall not be construed to be a waiver of such provisions by such Party nor to in
any way affect the validity of this Agreement of such Party's right thereafter
to enforce any provision of this Agreement, nor to preclude such party from
taking any other action at any time which it would legally be entitled to take.
15. SUCCESSORS AND ASSIGNS
Neither Party shall have the right to assign this Agreement, or any rights
or obligations hereunder, without the consent of the other Party; provided,
however, that upon the sale of all or substantially all of the assets, business
and goodwill of the Corporation to another corporation, or upon the merger or
consolidation of the Corporation with another corporation, this Agreement shall
inure to the benefit of, and be binding upon, both the Executive and the
corporation purchasing such assets, business and goodwill, or surviving such
merger or consolidation, as the case may be, in the same manner and to the same
extent as though such other corporation were the Corporation. Subject to the
foregoing, this Agreement shall inure to the benefit of, and bind, the Parties
and their legal representatives, heirs, successors and assigns.
16. ADDITIONAL ACTS
The Executive and the Corporation each agrees that h or it shall, as often
as requested to do so, execute, acknowledge and deliver and file, or cause to be
executed, acknowledged and delivered and filed, any and all further instruments,
agreements or documents as may be necessary or expedient in order to consummate
the transactions provided for in this Agreement and do any and all further acts
and things as may be necessary or expedient in order to carry out the purpose
and intent of this Agreement.
17. COMMUNICATIONS
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been given at the time
when mailed in any post office enclosed in a registered or certified postage
prepaid envelope and addressed to the addresses set forth at the beginning of
this Agreement, or to such other address as any party may specify by notice to
the other party; provided, however, that any notice of change of address shall
be effective only upon receipt.
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<PAGE>
18. CONSTRUCTION
The headings of the paragraphs of this Agreement have been inserted for
convenience of reference only and shall in no way restrict or otherwise affect
the construction of the terms or provisions hereof. References in this Agreement
to Paragraphs are to the paragraphs of this Agreement.
19. COUNTERPARTS.
This Agreement may be executed in multiple counterparts, each of which
shall be deemed to be an original and all of which together shall be deemed to
be one and the same instrument.
20. SEVERABILITY
If any provision of this Agreement is held to be invalid or unenforceable
by a court or tribunal of competent jurisdiction, such invalidity or
unenforceability shall not affect the validity and enforceability of the other
provisions of this Agreement and the provision held to be invalid or
unenforceable shall be carried out as nearly as possible according to its
original terms and intent to eliminate such invalidity or unenforceability.
21. GOVERNING LAW
This Agreement is made and executed and shall be governed by the laws of
the Province of British Columbia, Canada applicable to contacts made in and to
be performed in British Columbia.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first set forth above.
VOICE MOBILITY INC.
By: /s/James J. Hutton
--------------------------
James J. Hutton,
President
/s/Geof Heston
--------------------
Geof Heston,
The Executive
7
VOICE MOBILITY ACQUISITION AGREEMENT
AGREEMENT (the "Agreement") is made this 24th day of June, 1999 by and
among
VOICE MOBILITY INTERNATIONAL, INC., a Nevada corporation, with an office at
701-543 Granville Street, Vancouver, British Columbia V6C 1X8 ("VMII"),
3620697 CANADA, INC., a corporation incorporated under the Canada Business
Corporations Act, with an office at 701-543 Granville Street, Vancouver, British
Columbia V6C 1X8 ("Cancorp"),
VOICE MOBILITY INC., a corporation incorporated under the Canada Business
Corporations Act, with its registered office at 701-543 Granville Street,
Vancouver, British Columbia V6C 1X8 ("VMI"),
E. W. G. INVESTMENTS LTD. a British Columbia corporation, with its
registered address at 701-543 Granville Street, Vancouver, British Columbia V6C
1X8, Canada ("EWG"),
JAMES JOSEPH HUTTON of 6442-180th Street, Surrey, British Columbia
("Hutton"),
JASON DAVID CORLESS of 312-3277 Glasgow Avenue, Victoria, British Columbia
("Corless"),
PACIFIC WESTERN MORTGAGE CORPORATION, a British Columbia corporation with a
registered office at 300 Steward Road, Salt Spring Island, British Columbia
("PWMC"); and
COREY SCHOLEFIELD, of Ladysmith Street, Victoria, British Columbia
("Scholefield").
(EWG, Hutton, Corless, PWMC and Scholefield shall be collectively referred
to as "VMI Stockholders"; and the parties to this Agreement will be hereinafter
referred to as the "Parties" and each party as a "Party.")
WHEREAS, the VMI Stockholders believe that VMI should become a wholly-owned
operating subsidiary of a corporation, incorporated in the United States which
is trading publicly on a stock market or quotation service in the United States;
and
WHEREAS, the VMI Stockholders further believe that the most efficient route
to accomplish the above-stated objective is through the acquisition of VMI by a
public-traded company or subsidiary thereof; and
WHEREAS, VMII is a corporation incorporated in the United States and
trading on the Over-the-Counter Bulletin Board; and
WHEREAS, VMII has authorized, in addition to any other classes for common
stock, a class of preferred stock consisting on one authorized share having
voting and other rights identical to the Class "B" common stock of Cancorp and
equal to the number of unexchanged B Common Shares of Cancorp; and
WHEREAS, Cancorp has authorized two classes of common stock - Class "A"
common stock ("Cancorp A Common Shares") each of which has one vote and Class
"B" Common Stock ("Cancorp B Common Shares") which are nonvoting and are
exchangeable on an antidilutive one-for-one basis for the shares of VMII; and
WHEREAS, VMII is the sole stockholder of Cancorp owning one Cancorp A
Common Share.
<PAGE>
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the Parties agree as follows:
a) The VMI Stockholders will transfer all the issued and outstanding common
shares of VMI ("VMI Shares") to Cancorp for 6,600,000 Cancorp B Common
Shares; and Cancorp will issue 6,600,000 Cancorp B Common Shares to the VMI
stockholders as consideration therefor divided among the VMI Stockholders
as set forth after their names: EWG 2,650,000 shares, Hutton 1,750,000
shares, Corless 850,000 shares, PWMC 1,250,000 shares and Scholefield
100,000 shares.
b) The Cancorp B Common Shares to be issued to the VMI Stockholders will be
held in trust by a trustee to be determined by the VMI Stockholders.
c) The VMI Stockholders require that the transfer as set forth in paragraphs
a) and b) above be subject to an election under ITA 854(N).
d) The Parties intend the understandings and actions contemplated in this
Agreement will be embodied in a comprehensive set of documents on or before
September 30, 1999.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date
and year first above written.
Voice Mobility International, Inc.
By: /s/William E. Krebs
-----------------------------
William E. Krebs
3620697 Canada, Inc.
By: /s/William E. Krebs
--------------------------
William E. Krebs
Voice Mobility Inc.
/s/Jason David Corless
------------------------
By: /s/William E. Krebs Jason David Corless
--------------------------
William E. Krebs
/s/Corey Scholefield
E. W. G. Investments Ltd. ----------------------
Corey Scholefield
By: /s/Edith Marion Both
----------------------
Edith Marion Both
Its President Pacific Western Mortgage Corporation
/s/James J. Hutton
----------------------- By: /s/ William E. Krebs
James J. Hutton ---------------------------
Its President
AGREEMENT AND PLAN OF DISTRIBUTION
BY AND BETWEEN
EQUITY CAPITAL GROUP, INC.
(a Nevada corporation)
AND
PIONEER GROWTH CORP.
(a Nevada corporation)
DATED AS OF
April 1, 1999
<PAGE>
AGREEMENT AND PLAN OF DISTRIBUTION
THIS AGREEMENT AND PLAN OF DISTRIBUTION (the "Distribution Agreement")
dated as of April 1, 1999 by and between Equity Capital Group, Inc., a Nevada
corporation ("Equity"), and Pioneer Growth Corp., a Nevada corporation
("Pioneer"). (The parties to this Agreement are hereinafter referred to as the
"Parties" and a party to this Agreement, a "Party.")
WHEREAS, Equity intends to become a blank check company so that it may
acquire a suitable target company (an "Acquisition"); and
WHEREAS, Equity intends to transfer all of its Assets and Liabilities (as
hereinafter defined) to Pioneer in exchange for the issuance of shares of
Pioneer Common Stock; and
WHEREAS, Equity's board of directors expects to complete the Distribution
(as hereinafter defined) as soon as possible; and
WHEREAS, the purpose of the Distribution is to make possible an acquisition
by divesting Equity of the Assets and Liabilities as the management of Equity
believes a suitable target would be unwilling to combine Equity unless it mades
the Distribution, and this Distribution Agreement sets forth the various
understandings between Equity and Pioneer relating to the divestiture of the
assets and liabilities by Equity.
NOW THEREFORE in consideration of the mutual promises and benefits to be
derived from this Agreement, Pioneer and Equity hereby agree as follows:
ARTICLE I DEFINITIONS
Section 1.1 General. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
Action shall mean any action, suit, claim, arbitration, inquiry, proceeding
or investigation by or before any court, any governmental or other regulatory or
administrative agency, body or commission or any arbitration tribunal.
Agreement: This Agreement and Plan of Distribution as amended or
supplemented from time to time.
Affiliate: Affiliate of any Person shall mean any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agent: Any Person authorized to act and who acts on behalf of any other
Person with respect to the transactions contemplated herein.
Assets and Liabilities: The assets of Equity including but not limited to
cash, securities, loans receivable and accounts receivables and liabilities,
including but not limited to accounts payable, and principal and interest of
loans outstanding as listed on the financial statements of Equity dated March
31, 1999.
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<PAGE>
Commission: The Securities and Exchange Commission.
Distribution Date: The date selected by Pioneer to issue the Distribution
Shares.
Distribution Record Date: shall mean such date as may hereafter be
determined by Equity's Board of Directors as the record date for determining the
stockholders of Equity entitled to receive the Distribution Shares.
Distribution Shares: Shares of the common stock of Pioneer, par value
$.001, to be issued to Equity pursuant to this Agreement.
Documents: This Agreement, the Registration Statement, together with any
exhibits, schedules or other attachments thereto.
Exchange Act: The Securities Exchange Act of 1934, as amended from time to
time.
Effective Date: The date on which the distribution of the Distribution
Shares contemplated by this Agreement is authorized to commence pursuant to the
Securities Act.
Indemnifiable Losses shall mean any and all losses, Liabilities, claims,
damages, penalties, fines, demands, awards and judgments, including reasonable
costs and expenses (including, without limitation, attorneys' fees and any and
all out-of-pocket expenses) whatsoever reasonably incurred in investigating,
preparing for or defending against any Actions or potential Actions involving an
Indemnifiable Loss, incurred by an Indemnitee.
NASD: The National Association of Securities Dealers, Inc.
Person: shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an association, a company, an unincorporated
organization, a government or any department, political subdivision or agency
thereof.
Equity Indemnitees shall mean Equity, the directors and officers of Equity,
and each of the heirs, executors, successors and assigns of any of the
foregoing.
Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the distribution of any portion of the Distribution Shares covered by such
Registration Statement and by all other amendments and supplements to the
Prospectus, including post-effective amendments and all documents incorporated
by reference in such prospectus. If the prospectus filed pursuant to Rule 424(b)
or Rule 424(c) of the Securities Act shall differ from the Prospectus, the term
"Prospectus" shall also include the prospectus filed pursuant to such Rule.
Registration Expenses: See Section 5.2 hereof.
Registration Statement: Any registration statement of Pioneer which covers
any of the Distribution Shares pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all documents
incorporated by reference in such Registration Statement.
<PAGE>
2
Restricted Securities: The Distribution Shares upon original issuance
thereof.
Rules and Regulations: The rules and regulations of the Commission.
Securities: Pioneer's common stock, $.001 par value, to be issued by
Pioneer.
Securities Act: The Securities Act of 1933, as amended from time to time.
Transfer Agent: OTR Oxford Transfer and Registrar Company, and its
successors and assigns.
Section 1.2 References; Interpretation. References to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to one of the Schedules or Exhibits
attached to this Agreement and Plan of Distribution, and references to a
"Section" are, unless otherwise specified, to one of the Sections of this
Agreement and Plan of Distribution.
ARTICLE II DISTRIBUTION, OTHER TRANSACTIONS AND COVENANTS
Section 2.1 Transfer of Assets and Distribution of Securities.
(a) As of the Distribution Date, Pioneer shall issue to Equity, in exchange for
the contribution to Pioneer of the assets and liabilities, such number of
shares of Pioneer Common Stock as shall be required to effect the
Distribution. In connection therewith, Equity shall deliver to Pioneer for
cancellation any share certificates currently held by Equity representing
shares of Pioneer Common Stock.
(b) Equity shall deliver to the Transfer Agent on or prior to the Distribution
Date the certificates representing the shares of Pioneer Common Stock, and
shall instruct the Transfer Agent to distribute, on or as soon as
practicable following the Distribution Date, such Pioneer Common Stock to
holders of record of shares of Equity Common Stock on the Distribution
Record Date as further contemplated by the Information Statement and
herein. Pioneer shall provide all certificates that the Transfer Agent
shall require in order to effect the Distribution.
(c) On or prior to the Distribution Date, Equity, as the sole stockholder of
Pioneer, (i) shall have taken all necessary action by written consent to
elect to the Board of Directors of Pioneer, the individuals to be
identified in the Information Statement as directors of Pioneer, effective
upon the Distribution, and (ii) shall have caused the directors of Pioneer
to elect as officers of Pioneer the individuals to be identified in the
Information Statement as the officers of Pioneer, effective upon the
Distribution.
Section 2.3 Post-Distribution Transactions
(a) Pioneer shall use its reasonable best efforts to register the Pioneer
Common Stock with the Commission and, thereafter, to qualify the Pioneer
Common Stock issued pursuant to the Distribution for quotation on the Over
the Counter Electronic Bulletin Board operated by the National Association
of Securities Dealers, Inc.
3
<PAGE>
ARTICLE III
INDEMNIFICATION
Section 3.1 Indemnification by Pioneer. Subsequent to the Distribution
Date, except as otherwise specifically set forth in any provision of this
Distribution Agreement, Pioneer shall indemnify, defend and hold harmless
Equity, its officers, directors and shareholders ("Pioneer Indemnitees") from
and against any and all expenses and losses of the Pioneer Indemnitees arising
out of, by reason of or otherwise in connection with the breach, whether before
or after the Distribution Date, by Pioneer of any provision of this Distribution
Agreement.
Section 3.2 Indemnification Payments. Indemnification required by this
Article III shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred.
Section 3.3 Indemnities. The obligations of Pioneer hereunder shall survive
the sale or other transfer by either of them of any assets or businesses or the
assignment of any liabilities and shall be binding on the successors and assigns
of all, or substantially all, of their respective assets and business.
ARTICLE IV THE DISTRIBUTION
Section 4.1 Issuance, Sale and Delivery of the Shares.
(a) Equity shall deliver to the Transfer Agent on or prior to the Distribution
Date the share certificates representing the Distribution Shares and shall
instruct the Transfer Agent to distribute, on or as soon as practicable
following the Distribution Date, such Distribution Shares to holders of
record of shares of Equity on the Distribution Record Date as further
contemplated by this Agreement. Pioneer shall provide all share
certificates that the Transfer Agent shall require in order to effect the
Distribution.
(b) The Parties hereto represent that at the Distribution Date, the
representations and warranties herein contained and the statements
contained in all certificates theretofor or simultaneously delivered by any
Party to another pursuant to the Agreement, shall in all respects be true
and correct.
Section 4.2 Conditions to the Distribution
(a) Equity's obligation to effect the distribution hereunder, shall be subject
to the accuracy as of the date hereof and as of the Distribution Date, of
the representations and warranties on the part of Pioneer herein contained,
to the performance by Pioneer of all its understandings herein contained,
to the fulfillment of or compliance by Pioneer with all covenants and
conditions hereof, and to the following additional conditions:
(b) Between the date hereof and the Distribution Date, Pioneer shall not have
sustained any loss on account of fire, explosion, flood, accident, calamity
or other cause, of such character as materially adversely affects its
business or property, whether or not such loss is covered by insurance.
(c) Between the date hereof and the Distribution Date there shall be no
material litigation instituted or to the knowledge of Pioneer threatened
against Pioneer and there shall be no proceeding instituted or to the
knowledge of Pioneer threatened against Pioneer before or by any federal or
state commission, regulatory body or administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling,
decision or finding would materially adversely affect the business,
franchises, licenses, permits, operations or financial condition or income
of Pioneer.
4
<PAGE>
(d) Except as contemplated herein and prior to the Distribution Date, (i)
Pioneer (A) shall have conducted its business in the usual and ordinary
manner as the same was being conducted on the date of this Agreement and
(B) except in the ordinary course of its business, Pioneer shall not have
incurred any liabilities or obligations (direct or contingent), or disposed
of any of its assets, or entered into any material transaction or suffered
or experienced any substantially adverse change in its condition, financial
or otherwise.
(e) Pioneer shall have furnished to Equity the opinion, dated the first
Distribution Date, addressed to Equity, or its counsel that:
(i) Pioneer has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Nevada
with full corporate power and authority to own and operate its
properties and to carry on its business and has an authorized and
outstanding capitalization as of 5,000,000 shares of common stock,
$.001 par value each; and Pioneer is duly licensed or qualified as a
foreign corporation in all jurisdictions in which by reason of
maintaining an office in such jurisdiction or by owning or leasing
real property in such jurisdiction it is required to be so licensed or
qualified, except where the failure to do so would not have a material
adverse effect on the business, properties or operations of Pioneer.
(ii) The Distribution Shares, and the outstanding Common Stock of Pioneer
have been or will be duly and validly issued and fully-paid and
non-assessable and do not have any pre-emptive rights applicable
thereto.
(iii)No consents, approvals, authorizations or orders of agencies,
officers or other regulatory authorities are necessary for the valid
distribution of the Distribution Shares hereunder, except such as may
be required under the Securities Act or state securities or Blue Sky
Laws.
(iv) The Agreement has been duly authorized and executed by Pioneer and is
a valid and binding agreement of Pioneer, except no opinion need be
given regarding contribution and indemnification under Article VI and
enforceability under laws affecting creditors' rights.
Such opinion shall also cover such other matters incident to the
transactions contemplated by this Agreement as Equity shall reasonably request.
(i) Pioneer shall have furnished to Equity a certificate of the President
and the Treasurer of Pioneer, dated as of the first Distribution Date,
to the effect that the representations and warranties of Pioneer in
this Agreement are true and correct at and as of such Distribution
Date, and Pioneer has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or
prior to the first Distribution Date; and Pioneer has not incurred any
material liabilities, direct or contingent, or entered into any
material transactions, otherwise than in the ordinary course of
business.
All the opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
to Equity, whose approval shall not be unreasonably withheld. Equity reserves
the right to waive any of the conditions herein set forth.
5
<PAGE>
ARTICLE V
REGISTRATION OF PIONEER SHARES
Section 5.1 Registration Procedures. Pioneer will use its best efforts to
effect a registration to permit the distribution of the Distribution Shares, and
pursuant thereto Pioneer will as expeditiously as possible:
(a) Prepare and file with the Commission, as soon as practicable, a
Registration Statement relating to the applicable registration on any
appropriate form under the Securities Act, which form shall be available
for the distribution of the Distribution Shares and shall include all
financial statements required by the Commission to be filed therewith, and
use its best efforts to cause the Registration Statement to become
effective; provided, however, that before filing a Registration Statement
or Prospectus or any amendments or supplements thereto, including documents
incorporated by reference after the initial filing of the Registration
Statement, Pioneer will furnish to Equity copies of all such documents
proposed to be filed, and Pioneer will not file any registration Statement
or amendment thereto or any Prospectus or any supplement thereto (including
such documents incorporated by reference) to which Equity shall reasonably
object;
(b) Prepare and file with the Commission such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for the applicable period, or such shorter
period which will terminate when all Distribution Shares covered by such
Registration Statement have been distributed; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed with the Commission pursuant to Rule 424 under the Securities
Act;
(c) Notify Equity promptly, and (if requested by Equity) confirm such advice in
writing, (i) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness to the Registration Statement for the
initiation of any proceedings for that purpose, (iv) of the receipt by
Pioneer of any notification with respect to the suspension of the
qualification of the Distribution Shares for distribution in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose and (v) of the happening of any event which makes any statement
made in the Registration Statement, the Prospectus or any document
incorporated therein by reference untrue or which requires the making of
any changes in the Registration Statement, the Prospectus or any document
incorporated therein by reference in order to make the statements therein
not misleading;
(d) Make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) If requested by Equity, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as Equity requests to be included
therein relating to the distribution of the Distribution Shares and make
all required filings of such Prospectus supplement or post-effective
amendment;
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<PAGE>
(f) Furnish to Equity, without charge, at least one copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference
and all exhibits (including those incorporated by reference);
(g) Deliver to Equity without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons may reasonably request; Pioneer consents to the use
of the Prospectus or any amendment or supplement thereto by Equity in
connection with the distribution of the Distribution Shares covered by the
Prospectus or any amendment or supplement thereto;
(h) Prior to any public offering of Distribution Shares, register or qualify or
cooperate with Equity and its counsel in connection with the registration
or qualification of such Distribution Shares covered by the Registration
Statement; provided, however, that Pioneer will not be required to qualify
generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service
of process in any such jurisdiction where it is not then so subject;
(i) Cooperate with Equity to facilitate the timely preparation and delivery of
certificates representing Distribution Shares to be distributed, which
certificates shall not bear any restrictive legends; and enable such
Distribution Shares to be in such denominations and registered in such
names as the managing Equity or Equitys may request at least two business
days prior to any distribution of Distribution Shares to the shareholders
of Equity;
(j) Use its best efforts to cause the Distribution Shares covered by the
applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
Equity to consummate the distribution of such Distribution Shares;
(k) Upon the occurrence of any event contemplated by subparagraph (c)(v) above,
prepare a supplement or post-effective amendment to the Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Distribution Shares, the Prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(l) Use its best efforts to cause all Distribution Shares covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by Pioneer are then listed if requested by Equity
or, if not listed, to become listed or qualified for quotation on the
NASDAQ Stock Market or the Electronic Bulletin Board;
(m) Provide a CUSIP number for all Distribution Shares, not later than the
effective date of the applicable Registration Statement;
(n) Make generally available to its security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act, no later
than 45 days after the end of any 12-month period (or 90 days, if such
period is a fiscal year) commencing at the end of any fiscal quarter in
which Distribution Shares.
Pioneer may require Equity to furnish to Pioneer such information regarding
the distribution of the Distribution Shares as Pioneer may from time to time
reasonably request in writing.
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<PAGE>
Equity agrees by acquisition of the Distribution Shares that, upon receipt
of any notice from Pioneer of the happening of any event of the kind described
in Section 5.1(c)(iii) or 5.1(k) hereof, such holder will forthwith discontinue
disposition of Distribution Shares until such holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 5.1(c)(iii) or
5.1(k) hereof, or until it is advised in writing (the "Advice") by Pioneer that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and if so directed by Pioneer, Equity will deliver to Pioneer (at
Pioneer's expense) all copies, other than permanent file copies then in
possession or control of Equity at the time of receipt of such notice.
Section 5.2 Registration Expenses. All expenses incident to Pioneer's
performance of or compliance with this Agreement, including without limitation
all registration and filing fees, fees with respect to filings required to be
made with the NASD fees and expenses of compliance with state securities or blue
sky laws (including reasonable fees and disbursements of counsel in connection
with blue sky registrations of qualifications of the Distribution Shares and
determination of their eligibility for investment under the laws of such
jurisdictions as Equity may reasonably designate), printing expenses, messenger,
telephone and delivery expenses, and fees and disbursements of counsel for
Pioneer and of all independent certified public accountants of Pioneer
securities acts liability insurance if Pioneer so desires and fees and expenses
of other Persons retained by Pioneer (all such expenses being herein called
"Registration Expenses") will be borne by Pioneer, regardless of whether the
Registration Statement becomes effective, except as otherwise required by
applicable laws. Pioneer will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting expenses incurred in connection with
the listing of the securities to be registered on any securities exchange or
qualified for quotation by the NASDAQ Stock Market on the Electronic Bulletin
Board and the fees and expenses of any Person, including special experts,
retained by Pioneer.
ARTICLE VI
DISPUTE RESOLUTION
Section 6.1 Agreement and Plan of Distribution Disputes. In the event of a
controversy, dispute or claim arising out of, in connection with, or in relation
to the interpretation, performance, nonperformance, validity or breach of this
Agreement or otherwise arising out of, or in any way related to this Agreement,
including, without limitation, any claim based on contract, tort, statute or
constitution (singly, an "Agreement Dispute" and collectively, "Agreement
Disputes"), the Party asserting the Agreement Dispute shall give written notice
to the other Party of the existence and nature of such Agreement Dispute.
Thereafter, the general counsels (or other designated representatives) of the
respective Parties shall negotiate in good faith for a period no less than 60
days after the date of the notice in an attempt to settle such Agreement
Dispute. If after such 60 calendar day period such representatives are unable to
settle such Agreement Dispute, any Party hereto may commence arbitration by
giving written notice to all other Party that such Agreement Dispute has been
referred to the American Arbitration Association for arbitration in accordance
with the provisions of this Article.
Section 6.2 Arbitration in Accordance with American Arbitration Association
Rules. All Agreement Disputes shall be settled by arbitration in Orange County,
California, before a single arbitrator in accordance with the rules of the
American Arbitration Association (the "Rules"). The arbitrator shall be selected
by the mutual agreement of all Parties, but if they do not so agree within
twenty (20) days after the date of the notice of arbitration referred to above,
the selection shall be made pursuant to the Rules from the panels of arbitrators
maintained by the American Arbitration Association. The arbitrator shall be an
individual with substantial professional experience with regard to resolving or
settling sophisticated commercial disputes.
8
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Section 6.3 Final and Binding Awards. Any award rendered by the arbitrator
shall be conclusive and binding upon the Parties; provided, however, that any
such award shall be accompanied by a written opinion of the arbitrator giving
the reasons for the award. This provision for arbitration shall be specifically
enforceable by the Parties and the decision of the arbitrator in accordance
therewith shall be final and binding, and there shall be no right of appeal
therefrom. The Parties agree to comply with any award made in any such
arbitration proceedings that has become final in accordance with the Rules, and
agree to the entry of a judgment in any jurisdiction upon any award rendered in
such proceedings becoming final under the Rules.
Section 6.4 Costs of Arbitration. In the award the arbitrator shall
allocate, in his or her discretion, among the Parties to the arbitration all
costs of the arbitration, including, without limitation, the fees and expenses
of the arbitrator and reasonable attorneys' fees, costs and expert witness
expenses of the Parties. Absent such an allocation by the arbitrator, each Party
shall pay its own expenses of arbitration, and the expenses of the arbitrator
shall be equally shared.
Section 6.5 Settlement by Mutual Agreement. Nothing contained in this
Article shall prevent the Parties from settling any Agreement Dispute by mutual
agreement at any time. SECTION VII Miscellaneous
Section 7.1 No Inconsistent Agreements. Pioneer will not on or after the
date of this Agreement enter into any agreement with respect to its securities
which is inconsistent with this Agreement or otherwise conflicts with the
provisions hereof. In the event Pioneer has previously entered into any
agreement with respect to its securities granting any registration rights to any
person, the rights granted to Equity hereunder do not in any way conflict with
and are not inconsistent with the rights granted to the holders of Pioneer's
securities under any such agreements.
Section 7.2 Survival of Obligations. The obligations of the Parties under
Sections 6 and 7 of this Agreement shall survive the termination for any reason
of this Agreement (whether such termination is by Pioneer, by Equity, upon the
expiration of this Agreement or otherwise).
Section 7.3 Severability. In case any one or more of the provisions or part
of the provision contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect in any jurisdiction, such
invalidity, illegality or unenforceability shall be deemed not to affect any
other jurisdiction or any other provision or part of a provision of this
Agreement, but this Agreement shall be reformed and construed in such
jurisdiction as if such provision or part of a provision held to be invalid or
illegal or unenforceable had never been contained herein and such provision or
part reformed so that it would be valid, legal and enforceable in such
jurisdiction to the maximum extent possible. If, in any judicial proceeding, a
court shall refuse to enforce any of such separate covenants, then such
enforceable covenants shall be deemed eliminated from the provisions hereof for
the purpose of such proceedings to the extent necessary to permit the remaining
separate covenants to be enforced in such proceedings. If, in any judicial
proceeding, a court shall refuse to enforce any one or more of such separate
covenants because the total time thereof is deemed to be excessive or
unreasonable, then it is the intent of the Parties that such covenants, which
would otherwise be unenforceable due to such excessive or unreasonable period of
time, be enforced for such lesser period of time as shall be deemed reasonable
and not excessive by such court.
9
<PAGE>
Section 7.4 Entire Agreement, Amendment. This Agreement contains the entire
agreement between Pioneer and Equity with respect to the subject matter thereof.
Equity acknowledges that it neither holds any right, warrant or option to
acquire securities of Pioneer, nor has the right to any such rights, warrants or
options, except pursuant to the is Agreement. This Agreement may not be amended,
waived, changed, modified or discharged except by an instrument in writing
executed by or on behalf of the Party against whom any amendment, waiver,
change, modification or discharge is sought.
Section 7.5 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing and shall be deemed to have duly
given if delivered by hand-delivery, registered first-class mail, postage
prepaid, telex, telecopier, or air courier guaranteeing overnight delivery as
follows: To Pioneer: To Equity
Pioneer Growth Corp. Equity Capital Group, Inc.
2100 W. Orangewood Ave, Ste 220 2100 West Orangewood Avenue
Orange, California 92868 Orange, California 92868
Attn: Alan Staggs, President Attn: Robert Cashman, President
and/or to such other persons and addresses as any Party shall have specified in
writing to the other.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day if timely delivered to an air courier guaranteeing overnight
delivery.
Section 7.6 Assignability. This Agreement shall be assignable by either
Party on the express consent of the other and shall be binding upon, and shall
inure to the benefit of, the successors and assigns of the Parties.
Section 7.7 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Nevada applicable to contracts to be
performed in Nevada.
Section 7.8 Waiver and Further Agreement. Any waiver of any breach of any
terms or conditions of this Agreement shall not operate as a waiver of any other
breach of such terms or conditions or any other term or condition, nor shall any
failure to enforce any provision hereof operate as a waiver of such provision or
of any other provision hereof. Each of the Parties agrees to execute all such
further instruments and documents and to take all such further action as the
other Party may reasonably require in order to effectuate the terms and purposes
of this Agreement.
Section 7.9 Heading of No Effect. The paragraph headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
PIONEER GROWTH CORP.
By: /s/ Alan Staggs
-------------------------
Alan Staggs, President
EQUITY CAPITAL GROUP, INC.
By: /s/ Robert Cashman
-------------------------
Robert Cashman, President
10
EXHIBIT 10.9
Subsidiaries of Registrant
Voice Mobility Canada Limited
Voice Mobility Inc., organized under the laws of the province of British
Columbia, Canada is a subsidiary of Voice Mobility Canada Limited
THIS DEBT SETTLEMENT AGREEMENT ("this Agreement") made and effective as of
and from September 15, 1999.
BETWEEN:
VOICE MOBILITY INTERNATIONAL, INC., a body corporate,
incorporated under the laws of the State of Nevada, United States
of America, having an office at 701 - 543 Granville Street, in
the City of Vancouver, in the Province of British Columbia
(hereinafter referred to as "International")
OF THE FIRST PART
AND:
MARITIME TEL & TEL LIMITED, a body corporate, incorporated under
the laws of the Province of Nova Scotia and having its Head
Office at 4th Floor, Collins Bank Building, 1869 Upper Water
Street, in the City of Halifax, Province of Nova Scotia
(hereinafter referred to as "MTT")
OF THE SECOND PART
AND:
VOICE MOBILITY INC., a body corporate, incorporated under the
Canada Business Corporations Act, and having its Head Office at
701 - 543 Granville Street, in the City of Vancouver, Province of
British Columbia
(hereinafter referred to as "VMI")
OF THE THIRD PART
W H E R E A S:
A. MTT is party to an agreement, dated March 26, 1999, with VMI (the "MTT
Agreement"), pursuant to which MTT has been extensively involved in the
development of VMI's products and in researching and developing markets for
VMI's products, and anticipated future products.
B. International has closed an agreement with the owners of 100% of the issued
shares of VMI pursuant to which it has, through a subsidiary, acquired
those shares thereby making VMI indirectly the wholly owned subsidiary of
International.
C. The common stock of International are traded electronically on the
Over-The-Counter Bulletin Board (the "BB") administered by the National
Association of Securities Dealers.
D. Pursuant to the understandings between MTT and VMI prior to the MTT
Agreement, the work being done for VMI by MTT was all at the expense of
VMI, and MTT and VMI have agreed in the MTT Agreement that the total
charges by MTT for its work for VMI are settled at $500,000 Cdn. (the "VMI
Debt").
E. International is now willing to assume responsibility for the VMI Debt.
F. MTT is desirous of acquiring 1,428,571 voting shares of the common stock of
International (the "International Shares") on the terms hereinafter
contained.
G. Being a company publicly traded in the United States the International
Shares are subject to all the applicable laws and regulations of the United
States of America and its various States (hereinafter called the "U.S.
Laws").
NOW THEREFORE, in consideration of the premises and the covenants and
agreements hereinafter contained and other good and valuable consideration, the
receipt and sufficiency is hereby acknowledged, the parties hereto (the
"Parties") agree as follows:
1. International agrees with MTT that International hereby assumes
responsibility for the repayment of the VMI Debt and will issue
International Shares to MTT in satisfaction thereof.
2. MTT agrees that it will accept, in full satisfaction of the VMI Debt,
International Shares.
3. The International Shares are voting shares of the common stock of
International as they are constituted on this date. The International
Shares, when issued, will be issued as fully paid and non-assessable, free
of all liens, charges and encumbrances but will be "restricted" in that
they may not be sold or otherwise transferred in the absence of an
effective registration statement filed with the United States Securities
and Exchange Commission ("SEC") or an exemption therefrom.
4. Upon the issuance of the International Shares and the delivery of a
certificate therefor to MTT, the VMI Debt shall be wholly and
unconditionally deemed assigned to International and MTT shall have no
further interest in the VMI Debt.
5. It shall also be a condition of the assignment of the VMI Debt to
International that the Board of Directors of International shall have
appointed, as a Director of International, a person who shall have earlier
been designated by MTT in writing. Although such appointment shall be made
at any time and from time to time during the term of this Agreement, in the
event the appointment is not made on or before September 30, 1999 or the
requirements of subparagraphs (a) or (b) are not completed, the assignment
shall be effective notwithstanding the failure of MTT to appoint a
director. The appointment of MTT's nominee shall be subject to the prior:
(a) submission to International of a written consent of the nominee to act
as a director of International - which shall include a declaration
that the nominee is not, to the best of his knowledge and belief,
disqualified from acting pursuant to the provisions of any applicable
statutes, rules or regulations;
(b) delivery by MTT's nominee of such biographical and historical data as
International may reasonably request or
require so that it can satisfy applicable disclosure requirements.
It is understood that the initial appointment will not be subject to a
meeting of shareholders of International but that subsequent appointments or
appointments for subsequent periods will be subject to the normal voting
procedures applicable.
6. International covenants and warrants in favour of MTT that:
(a) it is a corporation duly incorporated pursuant to the laws of the
State of Nevada, United States of America, and is in good standing and
in full satisfaction of all of its obligations pursuant to the laws
and regulations of the said State;
(b) the International Shares are quoted for trading on the BB and it is in
full compliance with all applicable rules and requirements of the NASD
and the U.S. Laws;
(c) International is unrestricted in its right to enter into this
Agreement, and is not restricted from entering into this Agreement or
satisfying its obligations hereunder by the terms of any other
agreement to which it is a party or any outstanding orders or
judgments.
(d) International shall immediately make application to the securities
regulatory authorities of the Province of Nova Scotia, Canada to get
whatever approvals may be required to enable it to complete and close
this Agreement and to permit MTT to resell the International Shares at
the expiry of any hold period applicable to it under the laws of the
said Province. International will also bona fide use its best efforts
to prosecute such application to get the said approvals as soon as
possible following the execution of this Agreement. Further,
International agrees to include the International Shares in the first
registration statement it files with the SEC under the Securities Act
of 1933 and to use its best efforts to have such registration
statement declared effective.
(e) All necessary consents and approvals have been obtained by
International, and International has completed all necessary corporate
actions, including obtaining the approval of its directors, as
necessary, to authorize and permit it to enter into this Agreement and
to issue the International Shares;
(f) International shall maintain its quote on the BB or higher status
electronic trading facilities of the NASD or on a national exchange in
the United States for a period of not less than three (3) years
following the date of issue of the International Shares;
(g) The authorized capital of International consists of 50,000,000 voting
common shares with par value of $0.001 each of which at the date
hereof, and before giving effect to the issue of the International
Shares, 8,871,750 been duly issued and are outstanding, and 1 million
Preferred shares with par value of $0.001 each, none of which are
issued.
(h) No person has as of June 30, 1999 any option, warrant, right, call,
commitment, conversion right, right of exchange or other agreement or
any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an option, warrant, right, call, commitment,
conversion right, right of exchange or other agreement except as
detailed in Schedule "A" hereto;
(i) There were no shareholder loans outstanding at June 30, 1999 except as
disclosed in Schedule "B" hereto;
(j) Since its incorporation, International has not, directly or
indirectly, declared or paid any dividends or declared or made any
other distribution on any of its shares of any class and has not,
directly or indirectly, redeemed, purchased or otherwise acquired any
of its shares of any class or agreed to do so.
(k) Except as disclosed to MTT, or pursuant to the agreement disclosed in
Clause B, International has no subsidiaries or agreements of any
nature to acquire any subsidiary or acquire or lease any other
business operations.
(l) The corporate records of International are complete and accurate and
all corporate proceedings and actions reflected therein have been
conducted or taken in compliance with all applicable laws and with the
constituent documents, charter or by-laws of International, and
without limiting the generality of the foregoing,
(i) the minute books contain complete and accurate minutes of all
meetings of the directors and shareholders of International held
since the incorporation of International, and all such meetings
were duly called and held;
(ii) the minute books contain all written resolutions passed by the
directors and shareholders of International and all such
resolutions were duly passed;
(iii)the share certificate books, register of shareholders and
register of transfers of International are complete and accurate,
and all such transfers have been duly completed and approved and
any tax payable in connection with the transfer of any securities
of International has been duly paid; and
(iv) the registers of directors and officers are complete and accurate
and all former and present directors and officers of
International were duly elected or appointed, as the case may be.
(m) International has all necessary corporate power to enter into and
perform its obligations under this agreement. The execution, and
delivery and performance by International of this agreement and the
consummation of the transactions contemplated thereby:
(i) have been duly authorized by all necessary corporate action on
the part of International; and
(ii) do not (or would not with the giving of notice, the lapse of time
or the happening of any other event or condition) result in a
violation or a breach of, or a default under or give rise to a
right of termination, greater rights or increased costs,
amendment or cancellation or the acceleration of any obligation
under: (A) any charter or by-law instruments of International;
(B) any contracts or instruments to which International is a
party or by which International is bound; or (C) any laws
applicable to it.
(n) This Agreement constitutes legal, valid and binding obligations of
International enforceable against it in accordance with its terms,
subject only to the following qualifications:
(i) an order of specific performance and an injunction are
discretionary remedies and, in particular, may not be available
where damages are considered an adequate remedy;
(ii) enforcement may be limited by bankruptcy, insolvency,
liquidation, reorganization, reconstruction and other similar
laws generally affecting the enforceability of creditors' rights;
and
(iii)such approval order or other approval is obtained from the Nova
Scotia Securities Commission as may be required to make the
closing of this Agreement by the Parties in full and legal
compliance with the laws and regulations of the Province of Nova
Scotia.
(o) International is not subject to, or a party to, any charter or by-law
restriction, any law, any claim, any contract or instrument, any
encumbrance or any other restriction of any kind or character which
would prevent the consummation of the transactions contemplated by
this agreement or compliance by International with the terms,
conditions and provisions hereof or thereof or the continued operation
of its business by International after the date hereof on
substantially the same basis as heretofore operated or which would
restrict the ability of MTT to acquire any of the International
Shares, except for the necessity of obtaining such approvals as may be
required in the Province of Nova Scotia, Canada.
(p) All accounting and financial books and records of International have
been fully, properly and accurately kept and
completed in all material respects.
(q) The financial statements of International attached hereto as Schedule
"C" have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with those of
previous fiscal years and present fairly the assets, liabilities,
(whether accrued, absolute, contingent or otherwise) and financial
position of International as at the date of the statements - namely
March 31, 1999.
(r) The financial statements of VMI attached hereto as Schedule "D" have
been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with those of previous fiscal
years and present fairly the assets, liabilities (whether accrued,
absolute, contingent or otherwise) and financial position of VMI as at
the date of the statements - December 31, 1998.
(s) International has filed or caused to be filed, within the times and
within the manner prescribed by law, all tax returns and tax reports
which are required to be filed by or with respect to International.
The information contained in such returns and reports is correct and
complete and such returns and reports reflect accurately all liability
for taxes of International for the periods covered thereby. All taxes
and assessments (including interest and penalties) that are or may
become payable by or due from International have been fully paid or
fully disclosed and fully provided for in the books and records, and
the financial statements of International. No examination of any tax
return of International is currently in progress, there are no
outstanding agreements or waivers extending the statutory period
providing for an extension of time with respect to the assessment or
re-assessment of tax or the filing of any tax return by, or any
payment of any tax by International, and there are no claims now
threatened or pending against International in respect of taxes or any
matters under discussion with any governmental entity relating to
taxes.
(t) Since the date of the financial statements attached as Schedule "D",
the business of International has been carried on in the ordinary
course there has been no change in the affairs, assets, liabilities,
business, prospects, operations or conditions of International or its
business, financial or otherwise, except as has been disclosed to MTT.
(u) International is conducting its business in compliance with all
applicable laws of each jurisdiction in which its business is carried
on, except for acts of non-compliance which in the aggregate are not
material.
(v) International owns, holds, possesses or lawfully uses in the operation
of its business all authorizations which are in any manner necessary
for it to conduct its business as presently or previously conducted or
for the ownership and use of its assets, free and clear of all
encumbrances and in compliance with all laws applicable thereto.
International is not in default, nor has it received any notice of any
claim in default, with respect to any such authorizations. All such
authorizations are renewable by their terms or in the ordinary course
of business without the need for International to comply with any
special qualification or procedures or to pay any amounts other than
routine filing fees. None of such authorizations will be adversely
affected by the consummation of the transactions contemplated hereby.
(w) International has provided MTT a list of all contracts of
International and VMI which are material to the operation of its
business or which involve the expenditure of more than $10,000 each or
which have a term left to run of more than three (3) years (the
"Material Contracts"). Except as disclosed by MTT, International is
not party to or bound by:
(i) any benefit plans or any collective agreements;
(ii) any agreement or commitment relating to the borrowing of money;
(iii)any guarantee or other contingent liability in respect of any
indebtedness or other liability or obligation of any other person
(other than the endorsement of negotiable instruments for
collection in the ordinary course of its business);
(iv) any contract or commitment limiting the freedom of International
to engage in any line of business or to compete with any other
person;
(v) any licensing or other contract or commitment relating to
intellectual properties used by International in the conduct of
its business;
(vi) any agreement or commitment not entered into in the ordinary
course of its business; and
(vii)any agreement or arrangement with any person with whom
International (or their present or former directors, officers and
employees) does not deal at arm's length.
(x) International is in compliance with all laws respecting employment and
employment practices, terms and conditions of employment, pay equity
and wages and hours and has not and is not engaged in any unfair
labour practice.
(y) No unfair labour practice, complaint or grievance against
International is pending or, to the best of the knowledge of
International, threatened before any labour relations board or similar
governmental entity with respect to its business.
(z) There is no labour strike, dispute, slowdown or stoppage actually
pending or involving or, to the best of the knowledge of
International, threatened against International with respect to its
business.
(aa) No union representation question exists respecting the employees of
International in connection with its business and no collective
bargaining agreement is in place or currently being negotiated by
International.
(bb) International maintains insurance policies with responsible insurers
as are appropriate to its business and assets in such amounts and
against such risks as are customarily carried and insured against by
prudent owners of comparable businesses and assets. All such policies
of insurance coverage are in full force and effect. International is
not in default with respect to any of the provisions contained in any
such insurance policy and has not failed to give any notice or present
any claim under any such insurance policy in due and timely fashion.
(cc) There is no action, suit or proceeding, at law or in equity, by any
person, nor any arbitration, administrative or other proceeding by or
before (or to the best of the knowledge of International any
investigation by) any governmental entity pending, or, to the best of
the knowledge of International, threatened against or affecting
International or any of its properties or rights or any of the assets,
and International does not know of any valid basis for any such
action, suit, proceeding, arbitration or investigation. International
is not subject to any judgment, order or decree entered in any lawsuit
or proceeding.
(dd) International has not made any assignment for the benefit of its
creditors nor has any receiving order been made against it under the
bankruptcy or insolvency laws of any jurisdiction or similar laws of
any other jurisdiction, nor has any petition for such an order been
served upon it, nor has it attempted to take the benefit of any
legislation with respect to financially distressed debtors, nor, after
giving effect to this financing, is insolvent within the meaning of
any bankruptcy or insolvency laws which are applicable to, or have
jurisdiction over, International.
(ee) None of this Agreement or any documentation or any certificate or
statement in writing which has been supplied by or on behalf of
International or by any of the directors, officers or employees of
International in connection with the transactions contemplated hereby
contains any untrue statement of a material fact, or omits any
statement of a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to
International which materially and adversely affects the affairs,
businesses, prospects operations or conditions of International,
financial or otherwise, or its business or the assets, which has not
been set forth in this agreement.
7. MTT covenants and warrants in favour of International that:
(a) MTT is a company incorporated and existing under the laws of Nova
Scotia.
(b) MTT has all necessary corporate power to enter into and to perform its
obligations under this agreement. The execution, delivery and
performance by MTT of this Agreement and the consummation of the
transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of MTT. This agreement
constitutes legal, valid and binding obligations of MTT enforceable
against it in accordance with its terms.
(c) MTT is not subject to, or a party to, any charter or by-law
restriction, any law, any claim, any contract or instrument, any
encumbrance or any other restriction of any kind or character which
would prevent consummation of the transactions contemplated by this
agreement.
(d) Subject to section 12 hereof, MTT is acquiring the International
Shares as principal for its own account, not for the benefit of any
other person or company.
(e) MTT is resident in the Province of Nova Scotia.
8. MTT undertakes that it will execute or cause to be executed and delivered
to International, and assist International in filing on a timely basis any
report or undertaking with any securities commission, stock exchange or
other regulatory authority which may be required by applicable securities
legislation and stock exchange rules in connection with its acquisition of
the International Shares.
9. This Agreement is subject to the Closing occurring on or before December
31, 1999. If the Closing has not occurred by the said date either Party may
at any time thereafter give notice to the others terminating this
agreement. If the issuance and delivery of the International Shares does
not occur by December 31, 1999 VMI shall pay to MTT the VMI Debt upon
demand.
10. The acquisition of the International Shares by MTT is subject to the
following terms and conditions for the exclusive benefit of MTT to be
fulfilled or performed on or before the VMI Closing Date:
(a) The representations, warranties and covenants of International
contained herein shall be true and correct on and as of the Time of
Closing with the same force and effect as such representations,
warranties and covenants have been made as of such time.
(b) International shall comply with all covenants and agreements herein
agreed to be performed by it at or prior to the Time of Closing.
(c) International shall cause a favourable legal opinion dated at the Time
of Closing to be delivered by its lawyer to MTT to the effect that
International is duly incorporated, organized and validly subsisting,
that the International Shares have been validly issued as fully paid
and non assessable in compliance with all securities law requirements,
that this Agreement is a valid, binding and enforceable obligation of
International under the laws of the State of Nevada, together with
such other matters as MTT may reasonably require.
11. The closing of this Agreement shall take place on the VMI Closing Date at
such place and time as shall be agreed to by the parties or, in the absence
of such agreement, at the offices of VMI detailed on the first page of this
Agreement, the date the Closing is completed being hereinafter called the
"Time of Closing".
12. At the Time of Closing, International shall deliver to MTT duly executed
certificates representing the International Shares issued as fully paid and
non-assessable registered in the name of MTT or such associated, affiliated
or subsidiary company as MTT shall designate by notice to International.
The registered holder will give written confirmation that it will be bound
by the terms of this Agreement as the same may be applicable to it.
13. MTT agrees that it will not sell, on any one day, more than 25,000
International Shares without having given notice to VMI of its intent or
wish to sell such shares at least 5 business days prior to such day.
14. All covenants, representations, warranties and indemnities made herein
shall survive the closing of this Agreement.
15. The Parties agree to do, execute and deliver, or cause to be done, executed
and delivered, all such further assignments, documents, acts, matters and
things as, from time to time, may be reasonably required to give effect to
this agreement and the obligations of the parties hereunder.
16. Time shall be of the essence of this Agreement and of each and every part
hereof.
17. This Agreement may be executed in any number of counterparts and all such
counterparts taken together shall be deemed to
constitute one and the same instrument.
18. This Agreement shall be interpreted according to the laws of the State of
Nevada and the laws of the United States of America applicable therein.
19. Any notice which is required to be given hereunder shall be given in
writing and will be effectively given if the same is:
(a) delivered or mailed by prepaid registered or certified post to the
address of the intended recipient set forth at the top of this
Agreement;
(b) delivered to a director or officer of the intended recipient; Provided
that in the case of a notice being given by MTT, it may not be given
to a Director or Officer of VMI or International who was appointed or
elected to that position as a nominee of MTT; or
(c) sent be telecopier (fax) to the intended recipient at the following
numbers:
MTT (902) 468-3035
International: (604) 482-1169
VMI: (604) 482-1169
provided that any Party may give notice to the other parties of new
addresses or new fax numbers to be used for the purpose of this
provision. Any notice which is delivered shall be deemed to have been
given on the date of delivery. Any notice which is sent by telecopier
shall be deemed to be given on the first weekday following the date
upon which the telecopied message is transmitted. Any notice that is
sent by prepaid mail shall be deemed to have been given on the 5th
weekday after the date upon which the notice is mailed from a Post
Office in Canada.
20. None of the Parties may assign any of their rights hereunder without the
prior written consent of the other parties, such consent not to be
unreasonably withheld.
21. This Agreement shall enure to the benefit of and be binding upon the
Parties hereto and their respective successors and permitted assigns.
IN WITNESS WHEREOF the Parties hereto have caused this agreement to be
executed by their duly authorized officers as and
from the day and year first above written.
VOICE MOBILITY INTERNATIONAL, INC.
Per: /s/ James J. Hutton
President - James J. Hutton
Per: /s/ William E. Krebs
Secretary - William E. Krebs
MARITIME TEL & TEL LIMITED
Per: /s/ David H. Grinstead
VOICE MOBILITY INC.
Per: /s/ J. Hutton
J. Hutton - President
Per: /s/ W. E. Krebs
W.E. Krebs - Secretary
Exhibit 23.1
Consent of Hoffski & Pisano
<PAGE>
CONSENT
We, Hoffski & Pisano, hereby consent to the use of our report relating to
the audited financial statements for years ended March 31, 1999, 1998 and 1997
in a registration statement on Form 10-SB of Voice Mobility International, Inc.
(previously Equity Capital Group, Inc.) to be filed with the Securities and
Exchange Commission.
Signed: /s/ Hoffski & Pisano
Dated: September 13, 1999
BEDFORD CURRY & CO.
CHARTERED ACCOUNTANTS
MICHAEL J. BEDFORD INC.
JOHN E. CURRY INC.
Board of Directors
Voice Mobility International, Inc.
Suite 701, 543 Granville Street
Vancouver, BC
V6C 1Y8
Dear Sirs,
LETTER OF CONSENT
We, Bedford Curry & Co., hereby consent to the use of our report relating
to the audited financial statements for the years ended December 31 1998 and
1997 for Voice Mobility Inc. in a registration statement on Form 10-SB of Voice
Mobility International, Inc. (previously Equity Capital Group Inc.) to be filed
with the Securities and Exchange Commission.
/s/ BEDFORD CURRY & CO.
CHARTERED ACCOUNTANTS
Dated: September 13, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule March 31, 1999
</LEGEND>
<CIK> 0001094816
<NAME> Voice Mobility International, Inc.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 14,414
<SECURITIES> 0
<RECEIVABLES> 217,066
<ALLOWANCES> 21,766
<INVENTORY> 68,781
<CURRENT-ASSETS> 278,494
<PP&E> 306,462
<DEPRECIATION> 79,719
<TOTAL-ASSETS> 505,237
<CURRENT-LIABILITIES> 245,897
<BONDS> 0
0
0
<COMMON> 245,897
<OTHER-SE> 16,222
<TOTAL-LIABILITY-AND-EQUITY> 505,236
<SALES> 83,262
<TOTAL-REVENUES> 83,262
<CGS> 27,727
<TOTAL-COSTS> 27,727
<OTHER-EXPENSES> 211,965
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,800
<INCOME-PRETAX> (4,487,508)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,487,508)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,487,508)
<EPS-BASIC> (0.42)
<EPS-DILUTED> (0.42)
</TABLE>
