SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Event Requiring Report: April 18, 2000
Embryo Capital Group
(Exact name of registrant as specified in its charter)
Florida 000-28267 68-0427012
(State of Incorporation) (Commission (IRS Employer
File Number) Identification #)
5315 New Utrecht Ave Brooklyn, NY 11219
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(Address of Principal Executive Offices)
718.437.4523
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(Registrant's telephone number, including area code)
Thoroughbred Racing Associates, Inc.
16910 Dallas Parkway, Ste. 100, Dallas, Texas 75248
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(Registrant's Former Name and Address)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On April 18, 2000, a change in control of the Company occurred in
conjunction with closing under an Agreement and Plan of Reorganization (the
"Reorganization Agreement") between the Company, VDO.COM, Inc., a Florida
corporation ("Company") and Thoroughbred Racing Associates, Inc., a Delaware
corporation ("TRA").
The closing under the Reorganization Agreement consisted of a cash and
stock for stock exchange in which the Company acquired all of the issued and
outstanding common stock of the Registrant in exchange for the payment of
$100,000 and the issuance of 400,000 shares of its common stock. As a result of
this transaction, the Registrant became a wholly-owned subsidiary of the
Company.
The Reorganization was approved by the unanimous consent of the Board
of Directors of the Company on April 17, 2000. The Reorganization is intended to
qualify as a reorganization within the meaning of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
Prior to the Agreement, the Company had 16,900,000 shares of common
stock issued and outstanding. Following the Agreement, the Company had
17,300,000 shares of common stock outstanding. The Company was incorporated in
the State of Florida on February 9, 1989.
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Upon effectiveness of the Reorganization Agreement, pursuant to Rule
12g-3(a) of the General Rules and Regulations of the Securities and Exchange
Commission, the Company became the successor issuer to Thoroughbred Racing
Associates, Inc. for reporting purposes under the Securities Exchange Act of
1934 and elects to report under the Act effective May 17, 2000.
A copy of the Agreement is filed as an exhibit to this Form 8-K and is
incorporated in its entirety herein. The foregoing description is modified by
such reference.
(b) The following table contains information regarding the shareholdings
of the Company's current directors and executive officers and those persons or
entities who beneficially own more than 5% of the Company's common stock:
NAME AMOUNT OF COMMON STOCK PERCENT OF COMMON STOCK
BENEFICIALLY OWNED (1) BENEFICIALLY OWNED
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Embryo Capital Group, Inc 11,900,000 68.8%
(1) Based upon 17,300,000 outstanding shares of common stock.
COMPANY'S BUSINESS AND SUBSIDIARIES
VDO.Com, Inc. (OTCBB: "VDOOE")
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PROPERTY
The Company maintains its administrative offices at 5315 New Utrecht
Avenue Brooklyn NY 11219.
DESCRIPTION OF SECURITIES
The Company has an authorized capitalization of 50,000,000 shares of
common stock, with a par value of $0.001. Prior to the execution of this
Agreement, the Company had 16,900,000 shares of common stock issued and
outstanding. The Company's post-merger issued and outstanding shares is
17,300,000.
MARKET FOR VDO.COM'S SECURITIES
The Company is a non-reporting publicly traded company with certain of
its securities exempt from registration under the Securities Act of 1933, as
amended, pursuant to Regulation D, Rule 504 of the General Rules and Regulations
of the Securities and Exchange Commission. The Company's common stock is
presently traded on the NASD OTC Bulletin Board under the symbol "VDOOE." The
Company has recently requested a symbol change. The NASDAQ Stock Market has
implemented a change in its rules requiring all companies trading securities on
the NASD OTC Bulletin Board to become reporting companies under the Securities
Exchange Act of 1934.
The Company was required to become a reporting company by the close of
business on May 17, 2000. The Company acquired 100% the outstanding shares of
Thoroughbred Racing Associates, Inc. to become successor issuer to it pursuant
to Rule 12g-3 in order to comply with the reporting company requirements
implemented by the NASDAQ Stock Market.
MANAGEMENT
Name Age Title
Samuel (Max) Shneibalg 29 President & CEO
Max Shneibalg has a strong background in sales, management, product
design and implementation, purchasing and both public and private funding. Prior
experience includes four years as President of Beaupre Manufacturing, Inc. in
Montreal, Canada. Mr. Shneibalg also spent two years managing promotions and
funding for two publicly traded companies, Power phone, Inc. (PWPH) and TMC
Agroworld Corporation (TACN). He also spend two years as Vice President of L&M
Electrical Contracting Corp. where his duties involved product design, price
estimates, quality control, architectural review, and customer satisfaction. Mr.
Shneibalg's role in Embryo Capital will be to seek worthy ventures, the due
diligence process of prospective ventures, funding and business implementation.
EXECUTIVE COMPENSATION
Due to the start up nature of the business all officers and directors
have agreed to serve without salary for the following year.
All directors of the Company hold office until the next annual meeting
of shareholders or until their successors are elected and qualified. Currently,
there are two directors of the Company. The by-laws permit the Board of Director
to fill any vacancy and such director may serve until the next annual meeting of
shareholders or until his successor is elected and qualified. Officers serve at
the discretion of the Board of Directors.
RISK FACTORS
An investment in our securities involves a high degree of risk. In addition to
the other information in this prospectus, you should carefully consider the
following risk factors before investing in our securities.
We have a limited operating history and may face difficulties encountered by
early stage companies in new and rapidly evolving markets. Although some of our
targeted acquisitions have historical operating histories, we have a limited
operating history and will only begin providing our services after
consolidation. As a result, we have a limited basis upon which you may evaluate
our business and prospects. Our prospects must be considered in light of the
risks, expenses, delays, problems and difficulties frequently experienced by
early stage companies.
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We may be unable to meet our future capital requirements. Based on our current
operating plan, we anticipate that the net proceeds provided by operations will
allow us to meet our cash and capital requirements for at least 6 months
following the date of this prospectus. We may require additional funding sooner
than anticipated. If we raise additional capital through the sale of equity,
including preferred stock, or convertible debt securities, the percentage of
ownership of our stockholders will be diluted.
We currently do not have a credit facility or any commitments for additional
financing. We cannot be certain that additional financing will be available when
and to the extent required. If adequate funds are not available on acceptable
terms, we may be unable to fund our expansion, develop or enhance our services
or respond to competitive pressures.
We may experience difficulty in integrating the acquired businesses and assets
into our operations. If we are unable to manage and integrate our pending
acquisitions after we consummate the purchases, we may at some point in the
future experience difficulty in profitably managing all of the acquired
businesses or successfully integrating the acquired businesses as a whole
without substantial costs, delays or other operational or financial problems
that we had not previously experienced. Our acquisitions may also initially have
an adverse effect upon our operating results while the acquired business is
adopting our management practices. We may not in all circumstances be able to
establish, maintain or increase profitability of an acquired entity.
There are inherent risks with regard to the companies' operations in overseas
market. After consolidation, we will be operating businesses in overseas
markets. As with any overseas operations the presiding political and economic
climate may have an impact on our overseas operating subsidiaries. Currently,
certain overseas economies suffer from both high unemployment and high
inflation. Should such economies become severely unstable, this could have a
significant negative impact on our business and results of operations.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENT
This prospectus contains forward-looking statements. These forward-looking
statements are not historical facts, but rather are based on our current
expectations, estimates, and projections about our industry, our beliefs and
assumptions. Words including "may," "could," "would," "will," "anticipates,"
"expects," "intends," "plans," "projects," "beliefs," "seeks," "estimates," and
similar expressions are intended to identify forward-looking statement. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and other factors, some of which are beyond our control,
are difficult to predict and could cause actual results to differ materially
from those expressed or forecasted in the forward-looking statements. These
risks and uncertainties are described in "Risk Factors" and elsewhere in this
prospectus. We caution you not to place undue reliance on threes forward-looking
statements, which reflect our management's view only as of the date of this
prospectus. We are not obligated to update these statements or publicly release
the results of any revisions to them to reflect events or circumstances after
the date of this prospectus or to reflect the occurrence of unanticipated
events.
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Because our operating expenses and capital expenditures will outpace our
revenues, we will incur significant losses in the near term.
We expect to incur significant operating expenses and make relatively high
capital expenditures as we develop and distribute our products and operate our
businesses. These operating expenses and capital expenditures will initially
outpace revenues and result in significant losses in the near term. We may never
be able to reduce these losses.
BECAUSE WE HAVE SEVERAL AGREEMENTS WHICH REQUIRE US TO SHARE A SIGNIFICANT
PORTION OF THE REVENUES WE GENERATE WITH A THIRD-PARTY, IT WILL BE MORE
DIFFICULT FOR US TO BECOME A PROFITABLE BUSINESS.
We will not retain all revenues generated through our product, or the other
software products we produce and sell, which will make it more difficult for us
to become a profitable business.
BECAUSE OUR EXECUTIVE OFFICERS LACK SIGNIFICANT MANAGEMENT EXPERIENCE, WE MAY
NOT BE ABLE TO EFFECTIVELY MANAGE OUR GROWTH.
The growth of our business may place a significant strain on our management team
and we may not be able to effectively manage our growth. None of our executive
officers has significant experience in managing a company or overseeing a
company's rapid growth.
WE NEED TO EXPAND OUR SALES AND DISTRIBUTION CHANNELS OF OUR GROWTH COULD BE
LIMITED.
We will need to expand our direct and indirect sales operations in order to
increase market awareness of our products and services and to generate increased
revenue. Currently, In addition, we currently have relationships with only a
limited number of distribution partners. We cannot be certain that we will be
able to establish relationships with additional distribution partners on a
timely basis, or at all, or that these distribution partners will devote
adequate resources to the promoting or selling our products.
WE RELY ON STRATEGIC RELATIONSHIPS TO IMPLEMENT AND PROMOTE OUR SOFTWARE
PRODUCTS AND, IF THESE RELATIONSHIPS FAIL, OUR BUSINESS COULD BE HARMED.
We have entered into relationships with hardware platform and software
applications developers and service providers. We expect to derive a significant
portion of our revenues from customers that purchase products or services from
our partners. In most cases, the partner refers the customer to us, and we enter
into a software license agreement directly with the customer. To the extent our
partners are not successful, or they do not stay with us, we could lose these
sources of customers.
We may not have access to programming interfaces with applications made by third
parties, which could adversely affect our business.
Our software products use software components to communicate with our customers'
enterprise applications. Our ability to develop these software components is
largely dependent on our ability to gain access to the application programming
interfaces for the applications, and we may not have access to necessary
interface connections in the future. These connections are written and
controlled by the application provider. Accordingly, if an application provider
becomes a competitor by entering into our market, it could restrict our access
to its interface connections for competitive reasons. Our business could suffer
if we are unable to gain access to these interface connections.
The failure of third parties to develop software components necessary for the
integration of applications using our software could have an adverse impact on
our operations.
A core element of our strategy is to enable third parties to develop software
components that operate with our software. If these third parties are unable or
unwilling to develop these software components, we may need to develop them
internally, which would require us to divert financial and technical resources
to these efforts.
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Our intellectual property could be used by others, causing us to lose a
competitive advantage.
We do not currently own any issued patents, and other protection of our
intellectual property is limited. If competitors gain access to and use of our
intellectual property, they may be able to better compete against our products.
We need the proceeds of this offering to continue and expand our operations.
We have a minimal amount of cash flow from operations. We, therefore, are
substantially dependent upon the proceeds of this offering to provide financing
to continue, and to expand the scope of, our present operations. In the event we
sell less than the maximum number of shares offered we may be required to seek
additional sources of funding, the availability of which cannot be assured. We
may also be required to delay or abandon some of our planned future expansion or
expenditures if we fail to raise sufficient funds.
The report of our independent accountant contains a going concern qualification
which states that we may not be able to continue our operations if we do not
obtain additional capital.
PENNY STOCK REGULATION
Penny stocks generally are equity securities with a price of less than
$5.00 per share other than securities registered on certain national securities
exchanges or quoted on the NASDAQ Stock Market, provided that current price and
volume information with respect to transactions in such securities is provided
by the exchange or system. The Company's securities may be subject to "penny
stock rules" that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 together with their
spouse). For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the "penny stock rules" require the delivery, prior to the transaction,
of a disclosure schedule prescribed by the Commission relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative and current quotations
for the securities. Finally, monthly statements must be sent disclosing recent
price information on the limited market in penny stocks. Consequently, the
"penny stock rules" may restrict the ability of broker-dealers to sell the
Company's securities. The foregoing required penny stock restrictions will not
apply to the Company's securities if such securities maintain a market price of
$5.00 or greater. There can be no assurance that the price of the Company's
securities will reach or maintain such a level.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Not Applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election.
Pursuant to Rule 12g-3(a) of the General Rules and Regulations of the
Securities and Exchange Commission, upon effectiveness of the Agreement, the
Company became the successor issuer to Thoroughbred Racing Associates, Inc. for
reporting purposes under the Securities Exchange Act of 1934 and elects to
report under the Act effective May 17, 2000.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Pursuant to the terms of the aforementioned Agreement, the Registrant
has accepted the resignation of Kevin Halter and Kevin Halter, Jr., as the
Registrant's Director and Officer as of March 21, 2000, and appointed
Max Shneibalg as President and Director of the Registrant.
ITEM 7. FINANCIAL STATEMENTS
Financial statements for Thoroughbred Racing Associates, Inc. and
VDO.Com, Inc. are filed herewith. The Registrant is required to file
consolidated financial statements by amendment hereto not later than 60 days
after the date that this Current Report on Form 8-K must be filed.
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
EXHIBITS
2.1 Agreement and Plan of Reorganization between VDO.Com, Inc. and
Thoroughbred Racing Associates, Inc. dated April 18, 2000.
3.1 Articles of Incorporation of VDO.Com, Inc.
3.2 By-Laws of VDO. Com, Inc.
3.3 VDO.Com, Inc. Stock Purchase Agreement
99.1 Embryo Capital Group, Inc. Executive Summary
99.2 VDO.Com Financials
99.3 Proforma Information
99.4 VDO Financial Statements March 31, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
By /s/ Samuel Shneibalg
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Samuel Shneibalg, President
Date: May 9, 2000
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated April 18th, 2000, between
VD0.Com, Inc., ("VDO") a Florida corporation and Thoroughbred Racing Association
("TRA"), a Delaware corporation.
PLAN OF REORGANIZATION
The reorganization will comprise in general, the acquisition of TRA by VDO
pursuant to an I.R.S. qualified tax free exchange whereupon TRA shall become a
wholly owned subsidiary of VDO, all subject to the terms and conditions of the
agreement hereinafter set forth. For purposes of this Agreement, the terms
"shares", "stock" and/or "common capital stock" shall be interchangeable.
AGREEMENT
In order to consummate the foregoing Plan of Reorganization, and in
consideration of the premises and of the representations and undertakings herein
set forth, the parties agree as follows:
1. Transfer of shares. Upon and subject to the terms and conditions herein
stated, VDO shall acquire from TRA's shareholders, whose signatures appear
below, whom shall transfer, assign, and convey to VDO all of the issued and
outstanding shares of TRA's common stock to VDO in exchange for the sum of
$100,000.00 together with 400,000 shares (post split) of VDO common capital
stock. By virtue of the transaction, VDO shall acquire TRA as a going
concern, including all of the properties and assets of TRA of every kind,
nature, and description, tangible and intangible, wherever situated,
including, without limiting the generality of the foregoing, its business
as a going concern, its goodwill, and the corporate name (subject to
changes referred to or permitted herein or occurring in the ordinary course
of business prior to the time of closing provided herein). Upon, and
immediately subsequent to, the aforementioned acquisition, VDO will merge
into its wholly-owned subsidiary (TRA) under applicable Section of the
Florida Corporations Code.
2. Issuance and delivery of stock. In consideration of and in exchange for
the foregoing transfer, assignment, and conveyance, and subject to
compliance by VDO and TRA with their warranties and undertakings contained
herein, VDO shall issue and deliver to TRA the amount of $100,000.00
together with one or more stock certificates registered in the name of the
undersigned shareholders of TRA, on a pro-rata basis totaling 400,000
shares in exchange for 2,500,000 shares of TRA Common stock constituting
100% of the issued and outstanding shares of TRA including warrants,
options, or claims regarding any other shares of TRA. In the event that the
Company effects a reverse split of the Company's stock, additional shares
shall be issued in the same proportion as the ratio of the reverse split.
All of the shares exchanged shall, upon such issuance and delivery, shall
be fully paid and non-assessable.
3. Investment intent.
3.1 Each TRA Shareholder ("Subscriber") understands and acknowledges
that the VDO Shares being acquired hereunder have not been registered
under the Securities Act of 1933 (the "Act") or applicable state
securities laws; (ii) the Subscriber cannot sell such Stock unless
such securities are registered under the Act and any applicable state
securities laws or unless exemptions from such registration
requirements are available; (iii) a legend will be placed on any
certificate or certificates evidencing the Stock, stating that such
securities have not been registered under the Act and setting forth or
referring to the restrictions on transferability and sales of the
securities.
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3.2 Such Subscriber (i) is acquiring the Shares solely for the
Subscriber's own account for investment purposes only and not with a
view toward resale or distribution, either in whole or in part; (ii)
has no contract, undertaking, agreement or other arrangement, in
existence or contemplated, to sell, pledge, assign or otherwise
transfer the Shares to any other person; (iii) agrees not to sell or
otherwise transfer the Subscriber's Shares unless and until such
securities are subsequently registered under the Act and any
applicable state securities laws or unless an exemption from any such
registration is available.
3.3 Such Subscriber understands that an investment in the Shares
involves substantial risks and Subscriber recognizes and understands
the risks relating to this transaction and acquisition of the VDO
shares.
3.4 Such Subscriber has, either alone or together with the
Subscriber's Purchaser Representative (as that term is defined in
Regulation D under the Act), such knowledge and experience in
financial and business matters that the Subscriber is capable of
evaluating the merits and risks of the acquisition by VDO.
4. Dissenting shares: None. TRA represents and warrants that there are no
dissenting shareholders with respect to the proposed merger or acquisition.
5. Place of closing. The closing of this agreement and all deliveries
hereunder shall take place via electronic closing by fax or e-mail.
6. Time of closing. The closing shall be 3:00 PM, Central Standard time (or
such other time as may be mutually agreed upon) on the closing date, which
shall be April 24, 2000, unless extended by mutual agreement of the
parties. The last date fixed by mutual agreement of the parties or
otherwise becoming effective under this paragraph shall constitute the
closing date.
7. Representations and warranties of VDO. VDO and its shareholders
represent and warrant to TRA that:
(a) Corporate status. VDO is a corporation duly organized and existing
under the laws of the State of Florida, with an authorized capital stock
consisting of 50,000,000 Common shares, of which 17,300,000 shares are
currently issued and outstanding.
(b). The audited financial statements of VDO, through December 31, 1999,
are attached hereto. Since April 17, 2000, there has been no material
adverse change in the assets or liabilities or in the condition, financial
or other, of VDO, except changes occurring in the ordinary course of
business and changes referred to or permitted herein.
(c) Lawsuits and claims. VDO is not a party to or threatened by any
litigation, proceeding, or controversy before any court or administrative
agency which might result in any change in the business or properties of
VDO or which change would be substantially adverse taking into account the
entire business and properties of VDO; VDO is not in default with respect
to any judgment, order, writ, injunction, decree, rule, or regulation of
any court or administrative agency.
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(d) Taxes. VDO has filed with the appropriate governmental agencies all tax
returns required by such agencies to be filed by it and is not in default
with respect to any such filing. VDO has paid all taxes claimed to be due
by state and local taxing authorities and has not been examined by
representatives of the United States Internal Revenue Service for federal
taxes since inception.
8. Representations and warranties of TRA. TRA represents and warrants to
VDO that:
(a) Corporate status. TRA is a Delaware corporation duly organized and
existing under the laws of the State of Delaware, with an authorized
capital stock consisting of 50,000,000 shares of common stock, .001 par
value, of which two million five hundred thousand (2,500,000) shares have
been duly issued and are outstanding fully paid and non-assessable; and no
shares of preferred stock, or any other form of stock or security, of which
no shares are issued or outstanding. TRA has no subsidiary.
(b) Corporate authority. TRA and its shareholders have the corporate right
and authority to acquire and operate the properties and business now owned
and operated by it and to issue and deliver the number of shares of its
Common stock required to be issued hereunder to VDO.
(c) Disposition of assets. Since April 4, 2000, there has been no material
adverse change in the assets or liabilities or in the condition, financial
or other, of TRA except changes occurring in the ordinary course of
business and changes referred to or permitted herein.
(d) Lawsuits and claims. TRA is not a party to or threatened by any
litigation, proceeding, or controversy before any court or administrative
agency which might result in any change in the business or properties of
TRA or which change would be substantially adverse, taking into account the
entire business and properties of TRA.
(e) Taxes. TRA has filed with the appropriate governmental agencies all tax
returns required by such agencies to be filed by it and is not in default
with respect to any such filing. VDO has paid all taxes claimed to be due
by state and local taxing authorities and has not been examined by
representatives of the United States Internal Revenue Service for federal
taxes during the past three fiscal years.
9. Interim conduct of business by TRA. Until the time of closing, TRA will
conduct its business in the ordinary and usual course, and prior to the
time of closing it will not, without the written consent of VDO, borrow any
money, incur any liability other than in the ordinary and usual course of
business or in connection with the performance or consummation of this
agreement, encumber or permit to be encumbered any of its properties and
assets, dispose or contract to dispose of any property except in the
regular and ordinary course of business, enter into any lease or contract
for the purchase of real estate, form or cause to be formed any subsidiary,
pay any bonus or special remuneration to any officer or employee, declare
or pay any dividends, make any other distributions to its shareholders, or
issue, sell, or purchase any stock, notes, or other securities.
<PAGE>
10. Access to information. From the date hereof each party shall allow the
other free access to its files and audits, including any and all
information relating to taxes, commitments, and contracts, real estate and
personal property titles, and financial condition. From the date hereof
each party agrees to cause its auditors to cooperate with the other in
making available all financial information requested, including the right
to examine all working papers pertaining to audits made by such auditors.
11. Conditions of obligations of VDO. Unless at the time of closing the
following conditions are satisfied, VDO shall not be obligated to make the
transfer, assignment and conveyance as set forth in Paragraph1 herein, and
otherwise to effectuate its part of the reorganization herein provided:
(a) The representations and warranties of TRA set forth herein, are, on the
date hereof and as of the time of closing, substantially correct.
(b) The directors of TRA have approved the consummation of this agreement
and the matters herein provided.
(c) No litigation or proceeding is threatened or pending for the purpose of
with the probably effect of enjoining or preventing the consummation of
this agreement or which would materially affect TRA operation or its
assets.
(d) TRA has complied with its agreements herein to be performed by it prior
to the time of closing.
12. Conditions of obligations of TRA. Unless at the time of closing the
following conditions are satisfied, TRA shall not be obligated to issue and
deliver the shares of its Common stock as set forth in Paragraph 1 herein,
and otherwise to effectuate its part of the reorganization herein provided:
(a) The representations and warranties of VDO set forth in Paragraph 9 are,
on the date hereof and as of the time of closing, substantially correct
subject to any change made because of any action approved by TRA.
(b) The directors of VDO have approved and the holders of a majority of the
outstanding shares of VDO have voted in favor of the consummation of this
agreement and the matters herein provided.
(c) No litigation or proceeding is threatened or pending for the purpose or
with the probable effect of enjoining or preventing the consummation of
this agreement or which would materially affect VDO operation of the
properties and business to be acquired by it hereunder.
(d) VDO has complied with its agreements herein to be performed by it prior
to the time of closing, including payment of the $100,000.00 to the
undersigned shareholders and agreement to deliver 400,000 common capital
shares of VDO, Incorporated.
13. Abandonment of agreement. If by reason of the provisions of Paragraphs
11 or 12 above either party is not obligated to effectuate the
reorganization, then either party which is not so obligated may terminate
and abandon this agreement by delivering to the other party written notice
of termination prior to the time of closing, and thereupon this agreement
shall be terminated without further obligation or liability upon either
party in favor of the other.
<PAGE>
14. Authorization by shareholders. TRA and VDO shall promptly take such
action as may be necessary to obtain any required approval of their
respective shareholders to authorize the consummation of this agreement and
the matters herein provided, and each will recommend to its shareholders
that this agreement and the matters herein provided, and all other matters
necessary or incident thereto, be approved, authorized, and consummated.
15. Listing of VDO stock issued to TRA. VDO shall not be required to
prepare and file a registration statement under the Securities Act of 1933
covering the shares of Common stock to be delivered hereunder; however, it
shall prepare an 8-K filing providing the requisite information on the
acquisition.
16. Brokers' fees. Neither party has incurred nor will incur any liability
for brokerage fees or agents' commissions in connection with the
transactions contemplated hereby.
17. Execution of documents. At any time and from time to time after the
time of closing, VDO will execute and deliver to TRA and TRA will execute
and deliver to VDO such further conveyances, assignments, and other written
assurances as TRA or VDO shall reasonably request in order to vest and
confirm TRA's shareholders and VDO, respectively, title to the shares
and/or assets to be and intended to be transferred, assigned, and conveyed
hereunder.
18. Parties in interest. Nothing herein expressed or implied is intended or
shall be construed to confer upon or to give any person, firm, or
corporation other than the parties hereto any rights or remedies under or
by reason hereof.
19.Completeness of agreement. This agreement contains the entire
understanding between the parties hereto with respect to the transactions
contemplated hereby.
20. Survival of Representations and Warranties. Each of the parties hereto
hereby agrees that all representations and warranties made by or on behalf
of him or it in this Agreement or in any document or instrument delivered
pursuant hereto shall survive for a period of three (3) years following the
Closing Date and the consummation of the transactions contemplated hereby,
except with respect to the representation and warranties set forth in
Sections 4 which shall survive applicable statute of limitations period.
IN WITNESS HEREOF, the Parties hereto have hereunder set their hands and seals,
effective on the date above stated, as witnessed below:
VDO, INCORPORATED
A Florida corporation
By: /s/ Samuel Shneibalg
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Samuel Shneibalg, President
THOROUGHBRED RACING ASSOCIATION
A Delaware corporation
By: /s/ Kevin B. Halter
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Kevin B. Halter, President
HALTER CAPITAL CORPORATION
By: /s/ Kevin B. Halter
------------------------------
Kevin B. Halter, Shareholder
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the complete file of
VDO.COM, INC., a corporation organized under the laws of the State of Florida,
filed on February 9, 1989, as shown by the records of this office.
The document number of this corporation is K64366.
Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Sixteenth day of March, 2000
[GRAPHIC OMITTED]
/s/ Katherine Harris
------------------------
Katherine Harris
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
CTC 3, INC.
The undersigned subscriber to these Articles of Incorporation, a natural
person competent to contract, hereby forms a corporation under the laws of the
State of Florida.
ARTICLE I
NAME
The name of this corporation is CTC 3, INC.
ARTICLE II
NATURE OF THE BUSINESS
This corporation shall have the power to transact or engage in any business
permitted under the laws of the United States and of the state of Florida.
ARTICLE III
CAPITAL STOCK
The capital stock of this corporation shall consist of 7,500 shares of
common stock having a par value of One ($1.00) Dollar per share. All of said
stock shall be issued only for cash or other property or for services at a just
valuation as shall be determined by the Board of Directors.
ARTICLE V
INITIAL CAPITAL
The amount of capital with which this corporation shall commence business
shall be not less than One Hundred ($100.00) Dollars.
ARTICLE V
TERM OF EXISTENCE
This corporation shall have perpetual existence.
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<PAGE>
ARTICLE VI
INITIAL ADDRESS
The initial address of the principal place of business of this corporation
in the State of Florida shall be 1428 Brickell Avenue, Suite 202, Miami, Florida
33131. The Board of Directors may at any time and from time to time move the
principal office of this corporation to any location within or without the State
of Florida.
ARTICLE VII
DIRECTORS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By-Laws. The number of persons constituting the initial
Board of Directors shall be 1.
ARTICLE VIII
INITIAL DIRECTORS
The names and addresses of the initial Board of Directors are as follows:
Eric P. Littman 1428 Brickell Avenue
Miami, FL 33131
ARTICLE IX
SUBSCRIBER
The name and address of the person signing these Articles of Incorporation
as subscriber is:
Eric P. Littman
Suite 202
1428 Brickell Avenue
Miami, FL 33131
2
<PAGE>
ARTICLE X
VOTING FOR DIRECTORS
The Board of Directors shall be elected by the Stockholders of the
corporation at such time and in such manner as provided in the By-Laws.
ARTICLE XI
CONTRACTS
No contract or other transaction between this corporation and any person,
firm or corporation shall be affected by the fact that any officer or director
of this corporation is such other party or is, or at some time in the future
becomes, an officer, director or partner of such other contracting party, or has
now or hereafter a direct or indirect interest in such contract.
ARTICLE XII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
This corporation shall have the power, in its By-Laws or in any resolution
of its stockholders or directors, to undertake to indemnify the officers and
directors of this corporation against any contingency or peril as may determined
to be in the best interests of this corporation, and in conjunction therewith to
procure, at this corporation's expense, policies of insurance.
ARTICLE XIII
RESTRAINT ON ALIENATION
The stockholders of this corporation shall have the power to include in the
By-Laws, or adopt resolutions by a two-thirds (2/3) majority any regulatory or
restrictive provision regarding the proposed sale, transfer or other disposition
of the corporation's stock by its stockholders or in the event of the death of
any stockholder. Said restrictions shall be binding upon third parties with
actual knowledge thereof or if the same, or notice of the same, shall be plainly
written upon the certificate evidencing ownership of the stock.
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<PAGE>
ARTICLE XIV
AMENDMENT
Except as may be provided in the By-Laws of this corporation to the
contrary, these Articles of Incorporation may be amended by the affirmative vote
of a majority of the Board of Directors and by the affirmative vote of the
holders of not less than two-thirds (2/3) of the then outstanding stock of the
corporation.
ARTICLE XV
RESIDENT AGENT
The name and address of the initial resident agent of this corporation is:
Eric P. Littman
Suite 202
1428 Brickell Avenue
Miami, FL 33131
IN WITNESS WHEREOF, I have hereunto subscribed to and executed these Articles of
Incorporation this 31st day of January, 1989.
/s/ Eric P. Littman
--------------------
Eric P. Littman
Subscribed and Sworn to this
31st day of January, 1989
Before me:
/s/ Isabel J. Cantera
-----------------------
Isabel J. Cantera
Notary Public
My Commission Expires:
4
<PAGE>
CERTIFICATE DESINGATING PLACE OF BUSINESS OR
DOMICILE FOR SERVICE OF PROCESS WITHIN THIS STATE
NAMING THE AGENT UPON WHOM PROCESS MAY BE SERVED
In pursuance of Chapter 48.091 of the Florida Statutes, the following is
submitted:
CTC 3, INC. desiring to organize a corporation under the laws of the State
of Florida with its principle place of business as stated in its Articles of
Incorporation has named Eric P. Littman located at Suite 202, 1428 Brickell
Avenue, Miami, FL 33131 as its agent upon whom process may be served within this
state.
Having been named to accept service of process for the above-stated
corporation, I hereby accept to act in this capacity and to comply with the
provisions of the Act relative to keeping open said office.
/s/ Eric P. Littman
---------------------
Eric P. Littman
<PAGE>
ARTICLES OF AMENDMENT TO
CTC 3, INC.
THE UNDERSIGNED, being the sole director and president of CTC 3, INC., does
hereby amend its Articles of Incorporation of as follows:
ARTICLE I
CORPORATE NAME
The name of the Corporation shall be CTC 3, INC.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes authorized
under the laws of the state of Florida.
ARTICLE III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of 50,000,000 shares of
common stock $.001 par value.
ARTICLE V
PLACE OF BUSINESS
The address of the principal place of business of this corporation in the
State of Florida shall be 7695 S.W. 104th Street, Suite 210, Miami, FL 33156.
The Board of Directors may at any time and from time to time move the principal
office of this corporation.
ARTICLE V1
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By-Laws.
1
<PAGE>
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares or other securities
of the Corporation except to the extent such right may be granted by an
amendment to these Articles of Incorporation or by a resolution of the board of
Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the Bylaws, or the Florida
Corporation Act notwithstanding, bylaws shall not be adopted, modified, amended
or repealed by the shareholders of the Corporation except upon the affirmative
vote of a simple majority vote of the holders of all the issued and outstanding
shares of the corporation entitled to vote thereon
ARTICLE IX
SHAREHOLDERS
9.1 Inspection of Books. The board of directors shall make reasonable rules
to determine at what times and places and under what conditions the books of the
Corporation shall be open to inspection by shareholders or a duly appointed
representative of a shareholder.
9.2. Control Share Acquisition. The provisions relating to any control
share acquisition as contained in Florida Statutes now, or hereinafter amended,
and any successor provision shall not apply to the Corporation.
9.3. Quorum. The holders of shares entitled to one-third of the votes at a
meeting of shareholder's shall constitute a quorum.
9.4. Required Vote. Acts of shareholders shall require the approval of
holders of 50.01% of the outstanding votes of shareholders.
ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by law, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed to the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
officers and directors of this corporation against any contingency or peril as
may be determined to be in the best interests of this corporation, and in
conjunction therewith, to procure, at this corporation's expense, policies of
insurance.
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<PAGE>
ARTICLE XI
CONTRACTS
No contract or other transaction between this corporation and any person,
firm or corporation shall be affected by the fact that any officer or director
of this corporation is such other party or is, or at some time in the future
becomes, an officer, director or partner of such other contracting party, or has
now or hereafter a direct or indirect interest in such contract.
I hereby certify that the following was adopted by a majority vote of the
shareholders and directors of the corporation on May 20, 1998 and that the
number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, 1 have hereunto subscribed to and executed this
Amendment to Articles of incorporation this on May 20, 1998.
/s/ Eric P. Littman
- -----------------------------------
Eric P. Littman, Sole Director
The foregoing instrument was acknowledged before me on May 28, 1998, by Eric P.
Littman, who is personally known to me.
/s/ Isabel J. Cantera
-----------------------
Isabel J. Cantera
Notary Public
My commission expires: unavailable
3
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
CTC 3.INC.
----------
Pursuant to the provisions of section 607.1006, Florida Statutes, this
Florida profit corporation adopts the following articles of amendment to its
articles of incorporation:
FIRST: Amendment adopted:
Article I is hereby amended to read as follows:
The name of this corporation in Ventech International Corp.
SECOND: There is no change to the capital of the corporation.
THIRD: This amendment was adopted on July 14, 1998.
FOURTH: The amendment was approved by the shareholders. The number of votes cast
for the amendment was sufficient for approval.
Signed this 14th day of July, 1998.
/s/ Andrew Munro
- ----------------------------
Andrew Munro, President
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
VENTECH INTERNATIONAL CORP.
---------------------------
Pursuant to the provisions of section 607.1006, Florida Statutes, this
Florida profit corporation adopts the following articles of amendment to its
articles of incorporation:
FIRST: Amendment adopted:
Article I is hereby amended to read as follows:
The name of this corporation in VDO.Com, Inc.
SECOND: There is no change to the capital of the corporation.
THIRD: This amendment was adopted on June 4, 1999 with an effective date of June
14, 1999.
FOURTH: The amendment was approved by the shareholders. The number of votes cast
for the amendment was sufficient for approval.
Signed this 14th day of July, 1999.
/s/ Andrew Munro
- ----------------------------
Andrew Munro, President
BYLAWS
OF
VDO.COM, INC.
(A FLORIDA CORPORATION)
<PAGE>
<TABLE>
<CAPTION>
INDEX
PAGE NUMBER
<S> <C> <C>
ARTICLE ONE: OFFICES..............................................................................................1
Section 1. Principal Office.............................................................................1
----------------
Section 2. Other Offices................................................................................1
-------------
ARTICLE TWO: MEETINGS OF SHAREHOLDERS.............................................................................1
Section 1. Place........................................................................................1
-----
Section 2. Time of Annual Meeting.......................................................................1
----------------------
Section 3. Call of Special Meetings.....................................................................1
------------------------
Section 4. Conduct of Meetings..........................................................................1
-------------------
Section 5. Notice and Waiver of Notice..................................................................1
---------------------------
Section 6. Business and Nominations for Annual and Special Meetings.....................................2
--------------------------------------------------------
Section 7. Quorum.......................................................................................2
------
Section 8. Voting Rights Per Share......................................................................2
-----------------------
Section 9. Voting of Shares.............................................................................2
----------------
Section 10. Proxies.....................................................................................2
-------
Section 11. Shareholder List............................................................................3
----------------
Section 12. Action Without Meeting......................................................................3
----------------------
Section 13. Fixing Record Date..........................................................................3
------------------
Section 14. Inspectors and Judges.......................................................................3
---------------------
Section 15. Voting for Directors........................................................................4
--------------------
ARTICLE THREE: DIRECTORS..........................................................................................4
Section 1. Number; Term; Election; Qualification........................................................4
-------------------------------------
Section 2. Resignation; Vacancies; Removal..............................................................4
-------------------------------
Section 3. Powers.......................................................................................4
------
Section 4. Place of Meetings............................................................................4
-----------------
Section 5. Annual Meetings..............................................................................4
---------------
Section 6. Regular Meetings.............................................................................4
----------------
Section 7. Special Meetings and Notice..................................................................4
---------------------------
Section 8. Quorum and Required Vote.....................................................................4
------------------------
Section 9. Action Without Meeting.......................................................................5
----------------------
Section 10. Conference Telephone or Similar Communications Equipment Meetings...........................5
-----------------------------------------------------------------
Section 11. Committees..................................................................................5
----------
Section 12. Compensation of Directors...................................................................5
-------------------------
ARTICLE FOUR: OFFICERS...........................................................................................5
Section 1. Positions....................................................................................5
---------
Section 2. Election of Specified Officers by Board......................................................5
---------------------------------------
Section 3. Election or Appointment of Other Officers....................................................5
-----------------------------------------
Section 4. Compensation.................................................................................6
------------
Section 5. Term; Resignation; Removal; Vacancies........................................................6
-------------------------------------
Section 6. Chairman of the Board........................................................................6
---------------------
Section 7. Chief Executive Officer......................................................................6
-----------------------
Section 8. President....................................................................................6
---------
Section 9. Vice Presidents..............................................................................6
---------------
Section 10. Secretary...................................................................................6
---------
Section 11. Chief Financial Officer.....................................................................6
-----------------------
Section 12. Treasurer...................................................................................7
---------
Section 13. Other Officers; Employees and Agents........................................................7
------------------------------------
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<PAGE>
PAGE NUMBER
ARTICLE FIVE: CERTIFICATES FOR SHARES............................................................................7
Section 1. Issue of Certificates........................................................................7
---------------------
Section 2. Legends for Preferences and Restrictions on Transfer.........................................7
----------------------------------------------------
Section 3. Facsimile Signatures.........................................................................7
--------------------
Section 4. Lost Certificates............................................................................8
-----------------
Section 5. Transfer of Shares...........................................................................8
------------------
Section 6. Registered Shareholders......................................................................8
-----------------------
ARTICLE SIX: GENERAL PROVISIONS..................................................................................8
Section 1. Dividends....................................................................................8
---------
Section 2. Reserves.....................................................................................8
--------
Section 3. Checks.......................................................................................8
------
Section 4. Fiscal Year..................................................................................8
-----------
Section 5. Seal.........................................................................................8
----
Section 6. Gender.......................................................................................8
------
ARTICLE SEVEN: AMENDMENT OF BYLAWS...............................................................................8
</TABLE>
ii
<PAGE>
BYLAWS
OF
VDO.COM, INC.
ARTICLE ONE: OFFICES
Section 1. Principal Office. The principal office of VDO.com, Inc.. a
Florida corporation (the "Corporation"), shall be located at such place
determined by the Board of Directors of the Corporation (the "Board of
Directors") in accordance with applicable law.
Section 2. Other Offices. The Corporation may also have offices at such
other places, either within or without the State of Florida, as the Board of
Directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE TWO: MEETINGS OF SHAREHOLDERS
Section 1. Place. All annual meetings of shareholders shall be held at
such place, within or without the State of Florida, as may be designated by the
Board of Directors and stated in the notice of the meeting or in a duly executed
waiver of notice thereof. Special meetings of shareholders may be held at such
place, within or without the State of Florida, and at such time as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Time of Annual Meeting. Annual meetings of shareholders
shall be held on such date and at such time fixed, from time to time, by the
Board of Directors, provided, that there shall be an annual meeting held every
calendar year at which the shareholders shall elect a board of directors and
transact such other business as may properly be brought before the meeting.
Section 3. Call of Special Meetings. Special meetings of the
shareholders shall be held if called in accordance with the procedures set forth
in the Corporation's Articles of Incorporation (the "Articles of Incorporation")
for the call of a special meeting of shareholders or as provided in the Florida
Business Corporation Act.
Section 4. Conduct of Meetings. The Chairman of the Board of Directors
(or in his absence, the President, or in his absence, such other designee of the
Chairman of the Board of Directors) shall preside at the annual and special
meetings of shareholders and shall be given full discretion in establishing the
rules and procedures to be followed in conducting the meetings, except as
otherwise provided by law or in these Bylaws.
Section 5. Notice and Waiver of Notice. Except as otherwise provided by
law, written or printed notice stating the place, date and time of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than sixty
(60) days before the date of the meeting, either personally or by first-class
mail or other legally sufficient means, by or at the direction of the Chairman
of the Board, President, or the persons calling the meeting, to each shareholder
of record entitled to vote at such meeting. If the notice is mailed at least
thirty (30) days before the date of the meeting, it may be done by a class of
United States mail other than first class. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail addressed to the
shareholder at the address appearing on the stock transfer books of the
Corporation, with postage thereon prepaid. If a meeting is adjourned to another
time and/or place, and if an announcement of the adjourned time and/or place is
made at the meeting, it shall not be necessary to give notice of the adjourned
meeting unless the Board of Directors, after adjournment, fixes a new record
date for the adjourned meeting. Whenever any notice is required to be given to
any shareholder, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether signed before, during or after the time of the
meeting stated therein, and delivered to the Corporation for inclusion in the
minutes or filing with the corporate records, shall constitute an effective
waiver of such notice. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the shareholders need be specified in any
written waiver of notice. Attendance of a person at a meeting shall constitute a
1
<PAGE>
waiver of (a) lack of or defective notice of such meeting, unless the person
objects at the beginning to the holding of the meeting or the transacting of any
business at the meeting, or (b) lack of or defective notice of a particular
matter at a meeting that is not within the purpose or purposes described in the
meeting notice, unless the person objects to considering such matter when it is
presented.
Section 6. Business and Nominations for Annual and Special Meetings.
Business transacted at any special meeting shall be confined to the purposes
stated in the notice thereof. At any annual meeting of shareholders, only such
business shall be conducted as shall have been properly brought before the
meeting in accordance with the requirements and procedures set forth in the
Articles of Incorporation. Only such persons who are nominated for election as
directors of the Corporation in accordance with the requirements and procedures
set forth in the Articles of Incorporation shall be eligible for election as
directors of the Corporation.
Section 7. Quorum. Shares entitled to vote as a separate voting group
may take action on a matter at a meeting only if a quorum of those shares exists
with respect to that matter. Except as otherwise provided in the Articles of
Incorporation or applicable law, shares representing a majority of the votes
pertaining to outstanding shares which are entitled to be cast on the matter by
the voting group constitute a quorum of that voting group for action on that
matter. If less than a quorum of shares are represented at a meeting, the
holders of a majority of the shares so represented may adjourn the meeting from
time to time. After a quorum has been established at any shareholders' meeting,
the subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof. Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
Section 8. Voting Rights Per Share. Each outstanding share, regardless
of class, shall be entitled to vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting rights of the
shares of any class are limited or denied by or pursuant to the Articles of
Incorporation or the Florida Business Corporation Act.
Section 9. Voting of Shares. A shareholder may vote at any meeting of
shareholders of the Corporation, either in person or by proxy. Shares standing
in the name of another corporation, domestic or foreign, may be voted by the
officer, agent or proxy designated by the bylaws of such corporate shareholder
or, in the absence of any applicable bylaw, by such person or persons as the
board of directors of the corporate shareholder may designate. In the absence of
any such designation, or, in case of conflicting designation by the corporate
shareholder, the chairman of the board, the president, any vice president, the
secretary and the treasurer of the corporate shareholder, in that order, shall
be presumed to be fully authorized to vote such shares. Shares held by an
administrator, executor, guardian, personal representative, or conservator may
be voted by such person, either in person or by proxy, without a transfer of
such shares into his name. Shares standing in the name of a trustee may be voted
by such person, either in person or by proxy, but no trustee shall be entitled
to vote shares held by such person without a transfer of such shares into his
name or the name of his nominee. Shares held by or under the control of a
receiver, a trustee in bankruptcy proceedings, or an assignee for the benefit of
creditors may be voted by such person without the transfer thereof into his
name. If shares stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety or otherwise, or if two or more persons have the same fiduciary
relationship respecting the same shares, unless the Secretary of the Corporation
is given notice to the contrary and is furnished with a copy of the instrument
or order appointing them or creating the relationship wherein it is so provided,
then acts with respect to voting shall have the following effect: (a) if only
one votes, in person or by proxy, his act binds all; (b) if more than one vote,
in person or by proxy, the act of the majority so voting binds all; (c) if more
than one vote, in person or by proxy, but the vote is evenly split on any
particular matter, each faction is entitled to vote the share or shares in
question proportionally; or (d) if the instrument or order so filed shows that
any such tenancy is held in unequal interest, a majority or a vote evenly split
for purposes hereof shall be a majority or a vote evenly split in interest. The
principles of this paragraph shall apply, insofar as possible, to execution of
proxies, waivers, consents, or objections and for the purpose of ascertaining
the presence of a quorum.
2
<PAGE>
Section 10. Proxies. Any shareholder of the Corporation, other person
entitled to vote on behalf of a shareholder pursuant to law, or attorney-in-fact
for such persons may vote the shareholder's shares in person or by proxy. Any
shareholder of the Corporation may appoint a proxy to vote or otherwise act for
such person by signing an appointment form, either personally or by his
attorney-in-fact. An executed telegram or cablegram appearing to have been
transmitted by such person, or a photographic, photostatic, or equivalent
reproduction of an appointment form, shall be deemed a sufficient appointment
form. An appointment of a proxy is effective when received by the Secretary of
the Corporation (the "Secretary") or such other officer or agent which is
authorized to tabulate votes, and shall be valid for up to 11 months, unless a
longer period is expressly provided in the appointment form. The death or
incapacity of the shareholder appointing a proxy does not affect the right of
the Corporation to accept the proxy's authority unless notice of the death or
incapacity is received by the Secretary or other officer or agent authorized to
tabulate votes before the proxy authority under the appointment is exercised. An
appointment of a proxy is revocable by the shareholder unless the appointment
form conspicuously states that it is irrevocable and the appointment is coupled
with an interest.
Section 11. Shareholder List. After fixing a record date for a meeting
of shareholders, the Corporation shall prepare an alphabetical list of the names
of all its shareholders who are entitled to notice of the meeting, arranged by
voting group with the address of, and the number and class and series, if any,
of shares held by each. The shareholders' list must be available for inspection
by any shareholder for a period of ten (10) days prior to the meeting or such
shorter time as exists between the record date and the meeting and continuing
through the meeting at the Corporation's principal office, at a place identified
in the meeting notice in the city where the meeting will be held, or at the
office of the Corporation's transfer agent or registrar. Any shareholder of the
Corporation or such person's agent or attorney is entitled on written demand to
inspect the shareholders' list (subject to the requirements of law), during
regular business hours and at his expense, during the period it is available for
inspection. The Corporation shall make the shareholders' list available at the
meeting of shareholders, and any shareholder or agent or attorney of such
shareholder is entitled to inspect the list at any time during the meeting or
any adjournment. The shareholders' list is prima facie evidence of the identity
of shareholders entitled to examine the shareholders' list or to vote at a
meeting of shareholders.
Section 12. Action Without Meeting. Any action required or permitted by
law to be taken at a meeting of shareholders may be taken without a meeting or
notice if a consent, or consents, in writing, setting forth the action so taken,
shall be dated and signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all voting groups and shares entitled to vote
thereon were present and voted with respect to the subject matter thereof, and
such consent shall be delivered to the Corporation, within the period required
by Section 607.0704 of the Florida Business Corporation Act, by delivery to its
principal office in the State of Florida, its principal place of business, the
Secretary or another officer or agent of the Corporation having custody of the
book in which proceedings of meetings of shareholders are recorded. Within ten
(10) days after obtaining such authorization by written consent, notice must be
given to those shareholders who have not consented in writing or who are not
entitled to vote on the action, in accordance with the requirements of Section
607.0704 of the Florida Business Corporation Act.
Section 13. Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purposes, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
(70) days, and, in case of a meeting of shareholders, not less than ten (10)
days, before the meeting or action requiring such determination of shareholders.
If no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders or the determination of
shareholders entitled to receive payment of a dividend, the date before the day
on which the first notice of the meeting is mailed or the date on which the
resolutions of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination shall
apply to any adjournment thereof, except where the Board of Directors fixes a
new record date for the adjourned meeting.
Section 14. Inspectors and Judges. The Board of Directors in advance of
any meeting may, but need not, appoint one or more inspectors of election or
judges of the vote, as the case may be, to act at the meeting or any adjournment
thereof. If any inspector or inspectors, or judge or judges, are not appointed,
3
<PAGE>
the person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector or
judge fails to appear or act, the vacancy may be filled by the Board of
Directors in advance of the meeting, or at the meeting by the person presiding
thereat. The inspectors or judges, if any, shall determine the number of shares
of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots and consents, hear and determine
all challenges and questions arising in connection with the right to vote, count
and tabulate votes, ballots and consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all shareholders.
On request of the person presiding at the meeting, the inspector or inspectors
or judge or judges, if any, shall make a report in writing of any challenge,
question or matter determined by him or them, and execute a certificate of any
fact found by him or them.
Section 15. Voting for Directors. Unless otherwise provided in the
Articles of Incorporation, directors shall be elected by a plurality of the
votes cast by the shares entitled to vote in the election at a meeting at which
a quorum is present.
ARTICLE THREE: DIRECTORS
Section 1. Number; Term; Election; Qualification. The number of
directors of the Corporation shall be fixed from time to time, within the limits
specified by the Articles of Incorporation, by resolution of the Board of
Directors. Directors shall be elected in the manner and hold office for the term
as prescribed in the Articles of Incorporation. Directors must be natural
persons who are 18 years of age or older but need not be residents of the State
of Florida, shareholders of the Corporation or citizens of the United States.
Section 2. Resignation; Vacancies; Removal. A director may resign at
any time by giving written notice to the Board of Directors or the Chairman of
the Board. Such resignation shall take effect at the date of receipt of such
notice or at any later time specified therein; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. In the event the notice of resignation specifies a later effective
date, the Board of Directors may fill the pending vacancy (subject to the
provisions of the Articles of Incorporation) before the effective date if they
provide that the successor does not take office until the effective date.
Director vacancies shall be filled, and directors may be removed, in the manner
prescribed in the Corporation's Articles of Incorporation.
Section 3. Powers. The business and affairs of the Corporation shall be
managed by the Board of Directors, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these Bylaws directed or required to be
exercised and done by the shareholders.
Section 4. Place of Meetings. Meetings of the Board of Directors,
regular or special, may be held either within or without the State of Florida.
Section 5. Annual Meetings. Unless scheduled for another time by the
Board of Directors, the first meeting of each newly elected Board of Directors
shall be held, without call or notice, immediately following each annual meeting
of shareholders.
Section 6. Regular Meetings. Regular meetings of the Board of Directors
may also be held without notice at such time and at such place as shall from
time to time be determined by the Board of Directors.
Section 7. Special Meetings and Notice. Special meetings of the Board
of Directors may be called by the President or Chairman of the Board and shall
be called by the Secretary on the written request of any two directors. At least
forty-eight (48) hours' prior written notice of the date, time and place of
special meetings of the Board of Directors shall be given to each director.
Except as required by law, neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting. Notices to
directors shall be in writing and delivered to the directors at their addresses
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appearing on the books of the Corporation by personal delivery, mail or other
legally sufficient means. Subject to the provisions of the preceding sentence,
notice to directors may also be given by telegram, teletype or other form of
electronic communication. Notice by mail shall be deemed to be given at the time
when the same shall be received. Whenever any notice is required to be given to
any director, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before, during or after the meeting, shall
constitute an effective waiver of such notice. Attendance of a director at a
meeting shall constitute a waiver of notice of such meeting and a waiver of any
and all objections to the place of the meeting, the time of the meeting and the
manner in which it has been called or convened, except when a director states,
at the beginning of the meeting or promptly upon arrival at the meeting, any
objection to the transaction of business because the meeting is not lawfully
called or convened.
Section 8. Quorum and Required Vote. A majority of the prescribed
number of directors determined as provided in the Articles of Incorporation
shall constitute a quorum for the transaction of business and 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, unless a greater number is required
by the Articles of Incorporation. Whenever, for any reason, a vacancy occurs in
the Board of Directors, a quorum shall consist of a majority of the remaining
directors until the vacancy has been filled. If a quorum shall not be present at
any meeting of the Board of Directors, a majority of the directors present
thereat may adjourn the meeting to another time and place, without notice other
than announcement at the time of adjournment. At such adjourned meeting at which
a quorum shall be present, any business may be transacted that might have been
transacted at the meeting as originally notified and called.
Section 9. Action Without Meeting. Any action required or permitted to
be taken at a meeting of the Board of Directors or committee thereof may be
taken without a meeting if a consent in writing, setting forth the action taken,
is signed by all of the members of the Board of Directors or the committee, as
the case may be, and such consent shall have the same force and effect as a
unanimous vote at a meeting. Action taken under this Section 9 is effective when
the last director signs the consent, unless the consent specifies a different
effective date. A consent signed under this Section 9 shall have the effect of a
meeting vote and may be described as such in any document.
Section 10. Conference Telephone or Similar Communications Equipment
Meetings. Directors and committee members may participate in and hold a meeting
by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in such a meeting shall constitute presence in person at the
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground the
meeting is not lawfully called or convened.
Section 11. Committees. The Board of Directors, by resolution adopted
by a majority of the whole Board of Directors, may designate from among its
members an executive committee and one or more other committees, each of which,
to the extent provided in such resolution, shall have and may exercise all of
the authority of the Board of Directors in the business and affairs of the
Corporation except where the action of the full Board of Directors is required
by applicable law. Each committee must have two or more members who serve at the
pleasure of the Board of Directors. The Board of Directors, by resolution
adopted in accordance with this Article Three, may designate one or more
directors as alternate members of any committee, who may act in the place and
stead of any absent member or members at any meeting of such committee.
Vacancies in the membership of a committee may be filled only by the Board of
Directors at a regular or special meeting of the Board of Directors. The
executive committee shall keep regular minutes of its proceedings and report the
same to the Board of Directors when required. The designation of any such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon it or such member by law.
Section 12. Compensation of Directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Similarly, members of special or standing committees may be allowed
compensation for attendance at committee meetings or a stated salary as a
committee member and payment of expenses for attending committee meetings.
Directors may receive such other compensation as may be approved by the Board of
Directors.
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ARTICLE FOUR: OFFICERS
Section 1. Positions. The officers of the Corporation shall consist of
a Chairman of the Board, a Chief Executive Officer, a President, one or more
Vice Presidents (any one or more of whom may be given the additional designation
of rank of Executive Vice President or Senior Vice President), a Secretary, a
Chief Financial Officer and a Treasurer. Any two or more offices may be held by
the same person. Officers other than the Chairman of the Board need not be
members of the Board of Directors. The Chairman of the Board must be a member of
the Board of Directors.
Section 2. Election of Specified Officers by Board. The Board of
Directors at its first meeting after each annual meeting of shareholders shall
elect a Chairman of the Board, a Chief Executive Officer, a President, one or
more Vice Presidents (including any Senior or Executive Vice Presidents), a
Secretary, a Chief Financial Officer and a Treasurer.
Section 3. Election or Appointment of Other Officers. Such other
officers and assistant officers and agents as may be deemed necessary may be
elected or appointed by the Board of Directors, or, unless otherwise specified
herein, appointed by the Chairman of the Board. The Board of Directors shall be
advised of appointments by the Chairman of the Board at or before the next
scheduled Board of Directors meeting.
Section 4. Compensation. The salaries, bonuses and other compensation
of the Chairman of the Board and all officers of the Corporation to be elected
by the Board of Directors pursuant to Section 2 of this Article Four shall be
fixed from time to time by the Board of Directors or pursuant to its direction.
The salaries of all other elected or appointed officers of the Corporation shall
be fixed from time to time by the Chairman of the Board or pursuant to his
direction.
Section 5. Term; Resignation; Removal; Vacancies. The officers of the
Corporation shall hold office until their successors are chosen and qualified.
Any officer or agent elected or appointed by the Board of Directors or the
Chairman of the Board may be removed, with or without cause, by the Board of
Directors, but such removal shall be without prejudice to the contract rights,
if any, of the person so removed. Any officer or agent appointed by the Chairman
of the Board pursuant to Section 3 of this Article Four may also be removed from
such office or position by the Board of Directors or the Chairman of the Board,
with or without cause. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise shall be filled by the Board of
Directors, or, in the case of an officer appointed by the Chairman of the Board,
by the Chairman of the Board or the Board of Directors. Any officer of the
Corporation may resign from his respective office or position by delivering
notice to the Corporation, and such resignation shall be effective without
acceptance. Such resignation shall be effective when delivered unless the notice
specifies a later effective date. If a resignation is made effective at a later
date and the Corporation accepts the future effective date, the Board of
Directors may fill the pending vacancy before the effective date if the Board
provides that the successor does not take office until such effective date.
Section 6. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the shareholders and the Board of Directors. The
Chairman of the Board shall also serve as the chairman of any executive
committee.
Section 7. Chief Executive Officer. Subject to the control of the Board
of Directors, the Chief Executive Officer, in conjunction with the President,
shall have general and active management of the business of the Corporation,
shall see that all orders and resolutions of the Board of Directors are carried
into effect and shall have such powers and perform such duties as may be
prescribed by the Board of Directors. In the absence of the Chairman of the
Board or in the event the Board of Directors shall not have designated a
Chairman of the Board, the Chief Executive Officer shall preside at meetings of
the shareholders and the Board of Directors. The Chief Executive Officer shall
also serve as the vice-chairman of any executive committee.
Section 8. President. Subject to the control of the Board of Directors,
the President, in conjunction with the Chief Executive Officer, shall have
general and active management of the business of the Corporation and shall have
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such powers and perform such duties as may be prescribed by the Board of
Directors. In the absence of the Chairman of the Board and the Chief Executive
Officer or in the event the Board of Directors shall not have designated a
Chairman of the Board and a Chief Executive Officer shall not have been elected,
the President shall preside at meetings of the shareholders and the Board of
Directors. The President shall also serve as the vice- chairman of any executive
committee.
Section 9. Vice Presidents. The Vice Presidents, in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the President and the Chief Executive Officer, perform
the duties and exercise the powers of the President. They shall perform such
other duties and have such other powers as the Board of Directors, the Chairman
of the Board or the Chief Executive Officer shall prescribe or as the President
may from time to time delegate. Executive Vice Presidents shall be senior to
Senior Vice Presidents, and Senior Vice Presidents shall be senior to all other
Vice Presidents.
Section 10. Secretary. The Secretary shall attend all meetings of the
shareholders and all meetings of the Board of Directors and record all the
proceedings of the meetings of the shareholders and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. The Secretary shall give, or cause to be
given, notice of all meetings of the shareholders and special meetings of the
Board of Directors and shall keep in safe custody the seal of the Corporation
and, when authorized by the Board of Directors, affix the same to any instrument
requiring it. The Secretary shall perform such other duties as may be prescribed
by the Board of Directors, the Chairman of the Board, the Chief Executive
Officer or the President.
Section 11. Chief Financial Officer. The Chief Financial Officer shall
be responsible for maintaining the financial integrity of the Corporation, shall
prepare the financial plans for the Corporation and shall monitor the financial
performance of the Corporation and its subsidiaries, as well as performing such
other duties as may be prescribed by the Board of Directors, the Chairman of the
Board, the Chief Executive Officer or the President.
Section 12. Treasurer. The Treasurer shall have the custody of
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chairman of the Board and the Board of
Directors at its regular meetings or when the Board of Directors so requires an
account of all his transactions as Treasurer and of the financial condition of
the Corporation. The Treasurer shall perform such other duties as may be
prescribed by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer or the President.
Section 13. Other Officers; Employees and Agents. Each and every other
officer, employee and agent of the Corporation shall possess, and may exercise,
such power and authority, and shall perform such duties, as may from time to
time be assigned to such person by the Board of Directors, the officer so
appointing such person or such officer or officers who may from time to time be
designated by the Board of Directors to exercise such supervisory authority.
ARTICLE FIVE: CERTIFICATES FOR SHARES
Section 1. Issue of Certificates. The shares of the Corporation shall
be represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates (and upon request every holder of uncertificated shares) shall
be entitled to have a certificate signed by or in the name of the Corporation by
the Chairman of the Board or a Vice Chairman of the Board, or the Chief
Executive Officer, President or Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, representing the number of shares registered in certificate form.
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Section 2. Legends for Preferences and Restrictions on Transfer. The
designations, relative rights, preferences and limitations applicable to each
class of shares and the variations in rights, preferences and limitations
determined for each series within a class (and the authority of the Board of
Directors to determine variations for future series) shall be summarized on the
front or back of each certificate. Alternatively, each certificate may state
conspicuously on its front or back that the Corporation will furnish the
shareholder a full statement of this information on request and without charge.
Every certificate representing shares that are restricted as to the sale,
disposition, or transfer of such shares shall also indicate that such shares are
restricted as to transfer, and there shall be set forth or fairly summarized
upon the certificate, or the certificate shall indicate that the Corporation
will furnish to any shareholder upon request and without charge, a full
statement of such restrictions. If the Corporation issues any shares that are
not registered under the Securities Act of 1933, as amended, or not registered
or qualified under the applicable state securities laws, the transfer of any
such shares shall be restricted substantially in accordance with the following
legend:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1)
REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE
STATE LAW, OR (2) AT HOLDER'S EXPENSE, AN OPINION (SATISFACTORY
TO THE CORPORATION) OF COUNSEL (SATISFACTORY TO THE CORPORATION)
THAT REGISTRATION IS NOT REQUIRED."
Section 3. Facsimile Signatures. Any and all signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 4. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the Corporation may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost or destroyed.
Section 5. Transfer of Shares. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 6. Registered Shareholders. The Corporation shall be entitled
to recognize the exclusive rights of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of the State
of Florida.
ARTICLE SIX: GENERAL PROVISIONS
Section 1. Dividends. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in
cash, property, stock (including its own shares) or otherwise pursuant to law
and subject to the provisions of the Articles of Incorporation.
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Section 2. Reserves. The Board of Directors may by resolution create a
reserve or reserves out of earned surplus for any proper purpose or purposes,
and may abolish any such reserve in the same manner.
Section 3. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 4. Fiscal Year. The fiscal year of the Corporation shall end on
December 31 of each year, unless otherwise fixed by resolution of the Board of
Directors.
Section 5. Seal. The corporate seal, if any adopted, shall have
inscribed thereon the name and state of incorporation of the Corporation. The
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or in any other manner reproduced.
Section 6. Gender. All words used in these Bylaws in the masculine
gender shall extend to and shall include the feminine and neuter genders.
ARTICLE SEVEN: AMENDMENT OF BYLAWS
Except as otherwise set forth herein, these Bylaws may be altered,
amended or repealed or new Bylaws may be adopted at any meeting of the Board of
Directors at which a quorum is present, by the affirmative vote of a majority of
the directors present at such meeting.
9
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of March 15, 2000 by and between
VDO.COM, INC., a company incorporated under the laws of Florida, having an
office and address at 1350 East Flamingo Road, Suite 807, Las Vegas, Nevada
89119 ("Company"), EMBRYO CAPITAL GROUP, INC., a company incorporated under the
laws of Delaware, having an office at 5314 New Utrecht Avenue, Brooklyn, New
York 12109 ("Purchaser"), and VLR HOLDINGS CORP. (formerly known as "Ventech,
Inc."), a company incorporated under the laws of Nevada, having an office and
address at 1350 East Flamingo Road, Suite 807, Las Vegas, Nevada 89119
("Seller").
W I T N E S S E T H
WHEREAS, Seller desires to sell to Purchaser 11,900,000 shares of the
Company's common stock ("Shares"), representing 70.4142 % of the Company's
issued and outstanding shares in the common stock of the Company, on the terms
and conditions set forth in this Stock Purchase Agreement ("Agreement"); and
WHEREAS, Purchasers desire to buy the Shares on the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the promises and respective mutual
agreements herein contained, it is agreed by and between the parties hereto as
follows:
ARTICLE 1
SALE AND PURCHASE OF THE SHARES
1.1 Sale of the Shares. Upon the execution of this Agreement, subject
to the terms and conditions herein set forth, and on the basis of the
representations, warranties and agreements herein contained, Seller shall
deliver the Shares to Purchaser, and Purchaser shall purchase the Shares from
Seller.
1.2 Instruments of Conveyance and Transfer. At the Closing, Seller
shall deliver a certificate or certificates representing the Shares to
Purchaser, in form and substance satisfactory to Purchaser ("Certificates"), as
shall be effective to vest in Purchaser all right, title and interest in and to
all of the Shares.
1.3 Consideration and Payment for the Shares. In consideration for the
Shares, Purchaser shall pay to Seller the purchase price of $300,000 ($300,000
Dollars in U.S. currency, plus an amount equal to the cash on hand of the
Company at the time of Closing (together the "Purchase Price"), which sum shall
be wired into the trust account of Purchaser's counsel pursuant to a separate
Escrow Agreement. ("Escrow Agreement") The Purchase Price shall be payable only
upon Closing (as set forth in Article 7 hereof).
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1.4 Finder's Fee. Purchaser shall pay a finder's fee ("Finder's Fee")
to Halter Capital Corp., 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248
("Finder"), pursuant to a separate agreement between Purchaser and Finder.
ARTICLE 2
RESIGNATION OF THE OF DIRECTORS AND OFFICERS
2.1 Prior to the Closing, the Company will cause each person who is a
director or officer of the Company, as set forth in Schedule 2.1, to submit his
or her written resignation as director or officer of the Company which will be
effective immediately and the Company will take all steps required to appoint
nominees of Purchaser as directors and officers of the Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser the following:
3.1 Transfer of Title. Seller shall transfer title, in and to the
Shares to the Purchaser free and clear of all liens, security interests,
pledges, encumbrances, charges, restrictions, demands and claims, of any kind or
nature whatsoever, whether direct or indirect or contingent.
3.2 (a) Seller's Organization, Good Standing, and Authority. The Seller
is a corporation duly organized, validly existing and in good standing under the
laws of Nevada (as evidenced by the certificate of good standing attached hereto
as Schedule 3.2(a)(1)), with full power and authority to own, lease, use and
operate its properties and to carry on its business as and where now owned,
leased, used, operated and conducted. The Seller has no Subsidiaries other than
the Company. The Seller is not qualified to conduct business as a foreign
corporation in any jurisdiction and does not believe such qualification
necessary All actions taken by the incorporators, directors and shareholders of
the Seller have been valid and in accordance with the laws of the State of
Nevada. The Seller has all requisite corporate power and authority to enter into
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby and thereby and to deliver the Shares in
accordance with the terms hereof. As used herein, (x) "Subsidiary" means any
Person 50.1% or more of the voting power of which is controlled by another
Person, and (y) "Person" means any individual, corporation, limited liability
company, proprietorship, firm, partnership, limited partnership, trust,
association, or other entity, including government or government department,
agency or instrumentality.
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(b) Authorization. The execution, delivery and performance by the
Seller of this Agreement and the delivery by the Seller of the Shares have been
duly and validly authorized and no further consent or authorization of the
Seller, its Board of Directors, or its shareholders as required (as evidenced by
the resolutions of Seller's shareholders and Board of Directors attached hereto
as Schedule 3.2(b)).
(c) Due Execution. This Agreement has been duly executed and delivered
by the Seller.
(d) Valid Agreement. This Agreement constitutes, and upon execution and
delivery thereof by the Seller, will constitute, a valid and binding agreement
of the Seller enforceable against the Seller in accordance with its respective
terms.
(e) Seller's Title to Shares; No Liens or Preemptive Rights; Valid
Issuance. Seller has and at the Closing will have full and valid title and
control of the Shares; there will be no existing impediment or encumbrance to
the sale and transfer of such Shares to the Purchaser; and on delivery to the
Purchaser of the Shares, all of the Shares will be free and clear of all taxes,
liens, encumbrances, charges or assessments of any kind and shall not be subject
to preemptive rights, tag-along rights, or similar rights of any of the
stockholders of the Company; such Shares will be legally and validly issued in
material compliance with all applicable U.S. federal and state securities laws,
and will be fully paid and non-assessable shares of the Company's common stock;
and the Shares have all been issued under duly authorized resolutions of the
Board of Directors of the Company. On the Closing, Seller shall deliver to the
Purchaser certificates representing the Shares subject to no liens, security
interests, pledges, encumbrances, charges, restrictions, demands or claims in
any other party whatsoever.
3.3 No Governmental Action Required. The execution and delivery by the
Seller of this Agreement does not and will not, and the consummation of the
transactions contemplated hereby will not, require any action by or in respect
of, or filing with, any governmental body, agency or governmental official,
including but not limited to the Securities and Exchange Commission
("Commission") and the National Association of Securities Dealers ("NASD"),
except such actions or filings that have been undertaken or made prior to the
date hereof and that will be in full force and effect (or as to which all
applicable waiting periods have expired) on and as of the date hereof or which
are not required to be filed on or prior to the date of Closing.
3.4 Compliance with Applicable Law and Corporate Documents. The
execution and delivery by the Seller of this Agreement did not and will not and,
the sale by the Seller of the Shares will not contravene or constitute a default
under or violation of (i) any provision of applicable law or regulation, (ii)
the articles of incorporation or by-laws of the Company or Seller, (iii) any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Seller or any its assets, or result in the creation or imposition of any
lien on any asset of the Seller. The Seller is in compliance with and conforms
to all statutes, laws, ordinances, rules, regulations, orders, restrictions and
all other legal requirements of any domestic or foreign government or any
instrumentality thereof having jurisdiction over the conduct of its businesses
or the ownership of its properties.
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3.5 Taxes. All United States federal, state, county, municipality local
or foreign income tax returns and all other material tax returns (including
foreign tax returns) which are required to be filed by or on behalf of the
Seller have been filed (or will be filed in a timely manner) and all material
taxes due pursuant to such returns or pursuant to any assessment received by the
Seller have been paid, except those being disputed in good faith and for which
adequate reserves have been established. The charges, accruals and reserves on
the books of the Seller in respect of taxes or other governmental charges have
been established in accordance with GAAP.
3.6 No Joint Venture. The Seller does not have a direct or indirect
investment in any entity (other than the Company); nor is the Seller a party to
any partnership, management, shareholders' or joint venture or similar agreement
which would affect the Seller's performance of this Agreement or the Seller's
representations and warranties in this Agreement.
3.7 Not an "Investment Company". The Seller is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
3.8 Due Diligence Materials. The information heretofore furnished by
the Seller to the Purchaser for purposes of or in connection with this Agreement
or any transaction contemplated hereby does not, and all such information
hereafter furnished by the Seller to the Purchaser will not (in each case taken
together and on the date as of which such information is furnished), contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein, in the light of the
circumstances under which they are made, not misleading.
3.9 No Solicitation. No form of general solicitation or general
advertising was used by the Seller or, to the best of its actual knowledge, any
other person acting on behalf of the Seller, in connection with the offer and
sale of the Shares. Neither the Seller, nor, to its knowledge, any person acting
on behalf of the Seller, has, either directly or indirectly, sold or offered for
sale to any person (other than the Purchaser) any of the Shares, and the Seller
represents that neither itself nor any person authorized to act on its behalf
(except that the Seller makes no representation as to the Purchaser) will sell
or offer for sale any such security to, or solicit any offers to buy any such
security from, or otherwise approach or negotiate in respect thereof with, any
person or persons so as thereby to cause the issuance or sale of any of the
Shares to be in violation of any of the provisions of Section 5 of the
Securities Exchange Act of 1934 or any other provision of law.
3.10 No Liabilities. There are no liabilities of the Seller of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, which could be charged as a liability to the Company, and to the best
knowledge of Seller there is no existing condition, situation or set of
circumstances which could reasonably be expected to result in such a liability.
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3.11 Not a Voting Trust; No Proxies. None of the Shares are or will be
subject to any voting trust or agreement. No person holds or has the right to
receive any proxy or similar instrument with respect to the Shares. Except as
provided in this Agreement, the Company is not a party to any agreement which
offers or grants to any person the right to purchase or acquire any of the
Shares. There is no applicable local, state or federal law, rule, regulation, or
decree which would, as a result of the sale contemplated by this Agreement,
impair, restrict or delay any voting rights with respect to the Shares.
3.12 No Litigation. The Seller is not (and has not been) a party to any
suit, action, arbitration, or legal, administrative, or other proceeding, or
pending governmental investigation. To the best knowledge of the Seller, there
is no basis for any such action or proceeding and no such action or proceeding
is threatened against the Seller or the Company and neither the Seller nor the
Company is subject to or in default with respect to any order, writ, injunction,
or decree of any federal, state, local, or foreign court, department, agency, or
instrumentality
3.13 Survival of Representations. The representations and warranties
herein by the Seller will be true and correct in all material respects on and as
of the Closing with the same force and effect as though said representations and
warranties had been made on and as of the Closing and will, except, as otherwise
provided herein, survive the Closing.
3.14 Adoption of Company's Representations. The Seller adopts and
remakes as its own each and every representation made by the Company in Article
4 below.
3.15 No relationship to VDO.Com Canada Inc. The Company is not the
parent or subsidiary of, affiliated with, and has no relationship with or
obligation of any kind to VDO.Com Canada Inc. ("the Canadian Company"), which is
an unrelated company incorporated under Canadian law. There are no liabilities
of the Canadian Company of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result in any liability to Seller or the Company.
3.16 Corporate Documents Effective. The articles of incorporation, as
amended, and the bylaws of the Seller, annexed hereto as Schedule 3.16, are, or
will at Closing be, in full force and effect and all actions of the Board of
Directors or shareholders required to accomplish same have, or will at Closing
have been, taken.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser the following:
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4.1 Due Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of Florida (as evidenced by
the certificate of good standing attached hereto as Schedule 4.1), with full
power and authority to own, lease, use and operate its properties and to carry
on its business as and where now owned, leased, used, operated and conducted.
The Company has no Subsidiaries. The Company is not qualified to conduct
business as a foreign corporation in any jurisdiction and does not believe that
such qualification is necessary. All actions taken by the incorporators,
directors and shareholders of the Company have been valid and in accordance with
the laws of the State of Florida.
4.2 (a)Company Authority. The Company has all requisite corporate power
and authority to enter into and perform this Agreement and to consummate the
transactions contemplated hereby and to effect the transfer of the Shares in
accordance with the terms hereof.
(b) Due Authorization. The execution, delivery and performance by
the Company of this Agreement has been duly and validly authorized and no
further consent or authorization of the Company, its Board of Directors or its
shareholders is required, as is evidenced by the resolutions of the Company's
Board of Directors annexed hereto as Schedule 4.2(b).
(c) Valid Execution. This Agreement has been duly executed and
delivered by the Company.
(d) Binding Agreement. This Agreement constitutes, and upon
execution and delivery thereof by the Company, will constitute, a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
(e) No Violation of Corporate Documents or Agreements. The
execution and delivery of this Agreement by the Company and the performance by
the Company of its obligations hereunder will not cause, constitute, or conflict
with or result in (i) any breach or violation or any of the provisions of or
constitute a default under any license, indenture, mortgage, charter,
instrument, articles of incorporation, bylaw, or other agreement or instrument
to which the Company or its shareholders are a party, or by which they may be
bound, nor will any consents or authorizations of any party other than those
hereto by required, (ii) an event that would cause the Company to be liable to
any party, or (iii) an event that would result in the creation or imposition or
any lien, charge or encumbrance on any asset of the Company or on the securities
of the Company to be acquired by the Buyer.
4.3. Authorized Capital; No Preemptive Rights; No Liens; Anti-Dilution.
As of the date hereof, the authorized capital of the Company is 50,000,000
shares of common stock with a par value of $0.001 per share. The issued and
outstanding capital stock of the Company is 16,900,000 shares of common stock
and no other shares of capital stock of the Company will be issued or
outstanding as of the date of Closing. All of such outstanding shares of capital
stock are, or upon issuance will be, duly authorized, validly issued, fully paid
and non-assessable. No shares of capital stock of the Company are subject to
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preemptive rights or similar rights of the stockholders of the Company or any
liens or encumbrances imposed through the actions or failure to act of the
Company, or otherwise. As of the date hereof and at Closing, (i) there are no
outstanding options, warrants, convertible securities, scrip, rights to
subscribe for, puts, calls, rights of first refusal, tag-along agreements, nor
any other agreements, understandings, claims or other commitments or rights of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for any shares of capital stock of the Company, or arrangements
by which the Company is or may become bound to issue additional shares of
capital stock of the Company, and (ii) there are no agreements or arrangements
under which the Company is obligated to register the sale of any of its
securities under the Securities Act and (iii) there are no anti-dilution or
price adjustment provisions contained in any security issued by the Company (or
in the Company's articles of incorporation or by-laws or in any agreement
providing rights to security holders) that will be triggered by the transactions
contemplated by this Agreement. The Company has furnished to Purchaser true and
correct copies of the Company's articles of incorporation and by-laws.
4.4 Seller's Title to Shares; No Liens or Preemptive Rights; Valid
Issuance. Seller has and at the Closing will have full and valid title and
control of the Shares; there will be no existing impediment or encumbrance to
the sale and transfer of such Shares to the Purchaser; and on delivery to the
Purchaser of the Shares, all of the Shares will be free and clear of all taxes,
liens, encumbrances, charges or assessments of any kind and shall not be subject
to preemptive rights, tag-along rights, or similar rights of any of the
stockholders of the Company; such Shares will be legally and validly issued in
material compliance with all applicable U.S. federal and state securities laws,
and will be fully paid and non-assessable shares of the Company's common stock;
and the Shares have all been issued under duly authorized resolutions of the
Board of Directors of the Company. On the Closing, Seller shall deliver to the
Purchaser certificates representing the Shares subject to no liens, security
interests, pledges, encumbrances, charges, restrictions, demands or claims in
any other party whatsoever.
4.5 No Governmental Action Required. The execution and delivery by the
Company of this Agreement does not and will not, the sale by Seller of the
Shares does not and will not, and the consummation of the transactions
contemplated hereby will not, require any action by or in respect of, or filing
with, any governmental body, agency or governmental official, including but not
limited to the Commission and the NASD, except such actions or filings that have
been undertaken or made prior to the date hereof and that will be in full force
and effect (or as to which all applicable waiting periods have expired) on and
as of the date hereof or which are not required to be filed on or prior to the
Closing.
4.6 Compliance with Applicable Law and Corporate Documents. The
execution and delivery by the Company of this Agreement does not and will not
contravene or constitute a default under or violation of (i) any provision of
applicable law or regulation, (ii) the Company's articles of incorporation or
bylaws, (iii) any agreement, judgment, injunction, order, decree or other
instrument binding upon the Company or any its assets, or result in the creation
or imposition of any lien on any asset of the Company. The Company is in
compliance with and conforms to all statutes, laws, ordinances, rules,
regulations, orders, restrictions and all other legal requirements of any
domestic or foreign government or any instrumentality thereof having
jurisdiction over the conduct of its businesses or the ownership of its
properties.
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4.7 SEC Representations. Since July 10, 1998 through the date hereof,
the Company has timely filed all forms, reports and documents with the
Commission required to be filed by it (all of the foregoing filed prior to the
date hereof, including but not limited to any filings required in connection
with or pursuant to Regulation D, Sections 504, 505, and 506, as applicable, and
all exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits) incorporated by reference therein, being
referred to herein collectively as the "SEC Reports"). The Company has delivered
to Purchaser true and complete copies of the SEC Reports. Such SEC Reports, at
the time filed, complied in all material respects with the requirements of the
federal and state securities laws and the rules and regulations of the
Commission thereunder applicable to such SEC Reports. None of the SEC Reports,
including without limitation, any financial statements or schedules included
therein, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
4.8 Financial Statements. (a) The Purchaser has received a copy of the
audited financial statements of the Company as of May 21, 1998, and the related
statements of income and retained earnings for the period then ended. ("May 1998
Financial Statement"), which are annexed hereto as Schedule 4.8(a) The May 1998
Financial Statement was prepared in accordance with generally accepted
accounting principles consistently followed by the Company throughout the
periods indicated. The Purchaser has received a copy of the unaudited financial
statements of the Company for the year ended December 31, 1998, and December 31,
1999, and the related statements of income and retained earnings for the period
then ended ("December 1998 and December 1999 Unaudited Financial Statements"),
which are annexed hereto as Schedule 4.8(b). The December 1998 and December 1999
Unaudited Financial Statements have been prepared by management, and are
believed to fairly present the financial position of the Company as of the date
of the financial statements, subject to changes required by the auditors which
might be shown on the Company's audited financial statements for the periods
ended December 31, 1998 and December 31, 1999. The December 1998 and December
1999 Unaudited Financial Statements fairly present the financial condition of
the Company at the dates indicated and its results of their operations and cash
flows for the periods then ended and, except as indicated therein, reflect all
claims against, debts and liabilities of the Company, fixed or contingent, and
of whatever nature. Seller shall provide to Purchaser audited financial
statements for the periods ended December 31, 1998 and December 31, 1999,
prepared by an SEC recognized auditor, within 30 days of the Closing as provided
in the Escrow Agreement. ("December 1998 and December 1999 Audited Financial
Statements")
(b) Since December 31, 1999 (the "Balance Sheet Date"), there has been
(x) no material adverse change in the assets or liabilities, or in the business
or condition, financial or otherwise, or in the results of operations or
prospects, of the Company, whether as a result of any legislative or regulatory
change, revocation of any license or rights to do business, fire, explosion,
accident, casualty, labor trouble, flood, drought, riot, storm, condemnation,
act of God, public force or otherwise and (y) no material adverse change in the
assets or liabilities, or in the business or condition, financial or otherwise,
or in the results of operations or prospects, of the Company, except in the
ordinary course of business; and no fact or condition exists or is contemplated
or threatened which might cause such a change in the future.
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(c) There have been no material adverse changes in the Company's
business, properties, results of operations, condition (financial or otherwise)
or prospects since the Balance Sheet Date.
4.9 No Litigation. The Company is not (and has not been) a party to
any suit, action, arbitration, or legal, administrative, or other proceeding, or
pending governmental investigation. To the best knowledge of the Company, there
is no basis for any such action or proceeding and no such action or proceeding
is threatened against the Company and the Company is not subject to or in
default with respect to any order, writ, injunction, or decree of any federal,
state, local, or foreign court, department, agency, or instrumentality.
4.10 No Taxes. The Company is not liable for any income, sales,
withholding, real or personal property taxes to any governmental agencies
whatsoever. All United States federal, state, county, municipality local or
foreign income tax returns and all other material tax returns (including foreign
tax returns) which are required to be filed by or on behalf of the Company have
been filed or will be filed within 30 days of the Closing as provided in the
Escrow Agreement and all material taxes due pursuant to such returns or pursuant
to any assessment received by the Company have been or will be paid by Seller
within 30 days after the Closing, except those being disputed in good faith and
for which adequate reserves have been established. The charges, accruals and
reserves on the books of the Company in respect of taxes or other governmental
charges have been established in accordance with GAAP.
4.11 (a) The Company is not currently carrying on any business and is
not a party to any contract, agreement, lease or order which would subject it to
any performance or business obligations or restrictions in the future after the
closing of this Agreement.
(b) The Company has no employment contracts or agreements with any
of its officers, directors, or with any consultants, employees or other such
parties.
(c) The Company has no shareholder contracts or agreements.
(d) The Company has no insurance, stock option plans or employee
benefit plans whatsoever.
(e) The Company is not in default under any contract, or any other
document.
(f) The Company has no written or oral contracts with any third
party.
(g) The Company has no outstanding powers of attorney and no
obligations concerning the performance of the Seller concerning this Agreement.
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(h) The Company does not have a direct or indirect Investment
("Investment" means any investment, whether by means of share purchase,
partnership interest, capital contribution, loan, time deposit or otherwise) in
any Person ("Person" means individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind) and the Company is not a party to any partnership, management,
shareholders' or joint venture or similar agreement.
(i) (A) The Company has all material Permits ("Permits" means all
licenses, franchises, grants, authorizations, permits, easements, variances,
exemptions, consents, certificates, orders and approvals necessary to own, lease
and operate the properties of, and to carry on the business of the Company); (B)
all such Permits are in full force and effect, and the Company has fulfilled and
performed all material obligations with respect to such Permits; (C) no event
has occurred which allows, or after notice or lapse of time would allow,
revocation or termination by the issuer thereof or which results in any other
material impairment of the rights of the holder of any such Permit; and (D) the
Company has no reason to believe that any governmental body or agency is
considering limiting, suspending or revoking any such Permit.
(j) The Company does not have and will not have any assets at the
time of Closing other than cash, as disclosed in the December 1999 Audited
Financial Statement. The Company does not own any real estate or any interests
in real estate. The Company does not own any patents, copyrights, or trademarks.
The Company does not license the intellectual property of others nor owe fees or
royalties on the same.
(k) Neither the Company nor, to the Company's knowledge, any
employee or agent of the Company has made any payments of funds of the Company,
or received or retained any funds, in each case (x) in violation of any law,
rule or regulation or (y) of a character required to be disclosed by the Company
in any of the SEC Reports.
(l) There are no outstanding judgments or UCC financing
instruments or UCC Securities Interests filed against the Company or any of its
properties.
(m) The Company has no debt, loan, or obligations of any kind, to
any of its directors, officers, shareholders, or employees, which will not be
satisfied at the Closing other than as set forth on Schedule 4.11(m).
4.12 Not an "Investment Company", Not a Reporting Company The Company
is not an "investment company" within the meaning of the Investment Company Act
of 1940, as amended. The Company is not subject to the reporting requirements of
section 13 or 15(d) of the Exchange Act.
4.13 Not a "Blind Pool" The Company was not, has not been, and is not,
at any time between July 10,1998 and the present, a " blind pool" as that term
is generally interpreted, or a "blank check company" as that term is defined in
Rule 419 of the Securities and Exchange Act of 1933.
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4.14 Not a "Control Share Acquisition" The acquisition of the Shares by
Purchaser from Seller is not and will not be a "control share acquisition" as
defined in Section 607.0902, Title XXXVI of the Florida Business Corporations
Act ("FBCA"), and none of the provisions of Chapter 607 of the Act apply to the
transactions contemplated herein.
4.15 No Shareholder Approval Required. The acquisition of the Shares by
Purchaser from Seller does not require the approval of the shareholders of the
Company under the FBCA, the Company's articles of incorporation or bylaws, or
any other requirement of law or, if shareholder approval is required it has or
will, prior to the Closing, be properly obtained in accordance with the
requirements of the Company's articles of incorporation and by-laws and the
FBCA.
4.16 No Dissenters' Rights. The acquisition of the Shares by Purchaser
from Seller will not will not give rise to any dissenting shareholders' rights
under Sections 607.0902 or 607.1302 of the FBCA, the Company's articles of
incorporation or bylaws, or otherwise.
4.17 No Liabilities. There are no liabilities of the Company of any
kind whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise and, to the best knowledge of Seller, there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result in such a liability.
4.18 Not Subject to Voting Trust. None of the Shares are or will be
subject to any voting trust or agreement. No person holds or has the right to
receive any proxy or similar instrument with respect to such shares. The Company
is not a party to any agreement which offers or grants to any person the right
to purchase or acquire any of the securities to be issued pursuant to this
Agreement. There is no applicable local, state or federal law, rule, regulation,
or decree which would, as a result of the transfer of the Shares to Purchaser,
impair, restrict or delay any voting rights with respect to the Shares.
4.19 OTC Listing. The Company is currently listed on the OTC Electronic
Bulletin Board with the following trading symbol: "VDOO". The Company is not in
default with respect to any listing requirements of the NASD.
4.20 Prior Offerings. All issuances by the Company of shares of common
stock in past transactions have been legally and validly effected, and all of
such shares of common stock are fully paid and non-assessable. To the date of
this Agreement, the Company has offered its shares for sale only as shown on
Schedule 4.20 annexed hereto. All of the offerings listed on Schedule 4.20 were
conducted in strict accordance with the requirements of Regulation D, Rules 504
and 506, as applicable, in full compliance with the requirements of the
Securities Exchange Acts of 1933 and 1934, as applicable, and in full compliance
with and according to the requirements of the FBCA and the Company's articles of
incorporation and bylaws. The Company did not prepare or distribute any offering
prospectus, solicitation, or other documents in connection with any prior
offering and has provided to Purchaser copies of all documents prepared and
filed in connection with any such offerings. All investors in all prior
offerings were "accredited" investors as that term is defined in Rule 501 of
Regulation D.
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4.21 Compliance with Law. To the best of its knowledge, the Company has
complied with, and is not in violation of any provision of laws or regulations
of federal, state or local government authorities and agencies. There are no
pending or threatened proceedings against the Company by any federal, state or
local government, or any department, board, agency or other body thereof.
4.22 Corporate Documents Effective. The articles of incorporation, as
amended, annexed hereto as Schedule 4.22, are, or will at Closing be, in full
force and effect and all actions of the Board of Directors or shareholders
required to accomplish same have, or will at Closing have been, taken.
4.23 True Representations. The information heretofore furnished by the
Company to the Purchaser for purposes of or in connection with this Agreement or
any transaction contemplated hereby does not, and all such information hereafter
furnished by the Company to the Purchaser will not (in each case taken together
and on the date as of which such information is furnished), contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein, in the light of the circumstances
under which they are made, not misleading.
4.24 No relationship to VDO.Com Canada Inc. The Company is not the
parent or subsidiary of, affiliated with, and has no relationship with or
obligation of any kind to VDO.Com Canada Inc. ("the Canadian Company"), which is
an unrelated company incorporated under Canadian law. There are no liabilities
of the Canadian Company of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result any liability to Seller or the Company.
4.25 Survival. The representations and warranties herein by the Company
will be true and correct in all material respects on and as of the Closing with
the same force and effect as though said representations and warranties had been
made on and as of the Closing Time and will, except, as otherwise provided
herein, survive the Closing for a period of one (1) year.
ARTICLE 5
COVENANTS
From the date of this Agreement to Closing, the Seller and the Company
covenant as follows:
5.1 They will each to the best of their ability preserve intact the
current status of the Company and the trading capacity of the Company as a NASD
Bulletin Board company.
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5.2 The Seller will furnish Purchaser with whatever corporate records
and documents are available, such as Articles of Incorporation and Bylaws.
5.3 The Company will not enter into any contract, written or oral, or
business transaction, merger or business combination, or incur any debts, loan,
or obligations without the express written consent of Purchaser or enter into
any agreements with its officers, directors, or shareholders.
5.4 The Company will not amend or change its Articles of Incorporation
or Bylaws, or issue any further shares in the common stock of the Company
without the express written consent of Purchaser.
5.5 The Company will not issue any stock options, warrants or other
rights or interests in the Shares or to its shares of common stock.
5.6 The Seller will not encumber or mortgage any right or interest in
the Shares, and will not transfer any rights to the Shares to any third party
whatsoever.
5.7 The Company will not declare any dividend in cash or stock, or any
other benefit to its shareholders.
5.8 The Company will not institute any bonus, benefit, profit sharing,
stock option, pension retirement plan or similar arrangement.
5.9 The Seller will obtain and submit to the Purchaser resignations of
current officers and directors.
5.10 The Company will arrange for the Company's current bank account to
be closed, all funds transferred into trust, and the delivery of all bank
account statements and records pertaining to this account.
ARTICLE 6
INDEMNIFICATION
6.1 Seller hereby agrees to, indemnify and hold harmless the Purchaser
and the Company (which includes, for purposes of this Article, Purchaser's and
the Company's officers and directors, and shareholders) against any Losses,
joint or several, to which Purchaser may become subject under the Exchange Act,
any state or federal law, statutory or common law, or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise by reason of the inaccuracy
of any warranty or representation contained in this Agreement, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and Seller
will in addition reimburse Purchaser and the Company for any legal or any other
expenses reasonably incurred by Purchaser in connection with investigating or
defending any such loss, claim, liability, action or proceeding. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of Purchaser and shall survive the Closing for a period of one (1)
year. As used herein, "Losses" means any loss, claim, demand, damage, award,
liabilities, suits, penalties, forfeitures, cost or expense (including, without
limitation, reasonable attorneys', consultant and other professional fees and
disbursements of every kind, nature and description).
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ARTICLE 7
CLOSING AND DELIVERY OF DOCUMENTS
7.1 Closing. The closing shall be held on or before March 17, 2000, but
this date may be extended by mutual agreement of the parties for an additional
seven (7) days. The Closing shall occur as a single integrated transaction, as
follows:
(a) Delivery by Seller
(i) Seller shall deliver to the Purchaser such instruments,
documents and certificates as are required to be delivered by Seller or its
representatives pursuant to the provisions of this Agreement, subject only to
the Escrow Agreement.
(ii) Seller shall deliver the Certificates as directed by
Purchaser and appropriate powers of attorney made in blank with requisite
medallion guaranties in a form acceptable to the Company's transfer agent for
transfer of the Shares into the name of the Purchaser or Purchaser's designee.
(b) Delivery by Purchaser
(i) The Purchaser shall pay the Purchase Price to the Seller
as provided in this Agreement and subject to the Escrow Agreement.
(ii) The Purchaser shall deliver, or cause to be delivered, to
Seller such instruments, documents and certificates as are required to be
delivered by the Purchaser or their representatives pursuant to the provisions
of this Agreement.
(iii) The Purchaser shall pay the Finder's Fee pursuant to a
separate agreement.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Mutual Consent. Notwithstanding anything to the contrary contained
in this Agreement, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to delivery of the
Purchase Price solely by the mutual consent of all of the parties.
8.2 Waiver. Any term, provision, covenant, representation, warranty or
condition of this Agreement may be waived, but only by a written instrument
signed by the party entitled to the benefits thereof. The failure or delay of
any party at any time or times to require performance of any provision hereof or
to exercise its rights with respect to any provision hereof shall in no manner
operate as a waiver of or affect such party's right at a later time to enforce
the same. No waiver by any party of any condition, or of the breach of any term,
provision, covenant, representation or warranty contained in this Agreement, in
any one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach or waiver of any other
condition or of the breach of any other term, provision, covenant,
representation or warranty. No modification or amendment of this Agreement shall
be valid and binding unless it be in writing and signed by all parties hereto.
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8.3 Termination by Purchaser. Notwithstanding anything to the contrary
herein, Purchaser shall have the right, in its sole and absolute discretion, at
any time prior to its payment of the Purchase Price, to terminate this
Agreement, in which event, this Agreement shall be terminated and no party shall
have any further obligation to any other party.
ARTICLE 9
MISCELLANEOUS
9.1 Entire Agreement This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the transactions
contemplated hereby, and supersedes all prior agreements, arrangements and
understandings related to the subject matter hereof. No understanding, promise,
inducement, statement of intention, representation, warranty, covenant or
condition, written or oral, express or implied, whether by statute or otherwise,
has been made by any party hereto which is not embodied in this Agreement or the
written statements, certificates, or other documents delivered pursuant hereto
or in connection with the transactions contemplated hereby, and no party hereto
shall be bound by or liable for any alleged understanding, promise, inducement,
statement, representation, warranty, covenant or condition not set forth.
9.2 Notices All notices provided for in this Agreement shall be in
writing signed by the party giving such notice, and delivered personally or sent
by overnight courier or messenger or sent by registered or certified mail (air
mail if overseas), return receipt requested, or by telex, facsimile
transmission, telegram or similar means of communication. Notices shall be
deemed to have been received on the date of personal delivery, telex, facsimile
transmission, telegram or similar means of communication, or if sent by
overnight courier or messenger, shall be deemed to have been received on the
next delivery day after deposit with the courier or messenger, or if sent by
certified or registered mail, return receipt requested, shall be deemed to have
been received on the third business day after the date of mailing. Notices shall
be sent to the addresses set forth below:
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If to Seller: Andrew Munro
-------------
VLR Holdings, Inc.
1350 East Flamingo Road
Suite 807
Las Vegas, Nevada 89119
with a copy to: Alixe Cormick
---------------
VENTURE LAW CORPORATION
Suite 618 - 688 West Hastings Street
Vancouver, British Columbia, V6B 1P1
Telephone: (604) 659-9188
Facsimile: (604) 659-9178
If to Purchaser: Samuel Shneibalg
---------------
Embryo Capital, Inc.
5314 New Utrecht Avenue
Brooklyn, New York 12109
with a copy to: Howard C. Crystal, Esq.
--------------
Novack Burnbaum Crystal LLP
300 East 42nd Street
New York, New York 10017
Telephone: (212) 682-4001
Facsimile: (212) 986-2907
If to the Company: VDO.Com, Inc.
-----------------
c/o VLR Holdings, Inc.
1350 East Flamingo Road
Suite 807
Las Vegas, Nevada 89119
with a copy to: Alixe Cormick
---------------
VENTURE LAW CORPORATION
Suite 618 - 688 West Hastings Street
Vancouver, British Columbia, V6B 1P1
Telephone: (604) 659-9188
Facsimile: (604) 659-9178
16
<PAGE>
9.3 Governing Law. This Agreement shall be governed in all respects,
including validity, construction, interpretation and effect, by the laws of the
State of New York (without regard to principles of conflicts of law). Each of
the parties hereto agrees to submit to the exclusive jurisdiction of any federal
or state court within the County of New York, with respect to any claim or cause
of action arising under or relating to this Agreement. The parties agree that
any service of process to be made hereunder may be made by certified mail,
return receipt requested, addressed to the party at the address appearing in
Section 9.2, together with a copy to be delivered to such party's attorneys via
telecopier (if provided in Section 9.2). Such service shall be deemed to be
completed when mailed and sent and received by telecopier. Seller and Purchaser
each waives any objection based on forum non conveniens. Nothing in this
paragraph shall affect the right of Seller or Purchaser to serve legal process
in any other manner permitted by law.
9.4 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.5 Taxes Any income taxes required to be paid in connection with the
payments due hereunder, shall be borne by the party required to make such
payment. Any withholding taxes in the nature of a tax on income shall be
deducted from payments due, and the party required to withhold such tax shall
furnish to the party receiving such payment all documentation necessary to prove
the proper amount to withhold of such taxes and to prove payment to the tax
authority of such required withholding.
9.6 Waivers and Amendments; Non-Contractual Remedies; Preservation of
Remedies. This Agreement may be amended, superseded, cancelled, renewed, or
extended, and the terms hereof may be waived, only by a written instrument
signed by authorized representatives of the parties or, in the case of a waiver,
by an authorized representative of the party waiving compliance. No such written
instrument shall be effective unless it expressly recites that it is intended to
amend, supersede, cancel, renew or extend this Agreement or to waive compliance
with one or more of the terms hereof, as the case may be. No delay on the part
of any party in exercising any right, power or privilege shall hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any such right, power or privilege, or any single or partial exercise of any
such right, power of privilege, preclude any further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or in equity. The rights and remedies of any
party based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representation, warranty, covenant or agreement contained in this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is no inaccuracy or breach.
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9.7 Binding Effect; No Assignment, No Third-Party Rights. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. This Agreement is not
assignable without the prior written consent of each of the parties hereto or by
operation of law.
9.8 Further Assurances. Each party shall, at the request of the other
party, at any time and from time to time following the Closing promptly execute
and deliver, or cause to be executed and delivered, to such requesting party all
such further instruments and take all such further action as may be reasonably
necessary or appropriate to carry out the provisions and intents of this
Agreement and of the instruments delivered pursuant to this Agreement.
9.9 Severability of Provisions. If any provision or any portion of any
provision of this Agreement or the application of any such provision or any
portion thereof to any person or circumstance, shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of this Agreement, or the application of such provision or portion of
such provision is held invalid or unenforceable to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and such provision or portion of any provision as shall have
been held invalid or unenforceable shall be deemed limited or modified to the
extent necessary to make it valid and enforceable; in no event shall this
Agreement be rendered void or unenforceable.
9.10 Exhibits and Schedules. All exhibits annexed hereto, and all
schedules referred to herein, are hereby incorporated in and made a part of this
Agreement as if set forth herein. Any matter disclosed on any schedule referred
to herein shall be deemed also to have been disclosed on any other applicable
schedule referred to herein.
9.11 Captions. All section titles or captions contained in this
Agreement or in any schedule or exhibit annexed hereto or referred to herein,
and the table of contents to this Agreement, are for convenience only, shall not
be deemed a part of this Agreement and shall not affect the meaning or
interpretation of this Agreement. All references herein to sections shall be
deemed references to such parts of this Agreement, unless the context shall
otherwise require.
9.12 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the Closing occurs, each party hereto shall pay its
own expenses incidental to the preparation of this Agreement, the carrying out
of the provisions hereof and the consummation of the transactions contemplated.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as
of the date first written herein above.
VDO.COM, INC. EMBRYO CAPITAL GROUP, INC.
- --------------------------- ---------------------------
By: Andrew Munro, President By: Samuel Shneibalg
VLR HOLDINGS CORP.
By: Andrew Munro, President
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SCHEDULE 2.1
Directors and Officers of VDO.Com and Certificates of Resignation
<PAGE>
SCHEDULE 3.2(a)
Seller's Certificate of Good Standing
<PAGE>
SCHEDULE 3.2(b)
Resolutions of Seller's Shareholders and Board of Directors
<PAGE>
SCHEDULE 3.10
Liabilities of Seller
<PAGE>
SCHEDULE 3.16
Seller's Articles of Incorporation, Bylaws, and Amendments
<PAGE>
SCHEDULE 4.1
The Company's Certificate of Good Standing
<PAGE>
SCHEDULE 4.2(b)
Resolutions of the Company's Board of Directors
<PAGE>
SCHEDULE 4.8(a)
May 21, 1998 Audited Financial Statement of the Company
<PAGE>
SCHEDULE 4.8(b)
December 1998 and December 1999 Unaudited Financial Statements of the Company
<PAGE>
SCHEDULE 4.17
The Company's Liabilities
<PAGE>
SCHEDULE 4.20
The Company's Past Offerings
<PAGE>
SCHEDULE 4.22
The Company's Articles of Incorporation and Amendments
<PAGE>
Embryo
Capital
Group
Executive Summary
2000
<PAGE>
Executive Summary
Mission Statement
Embryo Capital Group, Inc. ("ECG") is a venture development and funding company
set to provide seed capital and management consulting for start-up entities in
technology related industries.
Objectives
Embryo Capital Group was formed in 1999 to fund technology companies that are
deemed to having promising products, concepts and personnel. ECG would seek to
provide seed capital in the amounts of $250,000 to $500,000 per venture.
Additionally, through the knowledge, experience and networking of its officers
and advisors, ECG will provide the necessary support and management to build,
solidify and expand the company's infrastructure. ECG will also aid in the
development of appropriate prototypes and demos.
The Market
The need for venture capital is a constant and ever-growing market. With the
tremendous growth in the technology segment the need for "value added" capital
has become increasingly greater. Value added capital is the influx of capital,
as well as, industry and general business management expertise. A successful
business venture will rely heavily on people that are well versed in corporate
finance, law, management and marketing. Since technology companies are most
often founded by individuals with strong backgrounds in science, technology and
engineering, most are lacking the expertise in business structure and management
that is vital to success. Furthermore, inventors and scientists are not often
sophisticated in arranging for needed capital. Frequently they are apprehensive
of seeking funding through traditional venture capital channels for fear that
their product will be misappropriated or that they will be exploited due to
their lack of experience and knowledge in arranging capital funding. Even more,
they often do not know where or how to begin the actual process. It is no wonder
that reports show that only six out one million inventions ever reach the
marketplace. ECG, with its unique funding programs, will be a source of capital
for promising start-up entities. With the assistance of our experience and
diverse group of advisors, ECG will assist in translating concepts into
marketable items, and subsequently in the development of industry contacts.
Furthermore, with the group's contacts within each industry, ECG will assist in
designing and building necessary prototypes and model demos.
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Management
The management and advisors of ECG are its strongest asset. Management and
advisors will be responsible for:
o Seeking ventures to fund
o Deeming ventures "investment worthy"
o Due diligence
o Securing investment capital
o Obtaining necessary management talent
o Preparation of business plans and financial models
o Technology development and trial process
o Assisting in designing and building prototypes
o Develop intellectual property rights and technology patents
o Development of industry contacts
o Identify strategic partnerships and negotiate joint ventures
o Product implementation, manufacturing and marketing
The following is a list of current management and advisors. The company is
constantly seeking additional talent to broaden and diversify its areas of
expertise.
Max Shneibalg, CEO
Max Shneibalg has a strong background in sales, management, product design and
implementation, purchasing and both public and private funding. Prior experience
includes four years as President of Beaupre Manufacturing, Inc. in Montreal,
Canada. Mr. Shneibalg also spent two years managing promotions and funding for
two publicly traded companies, Power phone, Inc. (PWPH) and TMC Agroworld
Corporation (TACN). He also spend two years as Vice President of L&M Electrical
Contracting Corp. where his duties involved product design, price estimates,
quality control, architectural review, and customer satisfaction. Mr.
Shneibalg's role in Embryo Capital will be to seek worthy ventures, the due
diligence process of prospective ventures, funding and business implementation.
Basilio Chen, Chief Technology Advisor
Basilio has over 25 years of technical, managerial and entrepreneurial
experience in high-tech product development for telecommunications, embedded
computing and computer controlled systems for industrial, commercial, and
consumer electronics. He provides business management and engineering of
embedded computing technology and software engineering processes from
requirement specifications to manufacturing.
Mr. Chen has performed engineering and management functions for many commercial,
industrial, and governmental organizations and pioneered many areas in system
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engineering, electrical software engineering, software verification and
validation, software safety, development, inspection, auditing and quality
assurance.
His technical and managerial expertise include techno-business development,
engineering development, verification/validation of software and hardware for
high reliability systems including process control, supervisory control and data
acquisition, robotics, medical equipment, telecommunication systems, and other
mission critical systems. He trains and mentors management and professionals in
the high-tech industry on the subject of techno-business development, zero
defect real-time software and gives seminars in Internet appliances.
Mr. Chen's received his degree from California State Polytechnic University. He
later attended the Florida State University Master of Business Administration
program and subsequently was a post graduate researcher at the University of
British Columbia involved in Dynamic Signature Pattern Recognition. Mr. Chen
speaks internationally on real-time software and software quality management. He
is on the International Technological University Board of Trustees and regularly
teaches software safety for the Zurich Insurance Group. He has been a consultant
to Fortune 500 companies such as FMC, General Signal, Raychem, Ericsson, Pacific
Bell, Fujitsu America, IBM, and Perkin Elmer.
Mr. Chen, with his deep-rooted experience in the technology sector, will be an
invaluable asset to the Embryo Capital Group. His responsibilities will include,
due diligence, building and designing of prototypes and overall product
implementation.
Robert G.L. Shorr, Chief Science Advisor
Robert Shorr competencies include the financing and commercial development of
pharmaceutical and biotechnology ventures, selection of technology or company
targets, and planning of business growth. Robert has successfully raised over
$50 million dollars in financing including $25 million for Enzon, Inc. Investors
include institutional and private funds and other biotechnology companies
including Schering Plough, Bristol-Myers Squibb, Eli Lilly, Baxter Healthcare.
Robert was also intimately involved in 30 other deals worth $50 million dollars.
Robert is currently a principal in Altira Capital and Consulting LLP where his
responsibilities include:
o The selection of technology and opportunities for investment, creation
of business model and plans as well as offering memoranda and
prospectus on an international scale.
o Identification of strategic partnerships and negotiation of deals.
o Development of intellectual property plans and technology patent
portfolios.
o Management of technology development and clinical trial processes.
o Market introduction and sales support.
o Road shows to support private placement and public investment.
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<PAGE>
Mr. Schorr is Director of Business Development for the State University of New
York at Stony Brook Center for Advanced Technology. He was formerly (1991 -
1998) Vice President of Science and Technology for Enzon, Inc. where his
responsibilities included:
o Engineered strategic joint ventures, co-development agreements,
partnering, licensing, sale of technology, and spin-offs.
o Created strategic and creative alliances, licensed technology and
marketing rights. Sold discovery stage products for further
development.
o Negotiated the buying and selling of research, development, and
clinical trial work.
o Networked with VC firms, investment bankers, institutional funds,
brokers and capital companies. o Structured and managed due diligence.
o Created impacting formats for presentation to financial backers.
o Prepared and wrote business plans and executive summaries. o Made
presentations that secured financial commitments.
Robert was the Founder, Vice President Technology and Chief Scientific Officer
of AT Biochem. The Company was devoted to research and development of polymers
used in automated DNA sequencing. The company was sold to FMC in 1991.
Peter H. Muller, Chief Engineering Advisor
Peter H. Muller has been President of InterForm, an internationally acclaimed
product development and design firm. His professional expertise is based on
highly diversified international product development and design for major
industries in Europe, USA, Japan, Korea, Malaysia, Australia and Hong Kong. His
clients range from General Motors to start-up companies with activities ranging
from concept development and problem solving to engineering and graphical user
interfaces.
His list of client companies include: Alltel, Avery Dennison, Becton Dickenson,
Echelon, General Electric, General Motors, Fujitsu, Phillips, RayoVac,
RCA/Thompson, Samsonite, Plantronics, Hayes, VistaVision and many others.
In addition, Mr. Muller is currently on the Board of Directors of the Alden Lee
Company and Director of Design at the IPT Corporation and the Abarca Group. He
was formerly Vice President of Frog Design and Director of PA Technology and
Management Consultants.
Mr. Muller has a background in mechanical engineering with a Master's Degree in
product design from Darmstadt, Germany and management training from Sunset park,
London, UK. He has published articles and given lectures throughout Europe, USA
and Asia and has received numerous patents and awards throughout his career.
5
<PAGE>
Roger NG, Engineering Advisor
Roger is a highly experienced technical consultant and project manager to
companies developing real-time software and firmware applications. He is
currently employed at EvoTech as Vice President of Engineering and is
responsible for all project development.
Roger brings a strong background in development processes with emphasis on
design, documentation and verification. Provided training, leadership, and
mentoring of software development. Has broad experience in the successful
definition, implementation, integration and verification of real-time
applications.
N. Mark Horowitz, Senior Marketing Analyst
Mark Horowitz is currently Vice President of Marketing at American Stock
Transfer & Trust Co., offering the services of AST, America's largest
independent stock transfer agent, to publicly traded companies. He Supervises
and trains a national sales force.
Prior to AST Mark was Vice President of AmTrust Realty, seeking suitable
commercial real estate properties for investment. Responsibilities include
performing all the due diligence on properties being offered.
Mark was also Vice President at Wang Recovery Services had the responsibility to
develop Wang Recovery Services (a division of Wang Technologies), which
specializes in Disaster Recovery services. Upon the company's decision to build
a hot site in lower Manhattan, was placed in charge of supervising construction,
purchasing computer and telecommunication equipment, and even designing the
networks. Was involved in the hiring of sales personnel and development of
marketing material.
Directed the company to become positioned as the only provider of call center
recovery, with the addition of satellite links to our mobile units. Developed
the plan whereby Wang Recovery Services, through various business partnerships,
would be the providers of complete Crisis Recovery Services - phones, computers,
trained operators and family counselors - to many smaller American and/or
foreign airlines. Secured approval from DOT, NTSB, and many aviation lawyers in
Washington.
Ezra Rosensaft, Chief Analyst
Ezra is currently employed at KPMG Peat Marwick LLP as Strategic Financial
Analyst for the Internet sector. His responsibilities include:
o Development of concepts, capabilities, and core competencies from
financial and strategic viewpoints for Internet companies.
o Generation of ideas to expand and assist in development of company
websites.
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o Financial statement analysis, due diligence, forecasting and valuation
reports.
o Valuation of public and private companies for the purpose of, IPO
pricing, Mergers and Acquisitions, purchase price allocation, and
intangible assets.
Ezra was formerly a research associate at McFarland Dewey & Company where he
conducted research and analysis of Fortune 500 companies.
Ezra has a MBA in Finance from Fordham University, Graduate School of Business,
New York, NY.
Stephen Seidenfeld, Financial Analyst
As President and Founder of Seiden Associates, a mortgage, investing and
financing institution, Stephen has generated over $70 million in loans annually
for the past five years. His financing experience involves the acquisitions of
large office buildings, shopping centers, and apartment houses across the U.S.
He was also involved in the financing of corporate acquisitions and the
structuring of leverage buyouts.
Robert Rodriguez, Healthcare Analyst
Robert is currently a Principal at Altira Capital & Consulting, LLC a firm that
provides consulting services for the commercialization, competitive positioning
and funding of healthcare related ventures. He has extensive experience in
assessing the technological and overall viability of various technologies and
products in the Pharmaceutical, biotechnology and medical diagnostic fields.
Prior positions include Manager of Business Development at Enzon, Inc. At Enzon
Robert was involved in the negotiations, implementation and engineering of many
of the company's technologies and products. Robert also spent two years as
Marketing Manager for Sienna Biotech, Inc. where he managed the acquisition of
pertinent marketing and business development related information from a variety
of sources including: personal interviews involving domestic and international
opinion letters, surveys, proprietary and syndicated market research studies,
relevant industry and scientific publications.
Robert has an MBA from Rensselaer Polytechnic Institute and BS in Biochemistry
from SUNY at Stony Brook. He was formerly an Associate Scientist at Johnson &
Johnson Ortho Diagnostic Systems and a Research Scientist at the Kimball
Research Institute of the New York Blood Center.
Evotech
Embryo Capital Group has formed a strategic partnership with Evotech, a full
service product development company. ECG feels that this partnership will
7
<PAGE>
provide the group with a constant flow of fundable ventures. Evotech will also
play a strong role in the due dilligence process and the development of needed
prototypes.
Since 1984, EvoTech has been one of the leaders in embedded computing solutions.
Their tremendous growth over a decade led them out of a home basement to have
developed a track record of excellence with many prominent startups and large
fortune 500 companies.
Telecommunication and embedded controls marks their strength. A long-standing
history of commitment to testing, validation, and verification keeps their
clients happy through every step of the product lifecycle.
>From high-speed data communications applications, POTS linecards to paging
system, cellular phones, and Internet appliances, Evotech has pioneered
technology integration using their software, hardware, and firmware expertise.
Telecommunications
Whether it's a cellular, xDSL, ATM, SNMP, Wireless Telecom Devices/Equipment,
pager, PCS or linecards, Evotech has the best of minds to integrate their
knowledge base with proven embedded technology to develop products quickly.
Right after regulatory divestiture, EvoTech has been involved in creating
Telecommunications products. Including Subscriber Loop, Customer Premise
Equipment (CPE) products, and Access Networks Accessories. About 70% of the
products that they have developed fall into latest xDSL, ATM and SNMP (network
management).
Recent achievement:
o Developed a VDSL line unit to increase high-speed data access and
digital video applications to the latest offerings of major primary
telecommunication providers
o Completed a Wireless Local Loop Switching Processor for a leading
wireless local loop startup that uses spread spectrum to customer
premises distribution.
o Developed next generation Smart Phone for multinational
o Created the first High-Bit-Rate DSL (HDSL) in the market for the
leading DSL manufacturer in the USA.
o From 1991-1995, EvoTech also developed 90% of all linecards for the
leading fiber access network manufacturer in the valley - the present
deployment rate is estimated to be over1/2million units.
Technology:
o DSOS message-switching embedded technology
o Applications such as digital subscriber Loop (xDSL)
o Access Networks (fiber-to-the-loop-Bellcore TR-303)
o Data communication applications such as T1/E1/T3/DS3, DSU/CSU
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Encryption and Control System
Evotech pioneered the use of DSOS embedded message switching kernel to optimize
ROM/RAM space and megahertz. It's an exciting option to save on total-product
costs, and especially time. Since 1992, they have been providing security
technologies to manufacturers including alarms and entry security for high-speed
data communications and voice ciphering. In the security area, Cryptography
modules and premise security are readily adaptable to OEM specifications. In
many cases, thay can add encryption services to already existing data
communication or voice products. And in more newer areas thay are in the process
of completing Gas Detection SCADA line of products that allows detection of
unsafe quantities of gases due to material breakdown. The specific technology
being created today is for Electrical Transformer applications, but its uses
outside of that area could be many.
Other special cases of leading technologies are autonomous robotics vehicles,
Digital Signal Processing (DSP), and fuzzy logic. Most developed products are
for large volume consumer markets or customer premise telecommunications
applications. Typical prediction volumes are in the high six figures.
Internet Appliances & Applications
Our lifestyle in the 20th century will become more technologically driven.
Evotech accelerates with the latest technology and bring their best architects
to serve web applications like Internet radios, Video and Television. A quote
from Henry Blodget, Senior Internet Analyst of Merrill Lynch proves the
viability of Internet radio. He said, "Music is one of the most exciting
applications on the Internet. There's a big promise that once we get the
technology and the bandwidth to download music that it's a great distribution
capability."
Recent Achievement:
o Manage prototype co-development of Internet appliances like ePhone,
eRadio, and WebTV
o Designed and implemented NetRadio with Cyrix Media GX processor, touch
screen, music and web surfing capability.
Our Technical Expertise:
o Hardware design and prototyping
o Firmware design and programming including intuitive user interface
design
o Software prototyping, tools and application development
o PERL, CGI scripts, Visual Basic, C, C++, JAVA, Java scripts, JAVA
applets
Company Clients
o Bay Networks
o Ericsson Fiber Access
o Cylink
o ETEC Systems
o Fujitsu America
o FMC Corp.
o NellCor
o General Electric
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o Varian
o Pacific Bell
o Racal Datacom
o Raychem
o Radionics/Honeywell
o Alcatel USA
Market Areas
Internet Access Devices
Set-top boxes, Web TV, Internet Radio
Telecom equipment
XDSL, wired/wireless local, loop and linecards
Customer Premise equipment
Paging information, Systems & remote controls
Customer Electronics
Digitally enhanced next , generation products
The Funding Process
1. Embryo Capital will seek to fund start-up ventures that are seeking to
raise between 100 -500K.
2. Embryo will guide the company in performing product analysis to determine
whether the project warrants investment.
3. After positive determination ECG would provide needed seed capital.
4. The next phase would involve a "505" private offering with a raise up to
$5,000,000.00.
5. ECG would arrange for any licensing agreement or strategic partnerships
where appropriate.
6. ECG would assist in creating a full and operating organization including
management personnel and suppliers.
7. Upon the completion of the corporate structure, ECG will guide the company
towards an eventual exit strategy e.g.: sale or IPO.
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Features:
For its efforts, ECG would receive an agreed-upon equity position in the company
(generally 60%) with an exit strategy upon an IPO. The company is given the
option to repurchase the equity from ECG at any time at an amount determined at
the time. The group feels that this option will put many inventors and start-ups
at ease, making the funding negotiations quicker and more effective.
It is not the objective of ECG to retain ownership on a permanent basis but
rather to capitalize on the growth potential of the initial stages.
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TracTech
THE BUSINESS
TracTech is engaged in the development, marketing and distribution of a
proprietary tracking system designed to provide highly accurate information
monitoring and data retrieval services. The system utilizes a sophisticated
combination of GPS (Ground Positioning Satellites) systems, Internet, paging and
cellular networks for the transmittal of data providing a most effective and
cost efficient solution.
The business of TracTech involves the sale of GPS tracking units and related
support products to various end-users, such as businesses, organizations and
individuals who require retrieval and transmission of data for the purpose of
tracking, monitoring and asset management. The TracTech product line will
revolutionize an industry currently dominated by outdated and primitive
technologies. For example, the options that are available today for automotive
security and retrieval are mostly preventative deterrents or systems that
require entire police squads be outfitted with tracking devices. None allow the
end-user to actually locate their own vehicle accurately and be instrumental in
its eventual retrieval. A vehicle equipped with the TracTech tracking system can
be located within minutes, from any standard PC or telephone. The product line
is unique in that it is capable of providing Internet based real-time monitoring
and data retrieval utilizing an accurate GPS tracking system with graphical
mapping. The system can locate any vehicle equipped with a tracking unit in a
matter of minutes and pinpoint its latitude, longitude, speed, direction, and
street location to within 40 feet. When appropriate, commands can be sent to the
vehicle to disable its operation thereby allowing for a safe and easy recovery.
The TracTech tracking system has many applications for the automotive industry
and is not limited to security alone. The system can be utilized to unlock the
doors of a vehicle when keys are not accessible, or to lock the vehicle from a
PC without having to actually approach it. The system can also be used to send
needed help to a stranded vehicle quickly and accurately.
The TracTech tracking system can also be programmed for one-way communication.
The unit can be configured to collect, hold and send data at a preprogrammed
time or interval (i.e. weekly, monthly0 or to provide notification when a unit
is being moved. In this format it can be utilized for remote data retrieval for
the purpose of tracking movable assets such as computers and business equipment.
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Market Analysis
According to the Wall Street Journal and The U.S. Department of Justice 1997
Uniform Crime Report, there were a total of 694,141 reported incidents of car
theft nationwide amounting to a $7.4 billion a year loss to consumers. It is no
wonder that reports show the demand for deterrent systems is growing at a rate
of 9-12% a year. Car theft has become a hard fact of life and its no longer a
question of if someone's car will get stolen rather when. The only basic options
available to consumer's today are to attach devices to their steering wheels,
engine cut-off devices, and noisy alarm systems. Consumers spend an estimated
$9.32 billion a year on car alarms and other deterrent devices. The company
believes there is a large market for a product that will allow a consumer to
recover his/her vehicle after it is actually stolen.
TracTech vs. LoJack
The industry leader and pioneer LoJack Corporation have dominated the vehicle
recovery product market in recent years. LoJack has developed a nonexistent
market into a $35 million a year industry. TracTech considers LoJack to be our
primary competition in the market.
Developed in 1982 the LoJack System consists of four basic operating components:
1) LoJack Unit, 2) Police Tracking Computer, 3) Sector Activation System (SAS),
4) Registration System.
The LoJack is the consumer component of the system. It is installed in the
consumer's car and consists of a VHF radio transponder, a microprocessor
computer and a modem. The computer's memory contains a set of codes unique to
that particular unit and the vehicle that it is installed in. Each unit has a
specific activation and reply code and is activated only by a signal from the
SAS. Once activated the LoJack unit will continue to send its signal until it is
instructed to stop.
Once the unit has been activated, the Police Tracking Computer is then utilized
to detect the transmittal signal. When the PTC detects a signal the PTC displays
the signal strength and direction. The patrol vehicle then proceeds to move in
the general direction of the signal. As the patrol vehicle moves closer to the
target vehicle, the signal strength increases.
Although the LoJack system was a breakthrough 16 years ago, today it is a
antiquated both in terms of technology and operating effectiveness. These are
some of its major shortcomings compared to the TracTech system.
1) LoJack: Effective only in a short range of distance. The PTC must be within
1-5 miles of an activated LoJack unit to pick up its signal
TracTech: The GPS tracking unit has no limitations, and can track a unit in
any state.
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2) LoJack: Provides no specific directional information. The PTC only tells
the patrol vehicle the general direction to head towards to find the target
vehicle. It can also lead the vehicle into inaccessible crossings and
dead-ends due to lack of specific geographical information. Additionally,
the central dispatcher is not availed to the information provided by the
PTC and requires the patrol vehicle to radio frequent updates.
TracTech: The GPS with geographical overlays provides pinpoint location of
target vehicle to within 30-40 ft. and allows patrol vehicle to select
specific routes to approach the target vehicle. The dispatcher can also
determine which patrol units are closest to the target vehicle.
3) LoJack: No feedback available on vehicle status: The LoJack unit provides
no feedback info on the operating condition of the vehicle. The vehicle
could be moving rapidly in the opposite direction of the patrol vehicle
never allowing the patrol vehicle to come within visual range.
TracTech: GPS system provides precise data of vehicle's direction, speed
and operational status. If the target vehicle flees, dispatch can select
the appropriate tactics to counteract. When safe to do so, the tracking
system can also disable the vehicle from any further travel.
4) LoJack: Lengthy infrastructure setup - Before entering a market, LoJack
must install several SAS radio towers to provide sufficient coverage to
transmit activation signals. LoJack must also negotiate with the local
municipalities and police departments to install PTC units in patrol
vehicles.
TracTech: The GPS tracking system's ease of access can provide a police
central dispatch tracking information for an entire state. It has taken
LoJack 16 years to expand its coverage into 16 states where TracTech can
provide nationwide coverage immediately following its launch.
5) LoJack: Recovery is dependent on one single source. In order to recover a
LoJack equipped vehicle, police intervention is required. Should the police
not detect the signal or be unable to immediately respond, the chances of
recovering that vehicle diminish with each passing hour. Chances are the
vehicle will be driven out of range, stripped or totally dismantled.
TracTech: The TracTech system empowers the vehicle owner with options on
how to recover the vehicle once it is stolen. 1) The police are notified of
the exact location of the vehicle, and the vehicle is disabled from further
movement. 2) Customer can contact TracTech command center and have the
vehicle recovered by an authorized recovery agent. 3) Customer can utilize
the secure Internet access to ascertain the location of the vehicle and
take appropriate action.
14
<PAGE>
Target Market
Secondary Auto Sales
The secondary automotive market is one of the largest commercial markets
available. Domestic automotive sales are a $673 billion dollars a year market.
Used car sales accounted for over $370 Billion of total sales in 1998. TracTech
will be targeting its products to both the new and used car markets as the
company feels it has strong potential in both. The company believes there will
be strong success in the marketing of the TracTech products to the companies
that provide financing for both new and used vehicles. The availability of the
TracTech Tracking System will allow those entities to track the whereabouts of
their financed vehicles thereby reducing their overall default risk in the event
a repossession should become necessary.
Other Products
Other products that the Embryo Capital Group is evaluating and will most likely
provide funding for would include:
Planet Cellular
The Yankee Group estimates that the pay-per-call cellular phone service in the
U.S. will have 23 million subscribers and $10.3 billion dollars in annual
revenue by the year 2002. Existing technology only allows pay-per-call service
through the use of prepaid calling cards. Planet Cellular has developed the
technology that will eliminate the need for prepaid calling cards and the cost
inefficiencies and inconveniences associated with their use. The company is
developing a product that will allow a user to make credit/debit and Smart card
transactions directly from a standard cellular telephone. Plant Cellular's
technology will provide:
o An innovative approach to pay-per-call cellular service that does not
require the cellular carriers to install any new infrastructure.
o Airtime rates that are competitive to those of traditional cell phone
service.
o Greater convenience to customers, for it will be no longer necessary to
travel to retail locations to purchase prepaid cards. Customers will also
be alleviated of the necessity to keep track of the balance remaining on
their cards.
o Unrestricted roaming.
o Low long distance charges.
o Unlimited international calls.
15
<PAGE>
Biometric Systems
Biometric Systems is dedicated to the development of fingerprint authentication
technology for the use in secure electronic commerce, door entry systems and ATM
Machines.
Secured Authentication
With the growing popularity of e-commerce, a large demand for authentication
devices has risen for the use of PC and Internet access. An increasing number of
PC users need to secure their computers while leaving the units unattended. Foe
example, a financial broker taking a break would enable his screen saver to
activate and upon return he or she would reactivate the system by a simple
fingerprint scan. The device would be incorporated into the user's mouse making
its usage virtually transparent. Additionally, the technology can be used to
facilitate a secure Internet transaction thereby eliminating the possibility of
fraud.
The Need
Fingerprint recognition has been used in the past primarily for law enforcement.
Recently, commercial applications of this technology have become available and
are deemed essential for the continued growth of the information age.
Specifically, fingerprint recognition would facilitate a secure e-commerce
transaction where the assurance of the end-users identity is necessary.
The market for this technology includes a variety of industries and applications
including banking institutions, online shopping, employee time attendance, door
entry, consumer credit, distance learning, motor vehicle licensing, immigration,
border control and voter registration. For all of these industries, fingerprint
authentication will solve the need of determining that "you are who you say you
are". There would no longer be a dependence on passwords that are often stolen
or forgotten.
Broadlink Communications
Broadlink has positioned itself to become the leading provider of wholesale,
open access, high-speed wireless last mile transport services. Internet Service
Providers and Competitive Exchange Carriers purchase the company's solutions to
serve their end-users. Broadlink is the first Internet-centric wireless
transport services provider offering local high-speed communications services to
its customers. A base station and a customer premise unit provides the ability
for point-to-multipoint wireless voice/data/video communications at speed higher
than 10 Mbps. Broadlink intends to have working prototypes to demonstrate to
large service providers who have expressed interest.
Jlink
Jagoo.com has developed an information technology system capable of many
wireless Internet applications requiring limited interactive response from the
user. The first application is in the financial industry for the use in
interactive stock trading with a compact and easy-to-use e-appliance that uses
two-way paging technology. Jagoo is currently developing the product concept and
working prototype, to be followed by sales and production in the last quarter of
2000.
16
VDO.COM, INC.
(FKA VENTECH INTERNATIONAL CORP.)
(A Development Stage Company)
-----------------------------
FINANCIAL STATEMENTS
-----------------
DECEMBER 31, 1998 AND 1999
<PAGE>
VDO.COM, INC.
CONTENTS
Page
Independent Auditor's Report.................................................. 1
Financial Statements:
Balance Sheet............................................................. 4
Statements of Operations.................................................. 5
Statement of in Stockholders' Equity...................................... 6
Statements of Cash Flows.................................................. 7
Notes to Financial Statements.......................................... 8-10
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Stockholdersand Board of Directors
of VDO.com, Inc.
We have audited the accompanying balance sheets of VDO.com, Inc. (a development
stage company) as of December 31, 1998 and December 31, 1999, and the related
statements of operations, stockholders' equity, and cash flows for the years
then ended and since inception on February 9, 1989 through December 31, 1999.
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 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 VDO.com, Inc. as of December
31, 1998 and December 31, 1999, and the results of its operations and cash flows
for the years then ended and since inception on February 9, 1989 through
December 31, 1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company has suffered recurring losses from operations
and has an accumulated deficit that raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to those matters
are also described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Salt Lake City, Utah
March 31, 2000
The accompanying notes are an integral part of these financial statements.
-8-
<PAGE>
<TABLE>
<CAPTION>
VDO.COM, INC.
(A Development Stage Company)
Balance Sheets
December 31, December 31,
1999 1998
------------------- --------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents (Note 1) $ 39,571 $ -
Accounts Receivable 88,000 -
Due from Related Party (Note 2) 101,011 100,308
------------------- --------------------
Total Assets $ 228,582 $ 100,308
=================== ====================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 11,772 $ 48,772
Accounts Payable - Related Party (Note 2) - 12,000
------------------- --------------------
Total Liabilities 11,772 60,772
------------------- --------------------
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value authorized
50,000,000 shares, 16,900,000 and 13,400,000
issued and outstanding at December 31, 1999
and 1998, respectively 16,900 13,400
Additional Paid-in Capital 336,600 95,100
Deficit accumulated during development stage (136,690) (68,964)
------------------- --------------------
Total Stockholders' Equity 216,810 39,536
------------------- --------------------
Total Liabilities and Stockholders' Equity $ 228,582 $ 100,308
=================== ====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
VDO.COM, INC.
(A Development Stage Company)
Statement of Operations
For the For the From Feb. 9,
Year Ended Year Ended 1989(inception)
December 31, December 31, To December 31,
1999 1998 1999
--------------------- ------------------- -----------------------
<S> <C> <C> <C>
Revenue $ - $ - $ -
General and administrative expenses 43,726 51,964 100,690
Management Fees (related party) 24,000 12,000 36,000
--------------------- ------------------- -----------------------
Net loss before income tax (67,726) (63,964) (136,690)
Income tax provision (Note 7) - - -
--------------------- ------------------- -----------------------
Net loss $ (67,726) $ (63,964) $ (136,690)
===================== =================== =======================
Net Loss per share $ (.004) $ (.010) $ (.05)
===================== =================== =======================
Weighted average common shares outstanding 16,025,000 5,933,333 2,948,462
===================== =================== =======================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
<TABLE>
<CAPTION>
VDO.COM, INC.
(A Development Stage Company)
Statement of Stockholders' Equity
Deficit accumulated
Common Stock Additional Pd During development
Shares Amount In Capital stage Total
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance @ December 31, 1997 5,000 $ 5,000 $ - $ (5,000)
Changed par value from $1.00 to
$.001 (4,995)
Forward stock split 200:1 995,000
Common stock issued for cash 12,400,000 12,400 103,500
Net Loss for year ended 12/31/98 (63,964) (63,964)
----------- ---------- ----------- ------------- -----------
Balance @ 12/31/98 13,400,000 $ 13,400 $ 95,100 $ (68,964) $ 39,536
----------- ---------- ----------- ------------- -----------
Common stock issued for cash 3,500,000 3,500 245,000
Net Loss for year ended 12/31/99 (67,726) (67,726)
----------- ---------- ----------- ------------- -----------
Balance at December 31, 1999 16,900,000 $ 16,900 $ 336,600 $ (136,690) $ 216,810
=========== ========== =========== ============= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
<TABLE>
<CAPTION>
VDO.COM, INC.
(A Development Stage Company)
December 31, 1999 and 1998
Feb. 9, 1989
(inception) to
December 31,
1999 1998 1999
---------------- ---------------- ------------------
<S> <C> <C> <C>
Reconciliation of net loss provided by (used in) operating activities:
Net loss $ (67,726) $ (63,964) $ (136,690)
Changes in assets affecting operations - (increase) decrease
Other receivable (88,000) - (88,000)
Related party receivables (703) (100,308) (101,011)
Changes in liabilities affecting operations - increase (decrease)
Management fee payable (related party) (12,000) 12,000 -
Other payables (42,000) 42,000 -
Accounts payable 5,000 6,772 11,772
---------------- ---------------- ------------------
Net cash provided by (used in) operating activities (205,429) (103,500) (313,929)
---------------- ---------------- ------------------
Cash flows from financing activities:
Proceeds from issuance of common stock 245,000 103,500 353,500
---------------- ---------------- ------------------
Net cash provided by (used in) financing activities 245,000 103,500 353,500
---------------- ---------------- ------------------
Cash flows from investing activities:
Increase (decrease) in cash 39,571 - 39,571
Cash - beginning of period - -
---------------- ---------------- ------------------
Cash - end of period $ 39,571 - $ 39,571
================ ================ ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE>
VDO.COM, INC.
(A Development Stage Company)
December 31, 1999 and 1998
1. Summary of significant accounting policies
Nature of business and organization
VDO.com, Inc., formerly known as Ventech International Corp., Inc. and
CTC 3, Inc., (the Company), was incorporated February 9, 1989 in the
state of Florida. The Company currently has no operations and, in
accordance with SFAS #7, is considered a development stage company.
Effective July 14, 1998, the Company changed it's name to Ventech
International Corp. On June 14, 1999, the Company changed it's name to
VDO.Com, Inc.
On February 26, 1989 the Company issued 5,000 shares of it's $1.00 par
value common stock for services valued at $5,000.
On May 21, 1998, the Company forward split its common stock 200:1, thus
increasing the number of outstanding common stock shares from 5,000
shares to 1,000,000 shares. The financial statements are retroactively
restated to reflect the forward stock split.
Basis of presentation
The accompanying financial statements have been prepared in conformity
with principles of accounting applicable to a going concern, which
contemplates the realization of assets and the liquidation of
liabilities in the normal course of business. The Company has incurred
losses since inception and has not yet generated sufficient working
capital to support its operations. The Company's ability to continue as
a going concern is dependent, among other things, on its ability to
operate profitably, and its obtaining additional financing and
eventually attaining a profitable level of operations.
It is management's opinion that the going concern basis of reporting
its financial condition and results of operations is appropriate at
this time.
Cash and cash equivalents
For the purpose of the statement of cash flows, the Company considers
currency on hand, demand deposits with banks or other financial
institutions, money market funds, and other investments with original
maturities of three months or less to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting
period. In these financial statements assets and liabilities involve
extensive reliance on management's estimates. Actual results could
differ from those estimates.
-8-
<PAGE>
VDO.COM, INC.
(A Development Stage Company)
December 31, 1999 and 1998
1. Summary of significant accounting policies (continued)
Income tax
Effective January 1, 1993, the Financial Accounting Standards Board
(FASB) issued FASB No. 109, "Accounting for Income Taxes". FASB No. 109
requires that the current or deferred tax consequences of all events
recognized in the financial statements be measured by applying the
provisions of enacted tax laws to determine the amount of taxes payable
or refundable currently or in future years. There was no impact on from
the adoption of this standard.
Loss per common share
Loss per common share is based on the weighted average number of common
shares outstanding during the period. Loss per share and weighted
average shares outstanding are restated to include any forward stock
splits which occurred during the periods.
2. Related party transactions
The Company issued 11,000,000 shares of restricted common stock to an
entity with common ownership for $5,500 in cash on July 24, 1998. This
transaction was valued at $.0005 per share since the stock was
restricted and the Company had no operations.
A director of the Company has interests in several entity's which have
borrowed money from the Company. These are due on demand and are
non-interest bearing. The balances of these transactions are $101,011
and $100,308 at December 31, 1999 and 1998, respectively.
The Company pays a management fee of $2,000 per month to a
shareholder/director for management services. During the years ended
1999 and 1998, $24,000 and $12,000 were paid for this management fee.
3. Stockholders' equity
On May 21, 1998, the Company changed its par value from $1.00 to $.001.
The financial statements have been retroactively restated to reflect
the change in par value.
On May 21, 1998, the Company forward split its common stock 200:1, thus
increasing the number of outstanding common stock shares from 5,000
shares to 1,000,000 shares. The financial statements are retroactively
restated to reflect the forward stock split.
During 1998, the Company issued 11,000,000 shares of restricted common
stock to a shareholder/director in exchange for $5,500 in cash. This
transaction was valued at $.0005 per share since the Company had no
operations and the shares were restricted.
-9-
<PAGE>
VDO.COM, INC.
(A Development Stage Company)
December 31, 1999 and 1998
3. Stockholders' equity (continued)
In August of 1998, the Company issued 1,400,000 shares of common stock
for $98,000 cash to an unrelated third party. This transaction was
valued at an agreed upon price of $.07 per share. The stock was not
actively trading during 1998, therefore no market values were
available.
In April of 1999, the Company issued 3,500,000 shares of common stock
in exchange for $245,000 cash to an unrelated third party. This
transaction was valued at $.07 per share. The stock was not
sufficiently active during 1999 to establish market values.
5. Going concern uncertainty
The accompanying financial statements have been prepared in conformity
with principles of accounting applicable to a going concern, which
contemplates the realization of assets and the liquidation of
liabilities in the normal course of business. The Company has incurred
operating losses from inception and has not yet generated any revenues
to support its operations. The Company's ability to continue as a going
concern is dependent, among other things, on its ability to operate
profitably, obtain and additional financing and eventually, attaining a
profitable level of operations.
It is management's opinion that the going concern basis of reporting
its financial condition and results of operations is appropriate at
this time. The Company plans to increase cash flows through the sale of
securities and take steps towards achieving profitable operations
through the merger with or acquisition of profitable operations.
-10-
<TABLE>
<CAPTION>
Proforma information Proforma
Thoroughbred Combined
VDO.COM Racing Assoc.,Inc Balance
31-Dec 31-Dec Adjustments 31-Dec
1999 1999 dr (cr) 1999
<S> <C> <C> <C> <C>
ASSETS
Cash and Cash equivalents $ 101,435 $ 279,042 $ 380,477
Accounts Receivable 88,000 88,000
Due from related parties 39,147 39,147
-
Livestock (net) 11,834 11,834
-
------------------------------------------------------------------
TOTAL ASSETS $ 228,582 $ 290,876 $ 519,458
==================================================================
LIABLIITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 11,772 $ 2,522 $ 14,294
Accounts payable-related party 737,640 737,640
------------------------------------------------------------------
TOTAL LIABILITIES 11,772 740,162 751,934
------------------------------------------------------------------
Common stock, $.001 par value, 50,000,000
shares authorized, 16,900,000 shares
issued and outstanding at December 31, 1999 16,900 2,500 19,400
Additional paid-in capital 336,600 7,500 344,100
Deficit accumulated during development stage (136,690) (459,286) (595,976)
------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 216,810 (449,286) (232,476)
------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 228,582 $ 290,876 $ 519,458
==================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Proforma information
Statement of Operations Proforma
Thoroughbred Combined
VDO.COM Racing Assoc.,Inc Balance
31-Dec 31-Dec Adjustments 31-Dec
1999 1999 dr (cr) 1999
<S> <C> <C> <C> <C>
Revenues
$ 51,482 $ 51,482
Expenses
General and administrative 43,726 83,061 126,787
Management fees 24,000 4,235 28,235
Training, veterinary and other horse expenses 18,146 18,146
Depreciation
----------------------------------------------------------------------------
Total expenses 67,726 105,442 173,168
----------------------------------------------------------------------------
Loss from operations (67,726) (53,960) (121,686)
----------------------------------------------------------------------------
Other income
Gain from sale of livestock 285,690 285,690
----------------------------------------------------------------------------
Net income (loss) (67,726) 231,730 164,004
============================================================================
EPS (0) 0 0
============================================================================
Weighted average shares outstanding 16,025,000 2,500,000
============================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Proforma information Proforma
Balance Sheet Thoroughbred Combined
At March 31, 2000 VDO.COM Racing Assoc.,Inc Balance
31-Mar 31-Mar Adjustments 31-Mar
2000 2000 dr (cr) 2000
<S> <C> <C> <C> <C>
ASSETS
Cash and Cash equivalents $ 28,082 $ - $ 28,082
Accounts Receivable - -
-
-
Livestock and equipment (net) 35,000 - 35,000
Goodwill
Investments 198,000 198,000
-------------------------------------------------------------------------
TOTAL ASSETS $ 261,082 $ - $ 261,082
=========================================================================
LIABLIITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 76,772 $ - $ 76,772
Accounts payable-related party - - -
Debenture 8% due March 28, 2002 122,000 122,000
-------------------------------------------------------------------------
TOTAL LIABILITIES 198,772 - 198,772
-------------------------------------------------------------------------
Common stock, $.001 par value, 50,000,000
shares authorized, 17,700,000 shares issued and
outstanding at March 31,2000 17,700 2,500 (2,500) 17,700
Additional paid-in capital 391,800 471,987 (471,987) 391,800
- -
Deficit accumulated during development stage (347,190) (474,487) 474,487 (347,190)
-------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 62,310 - 62,310
-------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 261,082 $ - $ 261,082
=========================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Proforma information Proforma
Balance Sheet Thoroughbred Combined
At March 31, 2000 VDO.COM Racing Assoc.,Inc Balance
31-Mar 31-Mar Adjustments 31-Mar
2000 2000 dr (cr) 2000
<S> <C> <C> <C> <C>
Revenues
$ 2,732 $ 2,732
Expenses
General and administrative 160,839 2,670 163,509
Research and Development 25,000 - 25,000
Training, veterinary and other horse expenses 13,563 13,563
Depreciation 1,699
------------------------------------------------------------------
Total expenses 185,839 17,932 202,072
------------------------------------------------------------------
Loss from operations (185,839) (15,200) (199,340)
------------------------------------------------------------------
Other income
Gain from sale of livestock - -
------------------------------------------------------------------
Net income (loss) (185,839) (15,200) (199,340)
==================================================================
EPS (0) (0)
==================================================================
Weighted average shares outstanding 17,300,000 2,500,000
====================================================================
</TABLE>
<PAGE>
VDO.COM, INC.
Notes to Proforma
Vdo.com purchased all of the outstanding stock in Thorougbred Racing Associates,
Inc. (TRA) during the first quarter of 2000 for $100,000 in cash and 400,000
shares of VDO.com common stock. At the time of the transaction, TRA had no
assets or liabilities. This transaction was recorded as a purchase. In relation
to this purchase, the company paid $50,000 and issued 400,000 shares of VDO.com
common stock as a finders fee.
A major shareholder loaned the Company $122,000 at 8% payable on demand. These
funds were use to purchase TRA and to pay legal fees.
VDO.Com, Inc.
Financial Statements
March 31, 2000
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
VDO.Com Inc.
Mountain View, California
We have reviewed the accompanying condensed balance sheet of VDO.Com, Inc. as of
March 31, 2000 and the related condensed statements of income and cash flows for
the period then ended.
These financial statements are the responsibility of the company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
/s/ Crouch, Bierwolf & Chisholm
---------------------------
Crouch, Bierwolf & Chisholm
May 20, 2000
<PAGE>
<TABLE>
<CAPTION>
VDO.Com, Inc.
Balance Sheets
ASSETS
March 31, March 31,
2000 1999
--------- ---------
CURRENT ASSETS (Unaudited)
<S> <C> <C>
Cash and Cash Equivalents $ 28,082 $ --
Accounts receivable - (related party) -- 100,308
Equipment 35,000 --
Goodwill -- --
Investments 198,000 --
--------- ---------
Total Current Assets 261,082 100,308
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 76,772 $ 18,772
Accounts payable - related party -- 42,000
Debenture 8% due March 28, 2002 122,000 --
--------- ---------
Total Liabilities 198,772 60,772
--------- ---------
Common stock, $.001 par value, 50,000,000 shares,
authorized, 17,700,000 shares issued and outstanding 17,700 13,400
Additional paid in capital 391,800 95,100
Deficit accumulated during development stage (347,190) (68,964)
--------- ---------
Total Stockholders' Equity 62,310 39,536
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 261,082 $100,308
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
<TABLE>
<CAPTION>
VDO.Com, Inc.
Consolidated Statements of Operations
For the three For the three
months ended months ended
March 31 March 31
2000 1999
------------ ------------
(Unaudited)
<S> <C> <C>
SALES $ -- $ --
OPERATING EXPENSES
General And Administrative 160,839 --
Research and Development 25,000 --
------------ ------------
TOTAL EXPENSES 185,839 --
------------ ------------
OPERATING INCOME (LOSS) (185,839) --
------------ ------------
NET INCOME (LOSS) $ (185,839) --
============ ============
NET INCOME (LOSS) PER SHARE $ (.01) --
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 17,300,000 13,400,000
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
<TABLE>
<CAPTION>
VDO.Com, Inc.
Consolidated Statements of Cash Flows
For the three For the three
months ended months ended
March 31 March 31
2000 1999
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities (Unaudited)
Net income (loss) $(185,839) --
Adjustments to Reconcile Net Income (Loss) to
Net Cash Used in Operating Activities:
Stock issued for services 31,339 --
Change in Assets and Liabilities
(Increase) Decrease in:
Accounts Receivable 127,147 --
Increase/(decrease) in:
Accounts Payable and Accrued Expenses 65,000 --
--------- ---------
Net Cash Provided (Used) by Operating Activities 37,647 --
---------
Cash Flows from Investing Activities
Purchase Investments (198,000) --
Purchase Equipment (35,000) --
--------- ---------
Net Cash Provided (Used) by Investing Activities (233,000) --
--------- ---------
Cash Flows from Financing Activities
Proceeds from debt financing 122,000 --
--------- ---------
Net Cash Provided (Used) by Financing Activities 122,000 --
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents (73,353) --
--------- ---------
Cash and Cash Equivalents
Beginning 101,435 --
--------- ---------
Ending $ 28,082 --
========= =========
Supplemental Disclosures of Cash Flow Information:
Cash payments for interest $ -- $ --
========= =========
Cash payments for income taxes $ -- $ --
========= =========
Supplemental Schedule of Noncash Investing and Financing Activities
Common shares issued for services $ -- $ --
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
VDO.Com, Inc.
March 31, 2000
NOTES TO FINANCIAL STATEMENTS
VDO.Com, Inc. (the "Company") has elected to omit substantially all
footnotes to the financial statements for the three months ended
March 31, 2000, since there have been no material changes (other
than indicated in other footnotes) to the information previously
reported by the Company in their Annual Audit for the year ended
December 31, 1999.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and
records of the Company without audit. However, such information
reflects all adjustments which are, in the opinion of management,
necessary to properly reflect the results of the period presented.
The information presented is not necessarily indicative of the
results from operations expected for the full fiscal year.
The accompanying notes are an integral part of these financial statements
<PAGE>
VDO.Com, Inc.
March 31, 2000
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use of our report, dated May 5, 2000, in this
quarterly report on Form 10-QSB for Vdo.Com, Inc.
/s/ Crouch, Bierwolf & Chisholm
---------------------------
Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
May 5, 2000
