UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
POLAR CARGO SYSTEMS, INC.
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(Name of Small Business Issuer in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
33-0843790
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(I.R.S. Employer Identification No.)
2240 SHELTER ISLAND DRIVE #202
SAN DIEGO, CALIFORNIA 92106
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(Address of principal executive offices) (Zip Code)
(619) 226-3536
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(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
Title of each class to be Name of each exchange on which
so registered each class is to be registered
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None None
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.001
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(Title of Class)
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POLAR CARGO SYSTEM, INC.
FORM 10-SB
Table of Contents Page
PART I
Item 1. Description of Business........................................ 1
Item 2. Management's Discussion and Analysis
of Financial Conditions and Results of Operation.......... 7
Item 3. Description of Property........................................10
Item 4. Security Ownership of Certain Beneficial
Owners and Management.....................................11
Item 5. Directors, Executive Officers, Promoters
and Control Persons.......................................12
Item 6. Executive Compensation.........................................14
Item 7. Certain Relationships and Related Transactions.................14
Item 8. Description of Securities......................................14
PART II
Item 1. Market Price of and Dividends on Polar Cargo's Common Equity
and Other Stockholder Matters..............................15
Item 2. Legal Proceedings..............................................16
Item 3. Changes in and Disagreements with Accountants..................16
Item 4. Recent Sales of Unregistered Securities........................16
Item 5. Indemnification of Directors and Officers......................16
PART F/S
Financial Statements.......................................................F-1
PART III
Item 1. Index to Exhibits and Description of Exhibits..................17
Signature Page.............................................................18
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ITEM 1. Description of Business
Polar Cargo Systems, Inc. (the "Company") was incorporated in the state
of Delaware in May 1981 under the name of Hotelphone, Inc. In April 1997, the
Company. changed its name to Biometric Access Technologies, Inc. In April, 1999,
Biometric Access Technologies, Inc. acquired all of the issued and outstanding
common stock of Polar Cargo Containers, Inc., a company formed to develop
technology for commercial applications for a refrigeration technology for use in
the transport of perishable cargo market, and to acquire an ongoing concern to
provide a revenue base during the completion of the development of the
refrigerated transport division. At that time, the company changed the Company's
name to Polar Cargo Systems, Inc. At present, the Company is comprised of two
divisions: Polar Cargo Research Ltd. and L&V Transportation, Inc.
Polar Cargo Research was established to consolidate the interests and
achievements of various parties from the U.S. and Asia that had invested in the
development of container-related refrigeration technology. During the past five
years, contributors to the resulting Coldwall(TM) technology included: RJS
Companies, a Texas-based refrigeration design and engineering group,
Coldwall(TM) Technologies Ltd., an American-Asian product development company
and several financing groups in the U.S. and abroad. In May 1999, the Company
completed acquisition of all the intellectual property and patents, under
application or otherwise accumulated, that are associated with the development
of the ColdwallTM refrigerated container technology from Polar Cargo Research
LTD in exchange for stock in the Company. As of the current date, we have not
granted or entered into any agreements to grant any manufacturing or
distribution rights nor licenses to our intellectual property.
In April 1999, The Company acquired L&V Transportation, Inc. to provide
both a revenue source during completion of the Coldwall(TM) research and
development and a fleet of tractors to test the refrigerated containers.
About the Refrigerated Transport Industry
Polar Cargo Research develops technology for the refrigerated transport
of perishable cargo. The refrigerated transportation technology industry has
remained basically the same since the 1970's. Polar Cargo System's Coldwall(TM)
technology addresses the design and performance limitations of conventional
refrigerated container technology. It will provide consistent and accurate
temperature control, preserve moisture levels in products and offer proper
atmospheric control. These features will improve the appearance and shelf lives
of perishable cargo when delivered to the final destination thereby reducing
spoilage and increasing profit margins for retailers.
Coldwall(TM) Technology
The Coldwall(TM) technology, developed in the United States, is a
refrigerated container design that integrates the refrigeration into the
construction of the container, known in the industry as the reefer box. Our
design is comprised of two major parts: refrigeration equipment configurations
and an airflow delivery system. Although it employs largely non-proprietary
refrigeration parts, only the Coldwall(TM) system integrates the equipment into
transportable refrigerated containers and trailers. Coldwall(TM) deploys larger
more robust evaporator and condenser coils, reverse impeller fans, simple and
reliable controls and smaller compressors. Our Coldwall(TM) system of airflow
ducts and plena deliver tightly regulated supply air throughout the length of
the box at consistent velocity and pressure with minimal infringement on the
interior container dimensions.
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Our technology eliminates or mitigates many disadvantages of
conventional reefer design; the result is a container that transports perishable
cargo with: Minimal dehumidification; Consistent airflow; Precise temperature
control; Superior cooling; and Greater efficiency.
Products
Marine container. The marine application of Coldwall(TM) will feature a complete
40-ft high cube integral refrigerated container -- the reefer box inclusive of
refrigeration equipment. The machinery will include Coldwall(TM) designed
evaporator, condenser and fan sections, but mainly generic refrigeration
components from other well-established manufacturers.
Although initial work on Coldwall(TM) has focused on the marine
container, the other viable commercial applications for the technology are
primarily the trucking and rail container businesses.
Truck trailer. The Coldwall(TM) design is readily adapted to the refrigerated
truck trailer, and will have significant advantages over the conventional truck
trailer design. Many conventional truck trailers are substantially longer than
marine containers and will benefit from an air delivery system that blows
chilled air cross-container rather than longitudinally. The Coldwall(TM)
container will provide significantly better airflow in a partially empty
container or one in which cargo is not loaded evenly because it divorces airflow
consistency from complicated loading patterns. In addition, while the truck
trailer doors are open, the Coldwall(TM) container can continue to provide
cooling to the cargo, whereas conventional truck trailers immediately lose all
of the chilled air out the rear doors. We anticipate launching a refrigerated
truck trailer production prototype in the U.S. market by mid-2000.
Preliminary research and design work indicates that with some
modifications an Asian version of the Coldwall(TM) truck trailer can be both
cost competitive and technically superior to any currently available product.
Our current target available date is mid-2000.
Rail container. We concurrently will adapt the Coldwall(TM) refrigeration design
to a version of the double-stacked refrigerated rail container. The
modifications necessary to produce a rail version are relatively similar to
those for a refrigerated truck trailer. Margins are considerably higher in the
double-stacked rail box due to the general absence of competition.
Marine Container Market
In 1997, there was an estimated 35-40 million tons of perishable cargo
moved in refrigerated containers. The figure is anticipated to grow to
approximately 45- 50 million tons by 2000. Of this reefer traffic, an estimated
43% is containers, and Drewry, a London-based shipping consultant forecasts a
containerisation ratio of 48% by 2005. This trend is driven by intermodal
efficiencies such as the reduction of handling costs and cargo damage. There are
three configurations of refrigerated containers, which account for 90+% of
market with the balance being insulated boxes and non-mechanical refrigerated
containers. The three are the 20-ft, 40-ft and 40-ft high cube configurations.
As of 1998, the most important and overwhelmingly dominant configuration is the
40-ft high cube. On this basis, we will focus only on producing Coldwall(TM)
containers in the 40-ft high cube configuration.
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Customer Segmentation. The market for 40-ft high cube reefers
represents the total market potential for Polar Cargo's marine application of
the Coldwall(TM)technology.
There are only two major reefer customer segments: shipping lines and
leasing companies. Although there is a general advantage in flexibility by
leasing dry freight or refrigerated containers from leasing companies, shipping
lines generally prefer to own their refrigerated containers. In the last decade
approximate 61-69% of reefers were owned by shipping lines. Leasing companies
also are reluctant to own reefers due to their high capital cost paired with
relatively higher utilization risks.
Shipping lines. While the total refrigerated shipping container fleet
has grown from 103,000 units in 1990 to 230,800 units in 1998, the 40-ft high
cube configuration has skyrocketed from 13,800 units in 1990 to 118,600 units in
1998. Although growth is unlikely to continue at this rate, the continued
retirement of units using the refrigerant R12 (which is being slowly phased out
due to environmental legislation) is likely to boost sales for several more
years.
The ten largest shipping lines own 60% of all reefer units,
particularly concentrated in the 40-ft high cube configuration, where they own
76% of all high cubes in the global reefer fleet. The list includes: Maersk,
Evergreen, OOCL, APL, Sea-Land, Mitsui, OSK, NYK, Hanjin, Blue Star / P&ON. A
number of fruit companies particularly Dole, Del Monte and Chiquita also have
interests in shipping lines such as Lauritzen, the Great White Fleet and
Ecuadorian Shipping Lines which are dedicated to moving their produce. Most of
these ships are reefer ships with immense refrigerated holds and move some 20
million of the 35- 40 million tons of reefer cargoes, however there is a growing
trend to containerization to exploit intermodal efficiencies, minimize handling
costs and handling damage to cargoes.
Leasing companies. Leasing companies own roughly 29% of the global
40-ft high cube fleet. They buy approximately half the number of reefers which
shipping lines buy. Although the numbers are significant, the purchase criteria
are often driven by the end users, which are shipping lines.
Truck and Rail Markets
U.S. producers alone produced and shipped more than 74 million tons of
produce in 1998, in a market with consumer demand of some US$100 billion. This
demand has driven developments in double-stacked railcars, which are equipped
with depressed platforms to stack refrigerated rail containers two high and
nearly double the transport efficiency. The U.S. Department of Commerce
considers this particular mode to be the most efficient long-haul mode of
transporting perishables, and industry estimates have put the total demand at
more than 100,000 units to service the U.S. produce industry alone. However,
clearance limits, which vary from city to city, still prevent double-stack rail
service to reach every city in the U.S., although these clearance limits are
gradually being lifted. The rate of progress on this issue is clearly a ceiling
on demand, and is being tracked closely by us.
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Major players in the intermodal rail business, which has been steadily
growing at an average of 6-8% per year throughout much of the 1990?s, have
lately accelerated investment in refrigerated rail containers, particularly in
high-efficiency high-technology versions. Union Pacific Railroad and Amtrak have
recently expanded their fleets of temperature-controlled containers and are
considering further acquisitions. They also have invested in dedicated rail
routes for intermodal freight, automated control and customer servicing systems,
improved on-time performance and reduced damage to cargoes with new handling
equipment.
Competition
At this time, there are no other significant manufacturers of integral
refrigerated containers, which offer a product that includes both the reefer box
and the refrigeration system. However, it is possible to consider competing
manufacturers in both components separately.
Reefer box. With the exception of minor variations in quality, price and the
place of manufacture, the reefer box is strictly a commodity. The manufacture of
reefer boxes is now dominated by China, followed closely by Korea. With utilized
capacity at only 53%, there are virtually no profits in the business of
manufacturing reefer boxes given the commoditized nature of the product. In
fact, some of the plants in China are willing to supply reefers at breakeven or
at a loss in order to maintain other objectives such as employment or survival.
We do not intend to compete in the manufacture of reefer boxes. With
the exception of installing some simple ceiling plena and a rather more complex
sidewall duct system, the construction of a Coldwall(TM) container is similar to
any other container. As such, we will enter into agreements with the most
competitive reefer manufacturers to build the Coldwall(TM) shell to
specifications at optimum cost and quality combinations.
Refrigeration Equipment. The market for refrigeration equipment is basically
dominated by two giants in transport-related refrigeration equipment -- Thermo
King and Carrier -- each with roughly less than half of the market. Two smaller
Japanese manufacturers, Mitsubishi and Daikin, occasionally contract with
Japanese and Taiwanese shipping lines.
Thermo King and Carrier are both formidable competitors with very large
service networks and highly efficient production capability. Most importantly,
they are well established and trusted names in a business where machinery
reliability is crucial. Both players manufacture conventional refrigeration
machinery, featuring advanced technological features such as microprocessor
communication ports, remote monitoring capability, compatibility with controlled
atmosphere systems and so on. The prices of both competitors are very similar
and have been under very strong downward pressure in the last two years from
shipping lines, who themselves face serious rate declines.
Alternative Technologies. There are ranges of alternative technologies, which
claim to overcome or compensate for the limitations of conventional refrigerated
container design. These range from packages of specially formulated chemicals,
which absorb and then gradually release moisture, to humidity control systems,
which inject vaporized water back into the cargo. None however addresses basic
limitations of the refrigeration equipment and airflow delivery. Some of these
compensatory technologies, if viable and effective, can always be used with the
Coldwall(TM) container, and therefore pose no significant competitive threat to
us.
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Patent Protection
Elements of the Coldwall(TM) technology and associated intellectual property are
protected under U.S. patent law. Polar Cargo Systems holds U.S. Patent number
5830057, issued November 3, 1998. In as much as our refrigerated containers are
going to be manufactured in China, which is not a treaty country under the
international intellectual property protection conventions, a mirror Chinese
patent has also been filed and is awaiting examination.
About our transportation division
L&V Transportation, Inc.
L&V Transportation, Inc. is based in El Centro, CA. It was incorporated
in December 1996 and conducted business under the name Progressive Trucking. In
April 1999, Progressive sold 100% of its stock to us and changed its name to L&V
Transportation, Inc.
L&V provides tractor service to Schneider National Trucking, one of the
largest national trailer movement companies, and water vacuum truck services to
local geo-thermal plants. Our mission is to focus on the long haul trucking
support business. Currently, L&V has six tractors and we plan to expand the
fleet during 2000.
There is limited competition for our transportation service
At present, L&V is the only long haul provider to Schneider National
Trucking in Southern California. It also is the only local-based water vacuum
trailer provider.
We plan to equip our trucks with global GPS systems that allow us to
know the exact location, movement and mileage of each truck and allow direct
communication with the trucks. In addition, we intend to develop and implement
an internet scheduling system.
Concerns and considerations associated with our business
Our revenues and operating results will be adversely affected if we fail to
compete successfully.
We are, and will continue to be, subject to intense competition in our
targeted markets, principally from businesses providing other traditional
refrigeration techniques, including existing and developing technologies, and
competitive products. Many of our competitors have substantially greater
financial, marketing and manufacturing resources and experience than us.
Significant competitive factors, which will affect future sales in the
marketplace, include regulatory approvals, performance, pricing and general
market acceptance.
The container refrigeration market is also highly competitive. There
are many companies engaged in this market, some with significantly greater
resources than ours. Our competitors may be able to develop technologies,
procedures or products that are more effective or economical than ours are or
that would render the Coldwall(TM) system obsolete or noncompetitive. Although
we are not aware of any substantial technological change, should such change
occur, there can be no assurance that we will be able to acquire the new or
improved systems which may be required to service our customers.
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Our foreign sales are subject to risks.
An increasing portion of our sales may be made in foreign markets.
Foreign sales expose us to two primary risks. The first concern is the
difficulty and expense of maintaining foreign sales distribution channels. The
second concern is the political and economic instability in foreign markets and
governmental quotas and other regulations.
Our business is subject to governmental regulation.
We are required to adhere to a wide variety of other regulations
governing the operation of our business. Noncompliance with local, state,
federal or foreign requirements can result in serious penalties that could harm
our business. Although we believe that our operations comply with applicable
regulations, there can be no assurance that subsequent adoption of laws or
interpretations of existing laws will not regulate, restrict or otherwise
adversely affect our business.
A successful liability claim asserted against us due to a defect in the
Coldwall(TM) system in excess of our insurance coverage would harm our business.
The provision of refrigerated container services involves the inherent
risk of product liability claims against us. We currently maintain commercial
general liability insurance coverage in the amount of $2 million per incident,
but this insurance is expensive, subject to various coverage exclusions and may
not be obtainable in the future on terms acceptable to us. We do not know
whether claims against us arising from the use of the Coldwall(TM) system will
be successfully defended or that our insurance will be sufficient to cover
liabilities arising from these claims. A successful claim against us in excess
of our insurance coverage could materially harm our business.
Our operations were not affected by Year 2000 compliance problems.
To date, the Company has not been affected by Year 2000 compliance
problems. We conducted a comprehensive Year 2,000 investigation with respect to
our internal business-critical systems. This investigation encompassed
information technology systems and equipment with embedded technology such as
fax machines and telephone systems. None of these systems were affected by the
passage into the year 2,000. Nonetheless, we have no assurance that we will not
experience isolated system failures as a result of third party technical
problems.
OUR EMPLOYEES
We currently have 10 full-time employees. None of our employees are
represented by an organized labor union. We have not experienced an
employee-related work stoppage to date; however we have no assurance that one
cannot occur in the future.
ADDITIONAL INFORMATION
We intend to provide an annual report, including audited financial
statements, to our security holders, and to make quarterly reports available for
inspection by our security holders.
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Upon completion of this offering, we will be subject to the
informational requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") which will require us to file reports, proxy statements and other
information with the Securities and Exchange Commission. Such reports, proxy
statements and other information may be inspected at public reference facilities
of the Commission at Judiciary Plaza, 450 Fifth Street N.W., Washington D.C.
20549; Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; 7 World Trade Center, New York, New York, 10048; and 5670
Wilshire Boulevard, Los Angeles, California 90036. Copies of such material can
be obtained from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street N.W., Washington, D.C. 20549 at prescribed rates.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the financial
statements and the related notes. This discussion contains forward-looking
statements based upon current expectations that involve substantial risks and
uncertainties. You can identify these statementy by forward-looking words such
as "may", "will", "expect", "anticipate", "believe", "estimate", and "continue",
or similar words. You should be aware that our actual results and the timing of
certain events could differ materially from those anticipated in these
forward-looking statements and could have an adverse effect on our business,
results of operations and financial conditions.
Neither Polar Cargo Systems nor Polar Cargo Containers had any
operations prior to the L&V Transportation transaction. L&V Transportation is
considered the accounting acquirer in the business combination with Polar Cargo
Systems. Accordingly, the transaction between L&V Transportation and Polar Cargo
Systems has been accounted for as a reverse acquisition of Polar Cargo Systems
by L&V Transportation. The assets of Polar Cargo Systems have been recorded at
historical cost since Polar Cargo Systems was a shell corporation with no
operations and only nominal assets prior to the L&V Transportation transaction.
Effective May 15, 1999, Polar Cargo Systems, Inc. consummated an asset
purchase agreement with Orient Refrigerated Transport Consolidated, Inc. whereby
Polar Cargo Systems acquired certain assets, which include patented
refrigeration system technology, from Orient in exchange for 2,000,000 shares of
Polar Cargo Systems common stock. The Orient transaction has been accounted for
under the purchase method.
Polar Cargo Systems, including the operations from the outstanding
common stock acquired from L&V Transportation are collectively referred to as
Polar Cargo subsequent to the transactions discussed above.
Polar Cargo Systems has continued the transportation and long haul
trucking business operations through L&V Transportation, a wholly owned
subsidiary. Additionally, we have continued the development and refinement of
the patented refrigeration system through Polar Cargo Research, Ltd., a wholly
owned subsidiary.
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We have incurred net losses since inception and expect future losses.
We have incurred significant losses since inception. As of September
30, 1999, we incurred cumulative net losses of $926,381 and had an accumulated
deficit of approximately $1,155,837. We expect to continue to incur net losses
until sales generate sufficient revenues to fund our continuing operations.
However, we may fail to achieve significant revenues from sales or achieve or
sustain profitability.
We believe that our available short-term assets and investment income
will be sufficient to meet our operating expenses and capital expenditures
through the current fiscal year. We do not know if additional financing will be
available when needed, or if it is available, if it will be available on
acceptable terms. Insufficient funds may prevent us from implementing our
business strategy or may require us to delay, scale back or eliminate certain
aspects of our services.
We may be unable to successfully market or support the market for our product.
Our ability to achieve profitability in the future will depend in part
on our ability to successfully market and sell our product and services on a
wide scale. In turn, our future sales and profitability depend in part on our
ability to demonstrate to the market place the potential cost savings and
performance advantages of the Coldwall(TM) system over traditional refrigeration
systems. We do not know if our products and/or services can be successfully
commercialized on a broad basis.
We have limited experience with widespread deployment of our products
and services to a diverse customer base. There can be no assurance that we will
have adequate personnel to provide the level of support that our customers may
require during initial product deployment or on an ongoing basis. An inability
to provide sufficient support to our customers could have an adverse impact on
our reputation and relationship with our customers, prevent us from gaining new
customers and adversely affect our business, financial condition or results of
operations.
The loss of any of our other key professionals could adversely affect our
business including our ability to develop and market our products.
We depend to a considerable degree on our limited number of key
personnel. During our limited operating history, many key responsibilities have
been assigned to a relatively small number of individuals. The loss of the
services of key members of our management could harm our business. Our success
will also depend, among other factors, on the successful recruitment and
retention of qualified technical and other personnel.
RESULTS OF OPERATIONS
Operating Expenses
Comparison of Year Ended December 31, 1998 and Year Ended December 31, 1997
Our historical operations for the year ended December 31, 1998 and 1997
are analyzed as follows:
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Revenues. We reported total revenues of approximately $497 thousand in
1998 a decrease from $847 thousand in 1997. The decrease in revenue was
primarily due to non-renewal of transportation contracts for a mining company in
1998.
Cost of Revenues. Cost of revenues of $443,000 for the year ended
December 31, 1998 decreased from $648,000 in 1997. Cost revenues decreased as a
result of decreased revenues.
General and Administrative Expenses. Polar Cargo Systems reported total
general and administrative expenses of $286,000 in 1998, an increase from
$173,000 in 1997. General and administrative expenses increased due to
depreciation expenses increasing approximately $52,000, bad debt expenses
increasing approximately $33,000, and consulting expenses increasing
approximately $35,000.
Loss before Provision for Income Taxes. As a result of the foregoing
factors, loss before provision for income taxes of $(232,000) for 1998 increased
from an income before provision for income taxes of $17,000 in 1997.
Comparison of Nine Months Ended September 30, 1999 and Nine Months Ended
September 30, 1998.
The historical operations of Polar Cargo Systems for the nine months
ended September 30, 1999 and 1998 are analyzed as follows:
Revenues. We reported total revenues of $316,525 for the nine months
ended September 30, 1999 a decrease from $373,282 in 1998. The decrease in
revenue was primarily due to non-renewal of transportation contracts for a
mining company in 1998.
Cost of Revenues. Cost of revenues of $265,960 for the nine months
ended September 30, 1999 decreased from $326,133 in 1998. Cost of revenues
decreased as a result of decreased revenues.
General and Administrative Expenses. We reported total general and
administrative expenses of $898,153 in 1999, an increase from $234,614 in 1998.
General and administrative expenses increased in consulting fees, depreciation,
professional fees and office rent.
Loss before Provision for Income Taxes. As a result of the foregoing
factors, loss before provision for income taxes of $926,381 for 1999 increased
from $184,464 in 1998.
Liquidity and Capital Resources
Liquidity is a measure of a company's ability to meet potential cash
requirements, including ongoing commitments to research and development
activities and for general purposes. Cash for research and development and
general operating expenses is primarily obtained through cash flows from
financing activities.
We have significant ongoing liquidity needs to support our existing
business and research and development activities. Our liquidity is actively
managed on a periodic basis and our financial status, including our liquidity,
is reviewed periodically by our management. This process is intended to ensure
the maintenance of sufficient funds to meet the needs of Polar Cargo Systems.
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We historically have relied upon the cash flow from operations and
financing activities to provide for our capital requirements. Our management
believes that cash generated from financing activities will continue to increase
for the next 12 months considering that cash on hand at September 30, 1999 will
not be sufficient to provide for our capital requirements. We may seek
additional equity financing in the latter part of 1999 and continue into the
year 2000 through additional issuance of our common stock. There can no
assurance that we will be able to complete a secondary offering or obtain credit
lines.
Net cash used in operating activities for the nine months ended
September 30, 1999 was approximately $361,222. The net cash used in operating
activities can be substantially attributed to the net loss incurred to date.
Net cash used in investing activities was $45,836 in the nine month
period ended September 30, 1999. The net cash used in investing activities
resulted primarily from the purchase of office furniture.
Net cash provided by financing activities was approximately $407,550 in
the nine month period ended September 30, 1999. The net cash provided by
financing resulted primarily from the proceeds from additional issuance of
common stock and advances from shareholders.
We have experienced a substantial increase in our capital expenditures,
primarily due to a decrease in the transportation revenue activities, and we
anticipate that this will continue for the foreseeable future. Additionally, we
will continue to increase research and development expenditures related to our
patented refrigeration system. We cannot be certain that the underlying assumed
levels of revenues and expenses will prove to be accurate. We may seek
additional funding through public or private financings or other arrangements
prior to such time. Adequate funds may not be available when needed or may not
be available on terms favorable to us. If funding is insufficient at any time in
the future, we may be unable to develop or enhance our service offering, take
advantage of business opportunities or respond to competitive pressures, any of
which could have a negative impact on our business, operating results and
financial condition.
ITEM 3. DESCRIPTION OF PROPERTY
Our corporate offices are located at the following address:
2240 Shelter Island Dr. Suite 202
San Diego, CA 92106
This facility is under a two-year lease with annual rent of $33,075.60, which
lease expires on March31, 2001.
Polar Cargo Research is located at the following address:
12360 Vickers Way
Richmond, B.C.
Canada V6V 1H9
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L&V Transportation office is located at the following address:
371 E. Ross
El Centro, CA 92243
The company purchased the office in 1996 with a 5 year mortgage of
$19,000. At present, the principal balance on the mortgage is $15,861.
L&V Transportation's trucking yard is located at 2201 S. Fairfield, El Centro,
CA , under a verbal, month-to-month lease at $1,000 per month.
The property consists of a fenced 20 acre lot. There is a central warehouse,
washing area and repair shop on the premises.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this registration statement,
the stock ownership of each executive officer and director of the Company, of
all executive officers and directors of the Company as a group, and of each
person known by the Company to be a beneficial owner of 5% or more of its common
stock. Except as otherwise noted, each person listed below is the sole
beneficial owner of the shares, and has sole investment and voting power for
such shares. No person listed below has any options, warrants or other rights to
acquire additional securities of the Company, except as may be otherwise noted.
Percent of Beneficial
Name and address Shares Owner of Class (1)
- ---------------- ---------- ---------------------
Northwest Capital Partners, L.L. C. 2,000,000* 14.06%
10900 NE 8th Street
Bellevue, WA 98004
Dr. Jeffrey Rush 1,364,590** 9.59%
c/o Polar Cargo Systems, Inc.
2240 Shelter Island Drive #202
San Diego, CA 92106
CIL Containers Ltd. 800,000 5.62%
Suite 3202 - Central Plaza
18 Harbour Road
Wanchai, Hong Kong
All officers and directors
as a group (2 persons) 3,364,590 23.65%
* Does not include 120,000 shares held by Nelson Children Family Trust.
Brent Nelson, Chairman of the Company, is Managing Partner of Northwest
Capital Partners, L.LC
** All of these shares are held of record by various family members of Dr.
Rush.
(1) For purposes of the table, a person is considered to "beneficially own" any
shares with respect to which he/she directly or indirectly has or shares voting
or investment power or of which he or she has the right to acquire the
beneficial ownership within 60 days. Unless otherwise indicated and subject to
applicable community property law, voting power and investment power are
exercised solely by the person named above or shared with members of his or her
household.
11
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth certain information with respect to our
directors and executive officers.
Name Age Position
- -------------------- ---- -------------------------------------------
Brent Nelson 38 Chairman of the Board-Polar Cargo Systems
Robert Dale 43 President and Director-Polar Cargo Systems &
Polar Cargo Research Development
Dr. Jeffrey Rush 62 Director
Dr. Kathy Kishimoto 38 Vice President
Ron Hui 35 Director
Brent Nelson, Chairman -- Mr. Nelson has more than fifteen years of experience
in investment banking and corporate finance establishing, acquiring and selling
a range of companies in the businesses of real estate development, natural
resources and import-export trade. He founded Pan Pacific Containers in 1995 and
is a principal of Northwest Capital Partners, LLC. He also serves on the board
of directors for several corporations, many of which are listed on public stock
exchanges, giving him a diverse range of management expertise. Mr. Nelson is
responsible for the overall direction of Polar and specifically for its
financial and corporate affairs.
Robert Dale, President and Director -- Mr. Dale has over 18 years of business
experience in sales and management in both the financial services industry and
product development ventures. Mr. Dale holds a Bachelor of Commerce degree from
the University of British Columbia, Vancouver. From 1979 to 1986 Mr. Dale served
in senior management positions with Executone Contel Inc.'s western Canadian
distribution company. He then served as a senior sales executive managing
provincial territorial accounts for both the Laurentian/Imperial Group and Crown
Life Insurance Company from 1987 to 1993. In 1996, as the Director, New Business
for Hong Kong Stock Exchange listed group, CIL Holdings Ltd., he spearheaded the
acquisition and managed the development of Coldwall(TM) technology as the
Managing Director of the product development company.
Dr. Jeffrey L. Rush, M.D., Director -- Dr. Rush has extensive experience in both
property development and the commercial development of technology-based ventures
in North America. He was one of the founders of the mobile Magnetic Resonance
scan technology. Prior to his entrepreneurial undertakings, he practiced as a
radiologist in several well-respected hospitals. He has served or continues to
hold the following executive positions: President of the Physician Radiology
Medical Group, San Diego, California; Diplomat of the American Board of
Radiology; Former Chairman of Radiology at Alvarado Hospital, San Diego,
California; Member of the Physicians Advisory Board of National Medical
Enterprises; Adjunct Associate Professor of Radiology at the University of
California, San Diego. Dr. Rush was also a founding member of Pan Pacific
Containers in 1995
12
<PAGE>
Dr. Kathy K. Kishimoto, Ph.D., Vice President Engineering & Technical Services
- -- Dr. Kishimoto received her Bachelor of Mechanical Engineering degree (Honors)
in 1977 and completed her doctoral work in 1986 both at the University of
Manchester Institute of Science & Technology. Since graduation and prior to
emigrating to Canada, Dr. Kishimoto has designed, overseen the construction and
commissioning of various testing facilities for civilian and military
institutions including underwater explosives simulators, explosives research
labs, high-speed photography and instrumentation systems, dynamic pressure
testing rigs, and liquid nitrogen (cryogenic) conditioning chambers. Dr.
Kishimoto has supervised the design engineering, technical development and
laboratory testing work of the Coldwall(TM) technology since joining the
company.
Ron Hui, Director, Engineering-Design -- Mr. Hui received his Bachelor of
Science, Mechanical Engineering degree (Honors) in 1988 from the University of
British Columbia, Vancouver. Mr. Hui received his Professional Engineer
designation in 1991. From 1988 to 1995, Mr. Hui was responsible for evaluating,
planning and managing various manufacturing processes and capital improvement
projects for Phillips Cables. Also while at Phillips, Mr. Hui designed high
speed data transmission cables as well as software evaluation systems and
various testing programs. In 1995, Mr. Hui assumed a senior design engineering
position with a large manufacturer of evaporator coils for tunnel, IQF and
spiral freezers for commercial and industrial applications. Mr. Hui's extensive
experience in refrigeration design and wide-ranging testing and modeling
experience as well as his work with Finite Element Analysis, brought him to the
company to undertake design engineering and testing of the Coldwall(TM)system.
All directors hold office until the next annual meeting of stockholders
and until their successors are elected. Officers are elected to serve, subject
to the discretion of the Board of Directors, until their successors are
appointed.
ITEM 6. EXECUTIVE COMPENSATION
Compensation for the officers of the Company is presented below. There
are no other benefits or compensation provided. The following table shows all
the cash compensation paid by the Company as well as certain other compensation
paid during the fiscal years indicated.
Annual Compensation Awards Payouts
Position Year Salary(*)
- -------- ---- ---------
Robert Dale, President 1999 $120,000
*Amortized salary
Note: Salary payments commenced June 15, 1999.
Option/SAR Grants in Last Fiscal Year.
There were no option/SAR Grants in the last fiscal year.
Compensation of Directors
The Company's directors serve without compensation.
13
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Brent Nelson, one if our directors, is the President of Northwest
Capital Partners, LLC. On April 15, 1999, we entered into a three-year
consulting agreement under which Northwest agreed to advise us financially and
assist us in arranging financing for our business operations. Northwest has a
right of first refusal to consult with us regarding financings throughout the
duration of its term. The consulting agreement provides for payment of monthly
consulting fees to Northwest in the amount of $5,000 per month. The fee
provision is subject to extension for 36 months upon the closing of certain
financing transactions set forth in the consulting agreement. In addition, the
consulting agreement provides that Northwest is to be granted up to 2,200,000
shares of our common stock if it achieves certain milestones related to locating
financing for our business. To date, 1,200,000 shares have been granted to
Northwest. Northwest's obligations under the consulting agreement are subject to
certain conditions to be performed by us, including refraining from modifying
our capital structure without Northwest's prior written consent. In addition,
the consulting agreement provides that for three years after the occurrence of
certain milestones set forth in the consulting agreement, if we desire to issue
new shares of stock or any of any of our officers or directors who hold 5% or
more of our common stock ("Principal Stockholders") desire to transfer their
shares of our stock to a third party, we and the Principal Stockholders are
required to first offer such shares to the Principal Stockholders or us (as
applicable), and then to Northwest. Finally, the consulting agreement provides
that Northwest is entitled to nominate a director for our board of directors for
a period of five years.
ITEM 8. DESCRIPTION OF SECURITIES
We are authorized to issue 50,000 shares of common stock, $.001 par
value, of which 14,227,123 shares were outstanding at September 30, 1999, held
by 159 shareholders of record. Holders of common stock are entitled to
dividends, pro rata, when, as and if declared by the board of directors out of
funds available therefor. Holders of common stock are entitled to cast one vote
for each share held at all stockholder meetings for all purposes, including the
election of directors. The holders of more than 50% of the common stock issued
and outstanding and entitled to vote, present in person or by proxy, constitute
a quorum at all meetings of stockholders. The vote of a majority of common
stockholders present at such a meeting will decide any question brought before
that meeting, except for certain actions such as amendments to our certificate
of incorporation, mergers or dissolutions which require the vote of the holders
of a majority of the outstanding common stock. Upon liquidation or dissolution,
the holder of each outstanding share of common stock will be entitled to share
equally in the assets of Polar Cargo Systems legally available for distribution
to such stockholder after payment of all liabilities. Holders of common stock
are not granted any preemptive, subscription, redemption rights or registration
rights. All outstanding shares of common stock are fully paid and
non-assessable.
We are also authorized to issue $5,000,000 shares of preferred stock
par value $.001. As of September 30, 1999, no shares of preferred stock have
been issued.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS
Our common stock is traded on the National Quotation Bureau's Pink
Sheets under the symbol "PCSI." The following table sets forth, for the fiscal
period indicated the high and low closing bid prices for our common stock.
14
<PAGE>
HIGH LOW
---- ----
Feb00 3.2 2.0
Jan00 2.4 .625
Dec99 4.5 .375
Nov99 3.0 .375
Oct99 2.5 .25
Sep99 1.625 .25
Aug99 2.0 1.125
Jul99 2.25 1.25
Jun99 2.0 1.25
May99 2.5 1.0
Apr99 1.5 .45
Mar99 1.25 .125
Feb99 1.375 .5
Jan99 1.125 .375
Dec98 1.5 .5
Nov98 1.625 .875
Oct98 1.375 .8125
Sep98 1.875 .75
Aug98 4.25 1.125
Jul98 4.5 3.15
Jun98 3.75 2.875
May98 3.5 2.875
Apr98 3.5 3.125
Until October 19, 1999 our common stock was traded on the OTC Bulletin
Board as was the common stock of our predecessor, Biometric Access,
Incorporated. Pursuant to NASD Rule 6530, our common stock was delisted from the
OTC Bulletin Board on that date because we did not satisfy the requirements to
become an issuer required to make certain filings pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934. Our common stock will be traded on
the National Quotation Bureau's Pink Sheets until such time as we meet the
eligibility requirements for relisting on the OTC Bulletin Board.
The quotations for the common stock traded on the Bulletin Board may
reflect inter-dealer prices, without retail mark-up, markdown or commission and
may not necessarily represent actual transactions.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. We
currently anticipate that we will retain all future earnings for use in the
operation and expansion of our business and do not anticipate paying any cash
dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
We are not a party to any pending legal proceedings nor are any
contemplated to our knowledge.
15
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have not had any disagreements with our independent outside auditors
since inception. After Biometric Access, Delaware, acquired Polar Cargo Systems,
Nevada, we changed our independent outside auditor to L.L. Bradford & Company.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The following unregistered securities of the Company have been issued in the
past three years:
1. On April 5, 1999, the Company issued 6,000,000 free-trading shares to
34 non-affiliates at a purchase price of $.025 per share for an
aggregate consideration of $150,000, and issued 165,000 shares to a
consultant in consideration for consulting services rendered in
connection with the acquisition of Polar Cargo Container, Inc., valued
at $4,125. All of such shares were issued pursuant to an exemption
from registration under Regulation D, Rule 504 of the Securities Act
of 1933, as amended (the "Act"). The Company also issued 5,000,000
restricted shares to 34 affiliates in connection with the acquisition
of all the outstanding common stock of Polar Cargo Containers, Inc.
Issuance of such shares was exempt from Registration pursuant to
Section 4(2) of the Act.
2. On April 27, 1999, the Company issued 1,000,000 shares of restricted
common stock to 2 affiliates in connection with the acquisition of all
common stock of L&V Transportation, Inc. Issuance of such shares was
exempt from Registration pursuant to Section 4(2) of the Act.
3. On may 19, 1999, the Company issued 2,000,000 shares of common stock
to 13 shareholders of Orient Refrigerated Transport Consolidated, Inc.
("Orient") in connection with the Company's purchase of certain assets
of Orient. Issuance of such shares was exempt from Registration
pursuant to Section 4(2) of the Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Delaware General Corporation Law and our certificate of
incorporation, our directors will have no personal liability to us or our
stockholders for monetary damages incurred as the result of the breach or
alleged breach by a director of his "duty of care." This provision does not
apply to the directors' (i) acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law, (ii) acts or omissions
that a director believes to be contrary to the best interests of the corporation
or its stockholders or that involve the absence of good faith on the part of the
director, (iii) approval of any transaction from which a director derives an
improper personal benefit, (iv) acts or omissions that show a reckless disregard
for the director's duty to the corporation or its stockholders in circumstances
in which the director was aware, or should have been aware, in the ordinary
course of performing a director's duties, of a risk of serious injury to the
corporation or its stockholders, (v) acts or omissions that constituted an
unexcused pattern of inattention that amounts to an abdication of the director's
duty to the corporation or its shareholders, or (vi) approval of an unlawful
dividend, distribution, stock repurchase or redemption. This provision would
generally absolve directors of personal liability for negligence in the
performance of duties, including gross negligence.
The effect of this provision in our certificate of incorporation is to
eliminate the rights of our company and our stockholders (through stockholder's
derivative suits on behalf of our company) to recover monetary damages against a
director for breach of his fiduciary duty of care as a director (including
breaches resulting from negligent or grossly negligent behavior) except in the
situations described in clauses (i) through (vi) above. This provision does not
limit nor eliminate the rights of our company or any stockholder to seek
non-monetary relief such as an injunction or rescission in the event of a breach
of a director's duty of care. In addition, our certificate of incorporation
provide that if the Delaware General Corporation Law is amended to authorize the
future elimination or limitation of the liability of a director, then the
liability of the directors will be eliminated or limited to the fullest extent
permitted by the law, as amended. The Delaware General Corporation Law grants
corporations the right to indemnify their directors, officers, employees and
agents in accordance with applicable law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling our company
pursuant to the foregoing provisions, we have been informed that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.
16
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
As of and for the nine months ended September 30, 1999 (Unaudited)
L.L. Bradford & Company
Certified Public Accountants & Consultants
<PAGE>
TABLE OF CONTENTS
PAGE NO.
Consolidated Financial Statements
Consolidated Balance Sheet 1
Consolidated Statement of Income 2
Consolidated Statement of Stockholders' Equity 3
Consolidated Statement of Cash Flows 4
Notes to Consolidated Financial Statements 5 - 10
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999
(UNAUDITED)
ASSETS
Current assets
Cash $ 1,932
Accounts receivable 14,469
Other current assets 4,814
-----------
Total current assets 21,215
Fixed assets, net 880,031
Other assets 167,318
-----------
Total assets $ 1,068,564
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 133,489
Accrued liabilities 331,541
Due to related parties 301,513
Capital lease obligations - current portion 6,418
Notes payable - current portion 93,074
-----------
Total current liabilities 866,035
Long-term liabilities
Capital lease obligations - long-term portion 94,448
Notes payable - long-term portion
21,512
-----------
Total liabilities 981,995
Commitments and contingencies --
Stockholders' equity
Common stock - $.001 par value, 100,000,000
shares authorized, 14,227,123 shares issued
and outstanding, respectively 14,227
Additional paid in capital 1,228,179
Accumulated deficit (1,155,837)
-----------
Total stockholders' equity 86,569
-----------
Total liabilities and stockholders' equity $ 1,068,564
===========
See Accompanying Notes to Consolidated Financial Statements
1
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
Revenues $ 316,525
Cost of revenues 265,960
-----------
Gross profit 50,565
General and administrative expenses 898,153
-----------
Loss from operations (847,588)
Other expenses
Loss on disposal of fixed assets 76,524
Other expenses 2,269
-----------
Total other expense 78,793
-----------
Loss before provision for
income taxes (926,381)
Provision for income taxes --
-----------
Net loss $ (926,381)
===========
Basic and diluted loss per common share $ (0.07)
===========
Weighted average number of common shares used in per
share calculation 14,227,123
===========
See Accompanying Notes to Consolidated Financial Statements
2
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock
------------------------ Additional Total
Number Paid-in Accumulated Stockholders'
Of Shares Amount Capital Deficit Equity
---------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1999 1,000,000 $ 1,000 $ 274,377 $ (229,456) $ 45,921
Issuance to acquire Polar Cargo
Systems, Inc., April 5, 1999, $0.001 62,123 62 -- -- 62
Issuance to acquire Polar Cargo
Containers, Inc., April 5, 1999, $0.001 5,000,000 5,000 62,004 -- 67,004
Issuance of common stock,
April 5, 1999, $0.025 6,165,000 6,165 116,335 -- 122,500
Issuance to acquire certain assets from
Orient Refrigerated Transport
Consolidated, Inc., May 15, 1999,
$0.389 2,000,000 2,000 775,463 -- 777,463
Net loss -- -- -- (926,381) (926,381)
----------- ----------- ----------- ----------- ----------
Balance at September 30, 1999 14,227,123 $ 14,227 $ 1,228,179 $(1,155,837) $ 86,569
=========== ========== =========== ============ ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
Cash flows from operating activities:
Net loss $(926,381)
Adjustments to reconcile net loss to
net cash used by operating activities:
Loss on disposal of fixed assets 76,524
Depreciation and amortization 118,030
Changes in operating assets and liabilities:
Decrease in accounts receivable 37,139
Increase on other assets (10,085)
Increase in accounts payable 76,904
Increase in accrued liabilities 266,647
----------
Net cash used by operating activities (361,222)
---------
Cash flows from investing activities:
Purchase of fixed assets (45,836)
----------
Net cash used by investing activities (45,836)
----------
Cash flows from financing activities:
Proceeds from due to related parties 164,986
Principal payments on note payable (6,102)
Payments on capital lease obligations (15,900)
Proceeds from additional paid-in-capital 264,566
----------
Net cash provided by financing activities 407,550
----------
Net increase in cash 492
Beginning balance 1,440
----------
Ending balance $ 1,932
==========
Schedule of non-cash investing and financing transactions:
2,000,000 shares of common stock issued to acquire
$777,463 of assets from Orient Refrigerated Transport
Consolidated, Inc. $ 777,463
==========
Supplemental disclosure of cash flow information:
Interest paid $ 21,635
==========
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
1. Organization and summary of significant accounting policies
Organization - Polar Cargo Systems, Inc., formerly known as Biometric
Access Technologies, Inc., (hereafter referred to as "Polar Cargo Systems")
was incorporated in the state of Delaware on May 1981.
Effective April 5, 1999, Polar Cargo Systems, Inc. consummated an
acquisition agreement with Polar Cargo Containers, Inc. (PCCI) whereby
Polar Cargo Systems acquired all the outstanding common stock of PCCI in
exchange for 5,000,000 share of Polar Cargo Systems common stock (referred
to as the "PCCI Transaction"). The PCCI Transaction has been accounted for
under the pooling of interest method.
Effective April 27, 1999, Polar Cargo Systems, Inc. consummated an
acquisition agreement with L&V Transportation, Inc. (LVT) whereby Polar
Cargo Systems acquired all the outstanding common stock of LVT in exchange
for 1,000,000 shares of Polar Cargo Systems common stock (referred to as
the "LVT Transaction").
Both Polar Cargo Systems and PCCI did not have any operations prior to the
LVT Transaction and are considered shell corporations, LVT is considered
the accounting acquirer in the business combination with Polar Cargo
Systems. Accordingly, the transaction between LVT and Polar Cargo Systems
has been accounted for as a reverse acquisition of Polar Cargo Systems by
LVT and the assets of Polar Cargo Systems have been recorded at historical
cost since Polar Cargo Systems was a shell corporation with no operations
and only nominal assets prior to the LVT Transaction.
Effective May 15, 1999, Polar Cargo Systems, Inc. consummated an asset
purchase agreement with Orient Refrigerated Transport Consolidated, Inc.
(ORTC) whereby Polar Cargo Systems acquired certain assets, which include
patented refrigeration system technology, from ORTC in exchange for
2,000,000 shares of Polar Cargo Systems common stock (referred to as the
"ORTC Transaction"). The ORTC Transaction has been accounted for under the
purchase method.
Polar Cargo Systems, including the operations from the outstanding common
stock acquired from LVT are collectively referred to herein as the
"Company" subsequent to the transactions discussed above.
The Company has continued the transportation and long haul trucking
business operations through LVT, a wholly owned subsidiary. Additionally,
the Company has continued the development and refinement of the patented
refrigeration system through Polar Cargo Research, Ltd., a wholly owned
subsidiary.
On July 20, 1999, the Internal Revenue Service filed a Federal Tax Lien
with the Secretary of State for delinquent payments on payroll taxes from
1997 through 1999 relating to LVT. Accordingly, all of LVT's assets have
been subjected to the Federal Tax Lien securing such delinquent payments.
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary. All significant inter-company
transactions and balances have been eliminated.
Interim consolidated financial statements - The accompanying consolidated
financial statements as of and for the nine months ended September 30, 1999
are unaudited. In the opinion of management, all necessary adjustments
(which include only normal recurring adjustments) have been made to the
accompanying financial statements in order to present fairly the financial
position, results of operations and cash flows for the nine months ended
September 30, 1999.
5
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
1. Organization and summary of significant accounting policies (continued)
Geographic concentration - Substantially all of the Company's operations
are derived from Southern California. Consequently, the Company's results
of operations and financial condition are affected by general trends in the
Southern California economy and its agricultural industry.
Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Revenue recognition - The Company recognizes revenue primarily from
transportation and trucking fees. Transportation and trucking fees are
recorded as revenue at the completion of the service contract.
Fixed assets - Fixed assets are stated at cost less accumulated
depreciation. Depreciation is provided principally on the straight-line
method over the estimated useful lives of the assets, which are generally 5
to 27.5 years. The cost of repairs and maintenance is charged to expense as
incurred. Expenditures for property betterments and renewals are
capitalized. Upon sale or other disposition of a depreciable asset, cost
and accumulated depreciation are removed from the accounts and any gain or
loss is reflected in other income (expense).
The Company periodically evaluates whether events and circumstances have
occurred that may warrant revision of the estimated useful life of fixed
assets or whether the remaining balance of fixed assets should be evaluated
for possible impairment. The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the fixed assets in
measuring their recoverability.
Comprehensive income - The Company has no components of other comprehensive
income. Accordingly, net income equals comprehensive income for all
periods.
Advertising costs - Advertising costs incurred in the normal course of
operations are expensed accordingly.
Income taxes - The Company accounts for its income taxes in accordance with
Statement of Financial Accounting Standards (SFAS) No. 109, which requires
recognition of deferred tax assets and liabilities for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date.
Year 2000 issue - The Company has assessed the exposure to date sensitive
computer software programs that may not be operative subsequent to 1999 and
has implemented a requisite course of action to minimize Year 2000 risk and
ensure that neither significant costs nor disruptions of normal business
operations are encountered. However, because there is no guarantee that all
systems of outside vendors or other entities affecting the Company's
operations will be 2000 compliant, the Company remains susceptible to
consequences of the Year 2000 issue.
6
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
2. Fixed assets
As of September 30, 1999, fixed assets consist of the following:
Vehicles $ 333,160
Equipment 621,813
Office building 19,000
Furniture and fixtures 49,918
------------------
1,023,891
Less: accumulated depreciation 143,860
------------------
$ 880,031
==================
3. Other assets
As of September 30, 1999, other assets consist of the following:
Intangible asset, (net of accumulated
amortization of $12,948) $ 157,052
Deposits 10,266
------------------
$ 167,318
=================
Intangible asset consists of a patent for an integrated
temperature-controlled container, which the Company's management estimate
future derived benefits. This intangible asset is amortized on a
straight-line basis over five years. Amortization expense for the nine
months ended September 30, 1999, approximated $12,948.
4. Notes payable
As of September 30, 1999, notes payable consist of the following:
Promissory note payable, secured by a vehicle,
due in monthly installments of $678, including
interest at 11%, which matures June 2003 $ 23,725
Promissory note payable secured by an office building,
bearing interest at 8% and due on demand 15,861
Promissory note payable, unsecured,
due in weekly installments of $1,960, including
interest at 8% and due on demand 75,000
------------
114,586
Less: amounts due within one year 93,074
------------
Long-term portion of notes payable $ 21,512
============
7
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
4. Notes payable (continued)
Scheduled principal payments on notes payable are as follows:
October 1, 1999 through December 31, 1999 $ 91,039
2000 5,834
2001 6,509
2002 7,263
2003 3,941
------------------
$ 114,586
==================
5. Capital lease obligations
The Company is obligated under various capital leases for vehicles which
range from 2 to 5 years in duration. As of September 30, 1999, capital
lease obligations totaling $100,866 require minimum monthly lease payments
ranging from $286 to $3,072 with interest rates ranging between 9.0% and
32.71%. Future minimum lease payments are as follows:
1999 $ 24,474
2000 47,518
2001 45,516
2002 63,332
---------------
180,840
Less: amount representing interest 79,974
---------------
100,866
Less: current portion 6,418
---------------
Capital lease obligations - long-term portion $ 94,448
===============
Equipment leased under capital leases as of September 30, 1999 totaled
$108,376 which is net of accumulated depreciation of $38,363.
6. Related party transactions
As of September 30, 1999, due to related parties consist of the following:
Promissory note payable to shareholder, unsecured,
bearing no interest, due on demand $ 18,635
8
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
6. Related party transactions (continued)
--------------------------
Promissory note payable to shareholder, unsecured,
bearing interest at 8%, due on demand 19,878
Promissory note payable to shareholder, unsecured,
bearing interest at 8%, due on demand 100,000
Promissory note payable to shareholder, unsecured,
bearing interest at 8%, due on demand 58,000
Promissory note payable to shareholder, unsecured
bearing no interest, due on demand 55,000
Promissory note payable to shareholder, unsecured
bearing no interest, due on demand 25,000
Promissory note payable to shareholder, unsecured
bearing no interest, due on demand 25,000
--------------
Total due to related parties $ 301,513
==============
7. Income taxes
The Company did not record any current or deferred income tax provision or
benefit for the period presented because of nominal differences.
8. Fair value of financial instruments
The carrying amounts of cash, accounts receivable, accounts payable, and
accrued liabilities, approximate fair value because of the short-term
maturity of these instrument.
9. Commitments and contingencies
The Company operates from a leased facility under a noncancellable
operating lease. The Agreement calls for an annual base rent of $16,538. As
of September 30, 1999, total rent expense for the leased facility
approximated $8,611.
Future minimum rental payments required under the operating lease for the
office facility as of September 30, 1999, are as follows:
1999 $ 4,134
2000 4,134
--------------
$ 8,268
==============
9
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
10. Going concern
The Company incurred a net loss of $926,381 for the nine months ended
September 30, 1999. The Company's current liabilities exceed its current
assets by $844,820 as of September 30, 1999. Those factors create an
uncertainty about the Company's ability to continue as a going concern. The
Company's management has developed a plan to reduce its liabilities by
reducing operating costs and improving overall efficiency of the
transportation and trucking operating activities. The Company may seek
additional sources of capital through issuance of common stock, but there
can be no assurance that the Company will be successful in accomplishing
its objectives.
The ability of the Company to continue as a going concern is dependent on
additional sources of capital and the success of the Company's plan. The
financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
11. Subsequent event
As of September 1999, the Company did not meet the required Securities and
Exchange Commission filing on Form 10-SB and was de-listed from trading on
the Over-The-Counter Electronic Bulletin Board. The Company is currently in
the process of filing a Form 10SB with the Securities and Exchange
Commission and will subsequently file for reinstatement of trading on the
Over-The-Counter Electronic Bulletin Board.
10
<PAGE>
L.L. Bradford & Company
Certified Public Accountants & Consultants
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
As of and for the year ended December 31, 1998 and
for the year ended December 31, 1997
(With Report of Independent Certified Accountants Thereon)
L.L. Bradford & Company
Certified Public Accountants & Consultants
<PAGE>
TABLE OF CONTENTS
PAGE NO.
--------
Report of Independent Certified Public Accountants 1
Consolidated Financial Statements
Consolidated Balance Sheets 2
Consolidated Statements of Income 3
Consolidated Statements of Stockholders' Equity 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6 - 10
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors
Polar Cargo Systems, Inc. and Subsidiaries
San Diego, California
We have audited the accompanying consolidated balance sheet of Polar Cargo
Systems, Inc. and Subsidiaries as of December 31, 1998, and the related
consolidated statements of income, stockholders' equity and cash flows for the
years then ended December 31, 1998 and December 31, 1997, respectively. These
consolidated financial statements are the responsibility of the Organization's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of as of December 31,
1998, and the results of its activities and cash flows for the year then ended
December 31, 1998 and 1997 in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 10 to
the consolidated financial statements, the Company has suffered losses from
operations and has a net capital deficiency that raise substantial doubt about
its ability to continue as a going concern. Management's plans in regards to
these matters are also described in Note 9. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
October 18, 1999
Las Vegas, Nevada
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Current assets
Cash $ 1,440
Accounts receivable 51,608
Other current assets 4,995
----------
Total current assets 58,043
Fixed assets, net 408,338
----------
Total assets $ 466,381
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 56,585
Accrued liabilities 64,894
Due to related parties 136,527
Capital lease obligations - current portion 19,232
Notes payable - current portion 22,141
----------
Total current liabilities 299,379
Long-term liabilities
Capital lease obligations - long-term portion 97,534
Notes payable - long-term portion 23,547
----------
Total liabilities 420,460
Commitments and contingencies --
Stockholders' equity
Common stock - $.001 par value, 100,000,000
shares authorized, 1,000,000 shares issued
and outstanding 1,000
Additional paid in capital 274,377
Accumulated deficit (229,456)
----------
Total stockholders' equity 45,921
----------
Total liabilities and stockholders' equity $ 466,381
==========
See Accompanying Notes to Consolidated Financial Statements
2
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Year For the Year
Ended Ended
December 31, December 31,
1998 1997
---------------- -----------------
<S> <C> <C>
Revenues $ 496,906 $ 847,492
Cost of revenues 442,534 648,268
----------- -----------
Gross profit 54,372 199,224
General and administrative expenses 286,244 173,009
----------- -----------
Income (loss) before provision for
income taxes (231,872) 26,215
Provision for income taxes -- 8,913
----------- -----------
Net income (loss) $ (231,872) $ 17,302
=========== ===========
Basic and diluted earnings (loss) per
common share $ (0.23) $ 0.02
=========== ===========
Weighted average number of common
shares used in per share calculation
1,000,000 1,000,000
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
------------------------ Additional Total
Number Paid-in Accumulated Stockholders'
Of Shares Amount Capital Deficit Equity
----------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997 1,000,000 $ 1,000 $ -- $ (14,886) $ (13,886)
Shareholder contributions -- -- 11,500 -- 11,500
Net income -- -- -- 17,302 17,302
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1997 1,000,000 1,000 11,500 2,416 14,916
Shareholder contributions -- -- 262,877 -- 262,877
Net income -- -- -- (231,872) (231,872)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1998 1,000,000 $ 1,000 $ 274,377 $ (229,456) $ 45,921
=========== =========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year For the Year
Ended Ended
December 31, December 31,
1998 1997
---------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (231,872) $ 17,302
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Depreciation and amortization 52,987 1,267
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 865 (52,473)
Increase on other assets (4,995) --
Increase in accounts payable 36,103 4,734
Increase in accrued liabilities 45,577 20,179
----------- ---------
Net cash used by operating activities (101,335) (8,991)
----------- ---------
Cash flows from investing activities:
Purchase of fixed assets (23,675) --
----------- ---------
Net cash used by investing activities (23,675) --
----------- ---------
Cash flows from financing activities:
Proceeds from due to related parties 136,527 20,926
Principal payments on notes payable (11,421) --
Payments on capital lease obligations (26,974) --
Proceeds from shareholder contribution 16,383 --
----------- ---------
Net cash provided by financing activities 114,515 20,926
----------- ---------
Net increase (decrease) in cash (10,495) 11,935
Beginning balance 11,935 --
----------- ---------
Ending balance $ 1,440 $ 11,935
========== ==========
Schedule of non-cash investing and financing transactions:
Acquisition of fixed assets under capital
lease obligations $ 203,598 $ --
========== =========
Acquisition of fixed asset from shareholder
contribution $ 246,494 $ 12,500
========== =========
Supplemental disclosure of cash flow Information:
Interest paid $ 11,254 $ 258
========== =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. Organization and summary of significant accounting policies
Organization - Polar Cargo Systems, Inc., formerly known as Biometric
Access Technologies, Inc., (hereafter referred to as "Polar Cargo Systems")
was incorporated in the state of Delaware on May 1981.
Effective April 5, 1999, Polar Cargo Systems, Inc. consummated an
acquisition agreement with Polar Cargo Containers, Inc. (PCCI) whereby
Polar Cargo Systems acquired all the outstanding common stock of PCCI in
exchange for 5,000,000 share of Polar Cargo Systems common stock (referred
to as the "PCCI Transaction"). The PCCI Transaction has been accounted for
under the pooling of interest method.
Effective April 27, 1999, Polar Cargo Systems, Inc. consummated an
acquisition agreement with L&V Transportation, Inc. (LVT) whereby Polar
Cargo Systems acquired all the outstanding common stock of LVT in exchange
for 1,000,000 shares of Polar Cargo Systems common stock (referred to as
the "LVT Transaction").
Both Polar Cargo Systems and PCCI did not have any operations prior to the
LVT Transaction and is considered to have been a shell corporations and LVT
is considered the accounting acquirer in the business combination with
Polar Cargo Systems. Accordingly, the transaction between LVT and Polar
Cargo Systems has been accounted for as a reverse acquisition of Polar
Cargo Systems by LVT and the assets of Polar Cargo Systems have been
recorded at historical cost since Polar Cargo Systems was a shell
corporation with no operations and only nominal assets prior to the LVT
Transaction.
Polar Cargo Systems, including the operations from the outstanding common
stock acquired from LVT are collectively referred to herein as the
"Company" subsequent to the transactions discussed above.
The Company has continued the transportation and long haul trucking
business operations through LVT, a wholly owned subsidiary.
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary. All significant inter-company
transactions and balances have been eliminated.
Geographic concentration - Substantially all of the Company's operations
are derived from Southern California. Consequently, the Company's results
of operations and financial condition are affected by general trends in the
Southern California economy and its agricultural industry.
Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Revenue recognition - The Company recognizes revenue primarily from
transportation and trucking fees. Transportation and trucking fees are
recorded as revenue at the completion of the service contract.
6
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. Organization and summary of significant accounting policies (continued)
Fixed assets - Fixed assets are stated at cost less accumulated
depreciation. Depreciation is provided principally on the straight-line
method over the estimated useful lives of the assets, which are generally 5
to 27.5 years. The cost of repairs and maintenance is charged to expense as
incurred. Expenditures for property betterments and renewals are
capitalized. Upon sale or other disposition of a depreciable asset, cost
and accumulated depreciation are removed from the accounts and any gain or
loss is reflected in other income (expense).
The Company periodically evaluates whether events and circumstances have
occurred that may warrant revision of the estimated useful life of fixed
assets or whether the remaining balance of fixed assets should be evaluated
for possible impairment. The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the fixed assets in
measuring their recoverability.
Comprehensive income - The Company has no components of other comprehensive
income. Accordingly, net income equals comprehensive income for all
periods.
Advertising costs - Advertising costs incurred in the normal course of
operations are expensed accordingly.
Income taxes - The Company accounts for its income taxes in accordance with
Statement of Financial Accounting Standards (SFAS) No. 109, which requires
recognition of deferred tax assets and liabilities for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date.
Year 2000 issue - The Company has assessed the exposure to date sensitive
computer software programs that may not be operative subsequent to 1999 and
has implemented a requisite course of action to minimize Year 2000 risk and
ensure that neither significant costs nor disruptions of normal business
operations are encountered. However, because there is no guarantee that all
systems of outside vendors or other entities affecting the Company's
operations will be 2000 compliant, the Company remains susceptible to
consequences of the Year 2000 issue.
2. Fixed assets
As of December 31, 1998, fixed assets consist of the following:
Vehicles $ 425,160
Equipment 13,400
Office building 19,000
Furniture and fixtures 5,032
------------------
462,592
Less: accumulated depreciation 54,254
------------------
$ 408,338
==================
7
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
3. Notes payable
As of December 31, 1998, notes payable consist of the following:
Promissory note payable, secured by a vehicle,
due in monthly installments of $678, including
interest at 11%, which matures June 2003 $ 29,827
Promissory note payable, secured by an office building,
bearing interest at 8.0%, due on demand 15,861
------------
45,688
Less: amounts due within one year 22,141
------------
Long-term portion of notes payable $ 23,547
============
Scheduled principal payments on notes payable are as follows:
1999 $ 22,141
2000 5,834
2001 6,509
2002 7,263
2003 3,941
-------------
$ 45,688
=============
4. Capital lease obligations
The Company is obligated under various capital leases for vehicles which
range from 2 to 5 years in duration. As of December 31, 1998, capital lease
obligations totaling $116,766 require minimum monthly lease payments
ranging from $286 to $3,072 with interest rates ranging between 9.0% and
32.71%. Future minimum lease payments are as follows:
1999 $ 53,376
2000 47,518
2001 45,516
2002 63,332
------------------
209,742
Less: amount representing interest 92,976
------------------
116,766
Less: current portion 19,232
------------------
Capital lease obligations - long-term portion $ 97,534
==================
Equipment leased under capital leases as of December 31, 1998, totaled
$130,327, which is net of accumulated depreciation of $16,413.
8
<PAGE>
POLAR CARGO SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
5. Related party transactions
As of December 31, 1998, due to related parties consist of the following:
Promissory note payable to shareholder, unsecured,
bearing no interest, due on demand $ 17,543
Promissory note payable to shareholder, unsecured,
bearing interest at 8%, due on demand 18,984
Promissory note payable to shareholder, unsecured,
bearing interest at 8%, due on demand 100,000
------------
Due to related parties $ 136,527
============
6. Income taxes
The Company did not record any current or deferred income tax provision or
benefit for any of the periods presented because of nominal differences.
7. Fair value of financial instruments
The carrying amounts of cash, accounts receivable, accounts payable, and
accrued liabilities, approximate fair value because of the short-term
maturity of these instrument.
8. Commitments and contingencies
The Company operates from a leased facility under a noncancellable
operating lease. The agreement calls for an annual base rent of $16,538. As
of December 31, 1998, total rent expense for the leased facility
approximated $7,200.
Future minimum rental payments required under the operating lease for the
office facility as of December 31, 1998, are as follows:
1999 $ 16,538
2000 4,134
--------------
$ 20,672
==============
9. Going concern
The Company incurred a net loss of $231,872 for the year ended December 31,
1998. The Company's current liabilities exceed its current assets by
$241,336 as of December 31, 1998. Those factors create an uncertainty about
the Company's ability to continue as a going concern. The Company's
management has developed a plan to reduce its liabilities by reducing
operating costs and improving overall efficiency of the transportation and
trucking operating activities. The Company will seek additional sources of
capital through issuance of common stock, but there can be no assurance
that the Company will be successful in accomplishing its objectives.
9
<PAGE>
9. Going concern (continued)
The ability of the Company to continue as a going concern is dependent on
additional sources of capital and the success of the Company's plan. The
financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
10. Subsequent events
Effective May 15, 1999, Polar Cargo Systems, Inc. consummated an asset
purchase agreement with Orient Refrigerated Transport Consolidated, Inc.
(ORTC) whereby Polar Cargo Systems, Inc. acquired certain assets, to
include patented refrigeration system technology, from ORTC in exchange for
2,000,000 shares of Polar Cargo Systems, Inc. common stock (referred to as
the "ORTC Transaction"). The ORTC Transaction has been accounted for under
the purchase method.
As of September 1999, the Company did not meet the required Securities and
Exchange Commission filing on Form 10-SB and was de-listed from trading on
the Over-The-Counter Electronic Bulletin Board. The Company is currently in
the process of filing a Form 10SB with the Securities and Exchange
Commission and will subsequently file for reinstatement of trading on the
Over-The-Counter Electronic Bulletin Board.
On July 20, 1999, the Internal Revenue Service filed a Federal Tax Lien
with the Secretary of State for delinquent payments on payroll taxes from
1997 through 1999 relating to L&V Transportation, Inc. (LVT), a wholly
owned subsidiary of Polar Cargo Systems, Inc. Accordingly, all of LVT's
assets have been subjected to the Federal Tax Lien securing such delinquent
payments.
10
<PAGE>
PART F/S
The Financial Statements of Polar Cargo Systems, Inc. required by regulation S-B
commence on page F-1 and are incorporated herein by reference.
PART III
Items 1&2. Index to Exhibits and Description of Exhibits
3.1 Articles of Incorporation with Amendments
3.2 By-Laws
10.2 Consulting Agreement with Northwest Capital Partners, LLC
10.7 Office Space Lease Agreement
21 Subsidiaries of the Registrant
27 Financial Data Schedule
11
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
POLAR CARGO SYSTEMS, INC.
Date: February , 2000 /s/Robert Dale
------------------------
Robert Dale, President
12
CERTIFICATE OF INCORPORATION
of
HoTelephone, Inc.
FIRST. The name of this corporation is HoTelephone, Inc.
SECOND. Its registered office in the State of Delaware is to be located
at 725 Market Street in the City of Wilmington, County of New Castle. The
registered agent in charge thereof is The Company Corporation at same as above.
THIRD. The nature of the business and, the objects and purposes
proposed to be transacted, promoted and carried on, are to do any or all the
things herein mentioned, as fully and to the same extent as natural persons
might or could do, and in any part of the world, viz:
"The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware."
FOURTH. The amount of the total authorized capital stock of this
corporation is 20,000,000 shares of $.0001 Par Value.
FIFTH. The name and mailing address of the incorporator is as follows:
NAME: Regina Cephas ADDRESS: 725 Market St., Wilmington, DE 19801
SIXTH: The powers of the incorporator are to terminate upon filing of
the certificate of incorporation, and the name(s) and mailing address(es) of
persons who are to serve as director(s) until the first annual meeting of
stockholders or until their successors are elected and qualify are as follows:
Name and address of director(s):
Neal R. Bruckman, 56 Pine Street, Ste. 620, New York, NY 10005
Joe Greene, William Holleran, same address as above
SEVENTH. The Directors shall have power to make and to alter or amend
the By-Laws; to fix the amount to be reserved as working capital, and to
authorize and cause to be executed, mortgages and liens without limit as to the
amount, upon the property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of the
stockholders; and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by the law or the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings
and keep the books, documents and papers of the Corporation outside of the State
of Delaware, at such places as may be from time to time designated by the
By-Laws or by resolution of the stockholders or directors, except as otherwise
required by the laws of Delaware.
It is the intention that the objects, purposes and powers specified in
the Third paragraph hereof shall, except where otherwise specified in said
paragraph, be nowise limited or restricted by reference to or inference from the
terms of any other clause or paragraph in this certificate of incorporation, but
that the objects, purposes and powers specified in the Third paragraph and in
each of the clauses or paragraphs of this charter shall be regarded as
independent objects, purposes and powers.
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the
laws of the State of Delaware, do make, file and record this Certificate and do
certify that the facts herein are true; and I have accordingly hereunto set my
hand.
DATED AT: 5-22-87
State of Delaware
County of New Castle
/s/ Regina Cephas
---------------------
Regina Cephas
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
HoTelephone, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, does hereby
certify:
FIRST: That at a meeting of the Board of Directors of HoTelphone, Inc.
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the Certificate of Incorporation of this Corporation be amended
by changing the Article thereof numbered FIRST, so that, as amended said Article
shall be and read as follows:
"FIRST: The name of this corporation is: Biometric Access Technologies, Inc."
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, upon notice is accordance with Section 222 of the General Corporation Law
of the State of Delaware, at which meeting of the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment as duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said HoTelephone, Inc. has caused its corporate seal to be
hereunto affixed and this certificate to be signed by authorized officer this
7th day of April, 1997.
/s/ Neal R. Bruckman
------------------------------
Neal R. Bruckman, Secretary
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/14/1997
971119245 - 0915187
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF BIOMETRIC ACCESS TECHNOLOGIES, INC.
Under Section 242 of the
Corporation Law of the State of Delaware
BIOMETRIC ACCESS TECHNOLOGIES, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by written consent filed
with the minutes of the Board, adopted the following resolutions proposing and
declaring advisable the following amendments to the Certificate of Incorporation
of said corporation:
"1. That Article FIRST of the Certificate of Incorporation be amended
and, as amended, read as follows:
`FIRST: The name of the Corporation is POLAR CARGO SYSTEMS, INC.",
"2. That Article FORTH of the Certificate of Incorporation be amended
and, as amended, read as follows:
`FOURTH: The Corporation shall be authorized to issue the following
shares:
CLASS Number of Shares Par Value
--------- ---------------- ---------
Common 50,000,000 $.001
Preferred 5,000,000 $.001
The Preferred Stock and the Common Stock may be issued in such classes
or series, and may have such voting powers, full or limited, or no
voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and qualifications, or
restrictions thereof, as shall be stated and expressed in the Articles
of Incorporation or of any amendment thereto, or in the resolution or
resolutions providing for the issue of such stock adopted by the Board
of Directors pursuant to the authority which is expressly vested in it
by the provisions hereof. Any of the voting powers, designations,
preferences, rights and qualifications, limitations or restrictions of
any such class or series of stock may be dependent upon facts
ascertainable outside these Articles of Incorporation or of any
amendment thereto, or outside the resolution or resolutions providing
for the issue of such stock adopted by the Board of Directors pursuant
to the authority which is expressly vested in it by the provisions
hereof, provided that the manner in which such facts shall operate upon
the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions of such class or series of
stock is clearly and expressly set forth in these Articles of
Incorporation or in the resolution or resolutions providing for the
issue of such stock adopted by the Board of Directors. Notwithstanding
the foregoing, each share of Common Stock shall be entitled to one vote
on all matters requiring approval by the holders of the Company's
Common Stock. Fully paid stock of this Corporation shall not be liable
to any further call or assessment. All shares of stock shall be voted
together on all matters except those pertaining to the rights of
particular classes of stock. The rights of any class of stock may not
be changed without the consent of a majority of the shares entitled to
vote on such a change.'
<PAGE>
4. The Corporation's outstanding shares are reverse split on a
one-for-50 basis, so that each 50 shares of Common Stock, $.0001 par value
outstanding prior to the reverse split shall become one share of Common Stock,
$.001 par value after the reverse split.
SECOND: That the aforesaid amendments and reverse split were duly
adopted in accordance with the applicable provisions of Section 242 of the
General Corporation Law of the State of Delaware.
THIRD: Prompt notice of the taking of this corporate action is being
given to all stockholders who did not consent in writing, in accordance with
Section 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Brent Nelson, its President, this 5th day of April, 1999.
BIOMETRIC ACCESS TECHNOLOGIES, INC.
/s/ Brent Nelson
-------------------------------
Brent Nelson, President
BY - LAWS
of
ARTICLE I - OFFICES
SECTION I. REGISTERED OFFICE. --The registered office shall be
established and maintained at in the County of in the State of Delaware.
SECTION 2. OTHER OFFICES. --The corporation may have other offices,
either within or without The State of Delaware, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II - MEETING OF STOCKHOLDERS
SECTION I. ANNUAL MEETINGS. --Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the Meeting, shall be held at such place, either within or without the State
of Delaware, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting In the event the
Board of Directors fails to so determine the time, date and place of meeting,
the annual meeting of stockholders shall be held at the registered office of the
corporation in Delaware on
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held the next succeeding business day. At each annual meeting,
the stockholders entitled to vote shall elect a Board of Directors and may
transact such other corporate business as shall be stated in the notice of the
meeting.
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<PAGE>
SECTION 2. OTHER MEETINGS. -- Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting.
SECTION 3. VOTING. -- Each stockholder entitled to vote in accordance
with the terms and provisions of the Certificate of Incorporation arid these
By-Laws shall be entitled to one vote, in person or by proxy, for each share of
stock entitled to vote held by such stockholder, but no proxy shall be voted
after three years from its date unless such proxy provides for a longer period.
Upon the demand of any stockholder, the vote for directors and upon any question
before the meeting shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided by majority vote
except as otherwise provided by the Certificate of Incorporation or the laws of
the State of Delaware.
SECTION 4. STOCKHOLDER LIST. - - The officer who has charge of the
stock ledger of the corporation shall at least 10 days before each meeting of
stockholders prepare a complete alphabetical addressed list of the stockholders
entitled to vote at the ensuing election, with the number of shares held by
each. Said list shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall be available for inspection at the meeting.
SECTION 5. QUORUM. -- Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
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SECTION 6. SPECIAL MEETINGS. --Special meetings of the stockholders,
for any purpose, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the directors
or stockholders entitled to vote. Such request shall state the purpose of the
proposed meeting.
SECTION 7. NOTICE OF MEETINGS. -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, snail be given to each stockholder entitled to vote thereat at his
address as it appears on the records of the corporation, not less than ten nor
more than fifty days before the date of the meeting.
SECTION 8. BUSINESS TRANSACTED --No business other than that stated in
the notice shall be transacted at any meeting without the unanimous consent of
all the stockholders entitled to vote thereat.
SECTION 9. ACTION WITHOUT MEETING. --Except as otherwise provided by
the Certificate of Incorporation, whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action by any provisions of the Statutes or the Certificate of Incorporation or
of these By-Laws, the meeting and vote of stockholders may be dispensed with, if
all the stockholders who would have been entitled by vote upon the action if
such meeting were held, shall consent in writing to such corporate action being
taken.
ARTICLE III - DIRECTORS
SECTION I. NUMBER AND TERM. --The number of directors shall be The
directors shall be elected at the annual meeting of the stockholders and each
director shall be elected to serve until his successor shall be elected and
shall qualify. The number of directors may not be less than three except that
where all the shares of the corporation are awned beneficially and of record by
either one or two stockholders, the number of directors may be less than three
but not less than the number of stockholders.
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<PAGE>
SECTION 2. RESIGNATIONS. -- Any director, member of a committee or
other officer may resign at any time. Such resignation shall be made in writing,
and shall take effect at the time specified therein, and if no time be
specified, at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
SECTION 3 VACANCIES. -- If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum by a majority vote, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. REMOVAL. -- Any director or directors may be removed either
for or without cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE OF NUMBER. -- The number of directors may be
increased by amendment of these By-Laws by the affirmative vote of a majority of
the directors, though less than a quorum, or, by the affirmative vote of a
majority in interest of the stockholders, at the annual meeting or at a special
meeting called for that purpose, and by like vote the additional directors may
be chosen at such meeting to hold office until the next annual election and
until their successors are elected -and qualify.
SECTION 6. COMPENSATION. -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the board a fixed fee and expenses or attendance may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
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<PAGE>
SECTION 7. ACTION WITHOUT MEETING. --Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof may be taken with out a meeting, if prior to such action a written
consent thereto is signed by all members of the board, or of such committee as
the case may be, and such written consent is filed with the minutes of
proceedings of the board or committee.
ARTICLE IV - OFFICERS
SECTION I. OFFICERS. -- The officers of the corporation shall consist
of a President, a Treasurer, and a Secretary, and shall be elected by the Board
of Directors and shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, one or more
Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as it
may deem proper. None of the officers of the corporation need be directors. The
officers shall be elected at the first meeting of the Board of Directors after
each annual meeting. More than two offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. -- The Board of Directors may
appoint such officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. -- The Chairman of the Board of Directors if one
be elected, shall preside at all meeting, of the Board of Directors and he shall
have and perform such other duties as from time to time may be assigned to him
by the Board of Directors.
SECTION 4. PRESIDENT,-- The President shall be the chief executive
officer of the corporation and shall have the general powers and duties of
supervision and management usually vested in the office of President of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of tire corporation Except an
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer.
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<PAGE>
SECTION 5. VlCE-PRESIDENT. --Each Vice-President shall have such powers
and shall perform such duties as shall be assigned to him by the directors.
SECTION 6. TREASURER. --The Treasurer shall have the custody of the
corporate funds and securities arid shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables 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, or the President, taking proper vouchers for
such disbursements. Re shall render to the President and Board of Directors at
the regular meetings of the Board of Directors, or whenever they may request it,
an account of all his transactions as Treasurer and of the financial condition
of the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the board shall prescribe.
SECTION 7. SECRETARY. --The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the President, or by the directors, or stockholders upon whose requisition
the meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the corporation and of directors in a book to be
kept for that purpose. He 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, and when so affixed, it shalt be attested by his
signature or by the signature of any assistant secretary.
SECTION 8. ASSISTANT TREASURERS & ASSISTANT SECRETARIES Assistant
Treasurers and Assistant Secretaries, it any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.
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<PAGE>
ARTICLE V
SECTION I CERTIFICATES OF ST0CK. --Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman or vice-chairman of the board of directors,
or the president or a vice-president and the treasurer or an assistant
treasurer, or the secretary of the corporation, certifying the number of shares
owned by him in the corporation. If the corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the
designations, preferences and relative participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations, or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class of series of stock, provided
that, except as other wise provided in section 202 of the General Corporation
Law of Delaware in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Where a
certificate is countersigned (1) by a transfer agent other than the corporation
or its employee, or (2) by a registrar other than the corporation or its
employee, the signatures of such officers may be facsimiles.
SECTION 2. LOST CERTIFICATES --New certificates of stock may be issued
in the place of any certificate therefore issued by the corporation, alleged to
have been lost or destroyed, and the directors may, in their discretion, require
the owner of the lost or destroyed certificate or his legal representatives to
give the corporation a bond, In such sum as they may direct, not exceeding
double the value of the stock, to indemnify the corporation against it on
account of the alleged loss of any such new certificate.
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<PAGE>
SECTION 3. TRANSFER OF SHARES. --The shares of stock of the corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the corporation by the delivery
thereof to the person in charge of the stock and transfer books and ledgers, or
to such other persons as the directors may designate, by who they shall be
cancelled, and new certificates shall thereupon be issued. A record shall be
made of each transfer and whenever a transfer shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. --In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the day of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 5, DIVIDENDS. -- Subject to the provisions of the Certificate
of Incorporation the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividends there may be set apart out of any funds of the corporation available
for dividends, such sum> or sums as the directors from time to time in their
discretion deem proper working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
SECTION 6. SEAL. -- The corporate seal shall be circular in form and
shall contain the name of the corporation, the year of its creation and the
words "CORPORATE SEAL DELAWARE." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or otherwise reproduced.
bl 8
<PAGE>
SECTION 7. FISCAL YEAR. -- The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
SECTION 8- CHECKS --All checks, drafts, or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by the officer or officers, agent or agents of the
corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors,
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required by these By-Laws to be given, personal notice is not meant unless
expressly stated, and any notice so required shall be deemed to be sufficient if
given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his address as it appears on the
records of the corporation, and such notice shall be deemed to have been given
on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by
statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions or the Certificate of
Incorporation of the corporation or these By-Laws, a waiver thereof in writing
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed proper notice.
ARTICLE VI - CLOSE CORPORATIONS: MANAGEMENT BY SHAREHOLDERS
If the certificate of incorporation of the corporation states that the
business and affairs of the corporation shall be managed by the shareholders of
the corporation rather than by a board of directors, then, whenever the context
so requires the shareholders of the corporation shall be deemed the directors of
the corporation for purposes of applying any provision of these by-laws.
ARTICLE VII - AMENDMENTS
These By-Laws may be altered and repealed and By-Laws may be made -at
any annual meeting of the Stockholders or at any special meeting thereof if
notice thereof is contained in the notice of such special meeting by the
affirmative vote of a majority of the stock issued and outstanding or entitled
to vote thereat, or by the regular meeting of the Board of Directors, at any
regular meeting of the Board of Directors, or at any special meeting of the
Board of Directors, if notice thereof is contained in the notice of such special
meeting.
bI 9
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